[Senate Hearing 111-1160]
[From the U.S. Government Printing Office]



                                                       S. Hrg. 111-1160
 
         FOR-PROFIT SCHOOLS: THE STUDENT RECRUITMENT EXPERIENCE

=======================================================================



                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,

                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING FOR-PROFIT SCHOOLS, FOCUSING ON THE STUDENT RECRUITMENT 

   EXPERIENCE, AND UNDERCOVER TESTING TO OBSERVE MARKETING PRACTICES

                               __________

                             AUGUST 4, 2010

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions


      Available via the World Wide Web: http://www.gpo.gov/fdsys/





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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                       TOM HARKIN, Iowa, Chairman

CHRISTOPHER J. DODD, Connecticut
BARBARA A. MIKULSKI, Maryland
JEFF BINGAMAN, New Mexico
PATTY MURRAY, Washington
JACK REED, Rhode Island
BERNARD SANDERS (I), Vermont
ROBERT P. CASEY, JR., Pennsylvania
KAY R. HAGAN, North Carolina
JEFF MERKLEY, Oregon
AL FRANKEN, Minnesota
MICHAEL F. BENNET, Colorado
CARTE P. GOODWIN, West Virginia

                                     MICHAEL B. ENZI, Wyoming
                                     JUDD GREGG, New Hampshire
                                     LAMAR ALEXANDER, Tennessee
                                     RICHARD BURR, North Carolina
                                     JOHNNY ISAKSON, Georgia
                                     JOHN McCAIN, Arizona
                                     ORRIN G. HATCH, Utah
                                     LISA MURKOWSKI, Alaska
                                     TOM COBURN, M.D., Oklahoma
                                     PAT ROBERTS, Kansas
                                       
                                       

                    Daniel E. Smith, Staff Director

                  Pamela Smith, Deputy Staff Director

     Frank Macchiarola, Republican Staff Director and Chief Counsel

                                  (ii)




                            C O N T E N T S

                               __________

                               STATEMENTS

                       WEDNESDAY, AUGUST 4, 2010

                                                                   Page
Harkin, Hon. Tom, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  opening statement..............................................     3
    Prepared statement...........................................     6
Kutz, Gregory D., Managing Director, Forensic Audits and Special 
  Investigations, Government Accountability Office, Arlington, VA    10
    Prepared statement...........................................    13
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    38
Isakson, Hon. Johnny, a U.S. Senator from the State of Georgia...    40
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of 
  Pennsylvania...................................................    42
Burr, Hon. Richard, a U.S. Senator from the State of North 
  Carolina.......................................................    44
Goodwin, Hon. Carte P., a U.S. Senator from the State of West 
  Virginia.......................................................    45
Mikulski, Hon. Barbara, a U.S. Senator from the State of Maryland    47
Bennet, Hon. Michael F., a U.S. Senator from the State of 
  Colorado.......................................................    50
Hawkins, David, Director of Public Policy and Research, National 
  Association for College Admission Counseling, Arlington, VA....    52
    Prepared statement...........................................    54
McComis, Michale S., Ed.D., Executive Director, Accrediting 
  Commission of Career Schools and Colleges, Arlington, VA.......    69
    Prepared statement...........................................    71
Pruyn, Joshua, Former Admissions Representative, Alta College, 
  Inc., Denver, CO...............................................    81
    Prepared statement...........................................    83
Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee    99

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Ingnorance by Degrees, article...............................     5
    Senator Bennet...............................................   120
    Response by Gregory D. Kutz to questions of:
        Senator Enzi.............................................   121
        Senator Hagan............................................   125
        Senator Alexander........................................   126
    Response by David Hawkins to questions of:
        Senator Enzi.............................................   127
        Senator Hagan............................................   139
        Senator Alexander........................................   140
    Response by Michale S. McComis, Ed.D. to questions of:
        Senator Enzi.............................................   141
        Senator Hagan............................................   146
        Senator Alexander........................................   148

                                 (iii)



         FOR-PROFIT SCHOOLS: THE STUDENT RECRUITMENT EXPERIENCE

                              ----------                              


                       WEDNESDAY, AUGUST 4, 2010

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m., in 
Room SD-106, Dirksen Senate Office Building, Hon. Tom Harkin, 
chairman of the committee, presiding.
    Present: Senator Harkin, Mikulski, Casey, Hagan, Merkley, 
Franken, Bennet, Goodwin, Enzi, Alexander, Burr, and Isakson.

                  Opening Statement of Senator Harkin

    The Chairman. The Senate Committee on Health, Education, 
Labor, and Pensions will come to order.
    This is the second in a series of hearings by this 
committee focusing on the growing Federal investment in for-
profit colleges and universities. This industry has grown at an 
extraordinary pace. Over the last 10 years, enrollment has 
increased from 600,000 students to over 2 million students.
    Federal financial aid to students at for-profit colleges 
has ballooned from $4.6 billion a decade ago to more than $23 
billion a year, today. The question is: What is driving the 
explosive growth in this industry?
    As you may know, I also chair the Appropriations 
Subcommittee that funds the Pell grant program. And CBO has 
given me some figures here that are quite startling. For 
example, in 2006, our obligation on Pell grants was 
$12,826,000,000. Last year, it was $26 billion, next year it 
will go to $30 billion--$30.6 billion that our Appropriations 
Committee will have to come up with just to fund the Pell grant 
program.
    And so, this explosive growth at a time where we have huge 
deficits, and we're trying to get our budgets in order, causes 
us real concern. The question we have to ask with this 
explosive growth, and with CBO estimates that over the next 10 
years we'll spend somewhere close to $300 billion to $350 
billion just on Pell grants, we have to ask the question, Are 
the students--and the U.S. taxpayers--getting a good value for 
the billions of taxpayers dollars they are investing in these 
for-profit schools?
    In our first hearing, in June, this committee heard 
testimony from witnesses about the pressures for for-profit 
companies to relentlessly enroll more students in order to 
increase profits and, in the case of publicly traded companies, 
to meet the expectations of investors. The committee issued a 
report showing that, in order to boost recruitment, many 
publicly traded for-profit schools spend huge sums of title IV 
dollars. Title IV dollars, which are taxpayer dollars. They 
spend a huge amount on TV advertisements, billboards, phone 
solicitations, and Web marketing, and as we shall see shortly, 
an aggressive sales staff.
    According to the Chairman's report, an analysis of the 
eight publicly traded schools shows that, on average, they 
spend 31 percent of revenues on recruiting and marketing. 
Thirty-one percent.
    This spending by for-profit schools sets them radically 
apart from other colleges. By contrast, community colleges 
typically spend just 1 or 2 percent on marketing; a tiny 
fraction of the money spent by publicly traded for-profits.
    However numbers only tell a part of the story. Much can be 
revealed, too, by the experience that students, who are perhaps 
the first in their family to go to college, have when they sit 
down to talk to a recruiter or admissions officer. That is why 
I asked the Government Accountability Office to investigate 
this key encounter during the recruitment process at for-profit 
institutions.
    GAO's findings make it disturbingly clear that abuses in 
for-profit recruiting are not limited to a few rogue recruiters 
or even a few schools with lax oversight. To the contrary, the 
evidence points to a problem that is systemic to the for-profit 
industry: a recruitment process specifically designed to do 
whatever it takes to drive up enrollment numbers, more often 
than not to the disadvantage of students.
    There is a cruel irony, here, that deserves special focus. 
One ostensibly admirable aspect of for-profit colleges is that 
they seek out and enroll large numbers of minority and low-
income students, offering them opportunities they might not 
have. In choosing to enroll in a for-profit college, these 
students typically go deeply into debt. They make other 
sacrifices, all in search of a better life. They need 
information that is clear, complete, and honest. Instead, too 
often, they are victims of deceptive and/or abusive marketing 
tactics.
    In our first hearing, we learned that for-profit schools 
are enrolling huge numbers of new students, but their total 
current enrollment numbers show only a small increase, which 
seems to point to an extremely high dropout rate. For example, 
one publicly traded school had 84,555 students as of March 31 
of this year. They enrolled 21,673 new students between April 1 
and June 30, but ended June with 84,695 students, a gain of 
only 140 students. What happened to the other 21,533? Did they 
all graduate in 3 months? Or did they drop out?
    Reports for the past year show that this school turns over 
between 22 and 25 percent of their student population every 3 
months. Every 3 months.
    Why are such large numbers of students turning over, and 
presumably dropping out? Are they leaving the schools with debt 
and no degree? How can that be happening in such large numbers? 
The testimony this morning from Mr. Gregory Kutz of the 
Government Accountability Office will begin to answer these 
questions.
    Our second panel will allow us to hear directly from a 
former recruiter for a large for-profit school. He will offer 
us insight into the training and supervision systems that 
foster the deceptive and misleading recruiting tactics that are 
all too common at these schools. We will also hear from an 
admissions counseling expert, who will contrast the recruiting 
policies and practices at non-profit and public colleges with 
those at for-profit schools. Finally, we will hear from the 
executive director of a national accrediting organization to 
help the committee better understand the national accreditation 
process, and the steps that accrediting agencies take to ensure 
that the for-profit schools they accredit are acting both 
lawfully and in the best interests of their students.
    I want to remind everyone that Congress has just committed 
to making an increased investment in Pell grants, as I 
mentioned earlier. We've boosted it up by $36 billion over the 
next 10 years, which will bring us to a 10-year total of 
somewhere between $300 billion and $350 billion in the next 10 
years, just in the Pell grant program. If current enrollment 
trends continue, a huge portion of those dollars will flow to 
students attending for-profit schools. I encourage the 
committee to keep this in mind as we hear testimony from 
today's witnesses.
    I think we need to keep two questions front and center: Are 
these schools serving the best interests of their students? Are 
our new investments--taxpayers' investments--in student 
financial aid sufficiently safeguarded under current law? These 
are the fundamental questions that this committee, and the 
Appropriations Committee that I chair, really need answers to.
    With that, I will turn to the committee's Ranking Member 
and former chair, Senator Enzi, for his opening statement. And 
then I will introduce our first panel.

                       Statement of Senator Enzi

    Senator Enzi. Thank you, Mr. Chairman.
    This morning, we are going to hear the details of 
aggressive and inappropriate recruiting practices. Among other 
things we will see examples of schools misrepresenting the 
quality of education students receive, making unrealistic 
promises of high-paying jobs, and in some instances encouraging 
outright fraud. This behavior is unacceptable and should not be 
defended. Use of pressure tactics, deceitful marketing, and 
outright lies to mislead students has absolutely no place in 
education, or for that matter, in any legitimate business. It's 
truly appalling behavior, and the schools that engage in such 
activities must be firmly dealt with.
    However, I am just as concerned that descriptions of wrong 
doings such as these will be used to unfairly characterize all 
for-profit schools as bad actors, and that is simply not the 
case. As Secretary Duncan has said, ``for-profit institutions 
play a vital role in training young people and adults for 
jobs.'' Unfortunately, this series of hearings has only shown 
the negative, and seems intent on portraying all for-profits as 
irresponsible and predatory.
    My comments should not be interpreted as defending 
unscrupulous behavior or condoning aggressive recruiting 
practices. I am also not suggesting that this committee should 
ignore wrongdoing in the for-profit sector. On the contrary, it 
is crystal clear that some programs at for-profit schools are 
misleading students and possibly defrauding taxpayers out of 
millions of dollars in student aid funds.
    However, in focusing only on for-profits, we are not being 
objective, and we are ignoring the bigger picture of what is 
happening across all of higher education. Public and nonprofit 
schools are not immune from inappropriate behavior when it 
comes to recruiting.
    One of the most blatant places, of course, is in athletic 
programs. A simple news search performed by my staff pulled up 
nearly 20 individual examples of recruiting violations in 
college athletic programs. For instance, one public university 
has been cited for making hundreds of impermissible calls and 
text messages to prospective student athletes, giving recruits 
improper benefits and improperly distributing free tickets to 
high school coaches and others. More recently, a college 
basketball coach allegedly helped boosters raise money at a 
high school tournament held in the university's gym; a direct 
violation of NCAA Rules that prohibit such behavior attended by 
prospective recruits. Situations like these are unacceptable 
and are firmly dealt with when uncovered. However, unlike what 
we are seeing here today, they are not used as evidence of 
widespread corruption, or used to suggest that all college 
athletic programs are engaged in unscrupulous behavior.
    For-profit schools are a part of a much larger system of 
higher education that includes for-profits, as well as 
thousands of traditional institutions of higher education. Many 
of the issues you raise, Chairman Harkin, particularly those 
regarding student debt and default, are problems throughout the 
higher education system, not only at for-profits. Also, the 
rules that apply to Federal loans, apply to all students, 
regardless of the type of institution they attend. We should be 
scrutinizing all sectors of higher education and asking the 
same questions you are now asking of for-profit institutions.
    Again, I don't dispute the need to shine a light on the 
for-profit sector. For-profits have grown at a tremendous rate 
and are receiving an increasingly larger percentage of Federal 
student aid funds. And, as the testimony today will illustrate, 
there is clearly inappropriate behavior taking place in the 
recruiting practices of some schools. However, if these 
hearings are to be meaningful, the for-profit sector must not 
be examined in a vacuum. It is part of a much broader community 
of postsecondary schools that includes public, 4- and 2-year 
schools, as well as private nonprofit schools. And, as 
Secretary Duncan has explained,

          ``They are helping us meet an ever increasing demand 
        for skills that public institutions cannot always meet. 
        They are an essential part in achieving President 
        Obama's goal of being first in the world in college 
        completion by 2020.''

    Therefore, I encourage you to reassess your approach to 
these hearings and provide the committee with an examination of 
for-profit schools in relation to all institutions of higher 
education. Many, if not most, of the same rules and regulations 
that we are discussing during these hearings apply to all 
sectors of higher education. I believe that understanding how 
each sector of higher education relates to the other is the 
best way for us to ensure that students are protected and that 
the taxpayers are getting the best return on their investment. 
For that reason I will be asking the GAO to expand upon the 
request you made for data on for-profit colleges to also 
include a review of all institutions of higher education. I 
hope that you will join me in that request.
    I would also ask permission to have included in the record, 
an article that was in the Wall Street Journal yesterday, 
``Ignorance By Degrees in Higher Education.''
    The Chairman. Without objection.
    Senator Enzi. Thank you.
    [The information referred to follows:]

               [The Wall Street Journal, August 2, 2010]

                          Ignorance By Degrees
    Colleges serve the people who work there more than the students who 
desperately need to learn something.

                        (By Mark Bauerlein) \1\

    Higher education may be heading for a reckoning. For a long time, 
despite the occasional charge of liberal dogma on campus or of a 
watered-down curriculum, people tended to think the best of the college 
and university they attended. Perhaps they attributed their career 
success or that of their friends to a diploma. Or they felt moved by a 
particular professor or class. Or they received treatment at a 
university hospital or otherwise profited from university-based 
scientific research. Or they just loved March Madness.
---------------------------------------------------------------------------
    \1\ Mr. Bauerlein, the author of ``The Dumbest Generation: How the 
Digital Age Stupefies Young Americans and Jeopardizes Our Future,'' 
teaches at Emory University.
---------------------------------------------------------------------------
    Recently, though, a new public skepticism has surfaced, with 
galling facts to back it up. Over the past 30 years, the average cost 
of college tuition and fees has risen 250% for private schools and 
nearly 300% for public schools (in constant dollars). The salaries of 
professors have also risen much faster than those of other occupations. 
At Stanford, to take but one example, the salaries of full professors 
have leapt 58% in constant dollars since the mid-1980s. College 
presidents do even better. From 1992 to 2008, NYU's presidential salary 
climbed to $1.27 million from $443,000. By 2008, a dozen presidents had 
passed the million-dollar mark.
    Meanwhile, tenured and tenure-track professors spend ever less time 
with students. In 1975, 43% of college teachers were classified as 
``contingent''--that is, they were temporary instructors and graduate 
students; today that rate is 70%. Colleges boast of high faculty-to-
student ratios, but in practice most courses have a part-timer at the 
podium.
    Elite colleges justify the light teaching loads of their 
professors--Yale requires only three courses a year, with a semester 
off every third year--by claiming that the members of their faculty 
spend their time producing important research. A glance at scholarly 
journals or university-press catalogs might make one wonder how much of 
this ``research'' is advancing knowledge and how much is part of a 
guild's need to credentialize its members. In any case, time spent for 
research is time taken away from students. The remoteness of professors 
may help explain why about 30% of enrolling students drop out of 
college only a few months after arriving.
    At the same time, the administrator-to-student ratio is growing. In 
fact, it has doubled since 1976. The administrative field has 
diversified into exotic specialties such as Credential Specialist, 
Coordinator of Learning Immersion Experiences and Dietetic Internship 
Director.
    In ``Higher Education?'' Andrew Hacker and Claudia Dreifus describe 
such conditions in vivid detail. They offer statistics, anecdotes and 
first-person accounts--concerning tuition, tenure and teaching loads, 
among much else--to draw up a powerful, if rambling, indictment of 
academic careerism. The authors are not shy about making biting 
judgments along the way.
    Of the 3,015 papers delivered at the 2007 meeting of the American 
Sociological Association, the authors say, few ``needed to be 
written.'' As for one of the most prestigious universities in the 
world, ``the mediocrity of Harvard undergraduate teaching is an open 
secret of the Ivy League.'' Much of the research for scholarly articles 
and lectures is ``just compost to bulk up resumes.'' College presidents 
succeed not by showing strong, imaginative leadership but ``by 
extending their school's terrain.'' Indeed, ``hardly any of them have 
done anything memorable, apart perhaps from firing a popular athletic 
coach.'' For all the high-minded talk, Mr. Hacker and Ms. Dreifus 
conclude, colleges and universities serve the people who work there 
more than the parents and taxpayers who pay for ``higher education'' or 
the students who so desperately need it.
    Take the adjunct issue. Everyone knows that colleges increasingly 
staff courses with part-time instructors who earn meager pay and no 
benefits. But who wants to eliminate the practice? Administrators like 
it because it saves money, professors because it saves them from 
teaching labor-intensive courses. And adjuncts themselves would rather 
continue at minimum wage than leave the profession altogether. In a 
``coda,'' Mr. Hacker and Ms. Dreifus declare that ``it is immoral and 
unseemly to have a person teaching exactly the same class as an 
ensconced faculty member, but for one-sixth the pay.'' Perhaps so, but 
without a united faction mobilized against it, such ``immorality'' 
won't stop anytime soon.
    But some change may still be possible. A lot of criticism of 
academia hasn't stuck in the past, Mr. Hacker and Ms. Dreifus imply, 
because people have almost unthinkingly believed in the economic power 
of the degree. Yes, you didn't learn a lot, and the professors blew you 
off--the reasoning went--but if you got a diploma the job offers would 
follow. But that logic may no longer be so compelling. With the economy 
tightening and tales of graduates stuck in low-paying jobs with $50,000 
in student loans, college doesn't look like an automatic bargain.
    We need some hard cost accounting and comparisons, Mr. Hacker and 
Ms. Dreifus argue, and so they end ``Higher Education?'' with capsule 
summaries of, as they put it, ``Schools We Like''--that is, schools 
that offer superior undergraduate educations at relatively low cost. 
The list includes Ole Miss, Cooper Union, Berea College, Arizona State 
and Western Oregon University. ``We think a low cost should be a major 
determinant in any college decision,'' the authors wisely conclude, for 
``a debt-free beginning is worth far more than a name-brand 
imprimatur.''

    [The prepared statement of Senator Enzi follows:]

                   Prepared Statement of Senator Enzi

    The June 24, 2010 and August 4, 2010 hearings of the 
Health, Education, Labor, and Pensions Committee focused almost 
exclusively on title IV funding at for-profit institutions of 
education. Many of the issues raised during these hearings 
apply throughout higher education, not just at for-profits. The 
following tables provide general statistical information 
regarding tuition, default rates, title IV funding, spending on 
instruction, and demographics for all sectors of higher 
education.
    As the table below illustrates, spending on instruction 
ranges from 21 percent to 38 percent for all schools. Spending 
on instruction at public and non-profit schools is only 
marginally higher than it is at for-profit schools, 26 percent 
at public 4-year schools versus 21 percent at for-profit 4-year 
schools. The data also show public schools receive between 40 
percent and 65 percent of their revenue from government 
sources, while for-profits rely almost exclusively on tuition. 
Despite this disparity, the data show for-profits spend roughly 
the same percentage on instruction as public schools.

                            Sources of Revenue vs. Spending on Instruction by Sector
----------------------------------------------------------------------------------------------------------------
                                                                             Percent of revenue
                                                                               from State and
                                                               Percent of           local           Percent of
                                                              revenue from     appropriations,   expenditures on
                                                              tuition and      and government      instruction
                                                                  fees           grants and
                                                                                  contracts
----------------------------------------------------------------------------------------------------------------
Public 4-year.............................................           16.77               40.82               26
Public 2-year.............................................           16.21               64.09               38
Private Non-Profit 4-year.................................           25.96               12.25               33
Private Non-Profit 2-year.................................           51.28               14.71               34
For-Profit 4-year.........................................           89.52                4.69               21
For-Profit 2-year.........................................           84.53                8.60               31
----------------------------------------------------------------------------------------------------------------
Source: Digest of Education Statistics.

    As shown below, the built-in government subsidies for 
public 4-year institutions ensure that tuition and fees are 
significantly lower than those for private non-profits or for-
profits. Additionally, the chart shows that the percentage 
increase in tuition and fees over the past 10 years at for-
profits is similar to that for public 4-year institutions.

                                    Average Higher Education Tuition and Fees
----------------------------------------------------------------------------------------------------------------
                                                         Yr/Yr        4-YR       Yr/Yr        4-YR       Yr/Yr
               Award year                 4-YR public   percent     private     percent   proprietary   percent
----------------------------------------------------------------------------------------------------------------
2003-4..................................       $4,542                 $15,149                 $12,037
2004-5..................................        4,936          9       16,046          6       13,063          9
2005-6..................................        5,206          5       16,888          5       13,894          6
2006-7..................................        5,496          6       17,943          6       14,261          3
2007-8..................................        5,730          4       19,047          6       14,908          5
2008-9..................................        6,070          6       20,112          6       15,521          4
----------------------------------------------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
                                                         Yr/Yr        2-YR       Yr/Yr        2-YR       Yr/Yr
               Award year                 2-YR public   percent     private     percent   proprietary   percent
----------------------------------------------------------------------------------------------------------------
2003-4..................................       $2,245                  $9,091                 $10,971
2004-5..................................        2,412          7        8,182        -10       11,248          3
2005-6..................................        2,514          4        8,553          5       11,778          5
2006-7..................................        2,645          5        9,063          6       11,961          2
2007-8..................................        2,749          4        9,396          4       12,357          3
2008-9..................................        2,830          3        9,987          6       13,073          6
----------------------------------------------------------------------------------------------------------------
Source: Congressional Research Service.

    As noted in the following chart, students in all sectors of 
higher education rely heavily on Federal student financial 
assistance under title IV of the Higher Education Act. However, 
due to growth in the for-profit sector, and a high proportion 
of low-income students, for-profit schools have seen a more 
rapid increase in their receipt of title IV money than 
traditional higher education, particularly Pell grant funds. 
Furthermore, high unemployment is reportedly increasing higher 
education applications and enrollment generally, and therefore, 
contributes to the increase in Pell-eligible students attending 
for-profit schools since 2007.

                                                                   Total Pell Funding
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Pvt. non-                        For-
                                                                                     Public    Pvt. non-profit     profit    For-profit total    profit
                          Award year                            Public total Pell   percent       total Pell      percent          Pell         percent
                                                                                     change                        change                        change
--------------------------------------------------------------------------------------------------------------------------------------------------------
1999-2000.....................................................     $4,920,644,931                $1,341,992,126                  $945,863,434
2000-1........................................................      5,412,886,963         10      1,459,846,858          9      1,083,570,363         15
2001-2........................................................      6,780,486,065         25      1,781,604,565         22      1,413,001,710         30
2002-3........................................................      7,883,765,781         16      1,968,766,154         11      1,789,019,783         27
2003-4........................................................      8,492,253,472          8      2,121,460,147          8      2,094,183,718         17
2004-5........................................................      8,681,903,806          2      2,144,224,722          1      2,323,811,232         11
2005-6........................................................      8,283,387,374         -5      2,049,911,431         -4      2,359,829,177          2
2006-7........................................................      8,280,454,552          0      2,054,920,997          0      2,481,940,708          5
2007-8........................................................      9,306,387,015         12      2,271,591,021         11      3,082,037,558         24
2008-9........................................................     11,336,207,797         22      2,638,985,719         16      4,308,185,267         40
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Research Service.

    As demonstrated below, individual Pell grant award amounts 
are roughly the same as those received by students attending 
traditional institutions of higher education.

                                            Average Pell Grant Award
----------------------------------------------------------------------------------------------------------------
                                                 Public 2-                  Public  4-                    For-
                                 Public 2-year-     year    Public 4-year-     year      For-profit      profit
           Award year              avg. award     percent     avg. award     percent     avg. award     percent
                                                   change                     change                     change
----------------------------------------------------------------------------------------------------------------
1999-2000......................          $1,775                     $2,036                     $1,859
2000-1.........................           1,883          6           2,195          8           1,946          5
2001-2.........................           2,125         13           2,478         13           2,197         13
2002-3.........................           2,246          6           2,625          6           2,361          7
2003-4.........................           2,272          1           2,662          1           2,389          1
2004-5.........................           2,277          0           2,671          0           2,390          0
2005-6.........................           2,243         -1           2,666          0           2,364         -1
2006-7.........................           2,267          1           2,696          1           2,380          1
2007-8.........................           2,422          7           2,874          7           2,536          7
2008-9.........................           2,705         12           3,253         13           2,866         13
----------------------------------------------------------------------------------------------------------------
Source: Congressional Research Service.

    Finally, data on student loan default rates, as detailed 
below, show that students at for-profit schools may be more 
likely to default on their loans.

                                              Cohort Default Rates
----------------------------------------------------------------------------------------------------------------
                                                                  2 Year [In       3 Year [In       4 Year [In
                            Sector                                 percent]         percent]         percent]
----------------------------------------------------------------------------------------------------------------
For-Profit...................................................             8.6             16.7             23.3
Public.......................................................             4.7              7.2              9.5
Private non-profit...........................................             3.0              4.7              6.5
----------------------------------------------------------------------------------------------------------------
Source: Congressional Research Service.

    A 2009 Government Accountability Office (GAO) report 
examined this issue and stated that the high default rates at 
for-profit schools can be linked to the demographic 
characteristics of their students. ``Specifically, students who 
come from low-income backgrounds and from families who lack 
higher education are more likely to default on their loans, and 
data show that students from proprietary schools are more 
likely to come from low-income families and have parents who do 
not hold a college degree.'' GAO-00-600. As the following 
tables illustrate, for-profit students are poorer, older, and 
more likely to be a first generation college student than 
students attending traditional institutions of higher 
education.

            Family Income and Parental Education of Students
------------------------------------------------------------------------
                                                         Parents with
                                     Annual median    associate's degree
             Sector                  family income       or higher [In
                                                           percent]
------------------------------------------------------------------------
For-Profit......................            $24,300                  37
Public..........................             40,400                  52
Private non-profit..............             49,200                  61
------------------------------------------------------------------------
Source: Congressional Research Service.


                     Age and Dependency of Students
------------------------------------------------------------------------
                                                              Financial
                                              Students age   independent
                   Sector                     25 and older  students [In
                                              [In percent]    percent]
------------------------------------------------------------------------
For-Profit..................................           56            76
Public......................................           35            50
Private non-profit..........................           38            39
------------------------------------------------------------------------
Source: Congressional Research Service.


                            Student Ethnicity
------------------------------------------------------------------------
                                                            Private non-
                                 For-Profit    Public [In    profit [In
                                [In percent]    percent]      percent]
------------------------------------------------------------------------
Am. Indian/AK Native..........            1             1             1
Asian/Pacific Islander........            4             7             6
Hispanic......................           19            13            11
African-American..............           26            13            12
White, non-Hispanic...........           50            66            70
------------------------------------------------------------------------
Source: Congressional Research Service.


    The Chairman. Thank you.
    Thank you, Senator Enzi.
    Now, I'll introduce our first witness. Mr. Gregory Kutz is 
the Managing Director of GAO's Forensic Audits and Special 
Investigations Unit. The mission of the FSI is to provide the 
Congress with high-quality forensic audits and investigations 
of fraud, waste, and abuse, and evaluations of security 
vulnerabilities and other requested investigative services.
    In 1991, Mr. Kutz joined the Governmental Accountability 
Office after 8 years at KPMG Peat Marwick. As a senior 
executive at GAO, Mr. Kutz has testified at congressional 
hearings over 80 times, primarily on matters related to fraud, 
waste, and abuse and other special investigations. Mr. Kutz has 
been responsible for reports issued by GAO, and testimony 
relating to credit card and travel fraud and abuse, and 
improper sales of sensitive military and dual-use technology, 
tax fraud and abuse, wage theft, Hurricanes Katrina and Rita 
fraud, transit benefit fraud, procurement fraud, pay problems 
for military members, and seclusion and restraint of disabled 
children in schools.
    I read all of that to make a note of the fact that Mr. Kutz 
has provided invaluable service along with the GAO to this 
Congress and to the American people in making sure that our 
taxpayers' dollars are well-spent, and that we have the 
information we need to oversee the spending of those tax 
dollars.
    So, Mr. Kutz, welcome to the committee. I will start the 
clock at 25 minutes. If you need a few more minutes than that, 
we'll do it, because I know you have a lengthy testimony and 
you have some video clips to show us. We have a vote at 10:40. 
We'll try to get through your opening testimony and then we'll 
take a break, and then we'll come back.
    So, Mr. Kutz, your written statement at the GAO will be 
made a part of the record in its entirety and again, welcome, 
and please proceed.

   STATEMENT OF GREGORY D. KUTZ, MANAGING DIRECTOR, FORENSIC 
 AUDITS AND SPECIAL INVESTIGATIONS, GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Kutz. Mr. Chairman and members of the committee, thank 
you for the opportunity to discuss for-profit colleges. Today's 
testimony will provide you with an inside look at the sales and 
marketing practices of these colleges.
    My testimony has two parts. First, I will discuss what we 
did, and second, I will discuss the results of our undercover 
testing.
    First, our prospective students applied for admission to 
for-profit colleges in six States, and here in Washington, DC. 
We selected these colleges based on a number of factors, 
including size, location, and the percentage of Federal funding 
that was received.
    Yes?
    The Chairman. I apologize for interrupting, I forgot to ask 
something I was supposed to.
    Mr. Kutz, before you begin, I'd like you to make the 
identity of the schools you visited public, together with the 
identity of the schools we will be seeing in the video clips. 
If you would like to provide a list of the schools, we would 
appreciate that, and then each member can have that.
    Mr. Kutz. Certainly, I'll list them off. In our testimony, 
they're numbered as Nos. 1 through 15, and so I'll just go 
through them. They're actually 12 unique colleges, we went to 
three of them once.
    Case No. 1 one is University of Phoenix in Arizona, case 
No. 2 is Everest College in Arizona, No. 3 is Westech College 
in California, No. 4 is Kaplan College in California, No. 5 is 
Potomac College in Washington, DC, No. 6, No. 7 is Medvance 
Institute in Florida, No. 8 is Kaplan College, again, this time 
in Florida, No. 9 is College of Office Tech in Illinois, No. 10 
is Argosy University in Illinois, No. 11 is the University of 
Phoenix, again, this time in Pennsylvania, No. 12 is Anthem 
Institute in Pennsylvania, No. 13 is Westwood College in Texas, 
No. 14 is, again, Everest College, this time in Texas, and No. 
15 is ATI Career Training in Texas.
    The Chairman. Thank you, Mr. Kutz.
    Mr. Kutz. What we did, was we used bogus identities and 
documents and spoke to representatives at these 15 colleges 
that I just mentioned, which is, again, 12 colleges, and 3 of 
them were repeats. For the first scenario, our student had 
income that was low enough to qualify for Federal grants and 
subsidized loans. For our second scenario, our student had 
higher income, and $250,000 in savings in what we described as 
a recent inheritance.
    We also enrolled our perspective students in two Web sites, 
and four students were enrolled in these, and I will refer to 
these throughout my testimony as marketing lead generators. We 
did this to determine the type and frequency of marketing calls 
that we would receive from these Web sites.
    Now that I've set up what we did, let me move onto my 
second point, the results of our undercover testing. 
Specifically, we found that four colleges encouraged our 
students to commit fraud.
    What I'm going to do is walk you through our key findings, 
and use the video clips to bring each of these points to life.
    Although, as I mentioned, all 15 provided deceptive and 
questionable information, as Senator Enzi mentioned, they were 
not all bad, and some provided some good practices. So, I'm 
going to start with that.
    For example, several applicants were told that the transfer 
of their credits depended upon the college that they were 
transferring to. Several applicants were told to research 
credible, independent evidence of expected salaries, and one 
representative that you'll see told our applicant to be 
cautious about taking out too much debt. These videos I'm going 
to show now will show some good practices.
    [Video]
    Unfortunately, these good practices were harder to identify 
than the bad ones. Let me start by speaking about my favorite 
topic, as you mentioned in your opening of me, I speak about 
fraud a lot.
    Representatives from four schools encouraged our applicants 
to falsify their Federal financial aid forms, or what you all 
have heard before is the FAFSA form, FAFSA. Examples included, 
telling our students not to report $250,000 in savings. One 
representative told us that this $250,000 wasn't any of the 
government's business. Another one told us to delete the 
$250,000 from our Federal aid form.
    Other students were told to add bogus dependents to their 
Federal aid form. One representative held up three fingers, and 
told us specifically to add three bogus dependents to our 
Federal aid form. By falsifying our applications, our 
fictitious students would have qualified for Federal grants and 
subsidized loans that they were not entitled to. In other 
words, although we had enough money to pay for this, they told 
us to commit fraud, so that Federal taxpayers would pick up the 
tab. The following videos show you two of these fraud cases.
    [Video]
    Representatives from 13 colleges gave our applicants 
deceptive or questionable information about graduation rates, 
guaranteed jobs, or they exaggerated future earnings. Examples 
include one representative that said that people coming out of 
their barber program--barber shop program--can earn $150,000 to 
$250,000. According to the Bureau of Labor Statistics, 90 
percent of the barbers in this area which, by the way, is here 
in Washington, DC, make less than $19,000 a year.
    Another representative did not offer a job guarantee but 
said that 90 percent of the students get jobs. Here are some 
videos that show these types of issues.
    [Video]
    As you know, Federal loan default rates at these for-profit 
colleges are high. At eight of these colleges, at least 80 
percent of the students have Federal loans. Examples of bad 
advice we received include one individual telling us that they 
had $85,000 of student loans that they probably would not 
repay. Another representative told us that, unlike car loans, 
nobody will come after you if you fail to pay your student 
loans.
    Also, you know, taxpayers pick up the tab for all of these 
defaulted Federal loans, and students do face consequences when 
they default on a loan. Here are some videos showing these 
points.
    [Video]
    Let's move on to cost. Our analysis found that for-profit 
colleges, for certificates and degrees, generally substantially 
cost higher than public and private nonprofits. The primary 
exception to this was for Bachelor's Programs, where private, 
nonprofits are often more expensive.
    Examples of deceptive information on cost include one 
representative saying that their $15,000 computer drafting 
program was a great value. The same certificate at a local 
community college was $520. And another representative in Texas 
said that their Bachelor's program cost $50,000 to $75,000 a 
year, which is far less than traditional programs. That same 
program at the University of Texas at Austin was $36,000.
    Here are a few video clips.
    [Video]
    The two Web sites I mentioned we registered with appear to 
be lead generators for numerous for-profit colleges. Two 
fictitious individuals expressed interest in a culinary arts 
certificate at Web sites A and B. We had two others express 
interest in business degrees at these same Web sites. Within 5 
minutes, our phone began to ring. The two individuals 
interested in business degrees received about 180 calls, each, 
in 1 month. The culinary arts students received far less 
interest, with one only receiving a few calls, and the other 
still receiving 72. In total, our four fictitious prospective 
students received 436 calls in 1 month. All but six of these 
calls were from for-profit colleges. The following video will 
give you a perspective of what your voice mail would sound like 
if you registered with one of these lead generators.
    [Video]
    As you can tell, our cover is blown, that was Amy Meyers, 
actually.
    So, we also identified a number of high-pressure sales and 
marketing practices. Examples include, at six colleges 
applicants were told that they could not speak to someone from 
financial aid until they paid an application fee and signed 
enrollment forms.
    At one college, our applicant was scolded and ridiculed for 
refusing to enroll before speaking to financial aid. And at 
another college, our applicant was told to sign enrollment 
forms, but was assured that it was not a legally binding 
document. These colleges do not appear to have any enrollment 
standards, and cost appears to be irrelevant because the 
Federal Government is paying for the vast majority of this. So, 
the aggressive marketing of anybody walking in the door should 
not be a surprise here to anybody.
    Here are two examples of these aggressive marketing 
practices.
    [Video]
    In conclusion, it wasn't hard to find deceptive and 
fraudulent marketing practices. These practices are not unique 
to this industry. We've reported on fraudulent and deceptive 
practices in several other industries, recently.
    However, the big difference, here, is the vast majority of 
money that is funding these activities is coming from American 
taxpayers.
    Mr. Chairman, you've been very generous with my time, and I 
appreciate that, but I want to finish the story of that last 
student. When you left off a minute ago, the sales 
representative was pressuring them to enroll without speaking 
to financial aid. They then said they were going to go get 
someone from financial aid. As you'll see on this final video, 
when they came back, they actually passed the person on to the 
admissions director. Here is the unhappy ending to this story.
    [Video]
    Mr. Chairman, that ends my statement. I look forward to all 
of your questions.
    [The prepared statement of Mr. Kutz follows:]
                 Prepared Statement of Gregory D. Kutz
                               Highlights
                         why gao did this study
    Enrollment in for-profit colleges has grown from about 365,000 
students to almost 1.8 million in the last several years. These 
colleges offer degrees and certifications in programs ranging from 
business administration to cosmetology. In 2009, students at for-profit 
colleges received more than $4 billion in Pell grants and more than $20 
billion in Federal loans provided by the Department of Education 
(Education). GAO was asked to (1) conduct undercover testing to 
determine if for-profit colleges' representatives engaged in 
fraudulent, deceptive, or otherwise questionable marketing practices, 
and (2) compare the tuitions of the for-profit colleges tested with 
those of other colleges in the same geographic region.
    To conduct this investigation, GAO investigators posing as 
prospective students applied for admissions at 15 for-profit colleges 
in 6 States and Washington, DC. The colleges were selected based on 
several factors, including those that the Department of Education 
reported received 89 percent or more of their revenue from Federal 
student aid. GAO also entered information on four fictitious 
prospective students into education search Web sites to determine what 
type of follow-up contact resulted from an inquiry. GAO compared 
tuition for the 15 for-profit colleges tested with tuition for the same 
programs at other colleges located in the same geographic areas. 
Results of the undercover tests and tuition comparisons cannot be 
projected to all for-profit colleges.
For-Profit Colleges--Undercover Testing Finds Colleges Encouraged Fraud 
     and Engaged in Deceptive and Questionable Marketing Practices
                             what gao found
    Undercover tests at 15 for-profit colleges found that four colleges 
encouraged fraudulent practices and that all 15 made deceptive or 
otherwise questionable statements to GAO's undercover applicants. Four 
undercover applicants were encouraged by college personnel to falsify 
their financial aid forms to qualify for Federal aid--for example, one 
admissions representative told an applicant to fraudulently remove 
$250,000 in savings. Other college representatives exaggerated 
undercover applicants' potential salary after graduation and failed to 
provide clear information about the college's program duration, costs, 
or graduation rate despite Federal regulations requiring them to do so. 
For example, staff commonly told GAO's applicants they would attend 
classes for 12 months a year, but stated the annual cost of attendance 
for 9 months of classes, misleading applicants about the total cost of 
tuition. Admissions staff used other deceptive practices, such as 
pressuring applicants to sign a contract for enrollment before allowing 
them to speak to a financial advisor about program cost and financing 
options. However, in some instances, undercover applicants were 
provided accurate and helpful information by college personnel, such as 
not to borrow more money than necessary.

       Fraudulent, Deceptive, and Otherwise Questionable Practices
------------------------------------------------------------------------
       Degree/certificate, location         Sales and marketing practice
------------------------------------------------------------------------
Certificate Program--California...........  Undercover applicant was
                                             encouraged by a college
                                             representative to change
                                             Federal aid forms to
                                             falsely increase the number
                                             of dependents in the
                                             household in order to
                                             qualify for grants.
Associate's Degree--Florida...............  Undercover applicant was
                                             falsely told that the
                                             college was accredited by
                                             the same organization that
                                             accredits Harvard and the
                                             University of Florida.
Certificate Program--Washington, DC.......  Admissions representative
                                             said that barbers can earn
                                             up to $150,000 to $250,000
                                             a year, an exceptional
                                             figure for the industry.
                                             The Bureau of Labor
                                             Statistics reports that 90
                                             percent of barbers make
                                             less than $43,000 a year.
Certificate Program--Florida..............  Admission representative
                                             told an undercover
                                             applicant that student
                                             loans were not like a car
                                             payment and that no one
                                             would ``come after'' the
                                             applicant if she did not
                                             pay back her loans.
------------------------------------------------------------------------
Source: GAO.

    In addition, GAO's four fictitious prospective students received 
numerous, repetitive calls from for-profit colleges attempting to 
recruit the students when they registered with Web sites designed to 
link for-profit colleges with prospective students. Once registered, 
GAO's prospective students began receiving calls within 5 minutes. One 
fictitious prospective student received more than 180 phone calls in a 
month. Calls were received at all hours of the day, as late as 11 p.m. 
To see video clips of undercover applications and to hear voice mail 
messages from for-profit college recruiters, see http://www.gao.gov/
products/GAO-10-948T.
    Programs at the for-profit colleges GAO tested cost substantially 
more for associate's degrees and certificates than comparable degrees 
and certificates at public colleges nearby. A student interested in a 
massage therapy certificate costing $14,000 at a for-profit college was 
told that the program was a good value. However the same certificate 
from a local community college cost $520. Costs at private nonprofit 
colleges were more comparable when similar degrees were offered.
                                 ______
                                 
    Mr. Chairman and members of the committee, thank you for the 
opportunity to discuss our investigation into fraudulent, deceptive, or 
otherwise questionable sales and marketing practices in the for-profit 
college industry.\1\ Across the Nation, about 2,000 for-profit colleges 
eligible to receive Federal student aid offer certifications and 
degrees in subjects such as business administration, medical billing, 
psychology, and cosmetology. Enrollment in such colleges has grown far 
faster than traditional higher-education institutions. The for-profit 
colleges range from small, privately owned colleges to colleges owned 
and operated by publicly traded corporations. Fourteen such 
corporations, worth more than $26 billion as of July 2010,\2\ have a 
total enrollment of 1.4 million students. With 443,000 students, one 
for-profit college is one of the largest higher-education systems in 
the country--enrolling only 20,000 students fewer than the State 
University of New York.
---------------------------------------------------------------------------
    \1\ For-profit colleges are institutions of post-secondary 
education that are privately-owned or owned by a publicly traded 
company and whose net earnings can benefit a shareholder or individual. 
In this report, we use the term ``college'' to refer to all of those 
institutions of post-secondary education that are eligible for funds 
under Title IV of the Higher Education Act of 1965, as amended. This 
term thus includes public and private nonprofit institutions, 
proprietary or for-profit institutions, and post-secondary vocational 
institutions.
    \2\ $26 billion is the aggregate market capitalization of the 14 
publicly traded corporations on July 14, 2010. In addition, there is a 
15th company that operates for-profit colleges; however, the parent 
company is involved in other industries; therefore, we are unable to 
separate its market capitalization for only the for-profit college line 
of business, and its value is not included in this calculation.
---------------------------------------------------------------------------
    The Department of Education's Office of Federal Student Aid manages 
and administers billions of dollars in student financial assistance 
programs under Title IV of the Higher Education Act of 1965, as 
amended. These programs include, among others, the William D. Ford 
Federal Direct Loan Program (Direct Loans), the Federal Pell grant 
program, and campus-based aid programs.\3\ Grants do not have to be 
repaid by students, while loans must be repaid whether or not a student 
completes a degree program. Students may be eligible for ``subsidized'' 
loans or ``unsubsidized'' loans. For unsubsidized loans, interest 
begins to accrue on the loan as soon as the loan is taken out by the 
student (i.e. while attending classes).
---------------------------------------------------------------------------
    \3\ The Federal Supplemental Educational Opportunity Grant (FSEOG), 
Federal Work-Study (FWS), and Federal Perkins Loan programs are called 
campus-based programs and are administered directly by the financial 
aid office at each participating college. As of July 1, 2010 new 
Federal student loans that are not part of the campus-based programs 
will come directly from the Department of Education under the Direct 
Loan program.
---------------------------------------------------------------------------
    For subsidized loans, interest does not accrue while a student is 
in college. Colleges received $105 billion in title IV funding for the 
2008-9 school year--of which approximately 23 percent or $24 billion 
went to for-profit colleges. Because of the billions of dollars in 
Federal grants and loans utilized by students attending for-profit 
colleges, you asked us to (1) conduct undercover testing to determine 
if for-profit college representatives engaged in fraudulent, deceptive, 
or otherwise questionable marketing practices, and (2) compare the cost 
of attending for-profit colleges tested with the cost of attending 
nonprofit colleges in the same geographic region.
    To determine whether for-profit college representatives engaged in 
fraudulent, deceptive, or otherwise questionable sales and marketing 
practices, we investigated a nonrepresentative selection of 15 for-
profit colleges located in Arizona, California, Florida, Illinois, 
Pennsylvania, Texas, and Washington, DC. We chose colleges based on 
several factors in order to test for-profit colleges offering a variety 
of educational services with varying corporate sizes and structures 
located across the country. Factors included whether a college received 
89 percent or more of total revenue from Federal student aid according 
to Department of Education (Education) data or was located in a State 
that was among the top 10 recipients of title IV funding. We also chose 
a mix of privately held or publicly traded for-profit colleges. We 
reviewed Federal Trade Commission (FTC) statutes and regulations 
regarding unfair and deceptive marketing practices and Education 
statutes and regulations regarding what information postsecondary 
colleges are required to provide to students upon request and what 
constitutes substantial misrepresentation of services. During our 
undercover tests we attempted to identify whether colleges met these 
regulatory requirements, but we were not able to test all regulatory 
requirements in all tests.
    Using fictitious identities, we posed as potential students to meet 
with the colleges' admissions and financial aid representatives and 
inquire about certificate programs, associate's degrees, and bachelor's 
degrees.\4\ We inquired about one degree type and one major--such as 
cosmetology, massage therapy, construction management, or elementary 
education--at each college. We tested each college twice--once posing 
as a prospective student with an income low enough to qualify for 
Federal grants and subsidized student loans, and once as a prospective 
student with higher income and assets to qualify the student only for 
certain unsubsidized loans.\5\ Our undercover applicants were 
ineligible for other types of Federal postsecondary education 
assistance programs such as benefits available under the Post-9/11 
Veterans Educational Assistance Act of 2008 (commonly referred to as 
``the Post-9/11 G.I. Bill''). We used fabricated documentation, such as 
tax returns, created with publicly available hardware, software and 
materials, and the Free Application for Federal Student Aid (FAFSA)--
the form used by virtually all 2- and 4-year colleges, universities, 
and career colleges for awarding Federal student aid--during our in-
person meetings. In addition, using additional bogus identities, 
investigators posing as four prospective students filled out forms on 
two Web sites that ask questions about students' academic interests, 
match them to colleges with relevant programs, and provide the 
students' information to colleges or the colleges' outsourced calling 
center for follow-up about enrollment. Two students expressed interest 
in a culinary arts degree, and two other students expressed interest in 
a business administration degree. We filled out information on two Web 
sites with these fictitious prospective students' contact information 
and educational interests in order to document the type and frequency 
of contact the fictitious prospective students would receive. We then 
monitored the phone calls and voice mails received.
---------------------------------------------------------------------------
    \4\ A certificate program allows a student to earn a college level 
credential in a particular field without earning a degree.
    \5\ Regardless of income and assets, all eligible students 
attending a title IV college are eligible to receive unsubsidized 
Federal loans. The maximum amount of the unsubsidized loan ranges from 
$2,000 to $12,000 per year, depending on the student's grade level and 
on whether the student is considered ``dependent'' or ``independent'' 
from his or her parents or guardians.
---------------------------------------------------------------------------
    To compare the cost of attending for-profit colleges with that of 
nonprofit colleges, we used Education information to select public and 
private nonprofit colleges located in the same geographic areas as the 
15 for-profit colleges we visited. We compared tuition rates for the 
same type of degree or certificate between the for-profit and nonprofit 
colleges. For the 15 for-profit colleges we visited, we used 
information obtained from campus representatives to determine tuition 
at these programs. For the nonprofit colleges, we obtained information 
from their Web sites or, when not available publicly, from campus 
representatives. Not all nonprofit colleges offered similar degrees, 
specifically when comparing associate's degrees and certificate 
programs. We cannot project the results of our undercover tests or cost 
comparisons to other for-profit colleges.
    We plan to refer cases of school officials encouraging fraud and 
engaging in deceptive practices to Education's Office of Inspector 
General, where appropriate. Our investigative work, conducted from May 
2010 through July 2010, was performed in accordance with standards 
prescribed by the Council of the Inspectors General on Integrity and 
Efficiency.
                               background
    In recent years, the scale and scope of for-profit colleges have 
changed considerably. Traditionally focused on certificate and programs 
ranging from cosmetology to medical assistance and business 
administration, for-profit institutions have expanded their offerings 
to include bachelor's, master's, and doctoral level programs. Both the 
certificate and degree programs provide students with training for 
careers in a variety of fields. Proponents of for-profit colleges argue 
that they offer certain flexibilities that traditional universities 
cannot, such as, online courses, flexible meeting times, and year-round 
courses. Moreover, for-profit colleges often have open admissions 
policies to accept any student who applies.
    Currently, according to Education about 2,000 for-profit colleges 
participate in title IV programs and in the 2008-9 school year, for-
profit colleges received approximately $24 billion in title IV funds. 
Students can only receive title IV funds when they attend colleges 
approved by Education to participate in the title IV program.
Title IV Program Eligibility Criteria
    The Higher Education Act of 1965, as amended, provides that a 
variety of institutions of higher education are eligible to participate 
in title IV programs, including:

     Public institutions--Institutions operated and funded by 
State or local governments, which include State universities and 
community colleges.
     Private nonprofit institutions--Institutions owned and 
operated by nonprofit organizations whose net earnings do not benefit 
any shareholder or individual. These institutions are eligible for tax-
deductible contributions in accordance with the Internal Revenue code 
(26 U.S.C.  501(c)(3)).
     For-profit institutions--Institutions that are privately 
owned or owned by a publicly traded company and whose net earnings can 
benefit a shareholder or individual.

    Colleges must meet certain requirements to receive title IV funds. 
While full requirements differ depending on the type of college, most 
colleges are required to: be authorized or licensed by the State in 
which it is located to provide higher education; provide at least one 
eligible program that provides an associate's degree or higher, or 
provides training to students for employment in a recognized 
occupation; and be accredited by an accrediting agency recognized by 
the Secretary of Education. Moreover, for-profit colleges must enter a 
``program participation agreement'' with Education that requires the 
school to derive not less than 10 percent of revenues from sources 
other than title IV funds and certain other Federal programs (known as 
the ``90/10 Rule''). Student eligibility for grants and subsidized 
student loans is based on student financial need. In addition, in order 
for a student to be eligible for title IV funds, the college must 
ensure that the student meets the following requirements, among others: 
has a high school diploma, a General Education Development 
certification, or passes an ability-to-benefit test approved by 
Education, or completes a secondary school education in a home school 
setting recognized as such under State law; is working toward a degree 
or certificate in an eligible program; and is maintaining satisfactory 
academic progress once in college.\6\
---------------------------------------------------------------------------
    \6\ GAO previously investigated certain schools' use of ability-to-
benefit tests. For more information, see GAO, PROPRIETARY SCHOOLS: 
Stronger Department of Education Oversight Needed to Help Ensure Only 
Eligible Students Receive Federal Student Aid, GAO-09-600 (Washington, 
DC: August 17, 2009).
---------------------------------------------------------------------------
Defaults on Student Loans
    In August 2009, GAO reported that in the repayment period, students 
who attended for-profit colleges were more likely to default on Federal 
student loans than were students from other colleges.\7\ When students 
do not make payments on their Federal loans and the loans are in 
default, the Federal Government and taxpayers assume nearly all the 
risk and are left with the costs. For example, in the Direct Loan 
program, the Federal Government and taxpayers pick up 100 percent of 
the unpaid principal on defaulted loans. In addition, students who 
default are also at risk of facing a number of personal and financial 
burdens. For example, defaulted loans will appear on the student's 
credit record, which may make it more difficult to obtain an auto loan, 
mortgage, or credit card. Students will also be ineligible for 
assistance under most Federal loan programs and may not receive any 
additional title IV Federal student aid until the loan is repaid in 
full. Furthermore, Education can refer defaulted student loan debts to 
the Department of Treasury to offset any Federal or State income tax 
refunds due to the borrower to repay the defaulted loan. In addition, 
Education may require employers who employ individuals who have 
defaulted on a student loan to deduct 15 percent of the borrower's 
disposable pay toward repayment of the debt. Garnishment may continue 
until the entire balance of the outstanding loan is paid.
---------------------------------------------------------------------------
    \7\ GAO-09-600.
---------------------------------------------------------------------------
College Disclosure Requirements
    In order to be an educational institution that is eligible to 
receive title IV funds, Education statutes and regulations require that 
each institution make certain information readily available upon 
request to enrolled and prospective students.\8\ Institutions may 
satisfy their disclosure requirements by posting the information on 
their Internet Web sites. Information to be provided includes: tuition, 
fees, and other estimated costs; the institution's refund policy; the 
requirements and procedures for withdrawing from the institution; a 
summary of the requirements for the return of title IV grant or loan 
assistance funds; the institution's accreditation information; and the 
institution's completion or graduation rate. If a college substantially 
misrepresents information to students, a fine of no more than $25,000 
may be imposed for each violation or misrepresentation and their title 
IV eligibility status may be suspended or terminated.\9\ In addition, 
the FTC prohibits ``unfair methods of competition'' and ``unfair or 
deceptive acts or practices'' that affect interstate commerce.
---------------------------------------------------------------------------
    \8\ 20 U.S.C. Sec. 1092 and 34 CFR Sec. Sec. 668.41-.49.
    \9\ 20 U.S.C. Sec. 1094 (c) (3) and 34 CFR Sec. Sec. 668.71-.75. 
Additionally, Education has recently proposed new regulations that 
would enhance its oversight of title IV eligible institutions, 
including provisions related to misrepresentation and aggressive 
recruiting practices. See 75 Fed. Reg. 34,806 (June 18, 2010).
---------------------------------------------------------------------------
   for-profit colleges encouraged fraud and engaged in deceptive and 
          otherwise questionable sales and marketing practices
    Our covert testing at 15 for-profit colleges found that four 
colleges encouraged fraudulent practices, such as encouraging students 
to submit false information about their financial status. In addition 
all 15 colleges made some type of deceptive or otherwise questionable 
statement to undercover applicants, such as misrepresenting the 
applicant's likely salary after graduation and not providing clear 
information about the college's graduation rate. Other times our 
undercover applicants were provided accurate or helpful information by 
campus admissions and financial aid representatives. Selected video 
clips of our undercover tests can be seen at http://www.gao.gov/
products/GAO-10-948T.
Fraudulent Practices Encouraged by For-Profit Colleges
    In order to qualify for financial aid, 4 of the 15 colleges we 
visited encouraged our undercover applicants to falsify their FAFSA. A 
financial aid officer at a privately owned college in Texas told our 
undercover applicant not to report $250,000 in savings, stating that it 
was not the government's business how much money the undercover 
applicant had in a bank account. However, Education requires students 
to report such assets, which along with income, are used to determine 
how much and what type of financial aid for which a student is 
eligible. The admissions representative at this same school encouraged 
the undercover applicant to change the FAFSA to falsely add dependents 
in order to qualify for grants. The admissions representative attempted 
to ease the undercover applicant's concerns about committing fraud by 
stating that information about the reported dependents, such as Social 
Security numbers, was not required. An admissions representative at 
another college told our undercover applicant that changing the FAFSA 
to indicate that he supported three dependents instead of being a 
single-person household might drop his income enough to qualify for a 
Pell grant. In all four situations when college representatives 
encouraged our undercover applicants to commit fraud, the applicants 
indicated on their FAFSA, as well as to the for-profit college staff, 
that they had just come into an inheritance worth approximately 
$250,000. This inheritance was sufficient to pay for the entire cost of 
the undercover applicant's tuition. However, in all four cases, campus 
representatives encouraged the undercover applicants to take out loans 
and assisted them in becoming eligible either for grants or subsidized 
loans. It was unclear what incentive these colleges had to encourage 
our undercover applicants to fraudulently fill out financial aid forms 
given the applicants' ability to pay for college. The following table 
provides more details on the four colleges involved in encouraging 
fraudulent activity.

                         Table 1.--Fraudulent Actions Encouraged by For-Profit Colleges
----------------------------------------------------------------------------------------------------------------
                                         Certification sought                              Fraudulent behavior
               Location                  and course  of study       Type of college             encouraged
----------------------------------------------------------------------------------------------------------------
CA...................................  Certificate--Computer    Less than 2-year,         Undercover
                                        Aided Drafting.          privately owned.         applicant was
                                                                                          encouraged by a
                                                                                          financial aid
                                                                                          representative to
                                                                                          change the FAFSA to
                                                                                          falsely increase the
                                                                                          number of dependents
                                                                                          in the household in
                                                                                          order to qualify for
                                                                                          Pell grants.
                                                                                          The undercover
                                                                                          applicant suggested to
                                                                                          the representative
                                                                                          that by the time the
                                                                                          college would be
                                                                                          required by Education
                                                                                          to verify any
                                                                                          information about the
                                                                                          applicant, the
                                                                                          applicant would have
                                                                                          already graduated from
                                                                                          the 7-month program.
                                                                                          The representative
                                                                                          acknowledged this was
                                                                                          true.
                                                                                          This
                                                                                          undercover applicant
                                                                                          indicated to the
                                                                                          financial aid
                                                                                          representative that he
                                                                                          had $250,000 in the
                                                                                          bank, and was
                                                                                          therefore capable of
                                                                                          paying the program's
                                                                                          $15,000 cost. The
                                                                                          fraud would have made
                                                                                          the applicant eligible
                                                                                          for grants and
                                                                                          subsidized loans.
FL...................................  Associate's Degree--     12-year, privately        Admissions
                                        Radiologic Technology.   owned.                   representative
                                                                                          suggested to the
                                                                                          undercover applicant
                                                                                          that he not report
                                                                                          $250,000 in savings
                                                                                          reported on the FAFSA.
                                                                                          The representative
                                                                                          told the applicant to
                                                                                          come back once the
                                                                                          fraudulent financial
                                                                                          information changes
                                                                                          had been processed.
                                                                                          This change
                                                                                          would not have made
                                                                                          the applicant eligible
                                                                                          for grants because his
                                                                                          income would have been
                                                                                          too high, but it would
                                                                                          have made him eligible
                                                                                          for loans subsidized
                                                                                          by the government.
                                                                                          However, this
                                                                                          undercover applicant
                                                                                          indicated that he had
                                                                                          $250,000 in savings--
                                                                                          more than enough to
                                                                                          pay for the program's
                                                                                          $39,000 costs.
PA...................................  Certificate--Web Page    Less than 2-year,         Financial aid
                                        Design.                  privately owned.         representative told
                                                                                          the undercover
                                                                                          applicant that he
                                                                                          should have answered
                                                                                          ``zero'' when asked
                                                                                          about money he had in
                                                                                          savings--the applicant
                                                                                          had reported a
                                                                                          $250,000 inheritance.
                                                                                          The financial
                                                                                          aid representative
                                                                                          told the undercover
                                                                                          applicant that she
                                                                                          would ``correct'' his
                                                                                          FAFSA form by reducing
                                                                                          the reported assets to
                                                                                          zero. She later
                                                                                          confirmed by email and
                                                                                          voicemail that she had
                                                                                          made the change.
                                                                                          This change
                                                                                          would not have made
                                                                                          the applicant eligible
                                                                                          for grants, but it
                                                                                          would have made him
                                                                                          eligible for loans
                                                                                          subsidized by the
                                                                                          government. However,
                                                                                          this applicant
                                                                                          indicated that he had
                                                                                          about $250,000 in
                                                                                          savings--more than
                                                                                          enough to pay for the
                                                                                          program's $21,000
                                                                                          costs.
TX...................................  Bachelor's Degree--      4-year, privately owned   Admissions
                                        Construction                                      representative
                                        Management.                                       encouraged applicant
                                                                                          to change the FAFSA to
                                                                                          falsely add dependents
                                                                                          in order to qualify
                                                                                          for Pell grants.
                                                                                          Admissions
                                                                                          representative assured
                                                                                          the undercover
                                                                                          applicant that he did
                                                                                          not have to identify
                                                                                          anything about the
                                                                                          dependents, such as
                                                                                          their Social Security
                                                                                          numbers, nor did he
                                                                                          have to prove to the
                                                                                          college with a tax
                                                                                          return that he had
                                                                                          previously claimed
                                                                                          them as dependents.
                                                                                          Financial aid
                                                                                          representative told
                                                                                          the undercover
                                                                                          applicant that he
                                                                                          should not report the
                                                                                          $250,000 in cash he
                                                                                          had in savings.
                                                                                          This applicant
                                                                                          indicated to the
                                                                                          financial aid
                                                                                          representative that he
                                                                                          had $250,000 in the
                                                                                          bank, and was
                                                                                          therefore capable of
                                                                                          paying the program's
                                                                                          $68,000 cost. The
                                                                                          fraud would have made
                                                                                          the undercover
                                                                                          applicant eligible for
                                                                                          more than $2,000 in
                                                                                          grants per year.
----------------------------------------------------------------------------------------------------------------

                  deceptive or questionable statements
    Admissions or financial aid representatives at all 15 for-profit 
colleges provided our undercover applicants with deceptive or otherwise 
questionable statements. These deceptive and questionable statements 
included information about the college's accreditation, graduation 
rates and its student's prospective employment and salary 
qualifications, duration and cost of the program, or financial aid. 
Representatives at schools also employed hard-sell sales and marketing 
techniques to encourage students to enroll.
Accreditation Information
    Admissions representatives at four colleges either misidentified or 
failed to identify their colleges' accrediting organizations. While all 
the for-profit colleges we visited were accredited according to 
information available from Education, Federal regulations state that 
institutions may not provide students with false, erroneous, or 
misleading statements concerning the particular type, specific source, 
or the nature and extent of its accreditation. Examples include:

     A representative at a college in Florida owned by a 
publicly traded company told an undercover applicant that the college 
was accredited by the same organization that accredits Harvard and the 
University of Florida when in fact it was not. The representative told 
the undercover applicant: ``It's the top accrediting agency--Harvard, 
University of Florida--they all use that accrediting agency. . . . All 
schools are the same; you never read the papers from the schools.''
     A representative of a small beauty college in Washington, 
DC told an undercover applicant that the college was accredited by ``an 
agency affiliated with the government,'' but did not specifically name 
the accrediting body. Federal and State Government agencies do not 
accredit educational institutions.
     A representative of a college in California owned by a 
private corporation told an undercover applicant that this college was 
the only one to receive its accrediting organization's ``School of 
Excellence'' award. The accrediting organization's Web site listed 35 
colleges as having received that award.
Graduation Rate, Employment and Expected Salaries
    Representatives from 13 colleges gave our applicants deceptive or 
otherwise questionable information about graduation rates, guaranteed 
applicants jobs upon graduation, or exaggerated likely earnings. 
Federal statutes and regulations require that colleges disclose the 
graduation rate to applicants upon request, although this requirement 
can be satisfied by posting the information on their Web site. Thirteen 
colleges did not provide applicants with accurate or complete 
information about graduation rates. Of these 13, 4 provided graduation 
rate information in some form on their Web site, although it required a 
considerable amount of searching to locate the information. Nine 
schools did not provide graduation rates either during our in-person 
visit or on their Web sites. For example, when asked for the graduation 
rate, a representative at a college in Arizona owned by a publicly 
traded company said that last year 90 students graduated, but did not 
disclose the actual graduation rate. When our undercover applicant 
asked about graduation rates at a college in Pennsylvania owned by a 
publicly traded company, he was told that if all work was completed, 
then the applicant should successfully complete the program--again the 
representative failed to disclose the college's graduation rate when 
asked. However, because graduation rate information was available at 
both these colleges' Web sites, the colleges were in compliance with 
Education regulations.
    In addition, according to Federal regulations, a college may not 
misrepresent the employability of its graduates, including the 
college's ability to secure its graduates employment. However, 
representatives at two colleges told our undercover applicants that 
they were guaranteed or virtually guaranteed employment upon completion 
of the program. At five colleges, our undercover applicants were given 
potentially deceptive information about prospective salaries. Examples 
of deceptive or otherwise questionable information told to our 
undercover applicants included:

     A college owned by a publicly traded company told our 
applicant that, after completing an associate's degree in criminal 
justice, he could try to go work for the Federal Bureau of 
Investigation or the Central Intelligence Agency. While other careers 
within those agencies may be possible, positions as a FBI Special Agent 
or CIA Clandestine Officer, require a bachelor's degree at a minimum.
     A small beauty college told our applicant that barbers can 
earn $150,000 to $250,000 a year. While this may be true in exceptional 
circumstances, the Bureau of Labor Statistics (BLS) reports that 90 
percent of barbers make less than $43,000 a year.
     A college owned by a publicly traded company told our 
applicant that instead of obtaining a criminal justice associate's 
degree, she should consider a medical assisting certificate and that 
after only 9 months of college, she could earn up to $68,000 a year. A 
salary this high would be extremely unusual; 90 percent of all people 
working in this field make less than $40,000 a year, according to the 
BLS.
Program Duration and Cost
    Representatives from nine colleges gave our undercover applicants 
deceptive or otherwise questionable information about the duration or 
cost of their colleges' programs. According to Federal regulations, a 
college may not substantially misrepresent the total cost of an 
academic program. Representatives at these colleges used two different 
methods to calculate program duration and cost of attendance. Colleges 
described the duration of the program as if students would attend 
classes for 12 months per year, but reported the annual cost of 
attendance for only 9 months of classes per year. This disguises the 
program's total cost. Examples include:

     A representative at one college said it would take 3.5-4 
years to obtain a bachelor's degree by taking classes year round, but 
quoted the applicant an annual cost for attending classes for 9 months 
of the year. She did not explain that attending classes for only 9 
months out of the year would require an additional year to complete the 
program. If the applicant did complete the degree in 4 years, the 
annual cost would be higher than quoted to reflect the extra class time 
required per year.
     At another college, the representative quoted our 
undercover applicant an annual cost of around $12,000 per year and said 
it would take 2 years to graduate without breaks, but when asked about 
the total cost, the representative told our undercover applicant it 
would cost $30,000 to complete the program--equivalent to more than 
2\1/2\ years of the previously quoted amount. If the undercover 
applicant had not inquired about the total cost of the program, she 
would have been led to believe that the total cost to obtain the 
associate's degree would have been $24,000.
Financial Aid
    Eleven colleges denied undercover applicants access to their 
financial aid eligibility or provided questionable financial advice. 
According to Federal statutes and regulations, colleges must make 
information on financial assistance programs available to all current 
and prospective students.

     Six colleges in four States told our undercover applicants 
that they could not speak with financial aid representatives or find 
out what grants and loans they were eligible to receive until they 
completed the college's enrollment forms agreeing to become a student 
and paid a small application fee to enroll.
     A representative at one college in Florida owned by a 
publicly traded company advised our undercover applicant not to concern 
himself with loan repayment because his future salary--he was assured--
would be sufficient to repay loans.
     A representative at one college in Florida owned by a 
private company told our undercover applicant that student loans were 
not like car loans because ``no one will come after you if you don't 
pay.'' In reality, students who cannot pay their loans face fees, may 
damage their credit, have difficulty taking out future loans, and in 
most cases, bankruptcy law prohibits a student borrower from 
discharging a student loan.
     A representative at a college owned by a publicly traded 
corporation told our undercover applicant that she could take out the 
maximum amount of Federal loans, even if she did not need all the 
money. She told the applicant she could put the extra money in a high-
interest savings account. While subsidized loans do not accrue interest 
while a student is in college, unsubsidized loans do accrue interest. 
The representative did not disclose this distinction to the applicant 
when explaining that she could put the money in a savings account.
Other Sales and Marketing Tactics
    Six colleges engaged in other questionable sales and marketing 
tactics such as employing hard-sell sales and marketing techniques and 
requiring enrolled students to pay monthly installments to the college 
during their education.

     At one Florida college owned by a publicly traded company, 
a representative told our undercover applicant she needed to answer 18 
questions correctly on a 50 question test to be accepted to the 
college. The test proctor sat with her in the room and coached her 
during the test.
     At two other colleges, our undercover applicants were 
allowed 20 minutes to complete a 12-minute test or took the test twice 
to get a higher score.
     At the same Florida college, multiple representatives used 
high pressure marketing techniques, becoming argumentative, and 
scolding our undercover applicants for refusing to enroll before 
speaking with financial aid.
     A representative at this Florida college encouraged our 
undercover applicant to sign an enrollment agreement while assuring her 
that the contract was not legally binding.
     A representative at another college in Florida owned by a 
publicly traded company said that he personally had taken out over 
$85,000 in loans to pay for his degree, but he told our undercover 
applicant that he probably would not pay it back because he had a 
``tomorrow's never promised'' philosophy.
     Three colleges required undercover applicants to make $20-
$150 monthly payments once enrolled, despite the fact that students are 
typically not required to repay loans until after the student finishes 
or drops out of the program. These colleges gave different reasons for 
why students were required to make these payments and were sometimes 
unclear exactly what these payments were for. At one college, the 
applicant would have been eligible for enough grants and loans to cover 
the annual cost of tuition, but was told that she needed to make 
progress payments toward the cost of the degree separate from the money 
she would receive from loans and grants. A representative from this 
college told the undercover applicant that the Federal Government's 
``90/10 Rule'' required the applicant to make these payments. However, 
the ``90/10 Rule'' does not place any requirements on students, only on 
the college.
     At two colleges, our undercover applicants were told that 
if they recruited other students, they could earn rewards, such as an 
MP3 player or a gift card to a local store.\10\
---------------------------------------------------------------------------
    \10\ Depending on the value of the gift, such a transaction may be 
allowed under current law. Federal statute requires that a college's 
program participation agreement with Education include a provision that 
the college will not provide 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. However, Education's regulations 
have identified 12 types of payment and compensation plans that do not 
violate this statutory prohibition, referred to as ``safe harbors''. 
Under one of these exceptions, schools are allowed to provide ``token 
gifts'' valued under $100 to a student provided the gift is not in the 
form of money and no more than one gift is provided annually to an 
individual. However, on June 18, 2010 the Department of Education 
issued a notice of proposed rulemaking that would, among other things, 
eliminate these 12 safe harbors and restore the full prohibition.
---------------------------------------------------------------------------
Accurate and Helpful Information Provided
    In some instances our undercover applicants were provided accurate 
or helpful information by campus admissions and financial aid 
representatives. In line with Federal regulations, undercover 
applicants at several colleges were provided accurate information about 
the transferability of credits to other postsecondary institutions, for 
example:

     A representative at a college owned by a publicly traded 
company in Pennsylvania told our applicant that with regard to the 
transfer of credits, ``different schools treat it differently; you have 
to roll the dice and hope it transfers.''
     A representative at a privately owned for-profit college 
in Washington, DC told our undercover applicant that the transfer of 
credits depends on the college the applicant wanted to transfer to.

    Some financial aid counselors cautioned undercover applicants not 
to take out more loans than necessary or provided accurate information 
about what the applicant was required to report on his FAFSA, for 
example:

     One financial aid counselor at a privately owned college 
in Washington, DC told an applicant that because the money had to be 
paid back, the applicant should be cautious about taking out more debt 
than necessary.
     A financial aid counselor at a college in Arizona owned by 
a publicly traded company had the undercover applicant call the FAFSA 
help line to have him ask whether he was required to report his 
$250,000 inheritance. When the FAFSA help line representative told the 
undercover applicant that it had to be reported, the college financial 
aid representative did not encourage the applicant not to report the 
money.

    In addition, some admissions or career placement staff gave 
undercover applicants reasonable information about prospective salaries 
and potential for employment, for example:

     Several undercover applicants were provided salary 
information obtained from the BLS or were encouraged to research 
salaries in their prospective fields using the BLS Web site.
     A career services representative at a privately owned for-
profit college in Pennsylvania told an applicant that as an entry level 
graphic designer, he could expect to earn $10-$15 per hour. According 
to the BLS only 25 percent of graphic designers earn less than $15 per 
hour in Pennsylvania.
Web Site Inquiries Result in Hundreds of Calls
    Some Web sites that claim to match students with colleges are in 
reality lead generators used by many for-profit colleges to market to 
prospective students. Though such Web sites may be useful for students 
searching for schools in some cases, our undercover tests involving 
four fictitious prospective students led to a flood of calls--about 
five a day. Four of our prospective students filled out forms on two 
Web sites, which ask questions about students' interests, match them to 
for-profit colleges with relevant programs, and provide the students' 
information to the appropriate college or the college's outsourced 
calling center for follow-up about enrollment. Two fictitious 
prospective students expressed interest in a culinary arts certificate, 
one on Web site A and one on Web site B. Two other prospective students 
expressed interest in a bachelor's degree in business administration, 
one on each Web site.
    Within minutes of filling out forms, three prospective students 
received numerous phone calls from colleges. One fictitious prospective 
student received a phone call about enrollment within 5 minutes of 
registering and another 5 phone calls within the hour. Another 
prospective student received 2 phone calls separated only by seconds 
within the first 5 minutes of registering and another 3 phone calls 
within the hour. Within a month of using the Web sites, one student 
interested in business management received 182 phone calls and another 
student also interested in business management received 179 phone 
calls. The two students interested in culinary arts programs received 
fewer calls--one student received only a handful, while the other 
received 72. In total, the four students received 436 phone calls in 
the first 30 days after using the Web sites. Of these, only six calls--
all from the same college--came from a public college.\11\ The table 
below provides information about the calls these students received 
within the first 30 days of registering at the Web site.
---------------------------------------------------------------------------
    \11\ Of the 436 calls, not all resulted in a voice message in which 
a representative identified the school he or she was calling from. For 
those callers who did not leave a message, GAO attempted to trace the 
destination of the caller. In some cases GAO was not able to identify 
who placed the call to the student.

                      Table 2.--Telephone Calls Received as a Result of Web site Inquiries
----------------------------------------------------------------------------------------------------------------
                                                                          Number of
                                                                            calls                   Total number
                                Student's   Web site                      received     Most calls     of calls
           Student              location     student        Degree        within 24    received in   received in
                                              used                        hours of      one day*      a  month
                                                                         registering
----------------------------------------------------------------------------------------------------------------
1............................         GA           A   Business                  21            19           179
                                                        Administration.
2............................           CA         B   Business                  24            18           182
                                                        Administration.
3............................         MD           A   Culinary Arts..            5             8            72
4............................         NV           B   Culinary Arts..            2             1             3
----------------------------------------------------------------------------------------------------------------
Source: GAO.
* This number is based on the number of calls received within the first month of registering but does not
  include the first 24 hours.

  tuition at for-profit colleges is sometimes higher than tuition at 
              nearby public and private nonprofit colleges
    During the course of our undercover applications, some college 
representatives told our applicants that their programs were a good 
value. For example, a representative of a privately owned for-profit 
college in California told our undercover applicant that the $14,495 
cost of tuition for a computer-aided drafting certificate was ``really 
low.'' A representative at a for-profit college in Florida owned by a 
publicly traded company told our undercover applicant that the cost of 
their associate's degree in criminal justice was definitely ``worth the 
investment.'' However, based on information we obtained from for-profit 
colleges we tested, and public and private nonprofit colleges in the 
same geographic region, we found that most certificate or associate's 
degree programs at the for-profit colleges we tested cost more than 
similar degrees at public or private nonprofit colleges. We found that 
bachelor's degrees obtained at the for-profit colleges we tested 
frequently cost more than similar degrees at public colleges in the 
area; however, bachelor's degrees obtained at private nonprofit 
colleges nearby are often more expensive than at the for-profit 
colleges.
    We compared the cost of tuition at the 15 for-profit colleges we 
visited, with public and private non-profit colleges located in the 
same geographic area as the for-profit college. We found that tuition 
in 14 out of 15 cases, regardless of degree, was more expensive at the 
for-profit college than at the closest public colleges. For 6 of the 15 
for-profit colleges tested, we could not find a private nonprofit 
college located within 250 miles that offered a similar degree. For 1 
of the 15, representatives from the private nonprofit college were 
unwilling to disclose their tuition rates when we inquired. At eight of 
the private nonprofit colleges for which we were able to obtain tuition 
information on a comparable degree, four of the for-profit colleges 
were more expensive than the private nonprofit college. In the other 
four cases, the private nonprofit college was more expensive than the 
for-profit college.
    We found that tuition for certificates at for-profit colleges were 
often significantly more expensive than at a nearby public college. For 
example, our undercover applicant would have paid $13,945 for a 
certificate in computer aided drafting program--a certification for a 
7-month program obtained by those interested in computer-aided 
drafting, architecture, and engineering--at the for-profit college we 
visited. To obtain a certificate in computed-aided drafting at a nearby 
public college would have cost a student $520. However, for two of the 
five colleges we visited with certificate programs, we could not locate 
a private nonprofit college within a 250 mile radius and another one of 
them would not disclose its tuition rate to us. We were able to 
determine that in Illinois, a student would spend $11,995 on a medical 
assisting certificate at a for-profit college, $9,307 on the same 
certificate at the closest private nonprofit college, and $3,990 at the 
closest public college. We were also able to determine that in 
Pennsylvania, a student would spend $21,250 on a certificate in Web 
page design at a for-profit college, $4,750 on the same certificate at 
the closest private nonprofit college, and $2,037 at the closest public 
college.
    We also found that for the five associate's degrees we were 
interested in, tuition at a for-profit college was significantly more 
than tuition at the closest public college. On average, for the five 
colleges we visited, it cost between 6 and 13 times more to attend the 
for-profit college to obtain an associate's degree than a public 
college. For example, in Texas, our undercover applicant was interested 
in an associate's degree in respiratory therapy which would have cost 
$38,995 in tuition at the for-profit college and $2,952 at the closest 
public college. For three of the associate's degrees we were interested 
in, there was not a private nonprofit college located within 250 miles 
of the for-profit we visited. We found that in Florida the associate's 
degree in Criminal Justice that would have cost a student $4,448 at a 
public college, would have cost the student $26,936 at a for-profit 
college or $27,600 at a private nonprofit college--roughly the same 
amount. In Texas, the associate's degree in Business Administration 
would have cost a student $2,870 at a public college, $32,665 at the 
for-profit college we visited, and $28,830 at the closest private 
nonprofit college.
    We found that with respect to the bachelor's degrees we were 
interested in, four out of five times, the degree was more expensive to 
obtain at the for-profit college than the public college. For example 
in Washington, DC, the bachelor's degree in Management Information 
Systems would have cost $53,400 at the for-profit college, and $51,544 
at the closest public college. The same bachelor's degree would have 
cost $144,720 at the closest private nonprofit college. For one 
bachelor's degree, there was no private nonprofit college offering the 
degree within a 250 mile radius. Three of the four private nonprofit 
colleges were more expensive than their for-profit counterparts.

                                      Table 3.--Program Total Tuition Rates
----------------------------------------------------------------------------------------------------------------
                                                               For-profit       Public
               Degree                       Location             college       college       Private nonprofit
                                                                 tuition       tuition        college tuition
----------------------------------------------------------------------------------------------------------------
Certificate--Computer-aided          CA....................         $13,945         $520  College would not
 drafting.                                                                                 disclose.
Certificate--Massage Therapy.......  CA....................         $14,487         $520  No college within 250
                                                                                           miles.
Certificate--Cosmetology...........  DC....................         $11,500       $9,375  No college within 250
                                                                                           miles.
Certificate--Medical Assistant.....  IL....................         $11,995       $3,990  $9,307
Certificate--Web Page Design.......  PA....................         $21,250       $2,037  $4,750
Associate's--Paralegal.............  AZ....................         $30,048       $4,544  No college within 250
                                                                                           miles.
Associate's--Radiation Therapy.....  FL....................         $38,690       $5,621  No college within 250
                                                                                           miles.
Associate's--Criminal Justice......  FL....................         $26,936       $4,448  $27,600
Associate's--Business                TX....................         $32,665       $2,870  $28,830
 Administration.
Associate's--Respiratory Therapist.  TX....................         $38,995       $2,952  No college within 250
                                                                                           miles.
Bachelor's--Management Information   DC....................         $53,400      $51,544  $144,720
 Systems.
Bachelor's--Elementary Education...  AZ....................         $46,200      $31,176  $28,160
Bachelor's--Psychology.............  IL....................         $61,200      $36,536  $66,960
Bachelor's--Business Administration  PA....................         $49,200      $49,292  $124,696
Bachelor's--Construction Management  TX....................         $65,338      $25,288  No college within 250
                                                                                           miles.
----------------------------------------------------------------------------------------------------------------
Source: Information obtained from for-profit colleges admissions employees and nonprofit college Web sites or
  employees.
Note: These costs do not include books or supplies, unless the college gave the undercover applicant a flat rate
  to attend the for-profit college, which was inclusive of books, in which case we were not able to separate the
  cost of books and supplies.

    Mr. Chairman, this concludes my statement. I would be pleased to 
answer any questions that you or other members of the committee may 
have at this time.
                                 ______
                                 
            Appendix I: Detailed Results of Undercover Tests
    The following table provides details on each of the 15 for-profit 
colleges visited by undercover applicants. We visited each school 
twice, posing once as an applicant who was eligible to receive both 
grants and loans (Scenario 1), and once as an applicant with a salary 
and savings that would qualify the undercover applicant only for 
unsubsidized loans (Scenario 2).


----------------------------------------------------------------------------------------------------------------
                                              Students     Students
                                             receiving    receiving    Graduation   Encouragement of fraud, and
   College information and degree sought    Pell grants    Federal     rate*  [In   engagement in deceptive, or
                                                 [In      loans  [In    percent]       otherwise questionable
                                              percent]     percent]                           behavior
----------------------------------------------------------------------------------------------------------------
1.........................................           27           39           15  Scenario 1
AZ--4-year, owned by publicly traded                                                Admissions
 company                                                                            representative compares the
Bachelor's--Education                                                               college to the University of
                                                                                    Arizona and Arizona State
                                                                                    University.
                                                                                    Admissions
                                                                                    representative did not
                                                                                    disclose the graduation rate
                                                                                    after being directly asked.
                                                                                    He provided information on
                                                                                    how many students graduated.
                                                                                    This information was
                                                                                    available on the college's
                                                                                    Web site; however, it
                                                                                    required significant effort
                                                                                    to find the college's
                                                                                    graduation rate, and the
                                                                                    college did not provide
                                                                                    separate graduation rates
                                                                                    for its multiple campuses
                                                                                    nationwide.
                                                                                    Admissions
                                                                                    representative says that he
                                                                                    does not know the job
                                                                                    placement rate because a lot
                                                                                    of students moved out of the
                                                                                    area.
                                                                                    Admissions
                                                                                    representative encourages
                                                                                    undercover applicant to
                                                                                    continue on with a master's
                                                                                    degree after finishing with
                                                                                    the bachelor's. He stated
                                                                                    that some countries pay
                                                                                    teachers more than they do
                                                                                    doctors and lawyers.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative said the
                                                                                    bachelor's degree would take
                                                                                    a maximum of 4 years to
                                                                                    complete, but she provided a
                                                                                    1-year cost estimate equal
                                                                                    to \1/5\ of the required
                                                                                    credit hours.
                                                                                    According to the
                                                                                    admissions representative
                                                                                    the undercover applicant was
                                                                                    qualified for $9,500 in
                                                                                    student loans, and the
                                                                                    representative indicated
                                                                                    that the applicant could
                                                                                    take out the full amount
                                                                                    even though the applicant
                                                                                    indicated that he had
                                                                                    $250,000 in savings.
                                                                                    Admissions
                                                                                    representative told the
                                                                                    undercover applicant that
                                                                                    the graduation rate is 20
                                                                                    percent. Education reports
                                                                                    that it is 15 percent.
2.........................................           57           83          Not  Scenario 2
AZ--4-year, owned by publicly traded                                     reported   Upon request by
 company                                                                            applicant, the financial aid
Associate's Degree--Paralegal                                                       representative estimated
                                                                                    Federal aid eligibility
                                                                                    without the undercover
                                                                                    applicant's reported
                                                                                    $250,000 in savings to see
                                                                                    if applicant qualified for
                                                                                    more financial aid. The
                                                                                    representative informed the
                                                                                    applicant he was ineligible
                                                                                    for any grants.
                                                                                    Admissions
                                                                                    representative
                                                                                    misrepresented the length of
                                                                                    the program by telling the
                                                                                    undercover applicant that
                                                                                    the 96 credit hour program
                                                                                    would take 2 years to
                                                                                    complete. However, she only
                                                                                    provided the applicant a
                                                                                    first year cost estimate for
                                                                                    36 credit hours. At this
                                                                                    rate it would take more than
                                                                                    2.5 years to complete.
3.........................................           94           96           84  Scenario 1
CA--less than 2-year, privately owned                                               College
Certificate--Computer Aided Drafting                                                representative told the
                                                                                    undercover applicant that if
                                                                                    she failed to pass the
                                                                                    college's required
                                                                                    assessment test, she can
                                                                                    continue to take different
                                                                                    tests until she passes.
                                                                                    The college
                                                                                    representative did not tell
                                                                                    the graduation rate when
                                                                                    asked directly. The
                                                                                    representative replied, ``I
                                                                                    think, pretty much, if you
                                                                                    try and show up and, you do
                                                                                    the work, you're going to
                                                                                    graduate. You're going to
                                                                                    pass guaranteed.'' The
                                                                                    college's Web site also did
                                                                                    not provide the graduation
                                                                                    rate.
                                                                                    Undercover applicant
                                                                                    was required to take a 12-
                                                                                    minute admittance test but
                                                                                    was given over 20 minutes
                                                                                    because the test proctor was
                                                                                    not monitoring the student.
                                                                                   Scenario 2
                                                                                    Undercover applicant
                                                                                    was encouraged by a
                                                                                    financial aid representative
                                                                                    to change the FAFSA to
                                                                                    falsely increase the number
                                                                                    of dependents in the
                                                                                    household in order to
                                                                                    qualify for a Pell grant.
                                                                                    The financial aid
                                                                                    representative was aware of
                                                                                    the undercover applicant's
                                                                                    inheritance and, addressing
                                                                                    the applicant's expressed
                                                                                    interest in loans, confirmed
                                                                                    that he could take out the
                                                                                    maximum in student loans.
                                                                                    The career
                                                                                    representative told the
                                                                                    undercover applicant that
                                                                                    getting a job is a ``piece
                                                                                    of cake'' and then told the
                                                                                    applicant that she has
                                                                                    graduates making $120,000-
                                                                                    $130,000 a year. This is
                                                                                    likely the exception;
                                                                                    according to the BLS 90
                                                                                    percent of architectural and
                                                                                    civil drafters make less
                                                                                    than $70,000 per year. She
                                                                                    also stated that in the
                                                                                    current economic
                                                                                    environment, the applicant
                                                                                    could expect a job with a
                                                                                    likely starting salary of
                                                                                    $13-$14 per hour or $15 if
                                                                                    the applicant was lucky.
4.........................................           73           83           66  Scenario 1
CA--2-year, owned by publicly traded                                                The financial aid
 company                                                                            representative would not
Certificate--Massage Therapy                                                        discuss the undercover
                                                                                    applicant's eligibility for
                                                                                    grants and loans and
                                                                                    required the applicant to
                                                                                    return on another day.
                                                                                   Scenario 2
                                                                                    While one school
                                                                                    representative indicated to
                                                                                    the undercover applicant
                                                                                    that he could earn up to $30
                                                                                    an hour as a massage
                                                                                    therapist, another
                                                                                    representative told the
                                                                                    applicant that the school's
                                                                                    massage instructors and
                                                                                    directors can earn $150-$200
                                                                                    an hour. While this may be
                                                                                    possible, according to the
                                                                                    BLS, 90 percent of all
                                                                                    massage therapists in
                                                                                    California make less than
                                                                                    $34 per hour.
5.........................................           34           66           71  Scenario 1
DC--4-year, privately owned                                                         Admissions
Bachelor's Degree--Business  Information                                            representative explains to
 Systems                                                                            the undercover applicant
                                                                                    that although community
                                                                                    college might be a less
                                                                                    expensive place to get a
                                                                                    degree, community colleges
                                                                                    make students spend money on
                                                                                    classes that they do not
                                                                                    need for their career.
                                                                                    However, this school also
                                                                                    requires students to take at
                                                                                    least 36 credit hours of non-
                                                                                    business general education
                                                                                    courses.
                                                                                    Admissions
                                                                                    representative did not
                                                                                    disclose the graduation rate
                                                                                    after being directly asked.
                                                                                    He told the undercover
                                                                                    applicant that it is a
                                                                                    ``good'' graduation rate.
                                                                                    The college's Web site also
                                                                                    did not provide the
                                                                                    graduation rate.
                                                                                    Admissions
                                                                                    representative encouraged
                                                                                    the undercover applicant to
                                                                                    enroll by asking her to
                                                                                    envision graduation day. He
                                                                                    stated, ``Let me ask you
                                                                                    this, if you could walk
                                                                                    across the stage in a black
                                                                                    cap and gown. And walk with
                                                                                    the rest of the graduating
                                                                                    class and take a degree from
                                                                                    the president's hand, how
                                                                                    would that make you feel?''
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative said the
                                                                                    bachelor's degree would take
                                                                                    3.5 to 4 years to complete.
                                                                                    He gave the applicant the
                                                                                    cost per 12 hour semester,
                                                                                    the amount per credit, the
                                                                                    total number of credits
                                                                                    required for graduation, and
                                                                                    the number of credits for
                                                                                    the first year. When asked
                                                                                    if the figure he gave
                                                                                    multiplied by four would be
                                                                                    the cost of the program, the
                                                                                    representative said yes,
                                                                                    although the actual tuition
                                                                                    would have amounted to some
                                                                                    $12,000 more.
                                                                                    Admissions
                                                                                    representative required the
                                                                                    undercover applicant to
                                                                                    apply to the college before
                                                                                    he could talk to someone in
                                                                                    financial aid.
                                                                                    Admissions
                                                                                    representative told the
                                                                                    undercover applicant that
                                                                                    almost all of the graduates
                                                                                    get jobs.
                                                                                    Flyer provided to
                                                                                    undercover applicant stated
                                                                                    that the average income for
                                                                                    business management
                                                                                    professionals in 2004 was
                                                                                    $77,000-$118,000. When asked
                                                                                    more directly about likely
                                                                                    starting salaries, the
                                                                                    admissions representative
                                                                                    said that it was between
                                                                                    $40,000 and $50,000.
6.........................................           74           74          Not  Scenario 1
DC--less than 2-year, Privately owned                                    reported   Admissions
Certificate--Cosmetology, Barber                                                    representative told the
                                                                                    undercover applicant that
                                                                                    the college was accredited
                                                                                    by ``an agency affiliated
                                                                                    with the government,'' but
                                                                                    did not specifically name
                                                                                    the accrediting body.
                                                                                    Admissions
                                                                                    representative suggested to
                                                                                    the undercover applicant
                                                                                    that all graduates get jobs.
                                                                                    Specifically he told the
                                                                                    applicant that if he had not
                                                                                    found a job by the time he
                                                                                    graduated from the school,
                                                                                    the owner of the school
                                                                                    would personally find the
                                                                                    applicant a job himself.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative told our
                                                                                    undercover applicant that
                                                                                    barbers can earn $150,000 to
                                                                                    $250,000 a year, though that
                                                                                    would be extremely unusual.
                                                                                    The BLS reports that 90
                                                                                    percent of barbers make less
                                                                                    than $43,000 a year. In
                                                                                    Washington, DC, 90 percent
                                                                                    of barbers make less than
                                                                                    $17,000 per year. He said,
                                                                                    ``The money you can make,
                                                                                    the potential is
                                                                                    astronomical.''
7.........................................           86           92           78  Scenario 1
FL--2-year, privately owned                                                         When asked by the
Associate's Degree--Radiologic Therapy                                              undercover applicant for the
                                                                                    graduation rate for two
                                                                                    programs, the admissions
                                                                                    representative did not
                                                                                    answer directly. For example
                                                                                    the representative stated
                                                                                    that ``I've seen it's an 80
                                                                                    to 90 percent graduation
                                                                                    rate'' for one of the
                                                                                    programs but said for that
                                                                                    information, ``I would have
                                                                                    to talk to career
                                                                                    services.'' She also said 16
                                                                                    or 17 students graduated
                                                                                    from one of the programs,
                                                                                    but couldn't say how many
                                                                                    students had started the
                                                                                    program. The college's Web
                                                                                    site also did not provide
                                                                                    the graduation rate.
                                                                                    Admissions
                                                                                    representative told our
                                                                                    prospective undercover
                                                                                    applicant that student loans
                                                                                    were not like car loans
                                                                                    because student loans could
                                                                                    be deferred in cases of
                                                                                    economic hardship, saying
                                                                                    ``It's not like a car note
                                                                                    where if you don't pay
                                                                                    they're going to come after
                                                                                    you. If you're in hardship
                                                                                    and you're unable to find a
                                                                                    job, you can defer it.'' The
                                                                                    representative did not
                                                                                    explain the circumstances
                                                                                    under which students might
                                                                                    qualify for deferment.
                                                                                    Borrowers who do not qualify
                                                                                    for deferment or forbearance
                                                                                    and who cannot pay their
                                                                                    loans face fees, may damage
                                                                                    their credit or have
                                                                                    difficulty taking out future
                                                                                    loans. Moreover, in most
                                                                                    cases, bankruptcy law
                                                                                    prohibits a student borrower
                                                                                    from discharging a student
                                                                                    loan.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative suggested to
                                                                                    the undercover applicant
                                                                                    that he not report $250,000
                                                                                    in savings reported on the
                                                                                    FAFSA. The representative
                                                                                    told the applicant to come
                                                                                    back once the fraudulent
                                                                                    financial information
                                                                                    changes had been processed.
                                                                                    This change would
                                                                                    not have made the undercover
                                                                                    applicant eligible for
                                                                                    grants because his income
                                                                                    would have been too high,
                                                                                    but it would have made him
                                                                                    eligible for loans
                                                                                    subsidized by the
                                                                                    government.
8.........................................          Not          Not          Not  Scenario 1
FL--2-year, owned by publicly traded           reported     reported     reported   Admissions
 company                                                                            representative falsely
Associate's Degree--Criminal Justice                                                stated that the college was
                                                                                    accredited by the same
                                                                                    agency that accredits
                                                                                    Harvard and the University
                                                                                    of Florida.
                                                                                    A test proctor sat
                                                                                    in the test taking room with
                                                                                    the undercover applicant and
                                                                                    coached her during the test.
                                                                                    The undercover
                                                                                    applicant was not allowed to
                                                                                    speak to a financial aid
                                                                                    representative until she
                                                                                    enrolled in the college.
                                                                                    Applicant had to
                                                                                    sign agreement saying she
                                                                                    would pay $50 per month
                                                                                    toward her education while
                                                                                    enrolled in college.
                                                                                    On paying back
                                                                                    loans, the representative
                                                                                    said, ``You gotta look at it
                                                                                    . . . I owe $85,000 to the
                                                                                    University of Florida. Will
                                                                                    I pay it back? Probably not
                                                                                    . . . I look at life as
                                                                                    tomorrow's never promised .
                                                                                    . . Education is an
                                                                                    investment, you're going to
                                                                                    get paid back tenfold, no
                                                                                    matter what.''
                                                                                    Admissions
                                                                                    representative suggested
                                                                                    undercover applicant switch
                                                                                    from criminal justice to the
                                                                                    medical assistant
                                                                                    certificate, where she could
                                                                                    make up to $68,000 per year.
                                                                                    While this may be possible,
                                                                                    BLS reports 90 percent of
                                                                                    medical assistants make less
                                                                                    than $40,000 per year.
                                                                                   Scenario 2
                                                                                    When the applicant
                                                                                    asked about financial aid,
                                                                                    the two representatives
                                                                                    would not answer but debated
                                                                                    with him about his
                                                                                    commitment level for the
                                                                                    next 30 minutes.
                                                                                    The representative
                                                                                    said that student loans
                                                                                    would absolutely cover all
                                                                                    costs in this 2-year
                                                                                    program. The representative
                                                                                    did not specify that Federal
                                                                                    student loans by themselves
                                                                                    would not cover the entire
                                                                                    cost of the program. While
                                                                                    there are private loan
                                                                                    programs available, they are
                                                                                    normally based on an
                                                                                    applicant passing a credit
                                                                                    check, and typically carry
                                                                                    higher interest rates than
                                                                                    Federal student loans.
                                                                                    The representative
                                                                                    said paying back loans
                                                                                    should not be a concern
                                                                                    because once he had his new
                                                                                    job, repayment would not be
                                                                                    an issue.
                                                                                    The representatives
                                                                                    used hard-sell marketing
                                                                                    techniques; they became
                                                                                    argumentative, called
                                                                                    applicant afraid, and
                                                                                    scolded applicant for not
                                                                                    wanting to take out loans.
9.........................................           83           80           70  Scenario 2
IL--2-year, privately owned                                                         Admissions
Certificate--Medical Assistant                                                      representative initially
                                                                                    provided misleading
                                                                                    information to the
                                                                                    undercover applicant about
                                                                                    the transferability of the
                                                                                    credit. First she told the
                                                                                    applicant that the credits
                                                                                    will transfer. Later, she
                                                                                    correctly told the applicant
                                                                                    that it depends on the
                                                                                    college and what classes
                                                                                    have been taken.
10........................................          Not          Not          Not  Scenario 1
IL--4-year, owned by publicly traded           reported     reported     reported   Admissions
 company                                                                            representative said the
Bachelor's Degree--Psychology                                                       bachelor's degree would take
                                                                                    3.5-4 years to complete, but
                                                                                    only provided an annual cost
                                                                                    estimate for \1/5\ of the
                                                                                    program.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative did not
                                                                                    provide the graduation rate
                                                                                    when directly asked. Instead
                                                                                    she indicated that not
                                                                                    everyone graduates.
11........................................           47           58            9  Scenario 1
PA--4-year, owned by publicly traded                                                Admissions
 company                                                                            representative told the
Bachelor's Degree--Business                                                         undercover applicant that
Administration............................                                          she could take out the
                                                                                    maximum amount of Federal
                                                                                    loans, even if she did not
                                                                                    need all the money. She told
                                                                                    the applicant she could put
                                                                                    the extra money in a high-
                                                                                    interest savings account.
                                                                                    While subsidized loans do
                                                                                    not accrue interest while a
                                                                                    student is in college,
                                                                                    unsubsidized loans do accrue
                                                                                    interest. The representative
                                                                                    did not disclose this
                                                                                    distinction to the applicant
                                                                                    when explaining that she
                                                                                    could put the money in a
                                                                                    savings account.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative told the
                                                                                    undercover applicant that
                                                                                    the college is regionally
                                                                                    accredited but does not
                                                                                    state the name of the
                                                                                    accrediting agency. The
                                                                                    college's Web site did
                                                                                    provide specific information
                                                                                    about the college's
                                                                                    accreditation, however.
                                                                                    Admissions
                                                                                    representative said
                                                                                    financial aid may be able to
                                                                                    use what they call
                                                                                    ``professional judgment'' to
                                                                                    determine that the
                                                                                    undercover applicant does
                                                                                    not need to report over
                                                                                    $250,000 in savings on the
                                                                                    FAFSA.
                                                                                    Admissions
                                                                                    representative did not
                                                                                    disclose the graduation rate
                                                                                    after being directly asked.
                                                                                    He instead explained that
                                                                                    all students that do the
                                                                                    work graduate. This
                                                                                    information was available on
                                                                                    the college's Web site;
                                                                                    however, it required
                                                                                    significant effort to find
                                                                                    the college's graduation
                                                                                    rate, and the college did
                                                                                    not provide separate
                                                                                    graduation rates for its
                                                                                    multiple campuses
                                                                                    nationwide.
12........................................           52           69           56  Scenario 1
PA--less than 2-year, privately owned                                               Admissions
Certificate--Web Page Design                                                        representative told the
                                                                                    undercover applicant that
                                                                                    she has never seen a student
                                                                                    decline to attend after
                                                                                    speaking with financial aid.
                                                                                    The admissions
                                                                                    representative would not
                                                                                    allow the applicant to speak
                                                                                    with financial aid until she
                                                                                    enrolled in the college.
                                                                                    If the undercover
                                                                                    applicant was able to get a
                                                                                    friend to enroll in the
                                                                                    college she could get an MP3
                                                                                    player and a rolling
                                                                                    backpack. As noted in the
                                                                                    testimony, although this is
                                                                                    not illegal, it is a
                                                                                    marketing tactic.
                                                                                   Scenario 2
                                                                                    Financial aid
                                                                                    representative told the
                                                                                    undercover applicant that he
                                                                                    should have answered
                                                                                    ``zero'' when asked about
                                                                                    money he had in savings--
                                                                                    the applicant had reported a
                                                                                    $250,000 inheritance.
                                                                                    The financial aid
                                                                                    representative told the
                                                                                    undercover applicant that
                                                                                    she would change his FAFSA
                                                                                    form by reducing the
                                                                                    reported assets to zero. She
                                                                                    later confirmed by e-mail
                                                                                    and voice mail that she had
                                                                                    made the change.
                                                                                    This change would
                                                                                    not have made the undercover
                                                                                    applicant eligible for
                                                                                    grants, but it would have
                                                                                    made him eligible for loans
                                                                                    subsidized by the
                                                                                    government.
13........................................           81           99           54  Scenario 1
TX--4-year, privately owned                                                         Admissions
Bachelor's Degree--Construction                                                     representative said the
 Management; Visual Communications                                                  program would cost between
                                                                                    $50,000 and $75,000 instead
                                                                                    of providing a specific
                                                                                    number. It was not until the
                                                                                    admissions representative
                                                                                    later brought the student to
                                                                                    financial aid that specific
                                                                                    costs of attendance were
                                                                                    provided.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative did not
                                                                                    disclose the graduation rate
                                                                                    after being directly asked.
                                                                                    The college's Web site also
                                                                                    did not provide the
                                                                                    graduation rate.
                                                                                    Admissions
                                                                                    representative encouraged
                                                                                    undercover applicant to
                                                                                    change the FAFSA to falsely
                                                                                    add dependents in order to
                                                                                    qualify for grants.
                                                                                    This undercover
                                                                                    applicant indicated to the
                                                                                    financial aid representative
                                                                                    that he had $250,000 in the
                                                                                    bank, and was therefore
                                                                                    capable of paying the
                                                                                    program's $68,000 cost. The
                                                                                    fraud would have made the
                                                                                    applicant eligible for
                                                                                    $2,000 in grants per year.
14........................................           89           92           34  Scenario 1
TX--2-year, owned by publicly traded                                                Admissions
 company                                                                            representative said the
Associate's Degree--Business                                                        program takes 18 to 24
 Administration                                                                     months to complete, but
                                                                                    provided a cost estimate
                                                                                    that suggests the program
                                                                                    takes more than 2.5 years to
                                                                                    complete.
                                                                                    The college's Web
                                                                                    site did not provide the
                                                                                    graduation rate.
                                                                                   Scenario 2
                                                                                    Undercover applicant
                                                                                    would be required to make a
                                                                                    monthly payment to the
                                                                                    college towards student
                                                                                    loans while enrolled.
                                                                                    Admissions
                                                                                    representative guaranteed
                                                                                    the undercover applicant
                                                                                    that getting a degree would
                                                                                    increase his salary.
15........................................          100          100           70  Scenario 1
TX--2-year, privately owned                                                         The undercover
Associate's Degree--Respiratory Therapy                                             applicant was not allowed to
                                                                                    speak to a financial aid
                                                                                    representative until he
                                                                                    enrolled in the college.
                                                                                   Scenario 2
                                                                                    Admissions
                                                                                    representative
                                                                                    misrepresented the length of
                                                                                    time it would take to
                                                                                    complete the degree. He said
                                                                                    the degree would take 2
                                                                                    years to complete but
                                                                                    provided a cost worksheet
                                                                                    that spanned 3 years.
                                                                                    The undercover
                                                                                    applicant was told he was
                                                                                    not allowed to speak to a
                                                                                    financial aid representative
                                                                                    until he enrolled in the
                                                                                    college. After refusing to
                                                                                    sign an enrollment agreement
                                                                                    the applicant was allowed to
                                                                                    speak to someone in
                                                                                    financial aid.
                                                                                    Admissions
                                                                                    representative told
                                                                                    undercover applicant that
                                                                                    monthly loan repayment would
                                                                                    be lower than it actually
                                                                                    would be.
----------------------------------------------------------------------------------------------------------------
Source: GAO undercover visits and Department of Education.
* This information was obtained from the Department of Education National Center for Education Statistics.


    The Chairman. Mr. Kutz, thank you for your testimony, but 
moreover, thank you for your diligence in following through on 
our requests for information.
    Is that a vote?
    A 15-minute roll-call vote has just started. Rather than 
interrupt our line of questioning--and I intend to have 10-
minute rounds of questions for this panel, let's recess for 10 
minutes or so, we'll go over and vote and come back, Mr. Kutz.
    We have two votes? I only got one vote. The committee will 
stand in recess for 15 minutes. And that should give us time to 
vote. If there are two votes than we'll probably be back here 
in about 20 minutes.
    So, we'll take at least a 15-minute break, Mr. Kutz, and 
we'll be back at that time.
    Thank you.
    [Recessed.]
    [Reconvened.]
    The Chairman. The committee will resume its sitting. I will 
go ahead with my first round of questioning in anticipation of 
other Senators coming here after this second vote. I apologize, 
but that's just the way of the Senate.
    So, Mr. Kutz, again, thank you very much for your testimony 
and thank you and all of the GAO for all of the great work that 
you do in keeping us advised and informed.
    But, Mr. Kutz, picking up on the deceptive recruiting 
practices, I hear a lot of talk that, ``Well, these are just a 
few rogue people.'' Or, perhaps a school just has lax recruiter 
oversight, that the vast majority of the for-profit schools 
would never engage in fraudulent, deceptive, or overly 
aggressive marketing to students. Based on, not just this 
investigation, but on your experience, would you say the 
misleading and deceptive practices--overly aggressive marketing 
are the exception, or are these more widespread throughout all 
of the for-profit schools?
    Mr. Kutz. Well, as I mentioned in my opening statement, all 
15 provided fraudulent, deceptive, or otherwise questionable 
practices. So, there were none that we would say were 
completely clean.
    There were some good practices, as I mentioned, sprinkled 
into these, and that's not surprising--there are good people 
trying to do the right thing. This was not a statistical 
sample, but it's important to point out, too, that we did not 
have any specific leads that led us to those 15 locations. We 
didn't know what we were going to find. So, it wasn't a 
statistical sample, but we had no specific leads of fraud. So, 
certainly it gives you an indication that this is much more 
widespread than a few bad actors.
    The Chairman. Mr. Kutz, I think, the first two clips were 
good practices. Did you identify those schools, or could you 
identify those schools? Were they on this list?
    Mr. Kutz. Yes, they were. Absolutely.
    Yes, the first three, the good practices were the College 
of Office Technology in Illinois, Argosy University and Potomac 
College, here, in Washington, DC.
    The Chairman. I see.
    Mr. Kutz. So, there were three clips in the good practices.
    The Chairman. I see.
    Mr. Kutz, in your opinion, what is the likelihood that a 
typical student considering a for-profit school could actually 
get an accurate understanding of the cost of the program and of 
the total cost?
    Mr. Kutz. Well, as you saw in the videos, it's highly 
unlikely. Not only did you have problems getting to speak to a 
financial aid representative, we kept saying, ``We want to know 
how much it is,'' and they kept saying, ``No, no, no.'' So, 
there were a lot of things. Plus, there were other things they 
did to kind of disguise the cost; whether telling you the 
program was 12 months or, 9 months and giving you 12 months of 
cost--or, the opposite, 9 months of cost for a 12-month 
program, meaning it really cost more. So, it was very difficult 
to sift through the cost in most cases.
    There were some, again, that were good practices, but most 
of them it was very difficult to determine the cost. I think 
you're talking, too, about oftentimes your low-income people. 
So, I think that's some of the people that are being targeted, 
here.
    The Chairman. Mr. Kutz, these schools are required in 
certain circumstances to provide prospective students with 
actual graduation rates for the college and programs. Your 
written testimony discusses the difficulty you had in obtaining 
these graduation rates. Could you go into more detail about 
that, and do you believe the average student is given an 
accurate understanding of the graduation rates at these for-
profit schools?
    Mr. Kutz. Nine of the fifteen neither provided us 
graduation rates orally, or had them on their Web sites. 
Others, we got conflicting information at the same school. One 
school the person said, ``We've only been around a few months, 
we don't really have one,'' the other person said it was 70 
percent--at the same school. So, it was very difficult to sift 
fact from fiction, here.
    The Chairman. Why do you believe that so many schools that 
we saw depicted would not even let you speak with a financial 
aid representative before paying a fee and signing an 
enrollment contract?
    Mr. Kutz. I believe it's part of the training they receive. 
It's a marketing pitch, and they were very consistent in some 
of these places. I mentioned the six--they would not let us 
speak to financial aid until we signed a document and paid them 
money as an admissions fee, or an application fee, I guess, is 
what it was probably called.
    So, they were consistently trained. And we tried--and some 
of those videos went on for 40 minutes, where we kept trying to 
speak to financial aid. So, you saw 2-minute clips, but our 
students got very frustrated. You know, it was a test for us, 
but real people would get very frustrated. We simply wanted to 
know what the cost was, and we had a hard time getting to 
financial aid. So it was--I think it was a marketing script.
    The Chairman. So, I've only got 30 seconds left, here. Your 
visit lasted for several hours. Would you say that the 
practices in those videos haven't been fully able to capture 
all that was in the presentation?
    Mr. Kutz. No, and there were other good practices, but 
there were many other bad practices. We just gave you 12 
minutes of clips here--we probably had 90 to 100 hours of video 
from our undercover visits. Some of them took 2 or 3 hours. So, 
there's dead time in there, too, but there's also other 
things--there were other fraud cases we didn't show you, there 
were other cases of people inflating the cost--or, understating 
the cost or providing some other deceptive information. So, 
there's a lot more than what you saw.
    The Chairman. Thank you, Mr. Kutz. My 5 minutes is up. I 
said we were going to have 10-minute rounds, but because we had 
this break to vote, I'm just going to do 5-minute rounds. We 
can do a second round, if people so desire.
    Senator Enzi.
    Senator Enzi. Thank you, Mr. Chairman.
    Actually, I used to use a ``secret shopper'' kind of 
concept in the retail business, and it's valuable to find out 
what people are really doing. And I suspect that is just what's 
been done with your secret shopper and probably is making a 
difference in colleges out there, already. I think they'll 
probably clean up their act a little bit.
    One of those scenarios did kind of remind me of when my 
oldest daughter was applying to college, and it was at a 
private, nonprofit college. And we had filled out the FAFSA 
form, and they were looking it over--we made all of our kids 
save money to go to college, to work and save money--and this 
person said, ``You know, you really ought to take some of that 
money and buy a car and re-do your form, because that won't 
count.'' I didn't appreciate that kind of instruction to my 
kids after making them save their money.
    Which of the situations in your investigation that were 
revealed in your investigation will you refer to the Department 
of Education's Inspector General or the Department of Justice 
for further review? Are you going to take some action with 
this?
    Mr. Kutz. Absolutely. We will refer, formally, to the 
investigative side of the Department of Education Inspector 
General the four fraud cases and, in fact, they came over to 
our office yesterday and met with us. So, they already are 
aware of the four, and so those four will go to the 
investigative side.
    All 15 of these cases will be shared with the Department of 
Education, if they want to have further information from an 
oversight standpoint, we will share it with them, too.
    Senator Enzi. Did you run into any difficulties with the 
hidden camera? I assume it was a hidden camera?
    Mr. Kutz. Yes, some were in hats, and some were in 
portfolios, and you did notice, sometimes, that we had a 
headshot above the nose or whatever the case may be, so 
sometimes--and we also went in with two. Every time we went in 
we had two people, there was a friend, and there was the 
prospective student. So, sometimes the camera would look at 
your prospective friend and you would lose the picture a little 
bit, but we typically had hats or other devices.
    Senator Enzi. I think they did a pretty good job with their 
photography.
    Now, in your written testimony, you criticized several 
schools for not allowing access to financial aid advice, and 
suggested that the Federal law requires the schools to provide 
that advice. And I do think that they were trying to keep 
people from getting information that they really deserve and 
need to know. Did the schools run into a problem with getting 
jammed up on people wanting specific financial advice without 
knowing whether a student had enrolled? And I'm not talking 
about just these colleges, I'm talking about any colleges. Do 
you run into that problem, where the school worries about not 
having enough financial aid people to provide specific 
information, unless they have some kind of an indication that 
they're going to enroll? Not necessarily signing on the dotted 
line for whatever the total amount is.
    Mr. Kutz. Well, as we talked in the opening statement, 
there were certain colleges that let us speak to financial aid 
representatives without signing a document and without 
enrolling. So, some gave us access. The other ones were very, 
as I mentioned, were very disciplined--they just kept saying, 
``No, no, no. You have to sign.'' So, it was a mixture. Some 
were more willing to share that financial information before we 
actually signed a document than others were. So, I don't know 
why that is, Senator, I mean, but it was a mixed bag.
    Senator Enzi. Yes. Did they have a filled-out FAFSA form, 
already?
    Mr. Kutz. That's interesting. We did go in with a filled-
out FAFSA, and they were actually surprised we walked in with 
one filled out. They said, ``We usually help the students fill 
it out,'' which is a little bit scary to me, given some of the 
advice that we received.
    But, yes, we went in with filled-out FAFSAs in all cases.
    Senator Enzi. You didn't take a look at any of the public 
or the private nonprofits when you did this, did you?
    Mr. Kutz. No, we didn't.
    Senator Enzi. Just these 15?
    Mr. Kutz. Just these 15 colleges.
    Senator Enzi. So, we wouldn't know if this practice of not 
allowing the financial advisor is common in other schools?
    Mr. Kutz. Can't speak to that.
    Senator Enzi. I'll go ahead and give up the rest of my 
time.
    The Chairman. Twenty seconds.
    Senator Enzi. I know, tremendous amount of time.
    Thank you, Mr. Chairman.
    The Chairman. Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Mr. Chairman. Thank you for 
this hearing. I think there is a reason to be doing this on 
for-profit colleges, and I have tremendous respect for the 
Ranking Member, but with so much of the defaults being in for-
profit, and such a low graduation rate, and so much profit 
being made, and so much government money being spent for these 
for-profit schools with such bad results, on the bad actors--
and I want to emphasize bad actors from good actors--this is 
low-hanging fruit. This feels like low-hanging fruit. Of 
course, you're going to have some athletic recruiting problems, 
we know those exist. But that's not what this hearing is about. 
This is about Pell grants going to schools that are recruiting 
people and, in an unethical manner, that are lying to people--
this is of a very different order. And I think we should 
recognize this.
    I'm very disturbed by the videos. I just want to ask you, 
just to make sure, Andrew Breitbart didn't edit these, did he?
    Mr. Kutz. No.
    [Laughter.]
    Senator Franken. You testified that all 15 schools 
investigated by the GAO made deceptive or otherwise 
questionable statements to undercover applicants. Now, most of 
the deceptive practices that your investigation exposed are 
already illegal. How are these schools getting away with this? 
What enforcement mechanisms are missing that allow this conduct 
to take place so readily and openly?
    Mr. Kutz. Well, you have the Department of Education who 
has certain remedies with organizations that don't follow their 
regulations, you've got the IG who we'll be giving the fraud 
cases to, and then you have, of course, industry typically 
talks about self-policing. Some combination of those, here, 
clearly has failed, Senator, and I think that there are certain 
things that need to be done. I mean, hopefully, like you said, 
that these colleges will take a look at this video, or one of 
you said, and straighten up after this, and actually talk to 
their people about--it's a combination of two things--it's the 
fraud, but it's also, how do these people feel? You know, I 
asked my people, ``How do you feel sitting in these things? '' 
It's uncomfortable, it's embarrassing. A lot of these--one of 
these schools----
    Senator Franken. Well, this is clearly their M.O., though, 
so they may not want to give this up. This is how they hook--
hoodwink people into signing on, and then rip them off. So, I'm 
not sure that feeling bad about it--I mean, I understand that 
the people who felt bad were your people.
    I want to get into this good actors versus bad actors. For 
example, at this school called Walden University in Minnesota, 
it has an impressively low 2-year cohort loan default rate of 
1.7 percent, and I've been told by their President that part of 
the reason for this is that they work hard to ensure that 
students they admit are good fits for their programs. Based on 
your research, I mean, you had all 15 be deceptive.
    Mr. Kutz. Correct.
    Senator Franken. How widespread do you think these 
deceptive and overly aggressive practices are at for-profit 
colleges? What other information do you think we need to 
determine how truly widespread this is?
    Mr. Kutz. Well, we did this, Senator, in June and July, 
primarily, so this is fresh information and my team did a good 
job of getting a lot done in a short period of time. It's not a 
statistical sample, but as you said, we were 15 for 15. So, 
there's indications that this would be a broader issue.
    One of the other things, too, is the Department of 
Education could do this kind of thing, and they maybe do some 
of this, but there has to be continuous testing of this and 
oversight for this.
    But you're right, giving this up and having sales impacted 
is something that is a consideration for these companies.
    Senator Franken. I just wanted to, as we do these hearings, 
make sure that we, No. 1, find a way to separate the good 
actors from the bad actors, and find some metrics to do that by 
and then act against the bad actors.
    Because, I'll tell you something, and I've said this before 
in this committee. My wife's father died when she was 18 months 
old, leaving her mom widowed with five kids, four girls. All of 
the girls went to college, including my wife. They all managed 
to go to college based on scholarships and Pell grants. There's 
no bigger defender of Pell grants than me, because of that.
    But, I can't conscience this. And we're studying these for-
profit institutions for a reason. There's a reason to be having 
these hearings and confining them to for-profit institutions, 
because the numbers are so outlandish. And if we are truly 
talking about saving money and cutting the deficit, we ought to 
be going after the low-hanging fruit. And that's what this 
appears to be.
    And I don't quite get this idea of, ``Well, we also have to 
be studying nonprofits and publics.'' Fifteen out of fifteen 
are giving you deceptive information. I think we've located a 
place where there are a tremendous high percentage of bad 
actors. And we've got to get after them.
    Thank you.
    The Chairman. Senator Isakson.

                      Statement of Senator Isakson

    Senator Isakson. Thank you very much, Mr. Chairman.
    In your GAO highlights, it says that the 15 were selected, 
(A) Because the Department of Education reported that they 
received 89 percent or more of their revenue from Federal 
funds, Federal student aid, is that right?
    Mr. Kutz. That is one of the factors we considered, yes.
    Senator Isakson. When you put the fictitious people on the 
Web sites, you gauged the number of solicitations that came 
back from those people being posted as a part of your 
determination?
    Mr. Kutz. No. Those Web sites were completely independent 
of the 15. Absolutely independent.
    Senator Isakson. They weren't--oh.
    Mr. Kutz. Although, some of the referrals from the Web site 
went to some of the 15. So, some of those 15 are linked to 
those Web sites.
    Senator Isakson. The point is, you had some suspicion, or 
some area of interest in these 15 to begin with.
    Mr. Kutz. Not really. I mean, they got a lot of Federal 
dollars, that was certainly one of the things. But we tried 
to--we did this in June and July, we did this in a very short 
period of time, so some of those geographic grouping, where we 
tried to get several in one location. But we had no specific 
evidence of fraud or any abuse at any location. There's a lot 
of noise about the industry, but we didn't pick any location, 
in particular, because of any specific allegations on that 
location.
    Senator Isakson. Did each one of the schools have a PPA 
agreement with the Department of Education?
    Mr. Kutz. I don't know that. I don't know.
    Senator Isakson. Well, following up on Senator Franken's 
statement and I may be wrong, and I welcome anybody to correct 
me that knows differently, but title IV funds are not available 
to you unless you enter into a Program Participation Agreement 
with the Department of Education.
    Mr. Kutz. This was all undercover, so presumably then they 
would have had that, but we did not look at any of those 
documents, except in our undercover.
    Senator Isakson. Well, I'm suggesting that you go check 
this out, because if they did, I believe--from what I've read 
in the Department of Education materials and other things I've 
been looking for--that there are substantial violations in the 
Participation Agreements in title IV based on what you've shown 
here.
    Mr. Kutz. And I think the Department of Education agrees. 
We did meet with the Department of Education earlier this week, 
also, so they will have evidence from all 15.
    Senator Isakson. Would their route of enforcement of a PPA 
agreement be through DOJ?
    Mr. Kutz. I don't know if it would be criminal, it might be 
more civil.
    Senator Isakson. Who, then, would they turn it over to, to 
pursue the institution? Internal people within the Department 
of Education?
    Mr. Kutz. For the civil. For the criminal, the 
investigative side of the Inspector General's who we're working 
with on these cases. And they would work for DOJ if they 
actually decided to take a case to a U.S. Attorney.
    Senator Isakson. So the IG is who you're working with?
    Mr. Kutz. On the fraud cases. On the rest of it, it would 
be more of the management oversight side.
    Senator Isakson. So DOE would do the contractual violation 
part?
    Mr. Kutz. Yes, correct.
    Senator Isakson. OK. Well, the reason for going along that 
line, we went through a lot of this on incentive compensation 
for recruiting students and all kinds of things. In fact, 1992 
was when the Higher Education Act was amended to address the 
commission incentive. There's a period of time where they were 
paying bonuses to people for bringing students in. That's a 
violation now. There are only certain safe harbors where your 
compensation can be tied in any way to recruiting. I don't 
think there's any safe harbor from fraud. I don't think there's 
any safe harbor from this type thing.
    The most effective thing the government can do is, if they 
have a bona fide case of a violation of a PPA agreement under 
Section 668.14 of the Act, then they ought to immediately 
pursue whatever legal remedy it is, or at least pursue those 
individuals cease and desist or remove their ability to receive 
the money.
    Mr. Kutz. As I said, we'll certainly make our information 
available to the Department of Education on the management side 
and on the investigative side.
    Senator Isakson. My point for raising that is the chips 
will fall where they may, but I don't want to leave a hearing 
with a generic application against all for-profits because of 
15 of them when we got 15 that violated an agreement they have 
with us, that we ought to be pursuing. The best way to get 
people to pay attention to the law is to enforce it, whether 
it's a regulation, a contractual agreement, or statutory law.
    I'd like to know what DOE is going to do to pursue any of 
these violations of PPA agreements with the institutions in 
mind because I think that would be important for us to know.
    Because if we leave here with just an indictment of an 
industry without actually going after people we've discovered, 
that certainly have information that the very least is 
questionable, or at the very most is probably against the law, 
then we ought to see to it that's enforced.
    Mr. Kutz. Can I make one more point?
    Senator Isakson. I didn't ask too many questions.
    Mr. Kutz. Well, no, and it's along these lines. I think the 
accountability here should be with the schools and not 
necessarily the individuals. But I think what's going to happen 
is the individuals will be held out as rogue employees, and 
will be potentially dealt with individually. But I think that's 
probably unfair here because I expect anybody we would have 
walked into perhaps that was trained a certain way in marketing 
was going to follow the same script.
    So, I think what we're going to see, and we've seen it 
before in other undercovers we've done for investigations that 
the organizations say that was a rogue employee. But I expect 
in some of these cases, that was absolutely not true.
    Senator Isakson. Well, if I may, Mr. Chairman, just 
following on that response, I think your intuition is probably 
correct, but my point is that the concern over what's happened 
in these instances, needs to be corrected, not just stated and 
end up being an indictment. But then nothing's done about it. I 
know we have people that are doing bad things, but I know we 
have a lot of people doing it right. And they're going to be 
under a cloud unless we begin to separate the wheat from the 
chaff.
    And I think the only way to do that is through enforcement 
of the program participation agreement. Then everybody will 
know it really means something. And then I think you'll 
automatically have compliance because of the ramifications of 
noncompliance.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. I see that my friend from Georgia 
was talking about the Nunn Commission. Senator Nunn from 
Georgia headed an investigation of for-profit colleges that led 
to the ban on incentive compensation in the 1992 Higher 
Education Act reauthorization.
    The second panel, Mr. Hawkins, will talk about that and 
point out how the safe harbors that were implemented in 2002 
basically negated what was done in 1992. So, the second panel 
will get into this.
    Next is Senator Casey.

                       Statement of Senator Casey

    Senator Casey. Thank you, Mr. Chairman. And sir, thank you 
for your testimony. It was enlightening to see both the video 
as well as to have read the report. I have to say in the 
interest of full disclosure, I was the auditor general in 
Pennsylvania for two terms. So I know what it's like to issue 
reports like this, and then to be criticized for the----
    Mr. Kutz. We're not very popular, are we, Senator?
    Senator Casey. I have a high degree of skepticism when a 
report like this gets attacked. So I'll put that on the table.
    But I was struck by the scope of what you found. I was 
looking through--just looking by way of summary of pages 9 
through 13. And when you break it down into the categories of 
deceptive or questionable statements, whether it's 
accreditation information, whether it's graduation rate, 
employment, questions, program duration, cost, financial aid. I 
mean, you have 15 colleges, 13 colleges involved, 9, 11, 6. And 
you really have no predicate, necessarily to--so you're looking 
at this fresh. And still, we see all kind of problems.
    To say it's inexcusable doesn't begin to describe the 
outrage of this. And you've done the American people a real 
service by pointing out these problems, and by making sure that 
we're focused on two groups of people, and maybe only these 
two, students and taxpayers in my judgment.
    I know that sometimes when you issue reports like this, the 
result is a series of recommendations or suggestions. So I want 
to ask you about that. But I think that what a lot of people 
are waiting for in the wake of a report like this is 
accountability at a couple of levels.
    Certainly at the individual level, these individuals who 
engage in these practices have to be held accountable. For 
some, that might mean firing them. And I think the institutions 
have to act very quickly, if they haven't already, to deal with 
that individually.
    And they have to work that out in terms of our employment 
laws and statutes, but there also has to be institutional 
industry accountability. That needs to happen real fast if 
taxpayers and students in the families that they come from or 
going to have confidence that the results of your report are in 
fact being taken seriously and implemented. So that's 
commentary. And I know you're not here to evaluate comments 
like that.
    But I wanted to ask you in light of the results that you 
found, and the outrage that we all feel about what was on the 
video, do you have any recommendations in terms of what the 
Federal Government should do, or--and I should say and the 
industry--in terms of strategies, tools, policies, statutory 
change, the whole range of possible actions that could flow 
from a report like this? Do you have any suggestions about how 
either the industry can right the ship, so to speak, and 
whether or not the Federal Government can take specific actions 
to prevent these kind of practices from taking place again?
    Mr. Kutz. Certainly. I think oversight like this, 
consistent oversight is going to be necessary to do this. And 
one of the benefits of consistent oversight like this with a 
lot of press coverage and whatever you're going to get is 
public awareness. And so, hopefully, we're go to--and that's a 
prevention tool. So if the public becomes more and more aware 
of what's going on, I think that some of the people targeted by 
this could believe some of the stuff that you actually saw in 
there and heard about, they're accredited by Harvard, just the 
same places Harvard University, these for-profit colleges has 
the same--I mean that's ridiculous, but someone might actually 
believe something like that.
    So prevention is the most important thing here. And ways 
the government can do that, monitoring by the Department of 
Education. And then we've talked about consequences here with 
respect for the bad actors. If you don't make examples of the 
bad actors, which also can have a preventive effect, as you 
know, then you have a system where people think there are no 
consequences. And you're going to see these practices continue. 
So if there's no consequences, we're going to be back here a 
year from now with the same discussion.
    Senator Casey. Do you have any sense as to whether or not 
the Department of Education has the resources to do the kind of 
oversight that's needed here? Or do you have any sense of that?
    Mr. Kutz. I don't--I can't speak to that specifically.
    Senator Casey. I wanted to ask you as well, and this is 
more broad ranging, based upon your experience, but based upon 
your experience in doing reports like this in the past, what's 
the most successful post-report strategy that you've seen, 
where you see either the Federal Government taking action to 
correct these problems, or prevent them from happening? Or 
follow-up that's done, that's particularly helpful?
    What do we have to try to avoid in the aftermath of a 
report like this? A hearing like this is part of the 
accountability. But what do we have to avoid, what do we have 
to be concerned about 6 months, a year from now, in terms of 
what didn't happen by way of follow up?
    Mr. Kutz. Well in some cases, the reactions automatically 
are that we need more legislation.
    Senator Casey. Right.
    Mr. Kutz. I don't know if that's true here or not. Perhaps 
on some of these issues, there's things that could be tightened 
up, but it sure appears to me that these regulations in place 
address most of what you saw on the video. So then it seems to 
me that they're not being effectively overseen and enforced. 
And so, unless you believe that there's holes in the 
regulations, and if there are, then that's your responsibility 
to consider legislation. If it's not, then you need to put the 
pressure on the Department of Education because this is Federal 
taxpayer money. I mean most of this is Federal taxpayer 
dollars. So Congress and the administration have a 
responsibility to make sure those dollars are being spent as 
efficiently, effectively as possible, and that they're not 
predatory lending practices and other things with low-income 
individuals in our country.
    Senator Casey. Thanks very much.
    The Chairman. Thank you, Senator Casey.
    Senator Burr.

                       Statement of Senator Burr

    Senator Burr. Thank you, Mr. Chairman. Mr. Kutz, thank you 
very much for what I think is a very thorough investigation on 
your part of bad practices, fraud, whatever we want to call it. 
It's No. 1, unacceptable.
    No. 2, it should be pursued in the most aggressive way as 
Senator Isakson said. And let me just ask you, without some 
enforcement, will this go away?
    Mr. Kutz. No, I mean, you're talking about money, profits. 
And, you look at sales, and I ask my people what does this 
seem--the people that sat in the chairs, because those are the 
ones that really saw this face to face. And it was kind of like 
an experience of buying an automobile in some cases. So I mean, 
yes, it's going to stay the same until someone does something.
    Senator Burr. I'd ask you in that investigation, did you 
ever follow up to see if there was some type of cash incentive 
that was provided by the institution to the individual that was 
actually processing the application for admission?
    Mr. Kutz. That's a great question. We didn't see it, but we 
saw certain things like the boards you might see up in the 
sales organization would close sales and things like that. So 
clearly, these were salespeople. There certainly appeared to be 
sales targets in some cases. Whether they're being compensated 
based on that or not, it sure felt that way, but there's no way 
for us to know.
    Senator Burr. Clearly, Mr. Chairman, that's an area I'd 
love for the Department of Education to look at within the 
contractual agreements we have with institutions. That might be 
an area that we look at eliminating any concerns about 
incentives playing a role in one's willingness to break the 
law.
    As troubling as this sounds, I've got to say, I'm more 
concerned with the graduation rates in this country than I am 
with whether it happened in for-profit or not-for-profit. I 
think we need to stay focused on how many kids get across the 
goal line.
    In North Carolina, we have 58, 4-year institutions by my 
count. Of those 4-year institutions, 9 institutions had a 
greater than 50 percent graduation rate after 4 years. Twenty-
two had a greater than 50 percent graduation rate after 6 
years. Twenty-four had a greater than 50 percent graduation 
rate after 8 years.
    In 2-year institutions, we have 120. Twenty-six of those 
institutions had a graduation rate of over 50 percent in the 
third year. Of those 26 institutions, 20 institutions were for-
profit. Of the 94 that didn't meet the 50 percent threshold 
after 3 years, 88 were public institutions and 6 were for-
profit.
    So I share this with my colleagues to let them know the 
label of for-profit or the label for nonprofit has no specific 
impact on graduation rates. And I think ultimately, that's 
something that we have to stay focused on from a policy 
standpoint.
    And I would conclude, Mr. Chairman, with just this 
observation, we're talking about the Federal Government's 
partnership in this particular case with institutions and flow 
through from institutions to students. When I look at a full-
time student for 8 years still receiving financial aid, and a 
graduation rate at 8 years or under 50 percent, I have to ask 
myself where does the Federal obligation to aid with graduation 
stop? I'm not talking about students that are on part-time 
schedules. I'm not talking about students that have to drop out 
because of family matters and come back. I'm talking about the 
student that is a full-time student throughout that whole 
process because they haven't figured out what their major's 
going to be. They like school.
    And I think we have to ask policy question at some point up 
here. If that crowds out somebody that wants to enter as a 
freshman, and doesn't provide them equal opportunity at those 
Federal resources, then we've got to rethink where our 
priorities are.
    I certainly don't have the answer. And I'm not here to do 
it. But I am here to say to my colleagues, it's a question that 
needs to be asked. More importantly, we need to focus more on 
graduation rates than how a school is constructed. But we need 
to hold for-profit and not-for-profit to the standards of the 
contractual agreements they have for the Federal partnership 
that Senator Isakson talked about. And I hope the Chairman will 
very seriously ask you, Mr. Kutz, if we haven't already, to 
take a similar review of the not-for-profit institutions that 
we have to find out if the problem is as great at those 
institutions as you found in the for-profit institutions. 
Again, I thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Burr.
    Senator Goodwin.

                      Statement of Senator Goodwin

    Senator Goodwin. Thank you, Mr. Chairman. I'd like to 
follow up on Senator Franken's questions to you earlier about 
the scope of the investigation, and specifically, the number of 
schools that were included as the chairman described there, you 
certainly have a significant amount of experience handling 
investigations, just like this.
    So my question would be, given the scope of this industry 
nationwide, what sort of conclusions can you draw from the fact 
that for 15 schools engaged in what looks like pretty egregious 
conduct, four may have, in fact, committed fraud. What sort of 
conclusions can you draw from the fact that four schools in 
this industry committed conduct like that? And what sort of 
principles can the committee extrapolate from those findings?
    Mr. Kutz. Well, 4 out of 15 for fraud is very disturbing.
    Senator Goodwin. Sure.
    Mr. Kutz. Because you're talking about people stealing from 
the Pell grant program, and Subsidized Student Loan Program. 
That takes money out of taxpayers' pockets certainly. So that 
is alarming. And that's something of all the enforcement things 
we've talked about here, that needs to be dealt with in the 
most strict manner by the Education IG and the Education 
Department, because those practices cannot be accepted under 
any circumstances--fraud in any program, getting that out of 
the program. Whatever anti-fraud tools you have to prevent 
these practices--if someone's taking the $250,000 off a form, 
what's the Department of Education doing on those FAFSA forms 
to validate people's assets? That's an important issue. I know 
that the IG has recommended in the past, as I understand, 
checking against IRS records independently to look for people 
under reporting income, because that's what we're talking about 
here, people falsifying the FAFSA forms to get Pell grants and 
subsidized student loans. And there are anti-fraud tools the 
Department of Education could use to prevent that.
    Senator Goodwin. That's related to my next question. Did 
your investigation in your opinion reveal gaps in the 
regulatory and oversight scheme for these schools, or simply a 
need for increased monitoring and enforcement of existing 
regulations?
    Mr. Kutz. Probably both. I mean, it was a strict 
undercover. So we didn't evaluate the Department of Education. 
But given what we saw, it's certainly a period a little bit 
like the wild, wild West out there if you will. So that would 
indicate that there is not a lot of regulatory infrastructure 
in place overseeing or enforcing perhaps both in this 
particular case.
    Senator Goodwin. You also mentioned earlier it was your 
intuition, and reasonable at that, that these folks we 
witnessed on the videos may have been trained in certain sales 
tactics and marketing approaches. And as the Senator from North 
Carolina referred to in his questioning, there may in fact have 
been incentives to reach certain sales goals. Did your 
investigation reveal any evidence of such incentives or 
marketing training or the converse, a lack of training as to 
how to respond to questions from prospective students in a 
manner that complied with Federal law?
    Mr. Kutz. There could have been lack of training, but it 
was really more training in a script and some of the actual 
practices we saw, like not letting someone speak to financial 
aid until they signed enrollment papers and paid an admission 
or application fee, they were--again, they were very, very 
persistent. We tried every which way. Those videos you saw were 
2 minutes, but we tried for 40 minutes to get into financial 
aid in one case. They just wouldn't let us in there.
    Maybe you didn't see the last video when they ripped up the 
application.
    Senator Goodwin. Sure, yes.
    Mr. Kutz. So that was the end result. I think they were 
very well-trained. But perhaps another one, that was six of 
them, that just refused to let us go to financial aid without 
signing a document enrolling you into the school.
    But there are other ones that I think may have just been 
lack of training or other types of things as you mentioned.
    Senator Goodwin. All right. Thank you, sir. Thank you, Mr. 
Chairman.
    The Chairman. Thank you, Senator Goodwin.
    Senator Mikulski.

                     Statement of Senator Mikulski

    Senator Mikulski. Thank you very much, Mr. Chairman. I want 
to salute you and the Ranking Member Senator Enzi for having 
this series of hearings on proprietary colleges.
    I would like to ask unanimous consent that a statement be 
placed in the record. Mr. Chairman, I took the lead 18 months 
ago to get higher education re-authorized when Senator Kennedy 
was so sick. We worked closely with you to work very closely 
with Senator Enzi, and also with my good friend from Tennessee.
    You know, we thought what we were creating was an 
opportunity ladder for people of all ages and all stages to 
pursue higher education. And we worked very hard.
    Now we see that what has been created in some instances is 
not a ladder of opportunity, but a black hole of debt and 
disappointment and heartbreak.
    I do think we need to reform, but I think we need to parse 
out the good, the bad, and the ugly. And we look forward to 
working with you. There's a lot of accumulated knowledge here 
that we could benefit from.
    My concern is with the Pell grants, we could be on the cusp 
of what I call the Pell grant bubble. All these schools have 
sprung up in the last couple of years or added to their 
enrollment. And part of their largesse is coming from the Pell 
grant program. It's a rip off of the student. And it's a rip 
off of the taxpayer. And I think it's despicable.
    Well, let me get to my questions Mr. Kutz. These people who 
are--these so-called admission representatives, do you regard 
them as bounty hunters? And were they paid bonuses, a variety 
of fees? Did they have quotas that they had to meet, et cetera? 
And were they paid bonuses? In other words, did they function 
like bounty hunters?
    Mr. Kutz. They functioned as sales people is the way I 
would describe it. And whether they were--it was an undercover, 
Senator. So we don't know for sure what was happening behind 
the scenes. But they certainly appeared to be well-trained in 
hard close tactics in aggressive marketing tactics. And you may 
have missed the video, but you actually saw what it was like to 
sit in the chair----
    Senator Mikulski. Yes, sir, I just read the script.
    Mr. Kutz. So yes, it was aggressive marketing and 
salespeople. They were called admissions officers.
    Senator Mikulski. But you don't know if they had quotas, et 
cetera?
    Mr. Kutz. We don't know that, no.
    Senator Mikulski. OK. Well, I'm going to call them bounty 
hunters. Were these bounty hunters employees of the college or 
the school? Or were they kind of like a telemarketing firm 
that's trained in, kind of eat your kill tactics?
    Mr. Kutz. The ones that we did the face to face with, which 
was the 15 colleges, they appeared to be employees. We also 
registered on two Web sites. And those appeared to me more 
telemarketers who were feeding the for-profit colleges.
    Senator Mikulski. So again, it's not a one-size-fits-all 
bounty hunter issue?
    Mr. Kutz. No, some were employees and some were what I call 
lead generators.
    Senator Mikulski. So we could prohibit telemarketing? Now 
let me ask you this question. After these students were 
recruited with often duplicitous promises, the false 
certification, et cetera, when they went to these schools, did 
they get what they paid for? In other words, if they signed up 
for everything from radiation therapy to a business degree, 
were the programs accredited for work in those fields?
    Mr. Kutz. We never actually went to class. We stopped the 
undercover. We just did these tests in June and July. We didn't 
go all the way through. We ended our undercover at the 
applications process. So we don't know what we would have 
actually gotten if we attended class.
    Senator Mikulski. So you don't know if after the 
duplicitous luring in of these students, where they thought 
they were getting a degree in say massage therapy or radiation 
therapy, which are licensed programs by the State, whether 
those students received appropriate training? They also have to 
be an accredited institution.
    Mr. Kutz. We didn't go far enough to do that.
    Senator Mikulski. You didn't do that?
    Mr. Kutz. No.
    Senator Mikulski. But that's another realm that we should 
look into. If they lied to you to get you in, do they lie to 
you when you're there?
    Third, what would you recommend as the metrics, because you 
are GAO guys--what would you recommend as the metrics to be 
able to parse out the good, bad, and ugly in terms of this type 
of recruitment?
    Mr. Kutz. Well, from the standpoint of what we saw, 
certainly fraud, deceptive marketing. I'm not sure what metrics 
you can have there. Some of the metrics they use, of course, 
are graduation rates, student loan default rates. Completion 
rate, I understand, is a different term that's used. So those 
are the metrics that are used.
    And these schools we went to, the graduation rates varied 
from single digits to 80 percent. So it was kind of all over 
the board. And the default rates are very, very high in this 
industry.
    But on the fraud, hopefully the metric is none. You know, 
hopefully, you don't have your employees telling people to lie 
about Pell grants, but that's in fact what we found. So to me, 
the metric there is zero is the right metric.
    Senator Mikulski. Well, schools operate on a broad range. I 
have an online university called Walden, and the default rate 
is less than 3 percent. That's better than the University of 
Maryland. And also, I have another school, where the default 
rate is 48 percent. That's outrageous.
    But I just want to then turn to the Chair, picking up with 
some of the issues raised by Senator Isakson. If in fact what 
you alleged is that these bounty hunters told students to lie, 
that means there's an intent to defraud the Federal Government. 
And I think my question, Mr. Chairman, is should we get this 
information for Federal prosecution? You're a good lawyer. I 
mean, if people are not only engaging in predatory practices, 
but also intending to defraud the Federal Government, I think 
they need to be prosecuted.
    Mr. Kutz. Senator, we've done that. We've met yesterday, in 
fact, with the investigative side of the Department of 
Education Inspector General. And so, those cases are all being 
referred to law enforcement. And whether they can make cases 
and take to a U.S. Attorney and get something done, I don't 
know that, but they are certainly going to consider them.
    Senator Mikulski. Well, I would like to know that. When 
I've got a school that's got a 3 percent default rate, you 
talked about a culinary school, there's only one culinary 
school in Baltimore. They were called back 72 times. It meant 
that they were cooking up something else other than steamed 
crabs. And I'm pretty steamy about what's going on here and 
even crabby about it.
    [Laughter.]
    Mr. Kutz. I can't comment on that.
    Senator Mikulski. So this old song is ready to go. Thank 
you, Mr. Chairman.
    Mr. Kutz. I'm glad you're not crabby at me, though, at 
least. Thank you.
    Senator Mikulski. Mr. Chairman, just a personal point--Kutz 
is my mother's family name. Are you all from Pennsylvania?
    Mr. Kutz. No, actually from Wisconsin, but Kutztown, it's 
the same----
    Senator Mikulski. Yes, we never made it past Baltimore.
    Mr. Kutz. Never made it up there, OK.
    Senator Mikulski. No, we got to this Polish sausage and 
opened a grocery store and there we are.
    [Laughter.]
    But anyway, thank you for all your good work. I appreciate 
it.
    Mr. Kutz. Thank you, Senator.
    The Chairman. All right, cousins.
    Senator Bennet.

                      Statement of Senator Bennet

    Senator Bennet. Thanks, Mr. Chairman. I may have lost track 
of what this hearing's about.
    [Laughter.]
    But I'm glad to be here. Mr. Kutz, thank you for your 
testimony, which revealed an array of problems, problems that, 
by the way, should be of concern and I think are of concern to 
the taxpayers and to prospective students and to the private 
universities themselves, at least the ones that are not engaged 
in the practices like the ones you saw. They're very 
disturbing.
    And my first question was, what is your sense about how 
much the problem is coming from a lack of enforcement of 
current rules versus a need for additional regulation? How is 
your experience with this investigation led you to think about 
that question?
    Because there are a lot of things we saw that are clearly--
in all respect--in theory regulated already, but there may be 
an enforcement problem. I wonder if you could talk about that a 
little bit?
    Mr. Kutz. Right, well, fraud is fraud. And so we can talk 
about that.
    Senator Bennet. Right.
    Mr. Kutz. But some of the other regulations, I just wrote 
down some just so I have them, but there are certain 
requirements related to disclosures with tuition, fees, other 
costs, accreditation, completion and graduation rates. We found 
issues with all of those.
    So in those instances, the regulations are there. And it's 
a matter of whether they're being enforced.
    Senator Bennet. Do you think that--and whose job is it to 
do that enforcement?
    Mr. Kutz. The Department of Education.
    Senator Bennet. Do you think they're resourced adequately 
to do that? I know you talked----
    Mr. Kutz. I can't speak to the resourcing.
    Senator Bennet. OK.
    Mr. Kutz. I mean, we met with them. They're certainly aware 
of these. And we're hopeful that they will use these to help 
improve their enforcement and oversight.
    Senator Bennet. Did you get an impression, having seen the 
regulations that already exist, that were clearly being 
violated, an impression about further work we should do, either 
statutory or regulatory to try to deal with practices that are 
not yet governed by these regulations?
    Mr. Kutz. We can consider that. We did this in 3 months. 
And actually, if you watch the videos, they were all from June 
and early July. We scrambled to really work hard. My team did a 
great job logistically to pull this off with these undercovers 
across the country in a period of just weeks.
    Senator, we could certainly consider that and get back to 
the committee on any things we see as holes in the regulations, 
if they came up. And we may not, but if we see anything, we 
would certainly share that with you.
    Senator Bennet. One of the challenges, I think, that we are 
going to face, and that the DOE is going to face is that it's 
so difficult to monitor every individual transaction that 
occurs. And that probably is not a sensible way to approach 
this, at least from my point of view.
    And so the question is, how do we have a set of enforcement 
mechanisms that really will work?
    Mr. Kutz. I think on certain things, like let's say Pell 
grants, for example, you've got the FASFA form. There are 
things you could do systemically there perhaps, such as looking 
at other independent databases of people who falsified those 
forms.
    If you could have access to IRS database, for example, you 
could run a match of IRS against Pell grant recipients, you 
would likely find people who were understanding their assets.
    Senator Bennet. Well, that was the video where they said 
you don't need to put this on your FAFSA form because that's 
what the income tax form is for?
    Mr. Kutz. That's what they said, yes.
    Senator Bennet. Yes.
    I wonder--just a last question, Mr. Chairman, how often 
during the investigation you found that prospective students 
were not able to speak with the tuition counselor until they 
paid an application fee? I mean, how common is that? That was 
one of the more disturbing things that we saw this morning.
    Mr. Kutz. They absolutely refused to let us speak to 
financial aid without signing enrollment and providing an 
application fee, 6 out of 15 times.
    Senator Bennet. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Bennet. Senator Kutz, or 
Mr. Kutz, thank you very, very much.
    Mr. Kutz. Thank you for the promotion.
    [Laughter.]
    Maybe a demotion around here. But again, thank you and all 
at GAO for your outstanding work. And we'll be interacting with 
you as we go ahead with our further investigations. Thank you 
very much.
    Mr. Kutz. Thank you so much.
    The Chairman. We'd like to now move to our second panel. 
And our second panel is: first, David Hawkins, director of 
Public Policy and Research at the National Association for 
College Admission Counseling, a nonprofit membership 
organization founded in 1937 by 19 midwestern colleges to 
create a code of ethics for college admission counseling. Mr. 
Hawkins has been at this organization since 2000. And also 
recently, he served in the Department of Education's negotiated 
rule making panel as a representative of college admission 
officials.
    After Mr. Hawkins, we'll hear from Michale McComis, who is 
the executive director and chief executive officer of the 
Accrediting Commission of Career Schools and Colleges. Dr. 
McComis joined ACCSC in 1994 and currently oversees the 
accreditation process for over 800 schools that enroll more 
than 250,000 students. He's also an adjunct faculty member at 
the University of Virginia, teaching graduate courses in 
education policy.
    Finally, we have Joshua Pruyn, who worked as an admissions 
representative at Westwood College in Denver from November 2007 
through May 2008. Mr. Pruyn now works in development for a 
Colorado-based substance abuse treatment provider. He graduated 
from Alfred University in 2005.
    Again, I welcome our second panel. All of your prepared 
statements will be made a part of the record in their entirety. 
I ask if you could basically sum up in 5 minutes or so. If it 
goes over a little bit, fine, but not too much, I hope. And 
again, your statements will be made a part of the record.
    And we'll start, as I said, again, with Mr. Hawkins, 
director of Public Policy and Research for the National 
Association for College Admission Counseling. Mr. Hawkins, 
welcome and please proceed.

   STATEMENT OF DAVID HAWKINS, DIRECTOR OF PUBLIC POLICY AND 
     RESEARCH, NATIONAL ASSOCIATION FOR COLLEGE ADMISSION 
                   COUNSELING, ARLINGTON, VA

    Mr. Hawkins. Thank you very much, Mr. Chairman, members of 
the committee. Thank you for holding this hearing. And thank 
you for inviting me to be a part of the testimony here today.
    The National Association for College Admission Counseling, 
as you said, is a nonprofit association of high school 
counselors and college admission officers from across the 
United States and around the world. We have a code of ethics 
that we call our Statement of Principles of Good Practice that 
govern admission practice for our member colleges and 
universities, as well as high schools. We have some binding 
principles that are enforceable within our membership. And we 
also have best practice principles that guide ethical practice 
for admission.
    In founding our association, the colleges that developed 
the idea of standards for ethical practice realized that it was 
not in their best interests to engage in a race to the bottom 
in terms of unethical admission practice.
    Likewise, perhaps more importantly, it was not in the 
students interest because students suffer from the same kinds 
of information asymmetry, frankly, that we see in other 
situations. The subprime mortgage industry comes to mind 
immediately, where you have the situation in the admission and 
financial aid process, where there is an incredible amount of 
ground to cover if you're a prospective student. If its your 
college, you know the information backward and forward. So 
there's an asymmetry there that leaves students particularly 
vulnerable to being misled in the process.
    Our founding colleges realized that. And they set forth in 
an effort to strive for higher standards for admission 
practice.
    Our involvement in the issue before the committee really 
stems back to the 2002 creation of what we are calling the safe 
harbors to the incentive compensation ban that is in the Higher 
Education Act. And as some of you alluded to earlier, that 
incentive compensation ban was enacted in 1992 after the Nunn 
Commission hearings, which found substantial problems in 
recruiting and admission, similar to the ones we've seen today. 
I would also point out, and have pointed out in our written 
testimony, that the Department of Education also covered this 
ground in the 1970s. There doesn't appear to have been any 
statutory result to Congress' and the department's 
investigation into recruitment practices in the 1970s, but I 
did include some information in our written testimony, 
indicating that it has been a problem that far back.
    Our concern about the safe harbors that were enacted in 
2002 is that they have effectively gutted the incentive 
compensation ban that was passed by Congress in 1992. Our 
concern specifically is that it's created a roadmap for 
institutions to circumvent the law as it was designed 
originally by Congress.
    We pointed out in 2002 to the department, as we have 
pointed out in our written testimony today, that what would 
result from the safe harbors was fairly widespread potential 
for fraud and abuse, and actual fraud and abuse. And 
unfortunately, I think we've seen this borne out.
    The basic features that--of the practices that the 
incentive compensation ban was enacted to eradicate on the 
college side, you see aggressive boiler room style sales 
tactics. You see obfuscation of financial aid information and 
costs. You see misinformation about academic programs 
accreditation and transfer of credits. You see false statements 
or misrepresentations about employment prospects and earnings 
potential. And in just about every case, what lies behind a lot 
of this is the fact that admission officers and recruiters are 
compensated almost exclusively if not exclusively, based on 
whether a student enrolls.
    So they do not get paid or they may risk substantial pay 
reduction or even firing if students--if they do not actually 
process students through the door.
    What results is a cascading series of problems for 
students, of course. They're pressured into making decisions 
without accurate information or being offered an opportunity to 
consider their options to comparison shop.
    They're ushered through the enrollment process with no 
information about the amount of debt that they may incur. 
They're roped into programs that may be ill-suited for their 
needs. And they're left with a large, large mountain of debt, 
which is very difficult to pay off, particularly if you do not 
improve your employment prospects.
    Of course, these are bad enough for the students. And I 
think that we have to consider that we are really concerned 
about the students here in this discussion, but they are 
equally concerning for the taxpayers, because when the students 
default on their loans, the taxpayers end up picking up the 
tab. So I think it's in our fiscal health interest to make sure 
that this problem is cleared up.
    I think in closing, really, I think contrary to what we've 
heard from the industry, these practices seem to be standard at 
this point. These are not isolated incidents. These do not 
appear to be isolated incidents of bad actors or rogue 
officers. This appears to be a fairly standard practice, which 
again, has been pretty--the blueprint for which has been laid 
out through the safe harbors.
    We acknowledge certainly that nonprofit colleges have 
occasionally run afoul of the incentive compensation ban, just 
as they sometimes run afoul of our own standards in our 
association. And for that reason, we sincerely appreciate the 
discussion that you, Mr. Chairman, have started here with this 
hearing. We certainly appreciate the Department of Education's 
effort to tighten up the regulations and eliminate the safe 
harbors. We will look forward to being a part of this 
discussion moving forward. Thank you.
    [The prepared statement of Mr. Hawkins follows:]
                  Prepared Statement of David Hawkins
                                summary
The Importance of Ethical Admission Practice as a Student and Taxpayer 
        Protection
    This testimony offers the perspective of the National Association 
for College Admission Counseling (NACAC), a non-profit association of 
college admission professionals that maintains a code of ethics for 
admission practice in the United States, on recruitment practices in 
relation to title IV Federal student aid programs. NACAC's ethical code 
mirrors Federal law in that it prohibits the payment of commissions to 
admission officers based on the number of students recruited or 
enrolled. This testimony discusses how ``commissioned sales'' as an 
admission model leads to harmful consequences for students and 
taxpayers due to information asymmetries in the admission and financial 
aid processes, particularly as they involve Federal financial aid.
The Current Regulatory Challenge
    Congress' 1992 enactment of the ban on incentive compensation for 
admission and financial aid officers as a program integrity measure 
helped curb fraud and abuse in student aid programs. However, the 
creation of 12 regulatory loopholes (dubbed ``safe harbors'') to the 
ban by the previous Administration in 2001-2 substantially weakened the 
law. Our objections to the ``safe harbors'' noted that widespread 
abuses would result from the creation of such loopholes. Indeed, the 
effect of the ``safe harbors'' has been to render statute nearly 
meaningless. We offer evidence of widespread disregard for the letter 
and spirit of the law banning incentive compensation, as institutions--
particularly those concentrated in the for-profit sector--appear to 
have made commissioned sales in admission standard business practice, 
with potentially disastrous results for students and taxpayers. Such 
evidence includes investigative reporting from news outlets across the 
Nation, State and Federal regulatory actions, and lawsuits highlighting 
the extent to which the ban on incentive compensation has been diluted.
Recurring Nature of Problems With Incentive Compensation and the Effort 
        to Correct for the Absence of Regulatory Oversight
    Finally, this testimony provides a brief reference to previous 
congressional efforts to reign in abusive recruiting practices. 
Congress was presented with evidence in the 1970s that commissioned 
recruiting practices posed a threat to the integrity of Federal aid 
programs. The Nunn Commission in the early 1990s offered evidence of 
the same abuses, resulting in the enactment of the ban on incentive 
compensation in the 1992 Higher Education Act reauthorization. In 2010, 
after nearly a decade of a weakened regulatory effort, Congress is 
faced with yet another abundance of evidence that abusive recruiting 
practices pose a threat to title IV program integrity. The Department 
of Education has issued draft regulations that would restore the 
regulatory purpose that Congress intended in 1992, and eliminate the 
safe harbors in favor of tougher regulation to ensure that students and 
taxpayers are protected from harmful recruiting practices.
                                 ______
                                 
                              about nacac
    NACAC is a non-profit association of nearly 12,000 high school 
counselors and college admission officers across the United States. The 
association represents more than 1,600 high schools and 1,100 not-for-
profit public and private colleges and universities. Founded in 1937, 
NACAC's core mission is to provide a code of ethics for the college 
admission counseling profession. NACAC's Statement of Principles of 
Good Practice constitutes the guiding principles for professional 
college admission practice in the United States.
                       ethical admission practice
    NACAC's Statement of Principles of Good Practice states that 
members ``will not offer or accept any reward or remuneration from a 
college, university, agency, or organization for placement or 
recruitment of students. Members will be compensated in the form of a 
fixed salary, rather than commissions or bonuses based on the number of 
students recruited.''
    Association members stress that NACAC's core principles are 
intended to serve the student interest in the transition from secondary 
to postsecondary education. Members will readily acknowledge that the 
number of students enrolled in a given academic year is a matter of 
great importance to all institutions of higher education. However, 
reducing the basis for compensation to the number of students enrolled 
in any circumstance introduces an incentive for recruiters to ignore 
the student interest in the transition to postsecondary education, and 
invites complications similar to those that preceded the enactment of 
the ban on incentive compensation in the 1992 Higher Education Act 
reauthorization.
    Our historic concern with the treatment of admission officers as 
professionals, rather than salespersons, is rooted in the interest of 
students in transition to postsecondary education. Because the 
transition to higher education is an unsystematic, often opaque process 
that individuals possessing varying levels of ``college knowledge'' 
must navigate, the information asymmetry between the employees in 
charge of recruiting and prospective students is immense. In an 
unregulated environment, the potential for misrepresentation and 
outright fraud is a clear and present threat, which can result in harm 
to students and, in the case of Federal aid and loans, to the taxpayer. 
Indeed, the recognition of this asymmetrical environment and its 
potentially detrimental effects on students was the founding purpose 
for NACAC in 1937.

Examples of such information asymmetry include:

     Lack of access to information about higher education is a 
well-documented challenge among under-served populations. The lack of 
information about college makes low-income students particularly 
susceptible to misrepresentation of information about a college or 
course of study. Aggressive recruiters whose livelihoods depend on 
meeting a weekly quota will have little incentive to accurately 
represent the goodness of fit between a potential student's interests 
or qualifications and the institution's program.
     Lack of information about financial aid is a second well-
documented challenge among under-served populations. Commissioned sales 
creates an incentive to obfuscate the source and nature of the 
financial means by which prospective students will pay for their 
education. The complexity of the modern financial aid system is 
indisputable, and unscrupulous institutions and recruiters use this 
complexity to their advantage. Indeed, NACAC has long argued for 
greater clarity in the presentation of financial aid packages at 
institutions of all types. In an environment where commissioned sales 
is accepted practice, the potential for manipulation and deception of 
financial aid information is far greater.
     Potential students trust colleges as gateways to 
certifications, licensing, and professional education. Understanding 
the level of education that is required to work in a professional field 
is a complicated task. A major challenge for secondary school 
educators, in fact, is to guide students to the appropriate 
institutional fit for pursuing careers. Much of the guidance school 
counselors offer to students about where to apply and or enroll in 
postsecondary education is based on students' career preferences and 
academic skills. Such guidance can mean the difference between 
successful and unsuccessful completion of a postsecondary certificate 
or degree. Non-traditional or under-served populations, who may be 
years removed from the structure of high school and/or whose high 
schools may not be equipped for college counseling, are often at the 
mercy of recruiters or admission offices for guidance. Most students 
trust that colleges will steer them in the right directions. Few seem 
to be prepared for high pressure sales tactics, and few--as evidenced 
by testimony from the previous hearing--seem aware that a college can 
be a for-profit company, or that there may be cause to question what 
recruiters and advertisements are telling them. Whereas consumers may 
be prepared for a high-pressure sales pitch at a car dealership, home 
improvement store, or other commercial setting, few are aware that a 
college recruiter might employ the same tactics. Taking advantage of 
this trust enables recruiters to exploit a potential student's lack of 
awareness of the terms of the interaction.
    Students trust postsecondary educational institutions and their 
admission officers because counseling--as opposed to sales or 
marketing--has historically been a prominent part of ethical admission 
practice at American colleges and universities. NACAC's commitment to 
the counseling component of higher education admission is contained in 
the association's ``Statement on the Counseling Dimension of the 
Admission Process at the College/University Level.'' (See Attachment 1) 
According to the statement:

          Increased recruitment efforts, the introduction of marketing 
        concepts and the trend toward enrollment management have led to 
        the perception, real or imagined, that recruitment and 
        marketing techniques are taking the place of counseling. It has 
        been suggested that while encouraging the optimum fit between 
        student and institution was once considered important, what 
        counts most today is using any means possible to attract 
        students to meet enrollment and economic targets.
          NACAC stands firm in its position that counseling has been 
        and continues to be an essential, if not the most essential, 
        ingredient in the college admission process. The development of 
        human resources and the assurance that each student will be 
        helped to realize his/her educational potential can only 
        strengthen and perpetuate the strong democracy we so proudly 
        enjoy--the democracy that, in turn, encourages and supports our 
        diverse educational system.

    NACAC considers the commitment to professional admission practice 
as an ethical imperative that serves student interests. The additional 
commitment to upholding the law constitutes an obligation to protect 
students and the taxpayers who underwrite the aid system that offers 
access to the full diversity of postsecondary institutions and provides 
an opportunity for a diverse range of institutions to operate.
    The ban on incentive compensation is a ``front-end'' protection for 
Federal student aid programs is among the last-remaining Federal 
protections against waste, fraud and abuse. Without such a restriction, 
unscrupulous institutions may:

     Use aggressive and misleading recruiting tactics to 
bolster enrollment numbers;
     Manipulate the academic program, such as awarding 
inappropriately high or passing grades to students who have not 
successfully completed coursework;
     Manipulate output measures, such as the student loan 
default rate, to mask serious integrity risks that result from the 
inappropriate recruitment of students.\1\
---------------------------------------------------------------------------
    \1\ See Final Audit Report ED-OIG A02H0007, U.S. Department of 
Education, Office of Inspector General, May 19, 2008; See also 
``Lawsuit Accuses U. of Phoenix of Protecting Its Default Rate at 
Students' Expense,'' Chronicle of Higher Education, January 14, 2009.
---------------------------------------------------------------------------
    Even in the absence of outright manipulation, the risks incurred by 
institutions that use overly aggressive marketing tactics to enroll 
students who are unable or unlikely to benefit from an educational 
program are unacceptable for proper stewardship of taxpayer funds.
                     failure of regulatory purpose
    The Higher Education Act statutory ban on incentive compensation 
states:

          [An] institution will not provide any commission, bonus, or 
        other incentive payment based directly or indirectly on success 
        in ensuring enrollments or financial aid to any persons or 
        entities engaged in any student recruiting or admission 
        activities or in making decisions regarding the award of 
        student financial assistance, except that this paragraph shall 
        not apply to the recruitment of foreign students residing in 
        foreign countries who are not eligible to receive Federal 
        student assistance. (20 U.S.C. Sec. 1094(a)(20)).

    This statute is worded similarly to NACAC's guidance on the same 
matter: ``Members will be compensated in the form of a fixed salary, 
rather than commissions or bonuses based on the number of students 
recruited.'' In NACAC's judgment, the wording in each instance is 
sufficiently clear to dictate forms of practice allowable under both 
the law and the accepted standards of the college admission profession.
    In 2001-2, the Department ostensibly developed the current 
regulatory ``safe harbors'' to clarify Federal policy toward 
enforcement of the incentive compensation statute. In our opinion, as 
expressed in our comments at the time, most ``safe harbors'' were 
neither necessary nor appropriate given the clarity of statute. NACAC 
also expressed concern that the regulatory safe harbors were enacted 
despite clear statements of concern from procedural and substantive 
standpoints. In the first instance, the Web-based Commission on 
Education, which issued a report in 2000, noted that the Department of 
Education stated that ``this [incentive compensation] provision could 
only be changed through new legislation.'' \2\ However, the Department 
subsequently embarked on a regulatory change in 2001. In the second 
instance, the regulations were passed over the objections of the two 
major associations representing admission officers (NACAC and the 
American Association of Collegiate Registrars and Admission Officers, 
or AACRAO), as well as members of the negotiated rulemaking committee.
---------------------------------------------------------------------------
    \2\ ``The Power of the Internet for Learning: Final Report of the 
Web-based Education Commission,'' December 2000.
---------------------------------------------------------------------------
    Shortly after the regulations were finalized, the U.S. Department 
of Education's Office of Inspector General noted:

          We nonconcurred with one provision to change the incentive 
        compensation regulations. This provision would allow 
        institutions to pay third parties based on success in securing 
        enrollment, without limitation on the incentive nature of those 
        payments. We do not believe that the existing statutory ban on 
        incentive compensation allows any incentive payments to 
        entities involved in recruiting based on their success in 
        enrolling students. (Semiannual Report to Congress No. 45, U.S. 
        Department of Education, Office of Inspector General, p. 9)

    NACAC sought more information about why the Inspector General's 
``non-concurrence'' was overridden by the Administration via the 
Freedom of Information Act (FOIA). NACAC's request for information 
about the statutory grounds for implementing the safe harbors over the 
objection of the Inspector General was denied, as were subsequent 
appeals.
    Despite their ostensible purpose, the safe harbors have failed to 
(1) provide additional clarity, and (2) satisfy statutory intent of 
preventing the use of incentive compensation for admission and 
financial aid staff. We believe that the regulations, combined with 
what appeared to be a de-emphasis of oversight within the 
Department,\3\ created an environment in which enforcement was 
effectively gutted.
---------------------------------------------------------------------------
    \3\ An October 30, 2002 memo to the Chief Operating Officer of the 
Federal Student Aid from Deputy Secretary William D. Hansen directing 
that violations of the incentive compensation ban are punishable by 
fines, rather than return of title IV funds, stated, ``I have concluded 
that the preferable approach is to view a violation of the incentive 
compensation prohibition as not resulting in monetary loss to the 
Department. . . . Improper recruiting does not render a recruited 
student ineligible to receive student aid funds for attendance at the 
institution on whose behalf recruiting is conducted.'' This approach 
fails to take into account the monetary loss to the Department incurred 
by student loan defaults which are likely to occur whether there is 
``documented misrepresentation,'' as the memo suggests, or simple 
obfuscation of the terms of enrollment or repayment of financial 
obligations.
---------------------------------------------------------------------------
practical effects of regulatory loopholes and de-emphasis of regulation
    In the 8 years since the enactment of the regulatory safe harbors, 
there is evidence of widespread disregard for the incentive 
compensation statute. Documentation of this phenomenon is included in 
this written testimony as Attachment 2. This documentation provides 
what we believe is a critical mass of evidence to suggest that the 
practice of compensating admission officers via commission has become 
standard practice at many institutions of higher education, 
particularly in the publicly traded for-profit sector. Our concern for 
compliance with this long-held ethical principle and Federal law 
extends to colleges of all types. Indeed, NACAC's Statement of 
Principles of Good Practice binds our postsecondary members (all of 
whom are not-for-profit public and private institutions) to this 
principle in addition to their legal obligation. However, evidence that 
incentive compensation is more the rule than the exception in the 
publicly traded for-profit sector is plentiful. Prominent examples 
include:

     ``Telemarketing--that's how enrollment at Lehigh Valley 
College often begins. Recruiters must make 125 calls and schedule five 
appointments a day, and enroll 10 applicants a month. Top performers 
get vacations to the Bahamas. Those who fail to sign up enough 
applicants are asked to resign.'' (Allentown Morning Call, April 24, 
2005) Among the Morning Call's investigative findings were ``aggressive 
and sometimes misleading sales tactics are at the center of LVC's 
recruiting. School officials give prospective students inaccurate or 
incomplete information.''
     ``Admission counselors [at Career Education Corporation's 
Brooks College] . . . were expected to enroll three high school 
graduates a week, regardless of their ability to complete the 
coursework. And if they didn't meet those quotas, they were out of a 
job. [Admission counselors] all say the pressure produced some very 
aggressive sales tactics.'' (60 Minutes, January 30, 2005)
     ``Many former students say admissions representatives told 
them whatever they thought the applicants needed to hear to get them to 
sign on the dotted line. The students claim admissions reps said it was 
a prestigious school that they would be lucky to gain admission to, 
when it actually accepts anyone eligible for a student loan. The 
graduates say they were misled about the terms of their loans; many 
have since realized that by the time they finish making payments, 
they'll have paid more than $100,000 for just 15 months of school. . . 
. Two former admissions representatives who worked at [California 
Culinary Academy] confirm that students were misled. . . . The two 
women describe a high-pressure sales environment where the reps focused 
solely on meeting enrollment numbers, not on finding students who would 
benefit from the program.'' (San Francisco Weekly, June 6, 2007)
     ``[A] serious finding regarding the school's substantial 
breach of its fiduciary duty; specifically that the University of 
Phoenix (UOP) systematically engages in actions designed to mislead the 
Department of Education and to evade detection of its improper 
incentive compensation system for those involved in its recruiting 
activities.'' (U.S. Department of Education Program Review Report, 
February 5, 2004, PRCN 200340922254) In the report, the Department 
unearthed a recruiting strategy, operating in plain view, designed to 
deceive the Department of Education. The Department's report found that 
the admission compensation structure at Phoenix was exclusively based 
on success in enrolling students, that methods for enforcing quotas on 
admission officers included a high-pressure ``red room'' strategy, and 
that the mantra for recruiters was to get ``asses in classes.''

    Taken together, the pattern of non-compliance with statute appears 
to take place in a systematic fashion, in nearly complete disregard to 
the statute and the principles it embodies.
     the recurring nature of congressional oversight on incentive 
                              compensation
    The detrimental effect of unethical recruiting is a recurring theme 
in the history of the Federal financial aid programs. For purposes of 
this committee hearing, we believe it is important to note that 
Congress seems compelled to revisit program integrity issues--
particularly recruitment practices--on a regular basis.

          We presently have under consideration--and expect to forward 
        to Congress soon--proposed statutory language which, if 
        enacted, would (among other points) strengthen the Office's 
        ability to review the performance of institutions relative to 
        student aid programs. The proposed language would also provide 
        for establishment of appropriate guidelines for institutional 
        financial responsibility and the maintenance of student 
        records, compliance with ethical standards for advertisement 
        and recruitment of students, provision for fair and equitable 
        tuition refund policies, and public disclosure of institutional 
        performance statistics. (emphasis added)--Excerpted from the 
        Statement by the Honorable T. H. Bell, U.S. Commissioner of 
        Education before the Permanent Subcommittee on Investigations 
        of the Senate Committee on Government Operations, November 20, 
        1975.

    Recognition of the information asymmetry between colleges and 
students was also central to the recommendations of the Nunn 
Commission, whose 1991 report led to the enactment of additional laws 
and regulations to protect against waste, fraud and abuse in the 
Federal student aid system.

          One of the most widely abused areas of those observed during 
        the Subcommittee's investigation lies in admissions and 
        recruitment practices. Among these practices three stand out in 
        terms of the adverse effects they generate: false and/or 
        misleading advertising; unethical and/or illegal recruitment 
        efforts; and, falsification of information use to satisfy GSLP 
        ability-to-benefit requirements.--Excerpted from ``Abuses in 
        Federal Student Aid Programs,'' Permanent Subcommittee on 
        Investigations, Senate Committee on Government Affairs, May 17, 
        1991.
                               conclusion
    Despite the ostensible goal of ``clarifying'' statute, the 
regulatory safe harbors promulgated in 2002 appear to have effectively 
gutted the incentive compensation ban contained in the Higher Education 
Act. As history has shown, there is a clear case for regulating against 
``commissioned sales'' in admission. The Department of Education's 
recent Notice of Proposed Rule Making (NPRM) would eliminate the safe 
harbors and restore the Federal Government's protection against this 
persistently troublesome practice. The two major associations that 
represent college admission officers in the United States, NACAC and 
the American Association of Collegiate Registrars and Admission 
Officers (AACRAO), are supportive of the Department's regulatory 
language on incentive compensation.
    NACAC considers the commitment to professional admission practice 
as an ethical imperative that serves student interests. We consider the 
additional commitment to upholding Federal law a logical extension of 
the ethical imperative, as well as necessary obligation to protect 
taxpayers who underwrite the aid system that offers access to the full 
diversity of postsecondary institutions.
    We appreciate the committee's attention to this matter, and will 
offer further information as needed.
                                 ______
                                 
 Attachment 1.--Statement on the Counseling Dimension of the Admission 
                Process at the College/University Level
    The National Association for College Admission Counseling (NACAC) 
has long been an advocate of the counseling dimension of the college 
admission process. The Association was founded in 1937 to establish a 
code of ethics that would guide colleges and universities in their 
relationships with students and secondary school counselors and, 
concomitantly, to promote the interests of students over those of 
institutions.
    As the door to higher education opened wider and greater numbers of 
students were encouraged to seek admission, there developed a need to 
help students understand the differences among the variety of 
institutions and the array of educational programs available to them. 
It also became necessary to determine the quality of students' 
secondary school preparation and to direct them to programs of study 
that would enable them to continue to grow both personally and 
academically.
    Because of the increased diversity of the American system of 
postsecondary education, the need continues today for helpful guidance 
to assist students in making decisions to best meet their individual 
needs among the full range of postsecondary choices. In addition, the 
cost of higher education today and the heightened concern regarding 
families' ability to pay for it place a high demand on the need for 
accurate, timely financial aid and planning information. Such guidance 
and counseling must come from both the secondary school counselor and 
college admission counselor.
    While the traditional college-going population remained stable in 
recent years and the predictions of dramatically declining numbers 
remained largely unrealized, we are now beginning to experience real 
demographic shifts in the population that may have a significant 
influence on college and university enrollment in the coming years. 
Increased recruitment efforts, the introduction of marketing concepts 
and the trend toward enrollment management have led to the perception, 
real or imagined, that recruitment and marketing techniques are taking 
the place of counseling. It has been suggested that while encouraging 
the optimum fit between student and institution was once considered 
important, what counts most today is using any means possible to 
attract students to meet enrollment and economic targets.
    NACAC stands firm in its position that counseling has been and 
continues to be an essential, if not the most essential, ingredient in 
the college admission process. The development of human resources and 
the assurance that each student will be helped to realize his/her 
educational potential can only strengthen and perpetuate the strong 
democracy we so proudly enjoy--the democracy that, in turn, encourages 
and supports our diverse educational system.
    NACAC believes that precollege guidance and counseling is a 
developmental process that begins early in the educational experience 
and continues through secondary school and on into college. College 
admission counselors stand with school counselors at the juncture 
between secondary and postsecondary education and together they play a 
pivotal role in helping to ease students' transition from one level to 
the next. We also believe in the dignity and worth of every human being 
and in the right to develop their full potential. Counseling individual 
students about postsecondary plans and during the school to college 
transition is a fundamental aspect of the admission process of 
institutions of higher learning.
              the college admission counseling initiative
    The foundation for counseling students for college admission is the 
emphasis on meeting students' needs.
    This perspective assumes the availability of individual and group 
counseling aimed at helping students understand their personal 
aptitudes, abilities, interests, and values in relation to the 
offerings of a particular college or university. Appropriate counseling 
interventions can occur during college day/night programs, college 
fairs, interview sessions, campus tours, and student/parent information 
sessions on campus.
    Institutions that promote a counseling perspective provide 
assurance that the admission staff includes trained professionals with 
appropriate counseling and related skills, and there is a willingness 
to assume responsibility for all institutional personnel who may become 
involved in the process of counseling students for admission (e.g., 
alumni, coaches, faculty, and students on campus). Further, effective 
linkages with secondary schools, community agencies, other campus 
student services offices, and the college faculty are developed and 
lead to open communication, understanding, and cooperation. Such 
programs are also characterized by the following:

     A clearly defined institutional mission, including written 
goals and objectives of the admission program, and an evaluation 
component that seeks to understand what is being done and that serves 
as a basis for major institutional decisions.
     Availability of clear, accurate information about the 
institution, including admission requirements, educational programs, 
costs and financial assistance that will enable students to reach sound 
decisions.
     Emphasis on equity and accessibility and a commitment to 
the needs of underrepresented students. This assumes the presence of 
positive attitudes that promote student development regardless of race, 
sex, or disability and support the inclusion of role models among the 
staff and faculty who reflect these characteristics.
     Delivery of services according to ethical practices 
developed by NACAC and other similar education groups.
     Referral of students to other institutions when it is 
determined that students' needs can be better met elsewhere.
     Emphasis on student retention, including the existence of 
adequate academic and other support services to insure the success of 
admitted students.
     A supportive administration and campus environment that 
promotes student growth and development.
    NACAC encourages all collegiate institutions to review their 
admission programs from this perspective. The entire process is 
predicated on the ability of professionals to relate to and respond to 
student needs. This is done in collaboration with other counselors and 
educators who share these beliefs and place the highest value on 
student development and the realization of student potential.
    Attachment 2.--Evidence of Incentive Compensation Ban Violations
    Recent evidence suggests widespread disregard for the Federal ban 
on incentive compensation by institutions participating in Federal 
student aid programs, putting students and taxpayers at risk. In a time 
of tight budgets, safeguarding the integrity of student aid funds 
should be the top priority for Congress and the Administration to 
ensure the most efficient and effective use of taxpayer funds for 
student aid.
                government accountability office reports
     Higher Education: Information on Incentive Compensation 
Violations Substantiated by the U.S. Department of Education. GAO-10-
370R, February 23, 2010.
     Proprietary Schools: Stronger Department of Education 
Oversight Needed to Help Ensure Only Eligible Students Receive Federal 
Student Aid. GAO-09-600, October 14, 2009.
                         federal investigations
     On January 17, 2008, an Assistant U.S. Attorney in the 
Civil Division of the U.S. Attorney's Office for the Eastern District 
of Pennsylvania contacted Kaplan Higher Education Division's CHI-
Broomall campus and made inquiries about the Surgical Technology 
program, including the program's eligibility for title IV Federal 
financial aid, the program's student loan defaults, licensing and 
accreditation. The inquiry is presently proceeding on an ``informal, 
voluntary basis.'' (Kaplan Inc., SEC Form 10-K, Filed 2008)
     The Technical Career Institute has been found to have 
improperly paid $440,487 to FFEL lenders to reduce the institutions 
cohort default rate in order to continue to participate in the FFEL and 
Direct Loan programs. To avoid listing students as defaulting on their 
loans, TCI returned all student funds to FFEL lenders then proceeded to 
collect debt directly from students with stricter terms than those 
under FFEL loans. (United States Department of Education, Office of 
Inspector General, Final Audit Report, Technical Career Institutes, 
Inc.'s Administration of the Federal Pell grant and Federal Family 
Education Loan Programs, May 19, 2008)
     The University of Phoenix paid $9.8 million to settle an 
investigation by the Department of Education into recruiting practices 
that violate the ban on ``commissioned sales'' of admissions. The 
Department found that Phoenix ``bases [recruiters'] salaries solely on 
the number of students they enroll.'' According to testimony in a later 
lawsuit by the former CFO, UOP had held back this report because of the 
fear of negative news coverage. (U.S. Department of Education, Program 
Review Report, PRCN 200340922254, 2004, Inside Higher Ed, January 17, 
2008)
     The Securities and Exchange Commission has launched an 
informal inquiry into stock-option granting practices at Corinthian 
Colleges, Inc., the company announced. (Yahoo! Finance News, August 18, 
2006)
     Apollo Group, Inc., was notified in June 2006 that the 
Securities and Exchange Commission was conducting an informal 
investigation relating to the company's stock option grants. (APOL Form 
NT 10-Q, Filed July 10, 2006, p. 2)
     The U.S. Department of Education New York Regional Office 
(NYRO) has determined that Interboro, through its parent company to 
EVCI Career Colleges Holding Corporation, must reimburse the DOE as a 
result of the program review pointing to failure to correctly follow 
the procedures of the Ability to Benefit admission exams (ABT) 
regarding some 79 graduates and liability for TAP grants received by 
these students. Also, NYRO has indicated it is referring the program 
review to the responsible division in DOE for possible administrative 
action against Interboro including suspension, fines or termination. 
Interboro closed on December 21, 2007, due to comply with the New York 
Board of Regents regulations regarding ABT. (Press Release from EVCI 
Career Colleges, December 17, 2007)
     Federal officials raided the National School of Technology 
in Miami and two campuses of Florida Career College in October 2007. 
Although the Department of Education would not comment on the substance 
of the investigation, media reports noted that 90 percent of National 
School of Technology's students are paying for their education with 
some sort of loan. The school's student loan default rates reached 
almost 49 percent in 1989 but stands at 12.7 percent in 2005, according 
to the Federal Government. (The Sun-Sentinel, October 17, 2007)
     Corinthian Colleges ordered to repay $776,241 to the 
Department of Education for violations of student aid procedures at 
Bryman College (CA). (Chronicle of Higher Education, May 16, 2005)
     The U.S. Department of Education's OIG found that seven 
institutions, working with the Apollo Group's Institute for 
Professional Development, violated the Higher Education Act ban on 
``commissioned sales'' of admissions from 1999-2001, resulting in the 
OIG's recommendation that more than $70 million in Federal funds be 
returned. (OIG Semiannual reports to Congress, 2002-3)
     The National Consumer Law Center found that in 2003, the 
Department of Education's Office of Inspector General (OIG) made public 
seven audits documenting serious fraud and abuse in school 
administration of Federal student aid programs. In decisions that 
required the return of more than $18 million in Federal student aid, 
the Department found widespread evidence of the following: (1) Schools 
closing without warning; (2) Routine fabrication of financial aid 
documents; (3) Falsification of ability-to-benefit tests; (4) Failure 
to comply with the 90/10 rule; (5) Overstating program length; (6) 
Disbursement of funds to ineligible students.
                          state investigations
     Career Education Corporation (CEC) was forced to pay 
$200,000 to the State of Pennsylvania after the Attorney General 
reached an Assurance of Voluntary Compliance with the Lehigh Valley 
College (LVC) operated by a subsidiary of CEC, Allentown Business 
School after a State-led investigation. The investigation finds LVC 
guilty of violating the Consumer Protection Law by failing to provide 
explanation and individual attention as promised to students regarding 
financial aid repayment guidelines and interest rates, using quotas for 
enrollment as well as incentive-based compensation for admission 
counselors and steering students towards one lender. The suit also 
finds that the students were misled in regards to post-graduation 
employment, compensation and transferability of credits to other 
institutions. (Assurance of Voluntary Compliance settlement, Court of 
Common Pleas for Lehigh County, PA, February 20, 2008)
     The Florida Attorney General's Office has settled with 
Florida Metropolitan University, a for-profit school that was accused 
of misrepresenting transfer value of credits to former students. Under 
the $99,900 agreement, FMU (which changed its name on November 5, 2007 
to Everest University) says it will maintain a ``transfer center'' and 
work out transfer agreements with other colleges and universities. Even 
though no wrong doing was admitted, the settlement touched on the 
students' main complaint that they were not clearly told by school 
officials that credits earned may not be accepted at other schools. 
There are still over 100 pending lawsuits by former FMU students. (St. 
Petersburg Times, November 5, 2007)
     Texas Attorney General filed suit under the Texas 
Deceptive Trade Practices Act against Kaplan Higher Education Corp. 
which operates Career Centers of Texas alleging that the 
``electricians'' program being offered by this school misled students. 
Allegedly, the school was claiming in market and recruitment material 
that the students could obtain a full license to conduct a range of 
resident and commercial electrical work with a 900 hour course for a 
fee of $10,000.00. Texas claims, however, that this program is not at 
all in line with the actual regulations to get an electricians license 
which requires testing under the Texas Electrical Safety and Licensing 
Act and a specified number of hours of on-the-job training with a 
licensed electrician rather than coursework at a college. The court 
asks to halt the misleading promotion, refund tuition paid by the 
students who were misled and request civil penalties of $20,000.00 per 
violation of the law. (Attorney General of Texas press release, October 
16, 2006)
     The New York State Education Department ordered Taylor 
Business Institute, a commercial 2-year business college, to close as 
of January 2007. The school was highly criticized for its poor 
curriculum, absence of leadership, high staff turnover, and high 
attrition rate of 80 percent. The Department also mentioned that more 
than 90 percent of students at Taylor had never received a high school 
degree. (New York Times, September 28, 2006)
     The Florida Attorney General's Office widened its 
investigation of Florida Metropolitan University in June 2006, seeking 
school records involving job-placement rates, grading, instructor 
qualifications, financial aid and course prices. The AG Office had 
announced in November 2005 that it was investigating FMU, owned by 
Corinthian Colleges, over the company's ``advertising and marketing 
practices.'' At that time, the Florida AG subpoenaed documents from the 
last 5 years related to advertisements, training of FMU admissions 
officers, complaints, compensation and identity of admission 
representatives, and other documents. (Tampa Bay Business Journal, 
November 22, 2005; Wall Street Journal Online, June 22, 2006)
     In June 2006, California legislators considered a bill 
that would require for-profit institutions to report graduation and 
job-placement rates to the State. This bill was introduced after 
activists argued that weak reporting rules give for-profit colleges an 
open door for false advertising practices. The reporting bill, however, 
was amended so that it will merely establish a working group on the 
issue. This legislation follows an earlier law, the Private 
Postsecondary and Educational Reform Act, that required non-Western 
Association of Schools and Colleges accredited institutions to report 
program data to the California Bureau for Private Postsecondary and 
Vocational Education. A law passed in 2003, however, weakened that act 
by exempting regionally accredited institutions. (Inside Higher 
Education, June 22, 2006)
     In New York, investigations into for-profit college 
activities led to a moratorium on the establishment of new programs by 
for-profit colleges while policymakers examined ways in which rules 
protect against fraud and abuse. The New York State Board of Regents 
has approved new regulations on for-profit institutions, including a 
transition period before new for-profit colleges are authorized to 
award degrees and a requirement that institutions enact stronger and 
more transparent admissions policies. (Inside Higher Education, May 24, 
2006)
     Kentucky's Attorney General has asked a court to strip 
Decker College, a for-profit institution, of its charter, thus 
prohibiting it from doing business in Kentucky. Investigations by 
Kentucky officials revealed widespread fraud and abuse, forcing the 
institution to close temporarily. The investigation and court 
procedures in this case are ongoing. (Louisville Courier-Journal, 
November 5, 2005)
     The New Jersey Department of Labor and Workforce 
Development issued a letter to the Sanford Brown Institute-Iselin, 
owned by Career Education Corporation, expressing concerns regarding 
allegations against SBI-Iselin raised in the January 2005 CBS News 60 
Minutes report on for-profit colleges. DLWD requested that the school 
provide justification for continued operation of the school in light of 
the allegations raised in the report. SBI-Iselin submitted a written 
explanation in July 2005, and school administration met with DLWD 
officials in September 2005. At this meeting, SBI-Iselin received 
confirmation that it could continue with the submission of its license 
application, a process which had been delayed by DLWD. (CECO SEC Form 
10-Q, Filed November 2, 2005, p. 20)
     In January 2003, the New York State Comptroller's Office 
began an audit of DeVry New York's compliance with the New York State 
Tuition Assistance Program grant (``TAP'') requirements for the 3-year 
period ending June 2002. Fieldwork was completed in June 2003 and a 
preliminary report was issued in July 2003. The Company responded to 
the preliminary report, disagreeing with some of the findings in the 
report. Subsequently, the Company received an amended report and 
responded again. In the first quarter of fiscal 2005, the Company 
received the final report and determination of disallowance that 
resulted in financial liability to the Company. The final liability was 
in an amount for which the Company had previously accrued. The Company 
has remitted the required claim of disallowance and the matter is now 
closed. (DeVry, Inc., SEC Form 10-Q, Filed May 11, 2005, p. 35)
     The Washington State Higher Education Coordinating Board 
required the Business Career Training Institute (BCTI) to repay $63,000 
in State need grants for low-income students after the school admitted 
falsifying enrollment tests to admit unqualified students. (Portland 
Oregonian, March 15, 2005)
     The Oregon Department of Education placed the Business 
Career Training Institute (BCTI) on probation after it found that the 
school was ``unfair and deceptive'' in how it recruited, admitted, and 
enrolled students. (Portland Oregonian, February 5, 2005) The State 
found that recruiters were paid on the basis of the number of students 
enrolled, which is a violation of the Higher Education Act. (OAR-581-
045-0061, ``Private Career School Agents,'' February 2005, Oregon 
Department of Education) BCTI subsequently suspended classes with no 
warning to students or State administrators. (Portland Oregonian, March 
15, 2005) The Accrediting Council for Continuing Education and Training 
revoked the Business Career Training Institute's accreditation on March 
15, 2005. In April 2005, the Council barred two BCTI presidents, Tom 
Jonez and Morrie Pigott, from ever again operating a school accredited 
by that council. BCTI had closed just days before, on March 11, 2005, 
after years of allegations of non-compliance with Federal education and 
auditing regulations and several student lawsuits.
     The California attorney general's office examining 
allegations of fraud against a number of for-profit institutions, 
including ITT and Corinthian. (Chronicle of Higher Education, October 
1, 2004)
                             media reports
     In a Good Housekeeping report, former students share 
stories of ``stressful'' loan debt, feeling ``defeated,'' and program 
``realit[ies] [that] didn't match the promises'' at Sanford-Brown in 
White Plains, NY (owned by Career Education Corp.); Brown Mackie 
College in Merrillville, IN; and American Intercontinental University 
in Los Angeles (owned by Education Management Corp.); respectively. A 
former president of Sanford-Brown College's Hazelwood, MO campus 
discussed ``unqualified'' faculty and meetings about money, never 
academics. (Good Housekeeping, June 2010)
     According to Securities and Exchange Commission filings by 
Education Management Corporation, attorneys general in Illinois and 
Oregon are investigating the for-profit college's Art Institute schools 
for their relationships between the schools and the providers of loans 
to students at those schools. In addition, a lawsuit against EMC's 
Argosy University in Texas filed by former students who claim the 
college misrepresented the importance of its accreditation, the 
availability of loan repayment options, and the quantity and quality of 
career options. (The Milwaukee Wisconsin Journal Sentinel, May 5, 2010)
     According to a regulatory filing from Corinthian Colleges, 
Inc., the U.S. Department of Education found that the company's Everest 
College Phoenix division misrepresented costs and aid eligibility, 
which the Department called ``intentional evasion of the 90/10 
requirements,'' as noted in the SEC filing. (Corinthian Colleges, Inc. 
SEC Form 10-Q, Filed March 31, 2010, p. 22; Associated Press, May 4, 
2010)
     Bloomberg News Service reported that Drake College of 
Business recruits at homeless shelters and 5 percent of students at its 
Newark, NJ campus is homeless. In 2008, the college began offering a 
biweekly stipend of $350 to students who attended at least 80 percent 
of classes and maintained a C average. A case manager at a Newark 
rescue mission, from which 20 clients over 2 years enrolled at Drake, 
told Bloomberg, ``It's basically known in the community: If you're 
homeless, and you need some money, go to Drake.'' The Accrediting 
Council for Independent Colleges & Schools reportedly opened an 
investigation of Drake's recruitment tactics, which could lead to the 
revoking of its accreditation making it ineligible for title IV aid. 
According to the report, Cleveland's Chancellor University and 
University of Phoenix also recruit at homeless shelters; this practice 
helps Phoenix recruiters meet their enrollment quota of five students 
per month. (Bloomberg News Service, April 30, 2010)
     The St. Petersburg Times revealed that for-profit 
companies are working to keep taxpayer dollars flowing to their 
revenues by opposing proposed regulations by the U.S. Department of 
Education that would tie student debt to future income. The Career 
College Association, the for-profit education group, has donated over 
$150,000 to congressional candidates and parties in just this 2010 
election cycle; only Harvard and Stanford have donated more. Arthur 
Keiser, owner Keiser Career Colleges and Keiser University, has donated 
more than $66,000 to congressional candidates since 2009, making him 
one of the top 12 donors nationwide. (St. Petersburg Times, April 11, 
2010)
     In a complaint filed in Maricopa County Court, a former 
Grand Canyon University enrollment counselor seeks punitive damages for 
being fired for refusal to ``call and threaten'' a prospective student 
regarding a $100 non-existent application fee, to shred records of 
calls to members of the Do Not Call registry daily, and to use sales 
scripts copyrighted by the University of Phoenix. (Courthouse News 
Service, April 9, 2010)
     Ohio State Representative Clayton Luckie (D-Dayton) called 
for an investigation of Miami-Jacobs Career College saying he will hold 
hearings on the college's practices and propose legislation requiring 
companies notify students of accreditation during the admission 
process. Miami-Jacobs has been accused of not meeting accreditation 
standards and was sued by its students in 2008 for claiming 
accreditation that did not exist. (Dayton Daily News, April 9, 2010)
     A report from Smart Money pointed out that Education 
Connection, with its enticing television commercials, sells names and 
contact information of potential students to a select group of for-
profit education companies and non-profit postsecondary education 
institutions. The article reveals that schools then call students 
directly or hire a third party referral business with a call center and 
that this recruiting process is much like ``dialing-for-dollars'' with 
companies making hundreds or thousands of calls per day. (Smart Money, 
April 7, 2010)
     In a report from the Sun Sentinel, a consumer alert urges 
prospective students to do research before enrolling in for-profit 
education. The report notes that costs for associate degrees can exceed 
$30,000 leaving students with loan debt and possibly a diploma that 
future employers and potential transfer institutions of higher 
education do not recognize. (Sun Sentinal, March 29, 2010)
     The New York Times featured a front-page article about a 
beneficiary of this economic recession: for-profit higher education 
companies. The article revealed that some companies require students to 
borrow for tuition that can exceed $30,000 per year. Also noted is that 
upon program completion, many students have acquired unmanageable debt 
and little training for gainful employment. (The New York Times, March 
13, 2010)
     After ITT Educational Services, Inc. purchased Daniel 
Webster College in June 2010 for $20.8 million, Bloomberg News Service 
revealed how the company obtained accreditation it would not have 
earned itself. ``Now [for-profit higher education companies are] taking 
a new tack in their quest to expand. By exploiting loopholes in 
government regulation and an accreditation system that wasn't designed 
to evaluate for-profit takeovers, they're acquiring struggling 
nonprofit and religious colleges--and their coveted accreditation. 
Typically, the goal is to transform the schools into online behemoths 
at taxpayer expense.'' (Bloomberg News Service, March 4, 2010)
     The Denver Post discussed the consequences of high tuition 
costs at for-profit colleges. Twenty-three percent of students 
attending Colorado for-profit institutions defaulted on their Federal 
student loans in the first 3 years of repayment; that compares to a 15 
percent default rate at Colorado 4-year public colleges. In addition to 
burdening taxpayers, defaulting on Federal student loans causes ruined 
credit ratings for students. (The Denver Post, January 24, 2010)
     The University of Phoenix has campuses in 29 of the 30 
most populated States; one State blocking Phoenix's bid for a campus is 
New York. A State review team of University of Phoenix's general 
education courses found that ``First-year algebra `is not a college-
level mathematics course' and `does not demand as high a level of 
critical thinking as the high school curriculum' in New York. . . . 
Courses in human nutrition and in environmental issues and ethics 
lacked basic science, and instructors were unqualified.'' (Bloomberg 
News Service, January 19, 2010)
     The Denver Post notes that for-profit higher education is 
a business ``in which the Federal Government guarantees up to 90 
percent of revenue, sales are recession-proof and profit margins 
regularly run in the double digits.'' A professor of education who 
studies for-profit education companies observes that it is easy to 
generate revenue in this sector: ``You have a limited set of courses, a 
standardized curriculum and a teaching staff of working professionals. 
Then you recruit like hell. . . . The more enrollments, the more money 
you make.'' (The Denver Post, January 18, 2010)
     The Denver Post reports that along with growth in for-
profit education comes an increase in complaints and lawsuits over 
recruiting practices, levels of debt, and employability. Colorado has 
received 164 student complaints about for-profit schools in the last 3 
years and it has revoked authorizations of two for-profit schools and 
one for-profit vocational school since September 2009. According to 
loan data from the U.S. Department of Education, last year Colorado 
students received $1.6 billion in Federal loans and Pell grants, of 
which $690 million went to for-profit companies. (The Denver Post, 
January 17, 2010)
     In an article about the recruitment of military personnel 
by for-profit colleges, Bloomberg News Service revealed that for-profit 
online colleges ``are lured by a Defense Department pledge of free 
schooling up to $4,500 a year for active members of the armed services. 
. . . Taxpayers picked up $474 million for college tuition for 400,000 
active-duty personnel in the year that ended Sept. 30, 2008, more than 
triple the spending a decade earlier, Defense Department statistics 
show.'' One Camp Lejeune director said some schools prey on Marines, 
calling and emailing them day and night. An executive at a search firm 
specializing in the placement of military personnel notes that Fortune 
500 firms are reluctant to hire service members with degrees from 
online for-profit companies. (Bloomberg News Service, December 15, 
2009)
     Apollo Group paid $78.5 million, of which $67.5 million 
will go to the Federal Government and $11 million will go to 
plaintiffs, in a whistleblower lawsuit filed by two former employees 
who said the University of Phoenix paid recruiters based on the number 
of students they enrolled. (Bloomberg News Service, December 14, 2009)
     A report from The Wall Street Journal reveals students 
using Federal student loans to cover costs of for-profit education have 
a 21 percent default rate in the first 3 years of repayment; about 
three times the rate of 4-year public and non-profit postsecondary 
education institutions. (The Wall Street Journal, December 14, 2009)
     An Associated Press analysis of for-profit colleges 
reveals that an increasing proportion of Federal student aid dollars 
are going to the sector. In 2008, the top five institutions receiving 
the most Pell grants were all for-profit companies. (USA Today, 
November 30, 2009)
     American Public Media's Marketplace reported on admission 
practices experienced by current and former students and former 
recruiters at the University of Phoenix, exposing abuses in the 
enrollment process. Three students interviewed experienced hard-sell 
tactics that included being hounded by for-profit college recruiters. 
Former recruiters cited deception in the process, including lying about 
space availability to create urgency and demand, winning a prospective 
student's trust through lengthy personal phone calls, and claiming 
regional accreditation. (American Public Media's Marketplace, November 
4, 2009)
     In a report about featuring statements from current and 
former University of Phoenix students, American Public Media's 
Marketplace notes that recruiters are paid based on the number of 
students they enroll, which can create a deceptive and high-pressure 
admission process. Students cite receiving loans without their 
knowledge and attending courses that provide no valuable training. 
(American Public Media's Marketplace, November 3, 2009)
     After the U.S. Department of Education's regulatory 
investigators cited the University of Phoenix with enrollment abuses in 
2004, the Apollo Group paid nearly $10 million to resolve the 
allegations. However, some of Phoenix's recruiters still use high-
pressure and deceptive tactics, according to current and former 
students and former recruiters interviewed by ProPublica and American 
Public Media's Marketplace. Recruiters disclosed they were required to 
display what they felt to be high-pressure sales tactics and misleading 
techniques. Students shared they were deceived about the 
transferability of credits and types of financial aid such as receiving 
loans after being promised grants and scholarships. (ProPublica, 
November 3, 2009)
     Thirteen students brought a suit against Corinthian 
Colleges Inc. alleging Corinthian, Rhodes, and Everest Colleges in 
Dallas, Fort Worth, and Arlington, TX did not deliver on promises made 
during the recruitment process and are focused only on revenue. 
Students say advertising claims about job placement rates and the 
transferability of credits to other colleges were false. (NBC Dallas-
Fort Worth, August, 28, 2009)
     In Atlanta, a lawsuit alleges American InterContinental 
University enrolled students who were unable to read and lacked a high 
school diploma and that it fraudulently attained accreditation. In 
addition, the college also rewarded recruiters with bonuses based 
solely on the numbers of students they enrolled. (The Atlanta Journal-
Constitution, August 24, 2009)
     A wrongful termination lawsuit against the University of 
Phoenix revealed evidence of the continuing use of recruiting practices 
in violation of the incentive compensation prohibition. Although the 
university claims to use an intricate system for evaluating recruiters 
taking into account enrollment numbers, but not solely using these 
numbers as a measure of performance, several documents surfaced 
suggesting that enrollment numbers were the key factor in determining 
job performance. A recruiter received credit for an enrolled student 
only if that student attended at least three classes or 3 weeks. In 
addition, failure to meet certain quotas set for a month would result 
in decreases in salary and possibly termination. (New America 
Foundation, February 19, 2009)
     In an article dated July 14, 2007, The Kansas City Star 
pointed to many struggles University of Phoenix is having regarding 
increasing its profits. Among the quotes, Trace Urdan, a senior analyst 
with the investment bank Signal Hill, says that the parent company, 
Apollo, is sending a message that they are ``chasing after growth for 
growth's sake'' in order to increase their stock value. (The Kansas 
City Star, July 14, 2007)
     In interviews with both former admission officers and 
students, San Francisco Weekly pointed out the deceptive practices of 
the California Culinary Academy (CCA) since Career Education 
Corporation took ownership of the school in 1999. These anonymous 
former admission officers tell the paper that they would tell the 
applicants anything they needed to hear to sign on the dotted line and 
admits anyone eligible for a student loan and a pulse. The students 
said that they were misled with high placement rates and unattainable 
salaries in the application material and conversations with admission 
officers. (San Francisco Weekly, June 6, 2007)
     In early February 2007, the New York Times ran a story 
chronicling the latest troubles for the University of Phoenix. 
According to the article, current and former students of the university 
both online and on campuses in Arizona, California, Colorado, Florida, 
Michigan, Texas, and Washington have complained of recruiting abuses, 
unqualified professors, and low academic standards. The university's 
stock fell greatly at the end of 2006 amidst resignations of top 
officials at Apollo Group. The article mentions a 16 percent graduation 
rate among all Phoenix students, and 4 percent rate among online 
students. About 95 percent of Phoenix instructors are part-time. (New 
York Times, February 11, 2007).
     Lehigh Valley College, owned by Career Education 
Corporation, is reported to have practiced illegal recruiting, 
enrollment, and grade reporting in Pennsylvania. Five complaints were 
submitted to the Pennsylvania Department of Education, which did not 
act on the complaints as they were ``out of its purview.'' (Allentown 
Morning Call, April 25, 2005)
     60 Minutes' report resulted in a hearing of the House 
Education & Workforce Committee on March 1, 2005, during which evidence 
of continued improprieties were provided by a former admission officer 
at one of Career Education Corporation's campuses.
     In Oregon, former employees of American InterContinental 
University Online (owned by Career Education Corporation) described the 
institutions ``admission'' tactics as little more than ``high pressure 
sales,'' as recruiters were dogged by supervisors with constantly 
escalating enrollment targets, misleading sales scripts, and the belief 
that managers wanted enrollees regardless of their ability to pay 
tuition. (Portland Oregonian, February 20, 2005)
     CBS News reported that recruiters for Career Education 
Corporation's (CEC) Brooks College employed high pressure sales 
tactics, and were expected to meet quotas of enrolled students. At 
other CEC campuses, reporters revealed that recruiters admitted clearly 
unqualified students, presumably to meet sales quotas. (60 Minutes, 
January 30, 2005)
                                lawsuits
     In a Federal lawsuit against Education Management Corp., a 
former employee of South University Online cites he observed violations 
of title IV Federal statute and regulations: paying salaries based on 
the number of students recruiters signed up for courses; submitting 
fake proctor forms for ability to benefit tests; allowing students to 
take ability to benefit tests repeatedly until they passed; and 
offering free trips, iPods, and gift cards to representatives who 
enroll the highest number of students. (The United States District 
Court Western Pennsylvania. Brian T. Buchanan vs. Education Management 
Corp., Filed July 2007; Pittsburgh Tribune-Review, May 7, 2010)
     In a lawsuit against ITT Educational Services, Inc., a 
plaintiff who was hired as director of ITT's Lathrop, CA campus cites 
he observed violations of State and Federal laws and regulations to 
benefit from Federal subsidized financial aid: staff changing failing 
scores to passing scores on placement tests, staff inflating and 
altering attendance records and grades, inaccurate job placement 
figures, and recruiters being compensated based on the number of 
students they convinced to enroll. In addition, he observed staff alter 
and destroy files required to be maintained by State and Federal law. 
(The United States District Court Southern District of Indiana. Jason 
Halasa vs. ITT Educational Services, Inc. Filed April 15, 2010)
     A class action suit was filed against Apollo Group Inc. 
and The University of Phoenix alleging that they artificially deflated 
their cohort default rates in order to remain eligible for title IV 
funds. By returning students' Federal loan money to lenders once they 
had withdrawn from classes during the first term, UOP avoided listing 
these students as defaulting on their loans. UOP then proceeded to 
collect the debt directly from the students under more rigid terms, 
devoid of a 6-month grace period and low interest rates, than those 
agreed upon between the student and the original lender resulting in 
debt being passed on to collection agencies and adversely affecting 
students' credit. (The U.S. District Court Eastern District of 
Arkansas. Shawn Martin, Angela Russ and Nitisha Ingram vs. Apollo 
Group, Inc. and University of Phoenix. Filed December 9, 2008)
     Three former academic officers at Kaplan University have 
filed a wide-ranging lawsuit alleging the for-profit institution of 
defrauding the U.S. Government of more than $4 billion. The lawsuit 
alleges that Kaplan enrolled unqualified students, inflated their 
grades so they could stay enrolled and falsified documents for 
accreditation purposes. They also accuse the company of paying its own 
employees to enroll in classes so they meet the requirement of 10 
percent of revenue coming from sources other than Federal loans and 
grants. In addition, the complaint also accuses Kaplan of providing 
incentives to its college recruiters based on the number of students 
they enroll, in violation of Federal regulations. (The Chronicle of 
Higher Education, March 13, 2008)
     The Apollo Group was forced to pay an estimated $277.5 
million to shareholders who sued for securities fraud alleging that the 
company officials withheld a harshly critical U.S. Department of 
Education report in February 2004 that accused the company of violating 
a Federal prohibition against paying recruiters based on the number of 
students they enrolled. Former CFO Kenda Gonzalez, also a defendant in 
the case, admitted in testimony that they did hold the report back out 
of fear of negative news coverage. (Inside Higher Ed, January 17, 2008)
     A class action suit was filed against Career Education 
Corporation alleging that their California Culinary Academy 
misrepresented that its admissions were selective, its program elite 
and its degree prestigious. Also, alleging CCA was erroneously saying 
that upon graduation well-paying jobs would be waiting and students' 
education loans would be readily repayable. The plaintiffs allege that 
none of this information was true when they were informed of it or even 
when they went to look for jobs. They also seek to prove that CEC, or 
CCA, accepted undisclosed benefits from lenders to place students in 
loans that exceed market rates. (Chronicle of Higher Education, October 
1, 2007)
     In December 2005, former students commenced a putative 
class action against DeVry University and DeVry Inc. (``Defendants'') 
in Los Angeles Superior Court, alleging that the defendants failed to 
comply with disclosure requirements under California Education Code 
relating to the transferability of academic units earned. This case was 
settled in 2007. (DeVry, Inc., SEC Form 10-K, Filed August 24, 2007, 
p. 36)
     Chubb Institute, a chain of career schools owned by High 
Tech Institute, has lost its accreditation in Chicago by the 
Accrediting Council for Continuing Education and Training (ACCET) and 
is being sued by former students in New Jersey and Pennsylvania 
alleging they misrepresented job placement figures. A branch of Chubb 
is also closing in Virginia due to financial problems due to alleged 
mismanagement and an unresponsive administration. The ACCET claims the 
Chicago school did not have ``required prerequisite courses'' and 
instructors adjusted test scores by deleting questions that were not 
covered so that most students in the class had an ``A''. (The 
Washington Post, August 13, 2007)
     Corinthian Colleges, a large vocational school chain based 
in California, has agreed to pay $6.5 million to settle a lawsuit 
alleging they engaged in unlawful business practices by exaggerating 
their record of placing students in well-paying jobs and forcing their 
recruiters to meet a pre-set quota of new enrollments. (LA Times, 
August 1, 2007)
     Oakland City University, a nonprofit college in Indiana, 
agreed to pay $5.3 million to settle a complaint by a whistle blower 
that maintained the institution offered improper incentives to student 
recruiters. The former admissions director at Oakland City claimed that 
he and others were paid in commissions and bonuses based on their 
ability to enroll students. (Chronicle of Higher Education, July 31, 
2007)
     An insurance company for the Business Computer Training 
Institute, which closed in July amidst allegations of Federal student-
loan fraud and other improper practices, has agreed to pay $9 million 
to former students in a class action lawsuit. The students had accused 
the institute of fraud, breach of contract, and of breaking Washington 
State's consumer-protection laws. The settlement could benefit as many 
as 28,000 students, and negotiations were underway for a second 
settlement in the amount of $55 million. (Chronicle of Higher 
Education, May 14, 2007)
     On September 6, 2006, the Ninth U.S. Circuit Court of 
Appeals reinstated a lawsuit against the University of Phoenix that 
alleges the institution obtained Federal funds under false pretenses by 
paying recruiters on the basis of how many students they enrolled. The 
case, brought against the University of Phoenix by two former 
recruiters, was dismissed by a U.S. District Court in California in 
2004. (Chronicle of Higher Education and Inside Higher Education, 
September 6, 2006) In May 2007, The U.S. Supreme Court declined a 
request from University of Phoenix to intervene in this lawsuit, 
letting the lawsuit proceed despite the institution's objections. 
(Chronicle of Higher Education, May 4, 2007)
     On August 25, 2005, a class action was filed against 
Career Education Corporation (CEC) through its subsidiaries by eight 
former students allege that defendants made fraudulent 
misrepresentations and violated the Missouri Merchandising Practices 
Act by misrepresenting or failing to disclose, among other things, 
details regarding instructors' experience or preparedness, estimates 
for starting salaries of graduates and curriculum, that credits earned 
were transferable at Sanford-Brown College (subsidiary of CEC). The 
plaintiffs also allege that admissions representatives had sales quotas 
for enrolling new students, directly in opposition to the Higher 
Education Act. The plaintiffs, through the complaint, accuse the 
defendants of failing to provide the promised instruction, training and 
placement services. This matter has been settled as of May 2007. 
(Career Education Corporation, SEC Form 10-Q, Filed May 3, 2007)
     On March 21, 2005, a class action complaint was filed in 
the Superior Court for the State of California against Brooks College, 
a school owned by Career Education Corporation. The complaint alleges 
that the college violated California Business and Professions Code and 
Consumer Legal Remedies Act by allegedly misleading potential students 
regarding the admission criteria, transferability of credits and 
retention and placement statistics as well as engaging in false and 
misleading advertising. (Career Education Corporation, SEC Form 10-K, 
Filed May 3, 2007)
     Former students of the Sanford-Brown Institute in 
Landover, MD issued a complaint in March 2006 alleging that SBI broke 
the Maryland consumer fraud act by ``misrepresenting or failing to 
disclose,'' among other things, details regarding instructors' 
experience or preparedness, availability of clinical externship 
assignments, and estimates for the dates upon which the plaintiffs 
would receive their certificates. The complaint also states the 
institution failed to provide promised instruction, training, 
externships and placement services. (Career Education Corporation, SEC 
Filing 10-Q Form, November 7, 2006, p. 76)
     A class action lawsuit has been filed by Kahn Gauthier 
Swick, LLC in the U.S. District Court for the District of Arizona on 
behalf of shareholders who acquired Apollo Group stock and securities 
between November 28, 2001 and October 18, 2006. The suit charges 
violations of Federal securities laws, including backdating of stock 
options.
     The University of Phoenix has been sued by the Equal 
Employment Opportunity Commission for employment discrimination. The 
EEOC charged the University of Phoenix preferred hiring admission 
counselors who belonged to the Church of Jesus Christ of Latter-day 
Saints over those who did not. The suit was filed on behalf of four 
current or former non-Mormon University of Phoenix enrollment officers. 
It alleges that after these four men complained internally, the 
University of Phoenix transferred all of them and terminated one of 
them. The suit was filed as a class action. (Inside Higher Ed, 
September 29, 2006)
     The Seattle Times reported in early August 2006 that Crown 
College of Tacoma would pay over $87,000 to settle claims by six 
students who alleged the school misled them about whether their credits 
would transfer to other colleges or universities. The settlement 
involved the third such lawsuit against the school. In January 2006, 
Crown College was ordered to pay almost $77,000 in a case that involved 
a student who said the college had told her she could transfer her 
credits to Gonzaga University. (Seattle Times, August 5, 2006)
     On July 21, 2006, a class-action securities fraud 
complaint was filed in Federal District Court in the Southern District 
of New York against EVCI Career Colleges Holding Corporation, parent of 
Interboro Institute. The complaint alleged that the company had cheated 
in determining whether students were eligible for Federal and State 
financial aid and had fired employees for failing to meet enrollment 
quotas. The complaint indicated that unethical practices at the 
corporation went even further than those outlined in a 2005 NY State 
Education Department investigation. (New York Times, July 24, 2006)
     A group of students have filed suit against the ECPI 
College of Technology in Greenville, SC, alleging that the school is a 
``fraud and a sham,'' and alleging that training at the school is 
``severely deficient.'' (Greenville News, August 11, 2005)
     A wrongful termination suit by a former professor and 
``educator of the year'' at American InterContinental University (AICU) 
against Career Education Corporation in Los Angeles indicates that 
fraudulent enrollment practices enabled that institution to receive 
Federal student aid funds. According to the lawsuit, AICU enrolled 
clearly unqualified students, enrolled ``imaginary'' students, falsely 
advertised job placement rates, and falsified reports to sustain 
enrollments. (New York Times, May 15, 2005)
     In January 2002, a graduate of one of DeVry University's 
Los Angeles-area campuses filed a class-action complaint on behalf of 
all students enrolled in the post-baccalaureate degree program in 
Information Technology. The suit alleges that the program offered by 
DeVry did not conform to the program as it was presented in the 
advertising and other marketing materials. In March 2003, the complaint 
was dismissed by the court with limited right to amend and re-file. The 
complaint was subsequently amended and re-filed. During the first 
quarter of the Company's fiscal year 2004, a new complaint was filed by 
another plaintiff with the same general allegations and by the same 
plaintiff's attorneys. Discovery continues but there is no determinable 
date at which this matter may be brought to conclusion. (DeVry, Inc., 
SEC Form 10-Q, Filed May 11, 2005, p. 25)
     In November 2000, three graduates of one of DeVry 
University's Chicago-area campuses filed a class-action complaint that 
alleges DeVry graduates do not have appropriate skills for 
employability in the computer information systems field. The complaint 
was subsequently dismissed by the court, but was amended and re-filed, 
this time including a then-current student from a second Chicago-area 
campus. Discovery continues but there is no determinable date at which 
this matter may be brought to conclusion. The Company has accrued $0.5 
million representing the estimated minimum amount to resolve the two 
class-action claims. (DeVry, Inc., SEC Form 10-Q, Filed May 11, 2005, 
p. 25)
     Institutions owned by Corinthian Colleges and Career 
Education Corporation face lawsuits across the country from current and 
former students. Lawsuits present allegations of ``systemic deceptive 
trade practices,'' including: (1) Falsification of grades to maintain 
enrollment; (2) Misleading information about transferability of credit; 
(3) Illegal recruiting and compensation practices (Chronicle of Higher 
Education, October 1, 2004; Miami Herald, March 11, 2005; Tacoma News-
Tribune, April 12, 2005)
     Shareholders of ITT and Career Education Corporation are 
attempting to file class action suits against the companies for 
allegedly using misleading financial information to artificially 
inflate the value of their stock. (Chronicle of Higher Education, 
October 1, 2004)
                                 other
     Career Education Corporation's American InterContinental 
University was recently placed on a 1-year probation by its accrediting 
agency, the Southern Association of Colleges and Schools. If AIU's 
accreditation is withdrawn, students attending would no longer be able 
to receive Federal financial aid. The latest action has prompted 
shareholders to again question the commitment to regulatory compliance 
on the part of the company's governing board. (Wall Street Journal, 
December 12, 2005)
     For-profit college activities in Canada have recently 
prompted the Canadian legislature to consider legislation tightening 
rules for private career colleges. Complaints have been submitted by 
students from across Canada against institutions such as CDI College, 
owned by Corinthian Colleges. (Canadian Press (via Canada.com), 
November 5, 2005)

    The Chairman. Thank you, Mr. Hawkins. Now Dr. McComis. Dr. 
McComis, welcome. Please proceed.

  STATEMENT OF MICHALE S. McCOMIS, Ed.D., EXECUTIVE DIRECTOR, 
    ACCREDITING COMMISSION OF CAREER SCHOOLS AND COLLEGES, 
                         ARLINGTON, VA

    Mr. McComis. Mr. Chairman, members of the committee, thank 
you for the opportunity to testify. My name is Michale McComis, 
and I'm the executive director of the Accrediting Commission of 
Career Schools and Colleges or ACCSC.
    Let me state at the outset unequivocally, that any student 
recruiting or advertising practice that unduly induces students 
to enroll in an institution is anathema to the mission of the 
organization that I represent and tarnishes the entire higher 
education community.
    ACCSC works diligently to enforce its standards in the 
areas being addressed by this hearing, and looks forward to 
exploring with this committee and Congress how oversight of the 
student recruitment experience might be strengthened.
    The role of accreditation is important as a means to ensure 
that only the highest level of integrity is injected into the 
student recruitment and admissions process, and to connect 
these processes to student achievement outcomes. It is 
essential to the success of our triad system that accreditors 
and their Federal and State partners work together to stem any 
institutional abuses, such as those presented here today.
    Unlike their Federal and State partners, accrediting 
agencies are private, independent entities, focusing on 
establishing standards and assessing their members and 
institutions in relation to those standards on a peer review 
basis.
    As such, they are the best resource to make determinations 
related to educational quality. Institutions eligible for title 
IV funds must be accredited by an agency recognized by the U.S. 
Department of Education. And the Higher Education Act creates 
the rigorous regulatory structure to which all accrediting 
agencies must adhere.
    The Federal regulations require that all agencies, 
regardless of the types of institutions that they accredit, 
have and enforce standards in the areas of recruitment, 
admissions, and advertising. The ACCSC standards of 
accreditation create a whole school assessment process whereby 
an institution's operational and education inputs can be 
evaluated in the context of student achievement outcomes. Each 
of a school's practices including recruitment, advertising, and 
admissions can impact its overall success and the success of 
its students. ACCSC has more than 50 standards that address 
these areas directly.
    Equally important to these standards are our processes to 
evaluate an institution's compliance. We have a multi-step 
process, which includes a self evaluation, onsite visits, and 
determinations of compliance. There's ample evidence that the 
commission holds its institutions accountable to its standards. 
In the last 2 years, approximately 8 percent of our findings 
resulted from site visits pertaining to the areas of 
recruitment, advertising, and admissions.
    Another indicator is provided from analysis of our student 
surveys. Results from surveys during 69 onsite evaluations 
between April and May of this year showed very high rate of 
student satisfaction in areas related to admissions and 
financial aid processes of their institutions, a rate high 
enough to support the conclusion that the problems that do 
exist are not widespread amongst our accredited institutions.
    Between accreditation cycles, ACCSC relies on an interim 
review and a robust complaint process to monitor potential 
violations of standards. If a student believes that he or she 
has been misled in the recruitment or admissions process, that 
student can forward a complaint to the commission for 
investigation.
    Pursuant to Federal regulations, and in keeping with best 
practices, we review every complaint received for compliance 
with accreditation standards. The commission has received 
complaints regarding recruitment and advertising practice, as I 
outlined in my written testimony. And those complaints are 
always troubling.
    When findings of noncompliance do occur, we are diligent in 
requiring institutions to take corrective action. And when none 
occurs, we take adverse action. ACCSC has a number of actions 
at its disposal to ensure compliance with the standards ranging 
from reporting to revocation. And the commission can provide 
examples of when it has taken those actions.
    I also want to explain the important connection between the 
issues discussed here today and student achievement. ACCSC 
requires its institutions to submit a report annually of all 
programmatic graduation and employment rates and monitors any 
institution falling below that commissions establish 
benchmarks. We view these benchmarks as tools by which an 
institution can improve its own success and the success of its 
students, but these outcomes also help us to identify related 
problems at an institution, including an appropriate 
recruitment, advertising, or admissions practices.
    If students are lured to an institution or induced to 
enroll when those students may not be a good fit in relation to 
program objectives, then that institution will likely have 
difficulty demonstrating competency achievement by its students 
and acceptable rates of graduation and employment.
    Overall, I believe that ACCSC has demonstrated its 
commitment to establishing and enforcing standards related to 
recruitment, advertising, and admissions. And I also believe 
that accreditors can in all instances be expected to uncover 
every instance of noncompliance.
    However, the unacceptable and abhorrent activities 
presented for this hearing do indicate that more vigilance 
amongst all accrediting agencies with regard to all 
institutions is necessary.
    To that end, here are a few final thoughts. ACC will 
continue to assess its standards and practices and policies in 
these areas and commit to strengthening its accreditation 
practices even further.
    Second, it is important that the department and ACCSC 
provide the appropriate oversight for all accreditors and 
create a level playing field, holding all accreditors 
accountable to establish and enforce rigorous and effective 
standards.
    Finally, ACCSC is committed to working with Congress should 
it decide that accreditors need to do more in this area, and to 
ensure sound policy to protect the integrity of our higher 
education students and the higher education system and its 
students. Thank you.
    [The prepared statement of Mr. McComis follows:]
            Prepared Statement of Michale S. McComis, Ed.D.
    Thank you for the opportunity to testify. My name is Michale 
McComis and I am the executive director of the Accrediting Commission 
of Career Schools and Colleges (ACCSC). I am honored to appear before 
the committee this morning to discuss the important issue of student 
recruitment by higher education institutions. I hope to provide the 
committee information about ACCSC's accreditation standards and process 
in this area, but also to provide our perspective on the role of 
accreditation in higher education more generally. Let me state 
unequivocally at the outset that any form of student recruiting or 
advertising practice that unduly induces students to enroll in an 
institution is anathema to the mission of the organization that I 
represent. As I outline in more detail below, ACCSC works diligently to 
enforce its standards in the areas being addressed by this hearing and 
is committed to eradicating inappropriate recruiting practices in its 
accredited institutions. In addition, ACCSC looks forward to exploring 
with this committee and Congress how oversight of the student 
recruitment experience might be strengthened through the accreditation 
process.
    By way of introduction, ACCSC is a private, non-profit independent 
accrediting agency recognized by the Secretary of Education continually 
since 1967. ACCSC is national in scope and currently accredits 789 
institutions with over 250,000 students throughout the country. These 
institutions are predominantly private sector, career-oriented 
institutions, offering programs at the non-degree, Associates Degree, 
Bachelors Degree, and Masters Degree levels. Institutions accredited by 
ACCSC prepare students for trade and technical careers in many areas 
including allied health, nursing, information technology, automotive 
technology, commercial art, and unique areas such as horology, 
luthiery, and yacht building and restoration.
    ACCSC's primary mission is to serve as a reliable authority on 
educational quality and to promote enhanced opportunities for students. 
To meet its mission, the Commission has a values-based framework for 
accrediting focused on integrity, accountability, continuous 
improvement, open communication, and teamwork. My tenure with ACCSC 
began in 1994, becoming its executive director in 2008. I have recently 
served on two of the Department of Education's negotiated rulemaking 
panels--the 2009 Accreditation Panel and the 2010 Program Integrity 
Panel. I also recently testified before the House Committee on 
Education and Labor at a hearing regarding program length and credit 
hour definitions.
                          summary of testimony
    My testimony is divided into two primary parts. First, I will place 
the issue of recruitment in the broader context of our higher education 
system and regulatory structure. It is important to provide a bit of 
background regarding the need for continued reliance on the regulatory 
``triad'' that provides the student funding and quality-assurance 
mechanisms for our institutions of higher education and to discuss ways 
in which that structure might be strengthened.
    The second part of my testimony will provide the committee with a 
summary of ACCSC's standards on student recruiting and advertising and 
its process for reviewing institutions generally, and with regard to 
recruitment and advertising in particular. Developed based on four 
decades of experience in the accreditation of career-oriented 
institutions, ACCSC believes that its standards on recruiting and 
advertising are amongst the most rigorous in the higher education 
community and can serve as a model for accreditors' assessment. I also 
would like to discuss with the committee how ACCSC's standards on 
recruitment and advertising directly relate to our assessments of 
student achievement at our institutions.
    the broader context of higher education policy, accreditation, 
      and the evaluation of recruitment and advertising practices
    As higher education continues to take a more diverse shape, 
ensuring the quality and integrity of higher education institutions and 
their programs continues to be a paramount concern, and historically, 
the primary responsibility of accrediting agencies and the schools they 
accredit. Unlike Federal and State governments, accrediting agencies 
are private, independent entities, focused on establishing standards 
and assessing their member institutions in relation to those standards 
on a peer-review basis. As such, they are the best resource for making 
determinations related to educational quality.
    Despite the independent, private nature of accreditation, 
accrediting agencies have been linked to the Federal student financial 
aid program since the Congress established the Higher Education Act 45 
years ago. Institutions eligible for title IV funds must be accredited 
by an accrediting agency recognized by the U.S. Secretary of Education 
and the Higher Education Act creates a structure for this recognition 
process. Included in the act and regulations are criteria which all 
accrediting agencies must include in their accreditation standards. In 
this manner, accreditation has played an essential role in 
institutional and programmatic quality assurance, an essential 
component of the regulatory ``triad'' with Federal and State 
governments in overseeing higher education.
    The Federal regulation of criteria for accreditation standards set 
forth the expectation that accrediting agencies have standards 
regarding recruitment, admissions practices, and advertising (section 
602.16(a)(1)(vii)). It is, therefore, paramount that all agencies adopt 
and enforce such standards--regardless of the types of institutions the 
agency accredits. All regulatory and oversight agencies in the triad 
must work together to stem abuses in these areas. For example, if an 
institution is found by the Federal Government to have violated Federal 
regulations regarding recruitment practices, then there should be an 
expectation that a State would also conduct a review to determine if 
State law or regulation was violated and accreditors should investigate 
to determine as to whether the agencies standards were violated. This 
is a primary purpose of the triad and one that the Congress should 
expect to occur. To that end, I am hopeful that the GAO will supply my 
organization with information from its recent report on recruiting 
activities regarding any institution accredited by ACCSC so that we can 
conduct our own investigation into these matters.
    The role of accreditation, in particular, is an increasingly 
important one. Given the growing diversity of higher education 
institutions and the growing demographic of career-focused, adult 
learners, coupled with the growth of education access and opportunity, 
accreditors must hold institutions accountable to ensure that only the 
highest level of integrity is injected into the student recruitment and 
admissions process. Moreover, all higher education institutions and 
their accreditors must understand the connection between recruitment 
and admissions processes and student achievement outcomes.
    As I demonstrate in the next section of my testimony, ACCSC has 
established rigorous standards in the areas of recruiting, advertising, 
and admissions, intended to help ensure that institutions recruit and 
admit only those students who are accurately and fully informed about 
the institution's program and who are qualified and capable of 
completing the program in which they intend to enroll.
  accsc's standards and processes regarding recruitment, advertising, 
                             and admissions
    The ACCSC Standards of Accreditation and accreditation process 
emphasize educational quality by focusing on outcomes. Essentially, the 
Commission evaluates an institution's educational objectives and 
assesses the institution's success in meeting those objectives. This 
assessment process includes a review of an institution's compliance 
with input standards and the institution's ability to demonstrate 
acceptable output results in terms of student achievement outcomes, 
specifically student learning assessment and rates of graduation and 
employment.
ACCSC's Standards
    In addition to having standards and processes to examine 
institutional inputs, ACCSC has outcomes-based standards, including 
graduation and employment rates, which the agency uses in its 
assessment process. Specifically, the Commission is concerned about 
institutional operations and how those operations contribute to student 
achievement outcomes and the application in the workplace of skills, 
knowledge, and competencies.
    ACCSC's standards on recruitment, advertising, and admissions are 
necessarily linked to its standards on student achievement; none of the 
standards are viewed in isolation from another. ACCSC strives for a 
``whole school'' assessment process whereby the appropriateness of an 
institution's operational and education inputs can be evaluated in the 
context of student achievement outcomes. Each component of the school 
(e.g., recruiting, advertising, admissions requirement, program design 
and curriculum, student services, the quality of the administration and 
faculty, the inclusion of the employment community in curriculum 
development and assessment, etc.) has an impact on the overall success 
of an institution and the success of students. ACCSC has more than 50 
standards that address the areas of recruitment, advertising, and 
admissions directly (see Appendix I) and several more that do so 
tangentially.
    ACCSC's primary standards require institutions to operate in an 
ethical manner with regard to recruitment practices and to demonstrate 
that:

     The institution describes itself to prospective students 
fully and accurately;
     The institution follow practices that permit prospective 
students to make informed and considered enrollment decisions without 
pressure;
     The institution's recruitment efforts attract students who 
are qualified and likely to complete and benefit from the training 
provided by the school, instead of simply obtaining enrollments;
     The institution observes ethical practices and procedures 
in the recruitment of its students in areas including the following:

         Only using school employees for recruitment;
         No making of false or misleading statements;
          No recruiting at or near welfare offices, 
        unemployment centers, or homeless shelters;
         No promises (explicit or implicit) of employment;
         No inducements to enroll;
         No recruiters involved in admissions decision;
          Allowance for a ``cooling off '' period and 
        implementation of cancellation policies; and,
          No discrediting others schools or influencing 
        prospective students to leave another school.

     The institution provides prospective students with a copy 
of the catalog prior to enrollment for the purpose of full disclosure; 
and
      The institution provides prospective students with a copy 
of the enrollment agreement (i.e., contract) prior to and after 
signing, which sets forth clearly the obligations of the school and the 
student.

    ACCSC's primary standards in the area of advertising require 
institutions to demonstrate that:

     All advertising and promotional materials are truthful and 
accurate and avoid leaving any false, misleading, or exaggerated 
impressions with respect to the school, its location, its name, its 
personnel, its training, its services, and its accredited status;
     Advertising and promotional materials clearly indicate 
that education, and not employment, is being offered and that no overt 
or implied claim or guarantee of individual employment is made at any 
time;
     Employment or Help Wanted classifieds are not used for any 
form of student recruitment;
     Endorsements used in school catalogs, literature or 
advertising are used only with the written consent of the authors and 
are kept on file and subject to inspection and that under no 
circumstances may currently enrolled students provide endorsements on 
behalf of the school;
     Advertisements and literature do not quote salaries for an 
occupation unless they also accurately indicate the normal range or 
starting salaries in the occupation for which training is provided and 
include the source of this information;
     Scholarships are not used as a recruiting device; and
     Advertising of accredited status also indicates by what 
agency or organization the institution is accredited and advertising of 
financial aid includes an eligibility phrase (e.g., financial aid 
available for those who qualify).
ACCSC's Process
    Equally important to ACCSC's standards are the processes used by 
the Commission to evaluate an institution's compliance with those 
standards. ACCSC, therefore, has a multistep process by which the 
Commission evaluates an institution's compliance with accrediting 
standards. To prepare for the re-accreditation process, institutions 
are required to prepare a Self-Evaluation Report (SER),\1\ which 
requires institutions to demonstrate how their programs meet ACCSC's 
standards. For example, institutions must explain how the institution 
has determined that its recruitment practices are ethical and 
appropriate, show that advertising in use is appropriate and not 
misleading, and demonstrate the appropriateness and implementation of 
admissions criteria.
---------------------------------------------------------------------------
    \1\ Institutions seeking initial accreditation are also required to 
complete a detailed SER, which would include a demonstration of 
compliance with our advertising and recruitment standards.
---------------------------------------------------------------------------
    ACCSC staff and peer-review evaluators then visit an institution 
and make determinations regarding an institution's compliance with 
standards based on the information presented in the SER and assessments 
made during the on-site evaluation. If there is an area of non-
compliance cited by an on-site evaluation team, an institution has the 
opportunity to demonstrate compliance to the Commission. If an 
institution fails to make such a showing, ACCSC will take action 
measured appropriate to the level of the offense.
    ACCSC has ample evidence to show that the Commission holds its 
institutions accountable to its standards to include, among many 
others, those related to recruitment, advertising, and admissions 
practices. Over the prior 2 years, ACCSC conducted 629 on-site 
evaluations for a variety of purposes (i.e., initial and renewal of 
accreditation, substantive changes reviews, and directed investigations 
on an announced and unannounced basis). During those 629 on-site 
evaluations, approximately 8 percent of our findings pertained to the 
areas of recruitment, advertising, or admissions practices. Within 
those findings, 70 percent were in the area of advertising, 25 percent 
were in the areas of admissions practices, and 4 percent were in the 
area of recruitment practices. Examples of these findings range broadly 
from less severe non-compliance such as stating correctly that the 
school is accredited without also stating that ACCSC is the accrediting 
agency to more serious noncompliance. Examples of more serious 
noncompliance include, in the area of advertising the use of a 
subjective statement or other information that an institution might not 
be able to fully support (e.g., ``state-of-the-art''), in the area of 
admissions not collecting sufficient documentation to demonstrate that 
admissions criteria were fully met prior to matriculation for all 
students, and in the area of recruitment not sufficiently removing 
recruitment personnel from the admissions decision process. While the 
statistics show that findings related to recruitment, advertising, and 
admissions practices are not indicative of substantial noncompliance by 
our institutions, ACCSC does take each and every instance of 
noncompliance seriously and the Commission is diligent in requiring 
institutions to take corrective action necessary to demonstrate that 
they achieve compliance.
    Another indicator that the issues addressed herein are not 
widespread among ACCSC-accredited institutions is the results of 
student surveys that the Commission conducts during the on-site 
evaluation. An analysis of student survey results from 69 on-site 
evaluations conducted in April 2010 through May 2010 shows the 
following:

                                             Student Survey Results
----------------------------------------------------------------------------------------------------------------
                                                          Total       Number              Percentage  Percentage
                   Survey question                     respondents     Yes     Number No      Yes         No
----------------------------------------------------------------------------------------------------------------
Were all entrance requirements explained to you              6,091      5,817        274        95.5         4.5
 before you enrolled?................................
Were all costs that you are required to pay to attend        6,070      5,668        402        93.4         6.6
 this school explained to you?.......................
Did you receive a copy of the school catalog before          6,073      5,539        534        91.2         8.8
 you enrolled?.......................................
Did you receive a signed copy of the enrollment              6,067      5,962        105        98.3         1.7
 agreement?..........................................
Did a school representative accurately provide you           6,057      5,456        601        90.1         9.9
 with all necessary facts and details about the
 school?.............................................
Did the school explain your loan payment                     5,893      5,518        375        93.6         6.4
 responsibilities?...................................
Are you clear about the size of your loan and what           5,890      5,060        830        85.9        14.1
 your repayment plan will be?........................
Did the financial aid representative appear                  5,927      5,289        638        89.2        10.8
 knowledgeable and helpful?..........................
Do you feel good about your decision to attend this          5,920      5,413        507        91.4         8.6
 school?.............................................
----------------------------------------------------------------------------------------------------------------

    While the results of the surveys do not show 100 percent student 
satisfaction, they certainly show a very high rate of student 
satisfaction in areas related to the admissions and financial aid 
processes of their institutions--a rate high enough to support a 
conclusion that the problems that do exist are not widespread amongst 
our accredited institutions.
    With regard to enforcement, ACCSC has a number of programmatic and 
institutional actions at its disposal to ensure compliance with its 
standards and rules. As stated previously, when non-compliance with a 
standard is found, the institution has an opportunity to demonstrate 
corrective action and that the institution has achieved compliance. If 
the Commission determines that an institution has not fully or 
sufficiently made such a showing, the Commission can defer final 
action, direct a school to show cause why accreditation should not be 
revoked, place an institution on probation, direct a school to cease 
enrollment in a program, or take an adverse action such as 
accreditation revocation. Which action the Commission takes will often 
depend on the severity of noncompliance or the amount of time that has 
transpired where the school over time has failed to demonstrate 
compliance. In at least one instance, ACCSC denied a school's 
application for initial accreditation solely on grounds that the 
institution did not meet the Commission's advertising standards. To 
reiterate an important point regarding accountability, all accreditors 
should have rigorous standards in the areas of recruitment and 
advertising practices and enforce those standards, regardless of the 
types of institutions accredited, insofar as all students must be 
protected from inappropriate recruiting practices or misleading 
advertising.
    Between accreditation cycles, ACCSC relies on both its interim 
monitoring process and its robust complaint process to monitor 
potential violations of recruitment, advertising, and admissions 
standards. With regard to interim monitoring, the Commission can direct 
an institution to submit reports to demonstrate on-going compliance 
over time. This function is used when a school has demonstrated 
corrective action, but the Commission wishes to monitor the 
institution's implementation of that corrective action and compliance 
with applicable accrediting standards over time. ACCSC also requires 
its institutions to submit a report annually of all programmatic 
graduation rates and employment rates and will place an institution 
into a monitoring phase should any reported rate of graduation or 
employment fall below the Commission's benchmarks.
    With regard to ACCSC's complaint process, if a student believes 
that he/she has, for example, been misled in the recruitment or 
admissions process, that student can forward a complaint to the 
Commission for investigation. Pursuant to Federal regulations and in 
keeping with best practices, ACCSC reviews every complaint received and 
investigates those that raise a reasonable doubt as to an institution's 
compliance with accrediting standards. The Commission believes that 
this is a crucial component of its interim monitoring and therefore 
requires every institution to publish in its catalog the ACCSC Student 
Complaint/Grievance Procedure that provides students with detailed 
information regarding how to file a complaint with the Commission.
    In the prior 2 years, ACCSC has received 411 complaints from 
students, parents, school employees, other accredited institutions, and 
members of the public.\2\ Of those 411 complaints, 50--12 percent--
included at least one allegation regarding recruitment, advertising, or 
admissions practices. Generally, these complaints allege issues such as 
the use of misleading advertisements or that school personnel made 
statements that the complainant believed to be inaccurate. Again, this 
statistic indicates that while problems associated with recruitment, 
advertising, and admissions practices exist and are troubling, the 
instances do not appear to be widespread among our schools. This 
notwithstanding, ACCSC takes all complaints seriously and in instances 
where a complaint investigation has uncovered an area of noncompliance, 
the Commission has required the institutions to demonstrate corrective 
action necessary to achieve compliance. ACCSC has had instances where 
an investigation predicated on a complaint ultimately led to a Show 
Cause Order, Probation Order, or the revocation of an institution's 
accreditation (although, not always for the same reasons set forth in 
the original complaint).
---------------------------------------------------------------------------
    \2\ Total enrollment in ACCSC-accredited institutions was 257,954 
as of June 30, 2009.
---------------------------------------------------------------------------
Connection to Student Achievement
    ACCSC believes that the evaluation of recruitment, advertising, and 
admissions practices is linked to our evaluation of student learning 
and outcomes at institutions. ACCSC therefore tightly aligns its 
student achievement standards to institutional operations and input 
standards. ACCSC views its graduation rate and employment rate 
benchmarks as tools to identify issues, such as inappropriate 
recruitment, advertising, or admissions practices, and to develop 
institutional improvement objectives as a means to enhance 
institutional and student success. In the area of student learning and 
achievement outcomes, ACCSC requires that:

     Student learning outcomes for each program are consistent 
with the program objectives and meet any relevant academic, 
occupational, or regulatory requirements;
     Student learning outcomes for each program are aligned 
with the program's objectives, the occupational area of study, and with 
the level of education intended (e.g., non-degree, degree, degree 
level);
     Student learning outcomes for each program reflect the 
necessary occupational and academic knowledge, skills, and competencies 
as applicable;
     The school has a developed and structured process to 
assess and evaluate the defined student learning outcomes;
     The school must demonstrate successful student achievement 
by documenting through its assessment practices that students are 
acquiring the knowledge, skills, and competencies intended by the 
program objectives; and
     The school must demonstrate successful student achievement 
by maintaining acceptable rates of student graduation and employment in 
the career field for which the school provided education.\3\
---------------------------------------------------------------------------
    \3\ Appendix II includes further detail of ACCSC's student learning 
and achievement outcomes standards.

    If students are lured to an institution and induced or encouraged 
to enroll when those students may not be a good fit in relation to 
program objectives, then that institution will likely have difficulty 
demonstrating competency achievement by its students and acceptable 
rates of graduation and employment. These are the types of assessment 
that are key and I have seen, anecdotally, where an institution's 
graduation rates decreased in direct correlation to more aggressive 
marketing schemes. In such instances, ACCSC has required an institution 
to make a showing of corrective action in a manner that positively 
affected student achievement outcomes.
    Overall, I am proud of the Commission's diligence in enforcing its 
recruitment, advertising, and admissions standards and while I believe 
that the unacceptable and abhorrent activities presented for this 
hearing are not in evidence for an entire sector of the higher 
education community, I am aware that more vigilance among all 
accrediting agencies, with regard to all institutions is necessary. To 
that end, ACCSC will continue to assess its standards in these areas 
and look for opportunities to strengthen its accreditation practices. 
It is also important that the oversight of all accreditors through the 
NACIQI process creates a level playing field and holds all accreditors 
accountable to establish and enforce rigorous and effective standards 
in the areas of recruitment, advertising, and admissions practices.
                               conclusion
    ACCSC believes that its standards represent exemplary practices in 
the areas of student recruitment, advertising, admission practices, and 
student achievement outcomes measures for the kinds of institutions it 
accredits. ACCSC also believes that accreditation has a significant 
role to play in institutional assessments regarding recruiting, 
advertising, and admissions practices and believes that all 
accreditors, regardless of the type of institution accredited, should 
establish and enforce similar rigorous standards in these areas. 
ACCSC's standards work because they have been developed in a peer 
review environment--an environment of for-profit institutions that are 
committed to best practices and institutional and student success. 
Accreditors can and should continue to be relied upon to establish 
these standards in conjunction with their institutions keeping in mind 
the best interest of students. Thus, Federal law and regulation should 
also continue its historical reliance on professional accreditors to 
make the appropriate assessments of its accredited institutions. 
Accreditors, however, also must be committed to enforcing 
accountability measures with their institutions and also must uphold 
their role in the triad to ensure that students are always a paramount 
consideration of our actions.
                                 ______
                                 
                               Appendix I
        accsc recruiting, advertising, and admissions standards
    Schools must describe themselves to prospective students fully and 
accurately and must follow practices that permit prospective students 
to make informed and considered enrollment decisions without undue 
pressure. The school's recruitment efforts must attract students who 
are qualified and likely to complete and benefit from the training 
provided by the school and not simply obtain enrollments.

A. Recruitment

    Schools must observe ethical practices and procedures in the 
recruitment of its students. Ethical practices and procedures include, 
at a minimum, the following:

    1. A school shall use only its employees to conduct student 
recruiting activities, except outside the United States, its 
territories, or its possessions, where a school may use third-party 
agents for recruiting.
    2. Schools under common ownership may employ a single recruiter.
    3. A school is prohibited from using employment agencies to recruit 
prospective students.
    4. A school is responsible to its students and prospective students 
for the actions and representations of its recruiters and, therefore, 
selects recruiters with the utmost care and provides adequate training 
and proper supervision.
    5. Each school complies with applicable State laws and regulations 
on student recruitment.
    6. A school that authorizes its recruiters to advertise, to prepare 
advertising, or to use promotional materials must approve the materials 
in advance and accepts full responsibility for the materials used.
    7. A school shall ensure that its recruiters do not make false or 
misleading statements about the school, its personnel, its training, 
its services, or its accredited status.
    8. A school shall not permit its recruiters or other school 
personnel to recruit prospective students in or near welfare offices, 
unemployment lines, food stamp centers, homeless shelters, or other 
circumstances or settings where such persons cannot reasonably be 
expected to make informed and considered enrollment decisions. Schools 
may, however, recruit and enroll prospective students at one-stop 
centers operated under government auspices, provided that all other 
recruitment and admissions requirements are met.
    9. A school may not make explicit or implicit promises of 
employment to prospective students.
    10. A school shall not permit the payment of cash or other 
consideration to any student or prospective student as an inducement to 
enroll.
    11. A school shall not permit its recruiters to assist prospective 
students in completing application forms for financial aid.
    12. A school shall not permit its recruiters to become involved in 
admission testing or admission decisions.
    13. The school must be clearly identified in all contacts with 
prospective students.
    14. Cancellation Policies:

    (a) Applicants who have not visited the school prior to enrollment 
will have the opportunity to withdraw without penalty within 3 business 
days following either the regularly scheduled orientation procedures or 
following a tour of the school facilities and inspection of equipment 
where training and services are provided.
    (b) All monies paid by an applicant must be refunded if requested 
within 3 days after signing an enrollment agreement and making an 
initial payment. An applicant requesting cancellation more than 3 days 
after signing an enrollment agreement and making an initial payment, 
but prior to entering the school, is entitled to a refund of all monies 
paid minus a registration fee of 15 percent of the contract price of 
the program, but in no event may the school retain more than $150.

    15. A school must provide the applicant with a receipt for any 
money collected.
    16. A school must provide the applicant with a copy of the 
completed enrollment agreement.
    17. When engaged in recruiting activities, a recruiter is not 
permitted to use any title, such as ``counselor,'' ``advisor,'' or 
``registrar,'' or credential that implies other duties.
    18. School personnel do not discredit other schools by: falsely 
imputing to them dishonorable conduct, inability to perform contracts, 
or questionable credit standing; making other false representations; 
falsely disparaging the character, nature, quality, value, or scope of 
their program of instruction or services; or demeaning their students.
    19. School personnel do not knowingly influence any student to 
leave another school or encourage a person to change plans after 
signing an enrollment application and paying the registration fee of 
another school.

B. Catalog

    1. A school's catalog must accurately portray the school; its 
educational programs, resources and facilities; and policies and 
procedures and include, at a minimum, all items listed on the Catalog 
Checklist. (See also Section I (D)(6), Substantive Standards, Standards 
of Accreditation.)
    2. A school's catalog must be designed and written, to convey an 
accurate and dignified impression of the school. The catalog's 
illustrations, photos, and narrative must pertain directly to the 
school and sources of illustrations and photos must be clearly 
identified.
    3. A school must provide each applicant with a current and complete 
catalog prior to signing the enrollment agreement so that each 
potential student may make an informed decision relative to the 
school's educational programs, institutional policies, and procedures. 
A school may provide either a printed and bound copy of the catalog or 
a read-only format electronic copy that cannot be altered (e.g., 
portable document format (PDF), etc.). In either case, all versions of 
the catalog must be identical and students that receive an electronic 
copy of the catalog must also be able to receive a printed and bound 
copy of the catalog upon request.

C. Enrollment Agreement

    1.The enrollment agreement must include, at a minimum, all required 
items listed on the Enrollment Agreement Checklist. (See also Section I 
(D)(6), Substantive Standards, Standards of Accreditation.)
    2. The enrollment agreement must clearly state the obligations of 
both the student and school.
    3. The school must ensure that each applicant is fully informed of 
the rights, responsibilities, and obligations of both the student and 
the school under the enrollment agreement before it is signed by the 
applicant.
    4. A complete enrollment agreement is furnished to the applicant at 
the time the applicant signs.
    5. No enrollment agreement is binding until it has been signed by 
the student and accepted by the appropriate school official. A copy of 
the fully signed enrollment agreement is furnished to the student.

D. Advertising and Promotion

    1. All advertising and promotional materials are truthful and 
accurate and avoid leaving any false, misleading, or exaggerated 
impressions with respect to the school, its location, its name, its 
personnel, its training, its services, and its accredited status.
    2. A school may use the term ``University'' in its name only when 
such use has been approved by the Commission and appropriate State 
authorities.
    3. The school's advertising and promotional materials must clearly 
indicate that education, and not employment, is being offered. No overt 
or implied claim or guarantee of individual employment is made at any 
time.
    4. A school may not use the Employment or Help Wanted classifieds 
for any form of student recruitment.
    5. Endorsements used in school catalogs, literature or advertising 
are used only with the written consent of the authors and are kept on 
file and subject to inspection. Such endorsements are used only when 
they are a bona fide expression of the author's opinions and are 
strictly factual and portray currently correct conditions or facts. 
Under no circumstances may currently enrolled students provide 
endorsements on behalf of the school.
    6. School literature and advertisements may not quote salaries for 
an occupation unless they also accurately indicate the normal range or 
starting salaries in the occupation for which training is provided and 
include the source of this information.
    7. Scholarships are not used as a recruiting device.
    8. A school may use the term ``accredited'' only if it indicates by 
what agency or organization it is accredited. Publication of 
accreditation must comply with the Advertising of Accredited Status 
form.
    9. Advertising of financial aid includes an eligibility phrase 
(e.g., financial aid available for those who qualify).
    10. A school may describe in its catalog, advertise, or promote new 
programs, substantive changes, or degree programs only after receiving 
Commission approval.
                    admission policies and practices
    Schools may only admit those students who are capable of 
successfully completing the training offered. Admission decisions must 
be based on fair, effective, and consistently applied criteria that 
enable the school to make an informed judgment as to an applicant's 
ability to achieve the program's objectives.

A. General Requirements

    1. The school must inform, prior to admission, each applicant for 
enrollment of the program's admission requirements, process, and 
procedures; the nature of the training and education provided; and the 
program's responsibilities and demands.
    2. The school must:

    (a) Consistently and fairly apply its admission requirements;
    (b) Determine that applicants admitted meet such requirements and 
are capable of benefiting from the training offered;
    (c) Determine that applicants rejected did not meet such 
requirements;
    (d) Ensure that each applicant admitted has the proper 
qualifications to complete the training; and
    (e) Secure documentation to demonstrate that each applicant meets 
all admission requirements.

    3. Documentation must exist, covering the last 5 years, that 
demonstrates that admission requirements have been met or explains the 
basis for any denial of admission.
    4. The school determines that each applicant has no disabilities, 
physical or otherwise, that would prevent use of the knowledge or skill 
gained from the training offered for successful on-the-job performance 
after completion of the training.
    5. No school denies admission or discriminates against students 
enrolled at the school on the basis of race, creed, color, sex, age, 
disability, or national origin. Schools must reasonably accommodate 
applicants and students with disabilities to the extent required by 
applicable law.
    6. Schools may not accept any enrollment from a person of 
compulsory school age or a person attending a school at the secondary 
level, unless it has established through contact with properly 
responsible parties that pursuit of the training will not be 
detrimental to the student's regular school work.
    7. The Commission, at its discretion, may require a school to 
conduct a study to document the effectiveness of its admission 
requirements for all students.

B. Non-Degree Programs

    If the school enrolls a person who does not possess a high school 
diploma or recognized equivalency certificate (non-degree programs 
only):

    1. The determination of the applicant's ability to benefit from the 
training offered must be confirmed by documentation of the applicant's 
achievement of an approved score on a test or tests that have been 
reviewed by a qualified, independent third party for appropriateness of 
the instrument and specific score levels required for admission.
    2. The acceptable score ensures that students will benefit from the 
training provided and that a substantial number of students will 
complete the training and be employed in the field for which training 
was provided.

C. Degree Programs--Undergraduate

    The school must use appropriate techniques to assess whether 
applicants have the skills and competencies to benefit from the 
training provided at the undergraduate level. Students admitted to 
associate or baccalaureate degree programs must have earned at least a 
high school diploma or recognized equivalency certificate prior to 
starting class.

D. Degree Programs--Graduate

    1. The school must use appropriate techniques to assess whether 
applicants have the skills and competencies to benefit from the 
training provided at the graduate level. A student admitted to a 
master's degree program must possess an earned baccalaureate degree 
from a recognized higher-education institution (e.g., accredited by an 
agency recognized by the U.S. Department of Education or the 
equivalent). All admission criteria, to include evidence of an earned 
baccalaureate degree, must be met prior to matriculation.
    2. For graduate level courses or master's degree programs, 
standardized or national examinations may be required (e.g., GRE or 
GMAT). The school may utilize other entrance tests that have been 
reviewed by a qualified, independent third party for appropriateness of 
the instrument and specific score levels required for admission. In any 
case, the school must disclose the type and nature of examination and 
the acceptable score and/or range of scores applicants must receive to 
be admitted.

E. ESL Programs

    1. Students enrolled in ESL programs must meet all other admission 
requirements applicable to students enrolled in the school's career or 
occupational programs, which may be established through testing in the 
student's native language. During the enrollment process, adequate 
translation resources must be available to assist students in their 
comprehension of the process and all program requirements.
    2. The school must demonstrate that, with appropriate teaching, the 
students enrolled in front-loaded and integrated ESL programs can 
qualify for specialized training or continue their occupational 
education.
    3. The school must demonstrate that students enrolled in stand-
alone ESL programs possess job skills, as evidenced by documentation of 
credentials or test scores, and that proficiency in English is needed 
by the student in order to obtain employment in the field for which 
trained. The school must also document that students enrolling in a 
stand-alone program have previously obtained occupational licensure or 
document that the students possess educational experience that is 
sufficient to obtain a job in the field for which trained.
                              Appendix II
            accsc student learning and achievement standards
    Student learning outcomes for each program are consistent with the 
program objectives defined by the institution's program design and 
development process and meet any relevant academic, occupational, or 
regulatory requirements (Section VII (A)(1)(a), Substantive Standards, 
Standards of Accreditation).
    Student learning outcomes for each program are aligned with the 
program's objectives, the occupational area of study, and with the 
level of education intended (e.g., non-degree, degree, degree level) 
(Section VII (A)(1)(b), Substantive Standards, Standards of 
Accreditation).
    Student learning outcomes for each program reflect the necessary 
occupational and academic knowledge, skills, and competencies as 
applicable (Section VII (A)(1)(c), Substantive Standards, Standards of 
Accreditation).
    The school has a developed and structured process to assess and 
evaluate the defined student learning outcomes of the education and 
training and established competencies (e.g., the application of 
knowledge and skills to the standard of performance articulated in the 
program objectives and as expected in the workplace). This process may 
include a variety and combination of methods such as grading, portfolio 
assessment, and criterion referenced testing based on developed and 
appropriate rubrics (Section VII (A)(2)(a), Substantive Standards, 
Standards of Accreditation).
    The school demonstrates successful student achievement by 
documenting through its assessment practices that students are 
acquiring the knowledge, skills, and competencies intended by the 
program objectives (Section VII (B)(1)(a), Substantive Standards, 
Standards of Accreditation).
    The school demonstrates successful student achievement by 
maintaining acceptable rates of student graduation and employment in 
the career field for which the school provided education. The school 
supports these rates through student transcripts, the school's 
verifiable records of initial employment of its graduates, or other 
verifiable documentation (Section VII (B)(1)(b), Substantive Standards, 
Standards of Accreditation).
                  accsc student achievement benchmarks

                                     Established Benchmark Graduation Rates
----------------------------------------------------------------------------------------------------------------
                                                               Average rates of
                                                                  graduation                      Established
                                                                 demonstrates      Standard        benchmark
                  Program length in months                        acceptable       deviation    graduation rates
                                                                   student       [In percent]    * [In percent]
                                                               achievement [In
                                                                   percent]
----------------------------------------------------------------------------------------------------------------
1-3.........................................................                92             8                 84
4-6.........................................................                82            13                 69
7-9.........................................................                69            14                 55
10-12.......................................................                69            15                 54
13-15.......................................................                61            16                 45
16-18.......................................................                59            17                 42
19-24.......................................................                56            20                 36
25-35.......................................................                55            22                 33
36+.........................................................                47            15                 32
----------------------------------------------------------------------------------------------------------------
* If a school reports a lower graduation rate for a program, that program will be subject to additional
  monitoring or reporting as deemed appropriate.


                                      Established Benchmark Employment Rate
----------------------------------------------------------------------------------------------------------------
                                                           Average rate of
                                                             employment                           Established
                                                            demonstrates         Standard          benchmark
                                                         acceptable student   deviation [In    employment rate*
                                                           achievement [In       percent]        [In percent]
                                                              percent]
----------------------------------------------------------------------------------------------------------------
All Programs...........................................                 82               12                  70
----------------------------------------------------------------------------------------------------------------
*If a school reports a lower employment rate for a program, that program will be subject to additional
  monitoring or reporting as deemed appropriate.


    The Chairman. Thank you very much, Dr. McComis. Now Mr. 
Pruyn, welcome. Please proceed.

 STATEMENT OF JOSHUA PRUYN, FORMER ADMISSIONS REPRESENTATIVE, 
                 ALTA COLLEGE, INC., DENVER, CO

    Mr. Pruyn. Thank you for inviting me today and for 
conducting hearings on this issue. My name is Joshua Pruyn. I'm 
a former admissions representative for, as Senator Mikulski 
might have referred, a bounty hunter for Westwood College. 
Westwood is a for-profit school with 17 campuses around the 
country, an online division, which is where I worked. I applied 
to be an admissions representative at Westwood, because of my 
experience with my college hockey team.
    As captain of the team, I would talk with prospective 
students about the team and the university. I got satisfaction 
on the experience and thought I'd feel the same about my role 
as an admissions representative when I accepted the position at 
Westwood in November 2007.
    It didn't take long before I realized my new job was 
essentially a sales job. During training, admissions 
representatives learned sales techniques, a seven step sales 
process in the cookie close. We were given a script that told 
us to tell potential students that they can go and get accepted 
into Westwood by interviewing with and securing a 
recommendation from an admissions representative.
    In reality, there's no recommendation process and no 
standard for enrollment into Westwood. The interview process, 
which is the psychological game to enroll students.
    I finished the training, feeling ill prepared in my 
knowledge about the programs, the classes, the instructors, and 
the support systems the school offered.
    After my initial training, the real training on the boiler 
room sales floor began. Prospective students are referred to as 
leads. I remember talking to one student shortly after he 
requested information. When I called him the very next day, he 
said he was put off by the whole experience because he received 
34 voice messages from various online schools attempting to 
recruit him, which doesn't stop just after 1 day.
    In the location where I worked, there are well over 100 
admissions representatives divided into about 10 teams. The 
directors keep the teams in constant competition for prizes 
with one another. Every time a team signed up a student, they'd 
set off their signature sound effect, bang a drum, ring a bell, 
or blow a whistle. An email was also sent out to the entire 
admissions department to announce their latest enrollment. All 
of this was designed to keep the energy high and the phones 
dialing.
    In addition to the hyped up atmosphere, representatives 
were also kept motivated by the promise of rewards. Each 
representative had a quota of two students to enroll per week. 
An enrollment was nothing more than a completed and 
electronically signed application. Individual enrollments could 
be paid time off or gift cards. In a successful year, the top 
representatives, an all expenses paid trip to Cancun.
    Most importantly, each term, representatives needed to 
return at least six of their enrollments into starts. A start 
consisted of a student who completed all of their financial aid 
requirements and attended classes for the first 14 days. 
Fourteen was the magic number. I was told after 14 days, 
Westwood could keep the student's Federal financial aid money, 
even if the student dropped out.
    It was this start number that determined salary and 
promotions. It was all about the numbers. With high numbers, 
the most successful representatives could earn about three 
times their starting salary.
    The emphasis on starts was brought home for me when I 
enrolled a student named Jeffrey. In Jeffrey's 13th day of 
school, he was called up from the Army Reserves into active 
duty. He called me to tell me he withdrew from college. I spoke 
to him and determined he was unable to attend school. I told my 
director and she was furious. On her orders, I spoke to Jeffrey 
again and reached the same conclusion.
    My assistant director and then my director both called 
Jeffrey and was pushing him to stay enrolled. She wasn't 
willing to lose this start, despite the fact that it was 
clearly in Jeffrey's best interest to withdraw before he was on 
the hook for his student loans.
    I was disgusted by such a flagrant disregard for the 
student, especially someone who's called on to serve in the 
military. Deception was built into the admissions department. 
To avoid reviewing the full $75,000 price tag for the online 
bachelors degree, some representatives would simply lie about 
the total cost. I overheard representatives say the final cost 
of education at Westwood was less than half the actual price.
    More often, representatives would tell the students the per 
term cost of approximately $4,800. And the student incorrectly 
assumed there were two or three terms per year, like most 
traditional colleges. There was actually five terms per year.
    I constantly overheard representatives promise that Federal 
grants would cover almost the entire cost of education and even 
make up or cite misleading salary information.
    To my knowledge, none of these lies were ever discouraged. 
And at times, they were even encouraged. The most appalling 
example I can think of was when my assistant director of 
admissions on my team was presented with a best liar award at a 
team celebration. In training, we were told that from the 
student's perspective, there's no significant difference 
between national and regional accreditation. I started 
investigating and discovered there's actually a big difference.
    Not only was there a higher standard of education for 
regionally accredited schools, but there's also a huge issue 
with transferring credits. Yet for months, I'd worked under the 
impression that there wasn't much difference between national 
and regional accreditation at all.
    One last example where students were often misled had to do 
with Westwood's internal loans program, which we called Student 
Supplemental Financing, which is basically a private loan from 
a college that we were told not to call a loan.
    We were told to tell students if their financial aid didn't 
cover all the costs, Westwood would step in to help. 
Representatives told students all they'd have to do to cover 
the balance was pay a maximum of $150 a month while they're in 
school.
    Probably when I began enrolling more students, a financial 
aid advisor eventually told me more about that loan. I was told 
that monthly payments hardly put a dent in the amount a student 
owed, and that the students would have to pay 12 percent on 
what they owed after graduation.
    I had no plan to quit Westwood as I drove to work on what 
became my last day. Sitting at my phone, I just finally 
accepted that I could no longer tell myself it was possible to 
work for Westwood and consider myself to be working within any 
degree of ethical standard.
    When I left, I had no expectation or reasonable prospect 
for finding another job quickly. I didn't really think about 
that. I just thought about how naive I'd been, hoping to help 
students make a better future for themselves through college.
    Instead, I left fearing the students I enrolled would end 
up with a mountain of debt, and little or nothing to show for 
it.
    Thank you.
    [The prepared statement of Mr. Pruyn follows:]
                   Prepared Statement of Joshua Pruyn
    Thank you for inviting me today and for conducting hearings on this 
issue.
    My name is Joshua Pruyn. I'm a former admissions representative of 
Westwood College. Westwood is a for-profit school with 17 campuses 
around the country and an online division, which is the division I 
worked for. The parent company for Westwood College Online is Alta 
Colleges, Inc.
    I applied for the admissions representative position at Westwood 
because of my experience with my college hockey team. As captain of the 
team, I would periodically speak with prospective students about the 
team and the university. I got satisfaction out of this experience, and 
I anticipated that I would feel the same in my role as an admissions 
representative when I accepted the position at Westwood in November 
2007.
    I remember the training for the position. It was essentially 
training for a sales job. We learned sales techniques such as ``the 
seven-step sales process'' and ``the cookie close.'' We were told how 
enrolling a student was a psychological game. We were given a script 
that told us to tell potential students they could only be accepted 
into Westwood by interviewing with and securing a recommendation from 
an admissions representative. In reality, that was not true. There was 
no recommendation process and absolutely no standard for enrollment 
into Westwood. A student only needed a high school diploma or GED and 
$100 for the application fee. During the interview, we were taught to 
portray ourselves as advisors looking out for the students' best 
interests and ensuring they were a good fit for the school. This fake 
interview would allow the representative to ask students questions to 
uncover a student's motivators and pain points--their hopes, fears, and 
insecurities--all of which would later be used to pressure a student to 
enroll. For example, if a lead told you they wanted to go to school 
because they hated their minimum wage job as a cashier, we were taught 
how to remind the lead of the dead-end job if he or she later declined 
to enroll.
    I remember finishing the training feeling ill-prepared in my 
knowledge about the programs, the classes, the instructors, and the 
support systems the school offered. I did, however, learn a lot about 
sales tactics.
    After the official training, my real training on the boiler-room 
sales floor began. Prospective students were referred to as ``leads.'' 
Leads came mostly from the Internet. Sometimes the student wouldn't 
even know their information was sent to Westwood. They may have just 
registered with a job Web site or contest that automatically sold their 
information. The lead's phone number and other personal information 
would immediately appear on our desk. We were urged to rush and call 
the students immediately, because quite a few other schools would get 
the same information and were also trying to call them right away. I 
remember talking to one student for more than an hour shortly after he 
requested information. When I called him the next day, he said he was 
put off by the whole experience because he received 34 voice messages 
from various online schools attempting to recruit him. This doesn't 
stop after just 1 day. We'd continue to call leads several times a day 
for 2 weeks.
    In the location where I worked there were well over 100 admissions 
representatives divided into about 10 teams. Each team had a name, like 
``the drivers'' or ``sopranos.'' Teams consisted of 10-15 reps and were 
supervised by a director of admissions and one or two assistant 
directors. The directors kept the teams in constant competition with 
one another. At any given time, multiple contests for gift-cards, paid 
time-off and other incentives were offered in order to motivate 
representatives to enroll as many students as possible. Every time a 
team signed up a student, they would set off their signature sound 
effect--bang a drum, ring a bell, or blow a whistle. An email was sent 
out to the entire admissions department to announce our latest 
enrollment--all of this was designed to keep the energy high and the 
phones dialing.
    I remember one email in particular (which has been provided to 
you). It was sent out after a sales representative signed up his second 
student of the day. A picture showed gangsters hanging out a car window 
with assault weapons. The comment read, ``Everyone Hit the 
DECK!!!!!!!!!!!!! A Drive BY JUST Occurred!'' As that email 
illustrates, many recruiters looked at students as just another target 
to nail to help meet their quotas. And that attitude was not isolated. 
It was part of the corporate culture. I was taken aback by the general 
disdain for prospective students. They were often characterized and 
described among admissions staff as stupid, lazy, and generally unaware 
of what was in their own best interest.
    In addition to the hyped-up atmosphere, representatives were also 
kept motivated by the promise of rewards. Each representative had a 
quota of two students to enroll per week. An ``enrollment'' was nothing 
more than a completed and electronically-signed application. Individual 
enrollments could mean paid time-off or gift cards, and when I was 
there, a successful year earned the top representatives an all-
expenses-paid trip to Cancun. Most importantly, each term 
representatives needed to turn at least six of those enrollments into 
``starts.'' A start consisted of a student who completed all of their 
financial aid requirements and attended classes for 2 weeks. I was told 
that after 2 weeks Westwood could keep the student's Federal financial 
aid money, even if the student dropped out. It was the start that 
determined most rewards including salary and promotions. It was all 
about the numbers. With high numbers, the most successful 
representatives could earn about three times their starting salary.
    But rewards were not the end of the story. If a representative was 
not meeting their numbers, supervisors would apply constant pressure. 
If you fell behind in your enrollments or start quotas you'd be 
expected to make at least 150 calls a day if you didn't want to be 
harassed and threatened by your supervisor. If my supervisor's 
monitoring system showed me slowing down on calls for a few minutes, 
I'd receive an email with a computer screen shot showing my inactivity. 
When I struggled to enroll students, I received more and more direct 
coaching. I was told to replicate how various representatives talked 
about financial aid or generated excitement for a program. The 
representatives I was told to emulate would exaggerate expected salary 
data, present misleading tuition information, and fabricate the 
credentials of faculty members. Of course, at the same time I was being 
constantly reminded that my job was on the line if I didn't hit the 
quotas, whether through hints, blunt statements, or the sudden absence 
of a co-worker.
    Not surprisingly, this type of environment led to abuse. To avoid 
revealing the full $75,000 price tag for a bachelor's degree, some 
representatives would simply lie about the total cost. I overheard 
representatives say the final cost of the education at Westwood was 
less than half the actual price. More commonly, representatives would 
tell students the per term cost of approximately $4,800 and let the 
student incorrectly assume there were two or three terms per year, like 
most traditional colleges. There were actually five terms each year. I 
also overheard representatives promise that Federal grants would cover 
almost their entire education. They'd make up or cite misleading salary 
information, leading potential students to believe that they could 
leave Westwood Online with a job that pays over $100,000 and at their 
choice of employer. There simply were no boundaries. The most troubling 
part about the job was that, to my knowledge, none of these lies were 
ever discouraged. I worked on two different teams and under three 
different directors of admissions. Our supervisors recorded every call 
and listened to many of them, but not once did I witness any supervisor 
step in to discourage any of the lies or deceptive statements. In fact, 
lying was often implicitly or explicitly encouraged. The most appalling 
example was when the assistant director of admissions on my team was 
presented with a ``Best Liar'' award at a team celebration.
    For months, I was able to convince myself that I wasn't like my 
supervisors, or any one of the majority of representatives who lied and 
deceived prospective students and mastered the art of pushing on pain 
points and emotional triggers to pressure students into attending 
school, regardless of what was in their best interest. But, eventually, 
all the coaching I received started working, and I began enrolling more 
students. I was becoming a better salesman. I was taken off probation. 
My job was now safe, because, as my supervisor put it, I was 
``fulfilling my potential.'' And I continued to convince myself I could 
work this job ethically.
    Sadly, when I started to see how students were treated after 
enrollment, I became even more disillusioned with the company I worked 
for. I learned that the lies don't stop at enrollment. The next 
important thing was to make sure that students didn't drop out--at 
least during the first 14 days of classes. Fourteen was the magic 
number. After a student attended for 14 days, the school was allowed to 
keep any financial aid it received as a result of enrolling that 
student. I remember one particular student I enrolled named Jeffrey. He 
was in the Army Reserves. On Jeffrey's 13th day of school, he was 
called up from the Army Reserves to active duty to serve as a drill 
sergeant, so he called in to withdraw from school. I spoke to him and 
determined he was completely unable to attend and succeed in school. I 
told my director, and she was furious. She ordered me to call him back. 
I spoke to Jeffrey again for more than an hour and reached the same 
conclusion. My director then had my assistant director call Jeffrey 
and, not surprisingly, he reached the same conclusion: Jeffrey was 
simply unable to go to school with his schedule. But my director still 
wasn't satisfied. She called him and tried to pressure him for yet 
another hour. I remember her saying she might even have my executive 
director call. Jeffrey was just 1 day away from the deadline, and she 
wasn't willing to lose the ``start'' regardless of the fact that it was 
clearly in his best interest to withdraw before he was on the hook for 
his Federal loans. I was disgusted by such a flagrant disregard for the 
student and a member of the military.
    The more I learned about the school's programs and operations, the 
more it became clear that it wasn't just a few rogue representatives 
under pressure lying to students. It was institutional, systematic and 
often hidden from the representatives themselves, who often didn't 
realize the information they shared with students was not true. Three 
examples in particular stand out in my memory.
    In training we were told that, from the student's perspective, 
there was no significant difference between national and regional 
accreditation. When Westwood announced they had applied for regional 
accreditation, I started investigating and discovered there was a big 
difference. Not only was there a higher standard of education for 
regionally accredited schools, but there was also the huge issue of 
transferring credits. Since Westwood was not regionally accredited, 
most traditional schools would not accept the school's credits or allow 
students to pursue an advanced degree. This meant that most Westwood 
students would not be able to transfer their credits to other colleges. 
Yet, for months I worked under the impression there wasn't much 
difference between regional and national accreditation.
    A second falsehood that started in training was the fictitious but 
impressive sounding credentials of Westwood College's gaming programs. 
They were the school's most popular programs, the easiest to get 
students excited about, and the ``most prestigious.'' Representatives 
often referred to Westwood as the ``Harvard'' of gaming schools. 
Virtually every representative, encouraged by supervisors and 
reinforced by training, would tell students about the endorsements the 
gaming programs received from respected companies in the industry, the 
sterling credentials of the faculty, and the promising prospects for a 
graduate with a gaming degree from Westwood. But as I found out, the 
endorsements did not exist. The credentials were fabricated, and the 
prospects were dim for graduates. When I spoke with the career center, 
which was supposed to help students with job placement, I learned they 
only had a small staff of two or three, compared to the 200-plus 
admissions representatives. It didn't seem like the school was equipped 
to provide the incredible career assistance we had been promising 
students. Even more disturbing, I was told the two gaming programs had 
only been around for about 3 years. And in fact, we didn't have any 
graduates working for the major gaming companies at all. In reality, we 
only had three students total who had graduated from our gaming 
programs. I found out that of the three graduates, one had an interview 
with a gaming company, one was unemployed and the other was working as 
a truck driver.
    One last example where students were often misled had to do with 
Westwood's internal loan program, which we called ``student 
supplemental financing.'' It was basically a private loan from the 
college that we were told not to call a loan. We were told to tell 
students that if their financial aid didn't cover all their costs, 
Westwood would step in to ``help.'' Representatives told students all 
they would have to do to cover the balance was pay $150 a month while 
they were in school. However, when I began enrolling more students, a 
financial aid advisor eventually told me more about the loan. I learned 
that the monthly payments hardly put a dent in the amount a student 
owed. It was only a couple of weeks before I left Westwood when I 
learned students would have to pay an oppressively high interest rate 
of 12 percent on what they owed after graduation.
    I began to realize that many of the things I accepted and told 
people on the phone about Westwood were based on falsehoods. I had 
graduated magna cum laude from my college, and yet I proved to be 
embarrassingly naive, foolish and trusting about the school. I started 
wondering how a student was supposed to navigate through these tricky 
waters. How could they be expected to know they were being misled?
    I quit my job at Westwood on a Monday morning. I had no plan to 
quit as I drove to work that day. But I came across a quote by Hannah 
Arendt that I had slipped under my keyboard months earlier while 
thinking of one of my supervisors--someone who I thought was a fairly 
likeable guy but didn't seem to have any sense of morality. As I read 
that quote about how evil isn't conducted by people who are perverted 
or sadistic, but by people who are terrifyingly normal, I started 
admitting things to myself that I'd been avoiding for almost 6 months. 
I accepted that I could no longer tell myself that it was possible to 
work for Westwood and consider myself to be working within any degree 
of ethical standards. That Monday morning, I walked out of the building 
and never returned.
    When I left I had no expectation or reasonable prospect for finding 
another job quickly. I didn't really think about that. I just thought 
about how naive I was when I applied for the job--hoping to help 
students make a better future for themselves through college. Instead, 
I left fearing the students I enrolled would end up with a mountain of 
debt and little or nothing to show for it.
       Attachments--Westwood Online Admissions Department Emails

Attachment 1




Attachment 2


Attachment 3








Attachment 4





    The Chairman. Thank you, Mr. Pruyn. Senator Enzi has to 
leave to go to the White House. I'm going to yield to him first 
for questions.
    Senator Enzi. Thank you, Mr. Chairman. I appreciate that. 
And I'd also ask permission to put a series of charts of 
information that we gathered on schools and dropout rates in 
the record.
    The Chairman. OK. Do we have them?
    Senator Enzi. I don't think so. I just got this, so.
    The Chairman. They're without----
    Senator Enzi. Yes. I'll begin with Mr. Hawkins. What 
disciplinary actions would the National Association of College 
Admission Counseling take if one of its members was found to be 
engaging in a type of behavior revealed by the GAO 
investigation?
    Mr. Hawkins. Typically, our enforcement is that we could, 
if our internal admission practices committee found that there 
was a violation, could censure the member who was in violation. 
If it was a violation of our ethical principles, could censure 
them and prohibit them from participating in certain programs, 
pending a change in the practices or if they deemed it 
appropriate according to our bylaws, could expel the 
institution from membership.
    Senator Enzi. OK. Now the GAO investigation shows 
admissions representatives refusing to allow perspective 
students the opportunity to speak with the financial aid 
office, how does that differ from admission counseling 
practices at public and nonprofit schools? Are there legitimate 
reasons why a school would not provide access to financial aid 
offices to the students who've either applied, neither applied 
nor enrolled?
    Mr. Hawkins. I can't think of a reason why an admission 
officer at a not-for-profit college would not let a prospective 
student talk to someone in the financial aid office. If no one 
was in the financial aid office that day would be one thing, 
but our standard practice for our institutions is to allow 
students to ask the kinds of questions that they feel they need 
about financial aid. And many admission officers are prepared 
to answer those questions. And if they can't, again, standard 
practice is to walk them over to the financial aid office.
    Senator Enzi. OK, thank you. What role do the incentive 
compensation safe harbors play in encouraging the behavior 
revealed in that GAO investigation? How will the department's 
proposed elimination of the safe harbors impact recruiting 
practices at for-profit schools?
    Mr. Hawkins. The safe harbors carved out a number of 
exceptions to the original incentive compensation ban. And in 
our association's opinion, each one of those safe harbors 
chipped away at the law's ability to be enforced. So the first 
safe harbor is the one I think is probably the most to blame 
here. And that is that they poked a little hole in the statute 
by saying you couldn't base the salary solely on the number of 
students enrolled.
    So if you put some minimal evaluatory criteria out for 10 
percent of the--or whatever percent you want to call it--of the 
admission officer's salary, you could base the other 90 percent 
on whether they enrolled the student or not. That is 
essentially commission sales. And that is what Congress sought 
to outlaw in 1992.
    To answer the second question, I feel like the department's 
proposed rule that would eliminate the safe harbors would 
really put the teeth back into that statute, and in our 
opinion, would go a long way toward providing enforceability. 
And a number of you have mentioned enforceability and how the 
department can do that. I think this puts the teeth back into 
it. And combined with greater oversight, it would really 
tighten things up.
    Senator Enzi. Thank you. Mr. McComis, what role do a 
school's recruiting practices have in the accreditation 
process? Is there any?
    Mr. McComis. Senator, as I outlined in my written and oral 
testimony, we have several standards that address recruiting, 
advertising, and admissions practices.
    The goal of those standards is to ensure that the 
activities that are engaged in by institutions lead to fully 
informed students, who are able to make enrollment decisions 
without any pressure, and that they are fully informed before 
they choose to do so. And it's something that we look at very 
closely.
    Senator Enzi. What actions would the ACCSC take if one of 
the schools it accredited was found to be engaging in the 
behavior that was revealed in the videos that we saw in that 
GAO investigation?
    Mr. McComis. Clearly, based upon the information that was 
presented there, I'm confident that our board would go into a 
full investigatory process to try and find out from the 
institution what were the specific instances and occurrences 
that went with that. And there are a range of actions that the 
commission can take with regard to findings. And they range 
with the severity of the actions. So some of the issues that 
were presented in the GAO report are certainly more severe than 
others, particularly with regard to fraud. And the commission 
has actions ranging from sanctions on programs, up to 
revocation of accreditation.
    Senator Enzi. Thank you. And Mr. Chairman, I thank you for 
letting me go first so that I can make it to the White House. I 
appreciate it. I yield.
    The Chairman. Thanks, Senator Enzi. Mr. Hawkins, in your 
testimony--both written, which I read last night and perused 
again this morning, but also in your verbal presentation--I 
made note of the fact that you said that there's enough 
evidence to suggest that compensating admissions officers based 
on the number of students enrolled is standard practice. First 
of all, why do you think that? And what's wrong with that? 
What's wrong with paying people an incentive for enrolling low-
income students?
    Mr. Hawkins. Mr. Chairman, to answer your first question, 
since the safe harbors have been passed, we've been collecting 
stories that are readily available in news accounts, State, 
Federal regulatory actions, and in lawsuits that have proceeded 
through the courts. We have in our written testimony 10 pages 
of bullet summaries of this kind of evidence. Combined with 
what we saw from the GAO today, there's no doubt in my mind 
that because of the safe harbors, and because of what we see in 
front of us, there is a preponderance of evidence, in fact, 
that this practice is pervasive, that it's not one or two rogue 
people here and there, that this is in fact industry practice.
    And of course, the question that I ask is how much more 
evidence do we need? How many more students are going to have 
to go through this for us to take some action? So all of that 
leads me to believe that this is a standard practice.
    To answer your second question, we feel strongly that 
whenever you reduce the basis for compensation for admission 
officers to a simple commission, you are effectively boiling 
the students interests out of the equation. Our principles for 
practice suggest that there is a significant need for 
counseling. When it comes to low-
income students, that need for counseling has never been 
greater. And that when you do not provide that counseling, the 
students are starting off at a disadvantage. And worse yet, 
when you give them misinformation, you are really, really 
stacking the deck against them.
    So we feel very strongly that admission officers should not 
be compensated based on the commission.
    The Chairman. Thank you very much, Mr. Hawkins. Mr. Pruyn, 
a couple of preliminary questions. I understand there is a 
lawsuit by Westwood students being handled by a Florida law 
firm. Are you personally suing Westwood or seeking money from 
the school?
    Mr. Pruyn. I'm not, no. After I left Westwood, I had 
obvious ethical concerns about them and reached out to a friend 
of mine, who's a freelance journalist. And during the course of 
his research, had uncovered a law firm that was investigating 
the school. And through him, they had contacted me, but I'm not 
suing Westwood, and nor do I have plans to.
    The Chairman. If you left Westwood 2 years ago, why are you 
willing to take the time off of work and from your life to come 
and tell us about your experiences?
    Mr. Pruyn. I would say that it's a minor inconvenience to 
try to help inform people about what goes on there. I mean, 
it's so egregious. And personally--I graduated from my 
undergraduate college with a lot of student debt. So I have a 
firsthand experience with that. And I guess it makes me a 
little bit more acute to what it can actually do to a student 
who graduates with significant student debt. And so, I think 
it's obviously something that needs to be addressed.
    The Chairman. Mr. Pruyn, we hear a lot of rhetoric about 
bad recruiting practices being asked of rogue recruiters, the 
sort of bad apples. Did you ever hear other recruiters say 
misleading or inappropriate things? And what was the 
disciplinary policy? Was there any reprimand or discipline for 
an employee who lied to a student on the phone?
    Mr. Pruyn. I never once witnessed anybody be reprimanded or 
disciplined at all. And supervisors monitored a lot of calls. 
Everyone was recorded. And you'd match up with your supervisor 
at least once or twice a week to go over calls and so forth.
    And we've also, I mean, it's very much in the open. I 
remember one person in particular who in my mind was probably 
the most rogue of anybody, who'd just stand up, and who's very 
loud, and would just spout off whatever came into his head. 
He'd tell students they could make over $100,000 at their 
choice of a video game company after they graduated.
    And he would do this and everybody would hear him. But as 
far as I know, he's never been disciplined, because he never 
stopped.
    The Chairman. Again, I'm reading some of the feedback from 
some of the for-profit schools and their representatives, who 
are saying that basically we have 200,000 people that work in 
this industry. Of course there's going to be a few out there 
that do these bad things. So it gets to the issue of, is this 
coming from the employees or is this something that's coming 
from the top down? What do you think? Is it just a few bad 
managers out there? Or is this something higher up coming down 
through the system itself?
    Mr. Pruyn. There's certainly a range of ethics among 
admissions representatives. There's certainly ones that try to 
do a good job and are ethical. And there's certainly ones that 
don't seem to care.
    I worked for at least 4 months when--and I had been trained 
by multiple directors, multiple assistant directors--in my 
initial training, about how wonderful our gaming program was.
    I was told about how we had all these wonderful graduates 
that went to these different major gaming companies, and these 
wonderful salaries they're making. And I believe the number was 
about 85 percent of the students that graduated from the 
program had a job there and in a video game company.
    I assumed these things were true, because they're being 
taught to me during training and reinforced through coaching 
for several months. And then one day, I decided to get more 
specific information. So I went to the career center. And I 
talked to the woman that ran this little career center with 
about two or three people. And she told me that, in fact, one 
of our two gaming programs didn't have a single student that 
had graduated from it. And the other had three. One of them was 
a truck driver, one of them was unemployed, and the other did 
have an interview with a gaming company.
    And so, for several months, I was lying to students, 
telling them that our program was very successful. We used to 
say it was the Harvard of gaming schools. And, in the end, it 
was--there was nothing behind it. And that's something that 
every representative is taught and every representative says. 
And that's not rogue representatives. That's institutional.
    The Chairman. Thank you very much, Mr. Pruyn. I will come 
back to this during our second round.
    Senator Alexander.

                     Statement of Senator Alexander

    Senator Alexander. Thanks, Mr. Chairman and thank you for 
the hearing. Mr. Hawkins, as I understand your testimony, if 
the things that you saw that the GAO presented were brought to 
you about a specific institution, you said that that might 
result in anything from censure to expulsion, is that correct?
    Mr. Hawkins. Yes, sir.
    Senator Alexander. Dr. McComis, you've got a fairly 
rigorous set of recruiting, advertising, and admissions 
standards for your commission. Did I understand you to say that 
if the information that the GAO discovered was brought to your 
attention, that that might result in a investigation of that 
institution, which could lead to a variety of things, including 
a withdrawal of accreditation?
    Mr. McComis. That is correct, Senator.
    Senator Alexander. Mr. Hawkins, you recommend as Secretary 
Duncan does, reinstating the safe harbor or removing the safe 
harbor exception to the reform that was made in 1992. I was 
Education Secretary in 1992 when that was done. What happened 
between 1992 and 2002? Did it pretty well dry up the practice 
of incentive compensation?
    Mr. Hawkins. My experience in admission policy at that time 
is limited. I was not at the association during that time, but 
my understanding of the issue, and I'm sure the Department of 
Education would be able to give a better answer, my 
understanding is that practice did in fact improve, and that 
the number of actions that the department had to take went down 
fairly substantially.
    Senator Alexander. But it would take us back to the 
position of there can't be incentive compensation. That would 
be the rule, right?
    Mr. Hawkins. That's correct.
    Senator Alexander. That's your recommendation?
    Mr. Hawkins. Exactly, yes, sir.
    Senator Alexander. Dr. McComis, you accredit institutions, 
more than 800? What percent of the for-profit institutions of 
the country does your organization accredit?
    Mr. McComis. I don't have that percentage precisely.
    Senator Alexander. Most of them or?
    Mr. McComis. I would say, well we accredit 800. So whatever 
the total population of that is.
    Senator Alexander. Well, there are 3,000. You know the 
number, don't you?
    Mr. McComis. About a third or so.
    Senator Alexander. Yes. And what percent of the students 
attend those institutions?
    Mr. McComis. Our census count is about 250,000 as of June 
2009.
    Senator Alexander. For all for-profit institutions or just 
the ones you accredit?
    Mr. McComis. Just for our accredited institutions.
    Senator Alexander. Yes. So generally speaking, for-profit 
institutions are a large number of institutions--about 3,000 of 
the postsecondary institutions we have in the country, but a 
relatively small part of the students, about 9 or 10 percent of 
all the students in postsecondary education in the United 
States are in for-profit institutions? And is it correct that 
most of them are low-income or they're predominantly low-
income, minority students and somewhat older than other 
postsecondary students?
    Mr. McComis. Our demographic data that we collect would 
support that.
    Senator Alexander. Is it your impression, Dr. McComis, that 
the problem here is a lack of rules or a lack of enforcement of 
the rules?
    Mr. McComis. Most likely it's a lack of enforcement, but it 
could be a combination of both. I don't know the accreditation 
standards for every agency. I know that many agencies like my 
own have very rigorous standards, particularly those that have 
a predominance of for-profit institutions within their 
membership. But it's likely a combination of both of those.
    Senator Alexander. Are there other accreditation agencies 
other than yours that accredit for-profit institutions?
    Mr. McComis. Yes.
    Senator Alexander. How many others?
    Mr. McComis. Six others at the national level. And then, 
each one of the regional accreditors also have some population 
of for-profit institutions.
    Senator Alexander. But the way I read your standards, 
they're pretty tough about recruitment. And if any of the 
things that we're talking about were done, a school where they 
violate it, the school could have a tough time keeping its 
accreditation?
    Mr. McComis. That is correct, Senator.
    Senator Alexander. Yes. Mr. Chairman, if I could get your 
attention just for a moment. I'm going through the 
accreditation. I found something out, when I was Education 
Secretary 20 years ago, in that the Education Secretary 
accredits the accreditors basically. In other words, Dr. 
McComis was saying there are six or seven accrediting 
institutions that are for-profit institutions. And there are 
3,000 for-profit institutions you might choose among. And here, 
standards looks to me like they are pretty tough.
    So, one avenue for dealing with the problem you've 
outlined, Mr. Hawkins has suggested one. Go back to the 1992 
ban on incentive compensation. But another one is to go to work 
on the accrediting agencies a little bit. Secretary Duncan may 
very well choose to do so, and say we're going to rely more on 
you. I think you almost invited that in your comments. You said 
you'd be willing to work with us if the committee and the 
Congress is worried about this, that we could work with the 
accrediting agencies, tighten up the rules and prove 
investigations have more enforcement. Is that correct?
    Mr. McComis. Yes, Senator.
    Senator Alexander. My time is up, Mr. Chairman, but as I 
think about this in this light, We've got 6,000 higher 
education institutions in the country. Together, they're the 
best system in the world. I mean, we altogether. That's one of 
the things the United States does well. I think one reason is 
because they're autonomous. People have a choice of those 
institutions. They can go to a national auto diesel college, or 
they can go to Harvard, or they can go to University of Iowa, 
or wherever they choose to go. And the money follows them.
    Now whenever that happens, though, you're going to have 
some problems. And we've seen some today. So I think as almost 
every Senator has said, we want to make sure when we do 
something about this, that we separate those who are doing the 
job of helping achieve the President's goal of increasing the 
college graduation rate. And we don't shoot quail with a 
cannon, in other words, and miss the quail and hit some 
innocent people.
    Or to use another analogy, if you have somebody singing out 
of tune on the Grand Ole Opry, you don't cancel the Opry. You 
cancel the act. So in looking for a way to cancel the act, I'm 
thinking that working with the accreditors is a very promising 
opportunity, because we really rely on them to make sure that 
the institutions are right. And if they're looking at things 
like graduation rates, student loan default rates, job 
placement rates, even passage into professional exams, and if 
they're enforcing the recruitment efforts, and we also go back 
to the 1992 rule on compensation incentive that Secretary 
Duncan has recommended, that those would be two steps that 
could make a big difference in achieving the goal that I think 
you set out for the hearing. Thank you for your attention and 
for your time.
    The Chairman. Thank you, Senator.
    Senator Franken.
    Senator Franken. Thank you Mr. Chairman. Mr. McComis, in 
your testimony you say that your agency has established 
``rigorous standards'' to ensure the schools you accredit 
``recruit and admit only those students who are accurately and 
fully informed about the institution's programs and who are 
qualified and capable of completing the program in which they 
intend to enroll.''
    Yet three of the schools found to be engaging in deceptive 
recruitment in the GAO report are accredited by your agency. 
And also Westwood is accredited by your agency. There seems to 
be a discrepancy here.
    What are these rigorous standards that you use to ensure 
that schools that you accredit, recruit and admit only students 
who are accurately and fully informed about the institutions?
    Mr. McComis. Senator, as I provided in the written 
testimony, the list of standards that you have there are the 
actual standards that we require of our institutions--that they 
only engage in ethical practices and ensure that they do not 
make misstatements to students.
    They require that institutions only engage in ethical 
practices and ensure that they do not make misstatements to 
students. That they do not make guarantees. That they ensure 
that students are provided with sufficient information such 
that they understand the program requirements.
    Senator Franken. I don't think you're quite answering my 
question. You say that you have rigorous standards to ensure 
that the schools you accredit, recruit and admit only those 
students who are accurately and fully informed. I understand 
that the fact that they have to be accurately and fully 
informed is one of your standards.
    I'm asking you what your rigorous standards are to ensure 
that the schools you accredit, recruit and admit only those 
students who are accurately and fully informed about the 
institutions when we've seen that three of the schools that you 
have accredited were involved in giving false information and 
inaccurate information to prospective students who were not 
fully informed about the institutions, or the institution.
    Mr. McComis. So the processes that we use then for that 
assurrance process is one whereby through a very high touch 
accreditation onsite evaluation requirements that we have 
within our institutions. Annual reporting of student 
achievement outcomes, robust complaint processes, robust 
interaction in the triad are all methods that we use to find 
out whether or not any of those rigorous standards have been 
violated.
    Senator Franken. And why do you believe--how do you explain 
the discrepancy then? That these three schools, that you 
accredited, were misleading to the GAO prospective students 
that came in? In other words, rigorous means rigorous. And yet, 
to me, this doesn't seem like there was much rigor in your 
process.
    Mr. McComis. So certainly I think it's fair to say that our 
agency is, I guess to quote Senator Mikulski, a bit crabby 
about this. That we would find institutions that are engaged in 
activities that might look like clear violations of our 
standards. And the important part of that process now is that 
we investigate that fully and that we sanction the institutions 
appropriately.
    Senator Franken. Do you think perhaps that maybe your 
rigorous standards aren't rigorous enough?
    Mr. McComis. I don't think that's the case Senator. I think 
that the standards themselves are----
    Senator Franken. OK, to me there is a real discrepancy 
here. Because you describe saying in your testimony, the 
rigorous standards to ensure that the schools accredit only 
those schools that recruit and admit students who are 
accurately and fully informed. And yet, we see that the 3 
schools that you accredited in this group of 15 didn't do that.
    So what I'm saying to you is, I think that your rigorous 
standards aren't rigorous enough. But you think they are. And I 
don't know how you think they are. Doesn't this industry--what 
bothers me--I know my time is up, but let me ask one last 
question. Doesn't this industry have any interest in self-
policing itself?
    Mr. McComis. I believe that it does Senator and I think 
that accreditation----
    Senator Franken. Is there any evidence that you can provide 
me, that your industry has any interest in self-policing 
itself?
    Mr. McComis. The best evidence that I can provide to you is 
my 16 years of experience in working in the accreditation 
industry, particularly with for-profit institutions and seeing 
rigorous self-
policing through that process.
    Senator Franken. And yet, what clearly was not rigorous you 
described as rigorous.
    You said that you have rigorous standards to ensure that 
schools you accredit, recruit and admit only those students who 
are accurately and fully informed about the institution's 
programs. And we saw that the three schools that you accredit 
misled the people that came in there.
    I asked you about that, and you said that you were 
satisfied with the rigor of your standards. That just seems to 
be, on its face, clearly wrong. And I'm sitting here--I have a 
responsibility to the taxpayer, OK? I have a responsibility to 
the taxpayer.
    And I'm supposed to take solace from you from your 
experience in this business when you're the one that just told 
me that what was clearly not rigorous is rigorous enough? 
Explain to me why I should believe you?
    Mr. McComis. I believe that the standards themselves are 
rigorous. In these particular instances, the schools' 
compliance with those standards certainly fell short.
    Senator Franken. You don't understand what the standards 
are. You are saying you have rigorous standards to ensure that 
the schools you accredit recruit honestly. I'm not talking 
about the standards you have that they do recruit honestly. 
It's your standard to ensure that they recruit honestly. That's 
the standard I'm asking you about. And you said you were 
satisfied with the rigor on that. I don't know how you can be.
    Mr. McComis. Yes, as I indicated in the conclusion of my 
oral statement. You know certainly our Commission and hopefully 
other accreditors will certainly look at this and find whether 
or not there can be greater vigilance put forth. I agree with 
that.
    Senator Franken. Thank you. I'm sorry to go over.
    The Chairman. Thanks Senator Franken.
    Senator Bennet.
    Senator Bennet. Thank you Mr. Chairman. Mr. Pruyn I want to 
start with you by first saying thank you for coming all this 
way from Colorado for this testimony and for your courage in 
speaking out. I wanted to ask you a question that has been 
asked of other panel members. Which you talked about the effect 
of the training on your pitch and so forth.
    I wondered whether you'd share with the committee your view 
about whether the incentive structure, the way you were paid 
and others were paid, contributed or didn't contribute to the 
pitches that were made. Would changing the incentive structure 
have made a difference do you think? What are your thoughts on 
that?
    Mr. Pruyn. It would help to a degree for sure. But, there's 
a lot that goes in to why the culture is there. Certainly the 
incentives motivate some people. But as they're dangling a 
carrot with one hand they have the axe in the other. I mean for 
quite a while I wasn't enrolling many students at all.
    And, I was on probation and threatened with my job on a 
regular basis. So there's that piece. A lot of it is just lies 
that are withheld from the representatives themselves. You know 
there were programs at Westwood that were not--while the school 
was accredited, the program itself wasn't accredited.
    One example is our paralegal program. I didn't know that 
for months of working there. I could give examples like that 
where I found something out close to the time I quit, all day. 
And that, that sort of information isn't provided to the 
representative. So changing the way a representative is 
compensated I don't think will have any effect on that, on that 
portion of the problem.
    Senator Bennet. Just to go back to the incentive for a 
second. When you said it would help, it might help a bit.
    Mr. Pruyn. Yes.
    Senator Bennet. Why would it help? And if you really don't 
think it would help to change it, to tell me that too. I want 
to hear your honest thought about it.
    Mr. Pruyn. It would help, but I don't think it would fix 
the problem.
    Senator Bennet. OK.
    Mr. Pruyn. I think it would help because some of the 
representatives that are more--rogue, I guess you could say, 
are really motivated by that piece. And so I think it would 
help rein in some of the more egregious claims. But I still 
think the fundamental problem is still going to be there.
    Senator Bennet. Thank you. Thanks again for being here. Dr. 
McComis, do you think, just to pick up on where Mr. Pruyn took 
my question, which was--rather than the direction I was headed 
which is always a good thing because you learn things. To what 
extent can some of the issues that he's raising be solved 
through better public disclosure of these issues that we're 
confronting?
    For example, the idea that they'd have programs, his 
testimony would suggest, that were not accredited even though 
the school is accredited. Is that sort of information publicly 
available and widely available?
    Mr. McComis. The differences between programmatic and 
institutional accreditation----
    Senator Bennet. As an example.
    Dr. McComis [continuing]. As an example?
    Senator Bennet. I mean of the kind of information that 
anybody would want to know before they even picked up the phone 
to call Westwood and say, ``you know, I'm thinking about your 
program.''
    Mr. McComis. It would likely take a little bit of digging 
by a consumer or prospective student to get to that. I don't 
know that I would say that it's necessarily readily available.
    Senator Bennet. Would you say that it's as readily 
available as the equivalent information for public 
institutions?
    Mr. McComis. Yes. In either instance it's--in this 
particular case, what you're referring to, is to what degree 
does the institution itself decide to disclose that 
information.
    So if I wanted to know about whether or not a gaming 
program or some other kind of program was programmatically 
accredited, the institution's lack of disclosure has to lead 
the student to assume that it's not accredited.
    What we're mainly focused on is when the school does use 
claims of accreditation that they accurately describe that 
status and the agency by which its institution or program is 
accredited.
    Senator Bennet. I think I'd make the opposite assumption 
probably, as a student. That if the school were accredited that 
that meant that the programs were accredited. But it doesn't 
matter. The question is, it seems to me it's in everybody's 
interests, the students, the schools, the taxpayers certainly, 
that people have access to this kind of information.
    It just feels to me, in these hearings, as though it's not 
out there in a way that makes sense to people. And it would 
have, I would think, based on what Mr. Pruyn and others have 
said, have the effect of making it harder to do the kind of 
stuff we were watching on the television earlier.
    One last question Mr. Chairman, thank you so much. I just 
wanted for you, Doctor, to describe--just to come back to 
something that Senator Franken was talking about. Can you tell 
the committee a little bit what the onsite part of your 
accreditation process looks like? What does it look like when 
you're on the ground at a Westwood or any of the other schools 
that you accredit?
    Mr. McComis. The process begins through the attendance at 
an accreditation workshop whereby then the applicant to agency 
or institution submits a self-evaluation report. Which is 
essentially our standards of accreditation in a question 
format. Then the institution will need to go through and answer 
those questions and provide documentation and description about 
how they comply with those standards.
    The role of the onsite evaluation team is to go through and 
evaluate the information that's provided in that self-study, do 
some sampling and some testing to ensure its veracity to the 
extent that they're able to. The team is comprised of subject 
matter specialists for each one of the program areas, education 
specialists and management specialists for that kind of 
institution.
    The self-evaluation report is the key document that they 
use in going through that process as well as reviews and 
interviews, onsite. A report is then generated from that. We'll 
list any findings of noncompliance and the institution will 
have an opportunity to respond to that. All that information 
then goes in front of our Board and they make a final decision 
relative to the application.
    Senator Bennet. How long--Mr. Chairman, thank you. Can you 
give me a sense, I've seen this in the K-12 context, not in a 
higher education context, the length of time that that onsite 
visit takes place generally?
    Mr. McComis. Generally the average enrollment in our school 
is under 300 students. So we can typically do an onsite 
evaluation in about 2 days.
    Senator Bennet. OK. And then just by order of magnitude in 
terms of the process of gathering the accreditation information 
that you have and then responding to the institution saying, 
we've detected the following problems before you take it to 
recommend it to the Board.
    Can you just give us a sense, by order of magnitude of how 
often you actually do go back and say, we've got this list of 
issues that have concerned us and then you're not satisfied by 
the response that comes back from the institution and therefore 
you can't recommend the accreditation?
    Mr. McComis. Well we've taken 12 adverse actions in the 
last 2 years against institutions. But that's the most extreme. 
So if an institution goes through and submits a response to a 
team report that has findings on noncompliance, they'll have an 
opportunity to respond to that.
    The Board could take a variety of actions. They could defer 
final action on that and try to get more information. They 
could place the school into a probation phase, again, through 
investigation.
    Senator Bennet. How many have been put on probation over 
the last 2 years?
    Mr. McComis. Oh I think we, on average, have somewhere 
between 6 and 10 institutions on probation at any time.
    Senator Bennet. And this is out of a total of how many?
    Mr. McComis. Eight-hundred institutions.
    Senator Bennet. And how often are they reviewed?
    Mr. McComis. The maximum accreditation cycle is 5 years. 
It's 3 years maximum for schools that are receiving their first 
grant----
    Senator Bennet. I'll stop you, but the 12 and the 6, if you 
look at--well let's stick with the 12. The 12 that lost their 
accreditation over the last 2 years, that's out of how many 
accrediting examinations that you did over that period of time? 
Because it's not 800, right?
    Mr. McComis. No, we don't do 800 a year.
    Senator Bennet. Right.
    Mr. McComis. So we would probably do somewhere in the 
neighborhood of 125 renewal onsite evaluations. And 
approximately another 150 or so of other kinds of evaluations 
for substantive change or unannounced or other investigations.
    Senator Bennet. I'd like to thank the panel and thank you 
Mr. Chairman for letting me go over.
    The Chairman. All right Senator Bennet. Dr. McComis, let me 
follow-up on that a little bit. When you do these onsite 
evaluations, as you said to Senator Bennet, and you take action 
on 6 to 10 over the last couple of years or something like 
that--was the figure I heard. Six to ten?
    Mr. McComis. No, he asked me how many were on probation.
    The Chairman. Yes. And then you said on others that you 
take action against them. And let's just take the probation. 
That's not the entire school, that's just the site, is it not?
    In other words, if you went to a location for the 
University of Phoenix and you found an offense and you put them 
on probation, you don't put the whole University of Phoenix on 
probation, you just do that one site? Is that correct?
    Mr. McComis. That is correct.
    The Chairman. OK, so it's the location. So whatever you put 
them on probation for might be going on someplace else but you 
just put that site on probation.
    Mr. McComis. We have instances, however Senator, where we 
have put entire systems on probation.
    The Chairman. And you'll provide that to this committee?
    Mr. McComis. Yes sir.
    The Chairman. I'd appreciate that. Now Mr. Hawkins, I heard 
Dr. McComis say something that caught my attention on a 
question I believe that was asked by Senator Franken. That the 
same information is provided to prospective for-profit students 
and other college students.
    Is that what you said Dr. McComis? I think Senator Franken 
asked you, he said do you feel that the same kind of 
information is provided to prospective for-profit students as 
other college students. And I believe your answer was, yes.
    Mr. McComis. I thought that what the Senator was asking me 
was regarding disclosures relative to accreditation status in 
programmatic versus institutional. Regardless of the 
institution you go to it depends on what that institution 
chooses to disclose and how they choose to disclose it.
    There's no requirement in our standards that you have to 
disclose programmatic accreditation. Although, I can't imagine 
why you wouldn't as long as you did it truthfully and 
accurately.
    The Chairman. Mr. Hawkins, what happens when a student 
wants to go to a private or nonprofit college, one of the ones 
that you are involved in and they ask for that kind of 
information about finances and accreditation and all that. What 
does the school say? Do they say you have to sign up first?
    Mr. Hawkins. No, that information is supposed to made 
readily available. Particularly about financial aid and the 
cost. Admission officers from the very junior admission 
officers, that we call our ``road warriors''--they go to high 
school and visit students, all the way up to the Dean and VP of 
enrollment--are pretty well versed in all the types of 
information that a student and their family might ask for.
    So that information is generally readily available. And as 
I said earlier, if they have questions that the admission 
office can't answer, standard practice again is to forward 
those types of questions to the people on campus who might be 
able to answer them, such as the financial aid office.
    The Chairman. So Dr. McComis, I see a clear delineation 
here between what the for-profit schools are doing and the 
schools that Mr. Hawkins covers in terms of how they answer 
student inquiries into finances, accreditation, and all other 
information. It seems to me a lot different.
    They seem to have a set of standards that they follow. And 
what I hear from you is, well each school kind of does it 
differently.
    Mr. McComis. Senator I was only referring to whether or not 
they choose to disclose accreditation status or not. With 
regard to all of the other instances that you've laid out, 
certainly it is our expectation that students are fully 
informed of all obligations prior to signing any kind of 
enrollment agreement.
    And that would include tuition, fees, all of the policies, 
the program objectives, the opportunities that the program 
leads to. Everything that we require to be disclosed to 
students through the catalogue and through the enrollment 
agreement.
    The Chairman. We had in our last hearing, a young woman who 
had gone to a for-profit school, spent a lot of money, went 
quite a bit into debt. She was told it was accredited but when 
she graduated she couldn't find a job because the for-profit 
school was accredited but the program that she was in was not, 
and she was not told that. And so a student goes to a school, 
they call up and say ``are you accredited'', and they say, 
``sure''. But they don't give them all the information.
    Mr. McComis. You know in that particular case Senator I 
think that if there needed to be disclosure about the need to 
graduate from a programmatically accredited program in order to 
obtain employment, that institution had an obligation to inform 
the student as such.
    The Chairman. Well they had an obligation, but they didn't 
do it. Dr. McComis again, your written testimony focuses 
extensively on your use of student outcomes to judge school 
quality.
    According to calculations by my staff, you accredit more 
than 41 institutions with 3-year cohort default rates of 30 
percent or higher. That means that at 41 schools, where you 
evaluate quality, more than 3 in 10 students default within 3 
years of leaving school.
    That includes ATI Technical Training Institute of Dallas, 
where the default rate was 49.5 percent. I have a whole list of 
them here. At Lincoln Technical Institute of Philadelphia, 42.2 
percent defaulted within 3 years. And yet these are accredited 
by you. So what does that say about the quality of these 
schools?
    Mr. McComis. We certainly have standards relative to 
student loan repayment. And we don't just apply those standards 
in terms of Federal financial Aid. Our standards apply to any 
kind of loan repayment obligations that students receive, 
should receive a fair amount of counseling that goes along with 
that to ensure the repayment of those loans.
    We also monitor student loan defaults at our institutions 
and place them into monetary mechanisms if they reach certain 
thresholds. We don't necessarily look at default rates, 
themselves, as a direct indicator of the quality of education 
that's provided by that institution.
    The Chairman. So you don't look at default rates as an 
indication of the quality of the education? Is that right? Is 
that what you just said?
    Mr. McComis. That is correct. We use other metrics such as 
graduation rates, employment rates, where applicable passing 
exams for State--for certification, other indices of student 
learning.
    The Chairman. So student default rates, let me get this 
straight, just don't factor into your accreditation process?
    Mr. McComis. I didn't say that Senator.
    The Chairman. What did you say?
    Mr. McComis. I said that we have standards that deal with 
student loan repayment, but we don't use it as a primary 
indicator of quality of education.
    The Chairman. Well is it a secondary or a tertiary 
indicator?
    Mr. McComis. We have standards that deal with it. And we 
look at whether or not institutions are fulfilling their 
obligations to assist students and providing them with 
information about their loan repayment obligations.
    The Chairman. So this doesn't seem to bother you and your 
association that you have 41 schools here that have default 
rates of over 30 percent in the first 3 years? Would that 
require you to look at these schools or maybe go out and do 
some more evaluations? Or do you just sort of look at that and 
say, ``Well that's what they say it is?''
    Mr. McComis. Those rates would certainly put them into a 
monitoring mechanism.
    The Chairman. Are you monitoring these schools? Are you 
monitoring ATI Technical Training Institute of Dallas?
    Mr. McComis. I don't think that those rates are the 
official rates that have been distributed as of yet.
    The Chairman. I'm told by my staff that these rates came 
from the Department of Education last fall.
    Mr. McComis. The way that the rates----
    The Chairman. But if they came out last fall, you've had 
since last fall to look at them. Now I'm asking you, have you 
taken any action or investigated or done something about these 
41?
    Mr. McComis. Those are based on, I believe, the 3-year 
default rates.
    The Chairman. Yes.
    Mr. McComis. Now we're currently still using the 2-year 
default mechanism for our monitoring.
    The Chairman. So you only do 2-year?
    Mr. McComis. Currently, because that's what the law has 
been up to this point.
    The Chairman. Yes, because it's going up to 30 percent as 
you know.
    Mr. McComis. Exactly, and so we've already looked at and 
our Board has already begun to talk about, as the law changes 
and the regulations change, we will change our monitoring 
mechanisms to accommodate that.
    The Chairman. So again, this doesn't say anything to you 
about the educational quality of those schools?
    Mr. McComis. In our data, we found no correlation 
necessarily to indicate that it is a--default rates are 
directly, statistically correlated to the quality of education. 
We find there to be a much more substantial connection between 
graduation rates and employment rates.
    The Chairman. Dr. McComis, in your written testimony, again 
you make note of the fact that you have standards on 
recruitment, admission processes, and advertising. Again, I'm 
interested in how you uphold those standards. The numbers that 
you provide demonstrate that over the prior 2 years you 
conducted 629 onsite evaluations.
    And that was also in response to Senator Franken's 
question, 629 onsite evaluations. You did not find any 
``substantial noncompliance by our institutions.'' That's in 
your written testimony. GAO randomly sampled three of your 
institutions and had adverse findings at all of them.
    How am I supposed to reconcile those two different 
versions? You visit them, you say you didn't find any 
substantial noncompliance. GAO randomly sampled three and had 
adverse findings at all of them. How do I reconcile those two 
facts?
    Mr. McComis. The process that we use for onsite evaluation 
I think is different from the way that the GAO has 
investigated. I'm not sure that our standard process would find 
substantially the kinds of fraud that the GAO has alleged has 
occurred.
    The onsite evaluation process through accreditation starts 
from a vantage to work with those institutions to understand 
their practices and for them to describe those practices and 
give us an opportunity to see those occur. We don't secret shop 
our institutions to see what they're recruitment practices are. 
And so in the normal course of an onsite evaluation I'm not 
sure that we would find those particular occurrences.
    Now having said that, the findings that we do have, 
particularly with respect to advertising and recruitment come 
to us from a variety of sectors, as I've indicated. So we rely 
not only upon what the school tells us but hopefully what we 
find out from our member partners in the triad, States and 
Federal Government, and also through student complaints.
    And use that information quite rigorously to understand the 
activities that occur at our institutions in those interim 
periods between our onsite evaluations. As I believe all 
accreditors should.
    The Chairman. So Dr. McComis if your process, and I say 
this by the way, as the Chairman of this committee I think it's 
become I think apparent to me that we need a hearing on 
accreditation and what that means.
    But if your process doesn't detect readily apparent fraud, 
who's protecting the students and the taxpayers? We rely upon 
the accreditation people, that's what I thought. So if your 
evaluations don't even uncover fraud, who can we go to to 
protect the taxpayers and the students?
    Mr. McComis. I think the Congress purposefully set up a 
triad system because accreditation first and foremost, is a 
system designed to evaluate quality of education, not to detect 
fraud. There are other opportunities within the triad for that 
to occur.
    The Chairman. I beg your pardon, quality education has 
nothing to do with fraud? It seems to me that fraud has a lot 
to do with a quality education.
    Mr. McComis. Senator, what I meant to say is----
    The Chairman. Maybe I'm wrong.
    Mr. McComis. The first and foremost goal of accreditation 
is the evaluation of the educational quality at the 
institution. Certainly if we find fraud within that process 
we're going to act upon it.
    The Chairman. But again, your onsite evaluations didn't 
detect one. You said we had no substantial noncompliance. GAO 
sampled three and found adverse findings at all three of them. 
I'm still trying to understand.
    Mr. McComis. We survey findings of noncompliance.
    The Chairman. I'm getting the sense you don't do the kind 
of investigations that GAO does.
    Mr. McComis. That is correct.
    The Chairman. You kind of go to the school and ask them 
what they're doing and they tell you and you just say fine. It 
seems like you accept the school's word on what they're doing.
    Mr. McComis. We look at other evidence points as well to 
support that information through, again student surveys. As 
I've indicated, the surveys that we did just over the last 2 
months indicated a very high rate of student satisfaction 
within those processes. We rely heavily on that kind of 
information that we receive.
    The Chairman. Again I saw that. I read that in your 
testimony last night when I was going through it on these 
student surveys. But I didn't see how those students were 
picked and whether or not those students also included students 
who had dropped out. Or are these just students who 
successfully completed the program?
    Mr. McComis. They are students----
    The Chairman. I need to know what the mix of those students 
are.
    Mr. McComis. Those are students that are currently enrolled 
at the time of the onsite evaluation. They are conducted in-
person at the time that we are there.
    The Chairman. OK. So no students that dropped out were 
interviewed?
    Mr. McComis. That is correct.
    The Chairman. In your written testimony Dr. McComis, you 
say that,

          ``accreditors must hold institutions accountable to 
        ensure that only the highest level of integrity is 
        injected into the student recruitment and admissions 
        process.
          ``Moreover, all higher education institutions and 
        their accreditors must understand the connection 
        between recruitment and admissions processes and 
        student achievement outcomes.''

    Let me repeat that because it gets to what we were talking 
about earlier.
    You said that accreditors, that's you,

          ``must hold institutions accountable to ensure that 
        only the highest level of integrity is injected into 
        the student recruitment and admissions process. 
        Moreover, all higher education institutions and their 
        accreditors must understand the connection between 
        recruitment and admissions processes and student 
        achievement outcomes.''

    That seems to me to have something to do with the quality 
of the education about which you just spoke.
    Can you explain how the practices observed by GAO in 
schools you accredit are consistent with the highest level of 
integrity in the student recruitment and admissions process? 
How are they consistent with what you just said? Accreditors 
must hold institutions accountable to ensure that only the 
highest level of integrity is injected into the student 
recruitment and admissions process. Well how can these 
practices observed by GAO be consistent with the highest level 
of integrity?
    Mr. McComis. Clearly, the GAO report puts forth some 
troubling practices. And I believe that those institutions need 
to be investigated and held accountable. There are findings of 
non-compliance with standards, non-compliance with law, 
violation of regulation, those institutions must be held 
accountable.
    The Chairman. Dr. McComis, how many accrediting 
institutions are there in the United States that accredit for-
profit schools? How many different accrediting agencies 
accredit for-profit schools?
    Mr. McComis. I believe there are 13.
    The Chairman. Thirteen. Thirteen. And Mr. Hawkins, how many 
accreditors are there for the private, the nonprofit and the 
public schools?
    Mr. Hawkins. That's a question I actually don't know the 
answer to sir.
    Mr. McComis. And Senator, just to make clear the issue 
there of when I gave you the number 13, there are some that do 
predominately for-profit and then the regional accreditors do 
both not-for-profit and for-profit.
    The Chairman. Six of the twelve companies that were visited 
by GAO have some campuses accredited by the ACCSC. Three of 
these companies were visited twice. Anthem College in 
Springfield, PA, ATI Career Training Center in Dallas, Everest 
College in Mesa and Dallas, Kaplan College, Riverside and 
Pembroke Pines, West Tech College in Ontario, Westwood in 
Dallas.
    Seven other Westwood campuses are accredited by you. 
Thirty-eight other Everest College Campuses are accredited by 
you. Three other Anthem Colleges are accredited by you. Twenty-
seven Kaplan College campuses are accredited by ACCSC. So what 
are you going to do about these?
    Mr. McComis. Certainly as I've already expressed, we're 
very interested in finding and gathering additional information 
from that GAO report, looking at ways that we can begin an 
investigation now that the disclosure of the institutions has 
been brought forward. We will certainly be forwarding this 
information to our Board to begin the processes that we have 
for these kinds of complaint reviews.
    I think it's important to know, and I'll go back, we have 
in the past taken action that began at a single campus or a 
number of campuses, and when we've seen that there seems to be 
a systemic problem we have placed the entire system on 
probation. I think largely if we were to find something similar 
in these instances our Board would look to take a similar kind 
of action.
    The Chairman. How old is ACCSC? How old is your 
institution? How long has it been in existence?
    Mr. McComis. Since 1967 as an accrediting body recognized 
by the Department.
    The Chairman. Since 1967. How many people work for ACCSC?
    Mr. McComis. I think currently we have 32 full-time 
employees.
    The Chairman. Thirty-two? There are 32 employees, you 
accredit 629 schools, you do onsite evaluations. Do you 
contract that out or something?
    Mr. McComis. No Senator.
    The Chairman. You do all of these evaluations with 32 
employees?
    Mr. McComis. And a cadre of volunteers as well.
    The Chairman. Pardon?
    Mr. McComis. A cadre of volunteers as well.
    The Chairman. Volunteers?
    Mr. McComis. Yes.
    The Chairman. From where?
    Mr. McComis. As with most accrediting bodies the volunteers 
come from the education sector, they come from the employment 
sector for subject matter specialist, and they come from other 
accrediting institutions.
    The Chairman. So you might get volunteers from the 
institution that you are evaluating?
    Mr. McComis. No Senator. You would never send anybody that 
had any kind of conflict of interest with the institution that 
you are evaluating.
    The Chairman. So no volunteers would come from an 
institution that you were evaluating?
    Mr. McComis. No Senator.
    The Chairman. They would come from someplace else?
    Mr. McComis. Yes, and typically we try to bring them from 
out of State so that there is no conflict with regard to 
competition, try not to find volunteers that would have any 
other kind of a conflict that might exist along those lines.
    The Chairman. I think that we need to look into it more. 
Now ACCSC, you receive your income how? How do you pay for what 
you do? Where do you get your money?
    Mr. McComis. The sustaining fees of our organization come 
from the member institution and from user fees.
    The Chairman. From where?
    Mr. McComis. User fees. Those are fees that are paid to us 
when an institution applies for a new program or a new branch 
campus, there's a fee that's associated with that application. 
The sustaining fees are based upon gross tuition revenue, 
annually.
    The Chairman. So the institutions you accredit pay for you 
to do their accrediting?
    Mr. McComis. That is correct.
    The Chairman. I do think we need to look into that some 
more. Mr. Pruyn, what did it cost to go to Westwood?
    Mr. Pruyn. An Associates Degree was approximately $40,000, 
a Bachelor was approximately $75,000 depending on the program.
    The Chairman. What portion of the students that were paying 
those higher amounts, say $75,000 were attending online?
    Mr. Pruyn. All of the students that I helped enroll were 
online students.
    The Chairman. What were you trained to tell people about 
the cost at Westwood? And how did the people you worked with 
handle the cost issue?
    Mr. Pruyn. Our official training would have us tell 
students that the cost were, we would phrase it in terms of per 
term. So we would say the cost per term is approximately $4,800 
per term.
    The problem with that is that often times the student will 
automatically assume there's only two or three terms like a 
traditional school, and there is in reality, five per year. And 
so it can mislead the student on the total cost.
    Representatives each had their own methods of explaining 
the cost. And there was no--I've never seen--the method on 
telling you is how we were initially trained. Once you get into 
individual coaching and you're on the sales floor, that 
deviates widely.
    And when I struggled to enroll students, one of the things 
I was told was that the way I explained the cost of the school 
and financial aid wasn't very effective. Because I was saying 
that the school costs $75,000 for a Bachelors Degree. I was 
told to emulate other representatives who had various tricks or 
would just straight up lie about the cost of the education.
    The Chairman. What did you do if a student asked to speak 
with someone in financial aid?
    Mr. Pruyn. They were absolutely not allowed to speak with 
someone in financial aid. What you saw in the video is pretty 
much identical. Because that would come up fairly frequently 
and our response was that, this is step one of the process, you 
can't jump to step two.
    We would absolutely not let them talk to someone in 
financial aid. The reason I was given for that policy was that 
we just simply can't overburden our financial aid staff. And 
when that happens, what you saw in the video is basically them 
pressuring the student into making that up front commitment 
with the application fee and signing their enrollment 
documents.
    What we would have done is use information about that 
student to use back at them. So you heard them say--I can't 
remember what exactly that director of admissions said, but we 
would say similar things like, ``well I thought you wanted to 
make a change,'' I think is actually the phrase they use in the 
video, and we would use that same terminology or that same 
methodology to push a student to first sign their enrollment 
documents before they had a discussion with financial aid.
    The Chairman. Dr. McComis hearing this, I understand that 
you accredit Westwood.
    Mr. McComis. We do have some Westwood campuses that we 
accredit, yes.
    The Chairman. Do you accredit this one in Colorado?
    Mr. McComis. We do.
    They have chosen to leave my agency. They are currently 
accredited though they're in a deferral status with us. They've 
chosen to make an application with another agency.
    The Chairman. But during the time that Mr. Pruyn was there, 
you did accredit them?
    Mr. McComis. We do--we still do accredit them.
    The Chairman. You still do accredit them.
    Mr. McComis. Yes.
    The Chairman. I guess I'm still a little concerned that you 
do onsite evaluations. This seemed to be pervasive at this 
campus. I mean it wasn't just one person, it was everyone. And 
you said, as I kept repeating, that in your written testimony 
you said that, ``the highest level of integrity injected into 
the student recruitment and admissions process.'' How could you 
do onsite evaluations at Westwood when this was so pervasive 
and not see it?
    Mr. McComis. We had that campus operating under a Show 
Cause Order. We were very concerned about the outcomes at that 
institution. We placed them on Show Cause. They responded by 
indicating that they were going to cease enrollment in six of 
the eight programs that we had identified as being low 
outcomes. I believe that the low outcomes were indicative of 
the kinds of practices that are being discussed here.
    After that action was taken, Westwood indicated to us that 
they had chosen to make application to another agency. They 
told us directly that it was because they were unable to meet 
our standards particularly with regard to student achievement. 
I think that's indicative of a problem throughout with regard 
to accreditation shopping and the opportunity for that to 
occur. And I would encourage the committee to look at this as a 
particular issue.
    I'd also like to just follow-up on the last point that you 
had made with regard to membership dues. All accreditors 
receive their sustaining fees, membership dues from their 
accredited institutions. It is an opportunity for that self-
policing peer review evaluation process to ensue. It doesn't 
matter whether you're a for-profit or not-for-profit.
    The Chairman. Yes, I'm going to look into that. That seems 
to me to be a situation that would be rife with a kind of a 
conflict if I'm inspecting somebody and they're paying me to 
inspect them and they can leave my organization and go 
someplace else and take their money someplace else.
    Mr. McComis. Well I think that accreditation shopping is 
a--I mean there are very legitimate reasons why it happens, 
particularly with regard to transfer of credit. Because, as 
we've even talked about here today, that there are some 
discriminatory practices with regard to transfer of credit.
    The Chairman. I guess I still come back to the fact that 
with all of this stuff going on at Westwood, you still accredit 
them. Why didn't you just see this during an onsite evaluation 
and say, ``we're taking your accreditation away.'' Bang, just 
like that. Why can't you do that? You can't do that?
    Mr. McComis. I don't know that we identified the specific 
instances, nor did we have evidence of the specific instances 
that were brought forward in this particular hearing. We 
certainly have identified issues that have led us to have 
concerns about their outcomes.
    The Chairman. Well I'd be wondering why your onsite 
evaluation didn't pick that up. Just like the other 41 that I 
mentioned here that have a high cohort default rate.
    Mr. Pruyn, again I just wanted to get back to one other 
thing here. And that is, this idea that there are just a few 
bad apples out there. I keep hearing that all the time, that 
you have to separate the bad actors from the good.
    I asked you a question earlier about whether this was just 
at the managerial level at a site, or was it something higher 
up that was filtering down through the organization. And the 
reason why I focus on that is to help us determine whether or 
not there is a systemic problem in the for-profit situation. Or 
is it really just a few bad apples?
    I'm going to show this chart right here because this just 
came in to us yesterday from the largest for-profit school in 
America. And we all know which one that is, University of 
Phoenix. This is a copy of the instructions, I had it put on a 
chart so people could see it, it came from the University of 
Phoenix to their recruiters and their people that sign up 
students.

          ``Creating urgency, getting them to apply now. 
        Remember students don't buy benefits, they buy to ease 
        or avoid pain. Finding and burrowing into that pain 
        moves the sale to a close. Also the close of the sale 
        is really just the beginning.''

    That doesn't come from some employee. That comes from the 
top, the University of Phoenix, the largest of the for-profit 
colleges.
    That's why I keep wondering about whether or not we are 
talking about a few bad apples or are we talking about the 
entire orchard being contaminated by a business model that 
churns students, that provokes the kind of recruitment and 
unethical conduct that we saw through the GAO because of the 
need, both to increase profits, to answer to Wall Street and 
expectations for earnings, and also the easy availability of 
taxpayer money.
    Now my generation, when I was a young man we had a lot of 
for-profit schools. The 1950s, 1960s, 1970s, these schools 
provided an avenue for kids who didn't want to go to a 4-year 
college to get an engineering degree or a liberal arts degree, 
but they wanted an occupation.
    We had these schools that at that time, taught women to be 
secretaries and stenographers and nurses assistants, and taught 
men to be welders and truck drivers. That's sort of blended 
now, but that was the idea, that not every student was suited 
for a 4-year college general degree but they could do an 
occupation.
    And quite frankly a lot of these for-profit schools did a 
good job in that area but also in the 1960s, 1970s, 1980s in 
transitioning the workforce in America. A workforce that was 
moving from one type of employment to another type.
    These were older people, older workers, maybe their skill 
set was no longer needed and they needed to learn a new skill 
set. These for-profit schools provided that and helped us 
transition from one economy to another. But that was then.
    Today we see a different system and setup with these for-
profit schools. Because at that time we didn't have so may Pell 
grants and guaranteed student loans. But there were instances, 
starting in the 1980s of for-profit schools incentivizing 
enrollments.
    That led to the Nunn Commission. And Senator Nunn's 
hearings that he held at that time led to the Higher Education 
Act of 1992, in which it was absolutely forbidden to have 
incentive payments for recruitment.
    Well then less than 10 years later, an Administrative 
Ruling, and Mr. Hawkins, you pointed this out in your 
testimony. It wasn't legislation passed by Congress, an 
Administration issued a ruling providing for 12 safe harbors. 
Which as you said, and I wrote your statement down, you said 
basically gutted what we had done in 1992 to close incentive 
compensation.
    I was interested to note in your testimony that the 
Inspector General at that time did not concur with that action 
taken by the Department. And the fact that you or others had 
asked for information under a Freedom of Information Act, the 
reasons for the IG not concurring and you were denied access to 
that information. That raises all kinds of questions.
    But nonetheless, the floodgates were opened again. And now, 
with Congress putting more money into the Pell grants. As I 
said, over the next 10 years $300 billion will go into the 
program. And we see now what's happening in the for-profit 
schools and this is what alarmed us in the first place.
    Nine percent of the students in higher education are in our 
for-profit schools. They're consuming 23, almost 24 percent of 
the Pell grants, and that's going up, escalating, and they have 
44 percent of the default rates. Get that?
    Nine percent of the students, 24 percent of the Pell grants 
at an ever-increasing rate, 44 percent of the default rates. 
And to me it seems that when we talk about recruitment and 
things like that some say, ``well private colleges they do 
advertising, they do recruiting.'' It's true they do, but at 
the end of the line they don't have to meet Wall Street 
expectations on earnings. They don't have to pay shareholders 
or private investors. So they don't have those kinds of 
incentives.
    So it seems to me what we have done with this industry, or 
what's happened to the industry is that with the easy 
availability of Pell grants and increased Pell grants and 
guaranteed student loans, and with incentive payments, and with 
a kind of almost a cloak of secrecy about what their graduation 
rates are. We don't know what the graduation rates are in the 
for-profit schools. We just don't know.
    I mentioned in my opening statement about how many 
thousands of students this one school had as of March 31, 
21,000 more were added in April, May, and June. But at the end 
of June they only had 143 more students. That's got to raise 
some questions. And also with what Mr. Pruyn said, they had the 
14-day thing.
    Well we know that, if a student's there 60 percent of the 
time for the term they get to keep the money. So that's why you 
had that 14-day rule. So you stay there 14 days, they don't 
care what happens to you, you walk away they keep the Pell 
grants.
    And guess where that goes? Does that go to help other 
students? No. Maybe some of it does but a lot of it goes to pay 
for very high paid administrators and executives. And a lot of 
it goes to pay investors, profits into either the public arena 
or into the private investor arena.
    So when we look ahead we say, ``look, education is too 
important for the future of this country. Education is too 
important for our students.'' And facing the budget problems 
that we have in the next 10 years, we just can't permit more 
and more of the taxpayers' dollars that are supposed to go for 
education, and quality education to go to investors on Wall 
Street. And I might add more and more of the student debt that 
these students have racked up, to be going to pay shareholders 
or private investors because they want to increase their 
profits. I can't blame them. I mean that's the profit motive.
    But it seems like what we've done here is we have 
privatized the profits and socialized the risk. Which is what 
we saw in the sub-prime lending problem that we had. That's why 
I'm concerned about this area. I think that's why a lot of us 
are concerned about this.
    And I will say that tomorrow I will issue a request for 
information and document requests to 30 for-profit schools. I 
believe the information I am requesting will help us form a 
more full picture than we have at this time. It's nearly 
impossible to figure out graduation rates. I want to know.
    I want to know what that one school I talked about in my 
opening statement, I want to know what happened to those 20,000 
students that enrolled but that didn't show up in June. Where 
did they go? How much churning is taking place among students 
in order to get the Pell grants. You get the student loans 
they've paid in and the students are out.
    I guess there's a lot of these things in these videos that 
appalled me. But the one that got me the most I think was when 
the individual that worked for the school said, ``this is not 
like a car loan, they can't come after you.'' Or the one 
recruiter that said, ``well I have all this debt I owe to the 
University of Florida and I don't intend to pay it back.''
    Here's the difference between the sub-prime problem that we 
had, the mortgage problem, or the car loan and student loans. 
That person was right, student loans and car loans or mortgage 
loans are completely different. You see if I have a debt that's 
on a car I walk away from the car. If I have a debt on a 
mortgage I can walk away from the house. But a student who has 
debt can't walk away from that debt. They never, never can walk 
away.
    It is not dischargeable in bankruptcy or any other way. 
That debt follows that student the rest of that student's life 
until it's paid off, with interest. They could come after your 
Social Security checks, believe it or not if you have defaulted 
on your student loans. They can come after your paychecks.
    They can garnish your paycheck when you get a job later on. 
You're married, you got two or three kids and you're trying to 
make ends meet and all of a sudden the government comes in and 
takes some of your money back. It's being done today. So there 
is a difference. And the difference is students cannot get rid 
of those debts. And I don't know how many of them really know 
that, or what the interest rates are.
    I'd like to thank each of our witnesses for being with us 
today. We'll leave the record open for 10 days. Witnesses may 
submit statements for the record or supplemental statements. I 
think what we have seen today from the GAO and our witnesses is 
very concerning.
    Let me just repeat, in 15 of the 15 schools that GAO 
investigated they found instances of fraud, deceptive 
practices, or made misleading statements to prospective 
students--15 out of 15. This is unacceptable. Especially when 
the students these schools are serving need the greatest help. 
These are our lowest income students. Maybe they don't have 
parents that went to college that would say, wait a minute 
let's take a look at this, let's examine this, and then they 
sign up, and the school gets the Pell grants.
    That's another misnomer, the students think they get the 
Pell grants, it goes to the school. So they come from the 
lowest income families, and yes, they want a better life. I 
continue to be amazed by the questionable and sometimes 
outright illegal practices occurring in this for-profit sector 
that Mr. Pruyn talked about.
    Again I say that, critics say it's only a few bad apples. 
But again I question, is the entire orchard contaminated, to 
use an analogy. Does something need to be done systemically, to 
make the for-profit institutions viable and an asset to society 
rather than a debt to these students and our taxpayers.
    So, as I said, I will issue a request for information and 
documents tomorrow. And I believe I might even issue more later 
on. And I will tell you that we will have additional hearings 
in September, not in October, probably in November and maybe in 
December.
    I intend to follow this trail to wherever it leads to get 
as much information as possible. Because we have to get to the 
bottom of this. And Mr. Hawkins, you mentioned the fact that 
the Department is issuing new regulations now.
    Well I put out a statement yesterday saying fine, it's a 
nice first step. But that's a regulation. Another 
administration could come in and overturn that regulation. I'm 
not certain regulations will suffice. I believe, and I think 
where we're headed, is very clear cut legislation that can't be 
overturned by another administration. That can't put in ``safe 
harbors'' and say it complies. But really tightly designed 
legislation to correct these practices.
    And quite frankly, because of the testimony this morning 
and the information that we get into our committee, I believe 
Dr. McComis we are going to have to take a look at 
accreditation and different accrediting agencies, how they 
work, what they can do, what their power is and how they fit 
into this overall structure of making these schools accountable 
for what they're doing. So you may be back here again. I don't 
know but we're going to look at the accreditation process also.
    The hearing of the HELP Committee is adjourned and we'll 
have another hearing, at least one in September.
    Thank you all very much.
    [Additional material follows.]

                          ADDITIONAL MATERIALS

                  Prepared Statement of Senator Bennet

    Mr. Chairman, thank you for having this hearing today. I 
want to start by emphasizing that the big picture here is the 
need to increase access to quality, affordable higher education 
opportunities; especially for low-income students. We need 
institutions that bring students who have historically been 
left out of higher education into the fold. For-profit 
universities have filled in gaps left by more traditional 
colleges and universities, and they have an important role to 
play in helping us remain competitive in the 21st Century.
    However, the government should not support institutions 
that bring students into programs and do not provide them with 
a quality education, or fail to provide accurate information 
about costs and outcomes. There is absolutely no excuse for 
fraudulent behavior or misleading students about the quality of 
education they are going to get, or defrauding the government.
    I'm extremely concerned about the well-documented evidence 
being presented today that there is a widespread problem with 
recruitment practices at many for-profit universities. We 
should hold those wrongdoers accountable, and then determine 
what needs to be done to prevent this kind of exploitative 
behavior from recurring.
                                ------                                

   Response to Questions of Senator Enzi, Senator Hagan and Senator 
                      Alexander by Gregory D. Kutz
       U.S. Government Accountability Office (GAO),
                                      Washington, DC 20548,
                                                September 10, 2010.
Hon. Tom Harkin, Chairman,
Committee on the Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20150.

Hon. Michael Enzi, Ranking Member,
Committee on the Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20150.

Subject:  Posthearing Responses to August 4, 2010, Hearing on For-
Profit Schools: The Student Experience

    On August 4, 2010, we testified before your subcommittee at a 
hearing entitled For-Profit Schools: The Student Experience. This 
letter responds to your request that GAO respond to a number of post-
hearing questions. The questions and our answers are provided in the 
enclosure. The responses are based on work associated with previously 
issued GAO products, which were conducted in accordance with generally 
accepted government auditing standards and investigative standards from 
the Council of the Inspectors General on Integrity and Efficiency. We 
did not obtain comments on our responses from the Department of 
Education.
    If you have any further questions or would like to discuss these 
responses, please call me on (202) 512-6722.
              
                                           Gregory D. Kutz,
                                                 Managing Director,
                        Forensic Audits and Special Investigations.
                                 ______
                                 
                              senator enzi
    Question 1. What is the role of accrediting agencies?
    Answer 1. In order to participate in certain Federal programs, such 
as Federal student aid programs authorized under Title IV of the Higher 
Education Act of 1965, postsecondary institutions must be accredited by 
an agency recognized by the Department of Education (Education). 
Accreditation is designed to ensure that schools provide basic levels 
of quality in their educational programs. Accrediting agencies develop 
evaluation criteria to assess the quality of educational programs at 
schools and conduct peer reviews to assess whether or not those 
criteria are met. For example, accreditors must have standards for 
assessing institutional and/or programmatic quality in areas such as 
student achievement, admissions, curricula, faculty, facilities, 
student support services, and fiscal and administrative capacity. 
Accrediting agencies are, for the most part, private educational 
associations of regional or national scope. These accreditors, along 
with Education and State oversight agencies, are part of what is often 
referred to as the ``triad'' of Federal, State, and private entities 
that oversee postsecondary institutions. An accreditor's decision to 
approve accreditation for an institution of higher education can extend 
up to 10 years.

    Question 2. What is the role of accrediting agencies in regulating 
the recruitment practices of institutions of higher education?
    Answer 2. All institutions of higher education that participate in 
the title IV programs must be accredited by an accrediting agency 
recognized by Education. The standards that accreditors use to assess 
schools must also address recruiting and admissions practices, academic 
calendars, catalogs, publications, grading, and advertising, records of 
student complaints received by, or available to, the accreditor, and 
records of compliance with the institution's program responsibilities 
under Title IV of the HEA,\1\ among other requirements.
---------------------------------------------------------------------------
    \1\ These records should include information based on the most 
recent student loan default rate data provided by the Secretary of 
Education, the results of financial or compliance audits, program 
reviews, and any other information that the Secretary may provide to 
the agency.

    Question 3. What is the Department of Education's role in 
regulating the recruiting practices of institutions of higher 
education?
    Answer 3. Education is responsible for overseeing Federal student 
aid programs authorized under Title IV of the Higher Education Act of 
1965, as amended. In this role, Education is responsible for enforcing 
the statutory ban against incentive compensation which prohibits 
schools that receive title IV student aid funds from 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 or in making decisions regarding the award of student 
financial assistance . . .'' The ban applies to all schools, including 
private, for-profit institutions as well as public and private non-
profit schools. In our February 2010 congressionally mandated report on 
incentive compensation, we found that between 1998 and 2009 Education 
substantiated incentive compensation violations at 32 schools and 
entered into settlement agreements with another 22 schools.\2\ We plan 
to issue a follow-up report in fall 2010 on Education's enforcement of 
the incentive compensation ban.
---------------------------------------------------------------------------
    \2\ Higher Education: Information in Incentive Compensation 
Violations Substantiated by the U.S. Department of Education, GAO-10-
370R, February 23, 2010.
---------------------------------------------------------------------------
    In addition to enforcing the ban on incentive compensation, 
Education is responsible for enforcing the statutory ban against 
schools misrepresenting the nature of their educational programs, 
financial charges, or the employability of their graduates (section 
487(c)(3)(A) of the Higher Education Act of 1965). As with other 
violations of statute or regulation, Education may fine schools or 
limit, suspend, or terminate their participation in Federal student aid 
programs for misrepresentation or violations of the incentive 
compensation ban.

    Question 4. According to your testimony, schools are required to 
make certain disclosures regarding graduation and/or completion. What 
exactly do schools have to disclose regarding graduation or completion 
rates and how must they make that disclosure. Please provide a 
reference to the statutory provisions you believe were violated during 
GAO's investigation.
    Answer 4. Pursuant to 20 U.S.C. Sec. 1092(a)(1)(L), institutions 
that participate in title IV are required to produce and make ``readily 
available upon request, through appropriate publications, mailings, and 
electronic media'' to any prospective student the ``completion or 
graduation rate of certificate- or degree-seeking, full-time, 
undergraduate students entering such institutions.'' Furthermore, under 
Sec. 1092(a)(3), the completion or graduation rate must cover the 1-
year period ending on August 31 of the preceding year, and must be made 
available to prospective students prior to the students enrolling or 
entering into any financial obligation.
    The Department of Education has promulgated regulations, such as 34 
CFR Sec. 668.41(b)(2) and (d)(4), that further clarify this 
requirement. Specifically, the regulations state that institutions may 
satisfy their disclosure requirements by posting the information on a 
Web site.
    Prior to July 1, 2010, the language that is currently in 
Sec. 668.41(d)(4) was contained in Sec. 668.41(d)(3). The pre-July 1 
language more closely mirrored the language of 20 U.S.C. Sec. 1092(a), 
by stating that ``an institution must make available to any enrolled 
student or prospective student, on request, through appropriate 
publications, mailings or electronic media, information concerning'' 
several different pieces of information, including the institution's 
completion or graduation rate.
    Effective July 1, however, new regulations removed the words ``on 
request'' from the regulation. In its rulemaking, Education explained 
that, even though the statute contains the words ``upon request,'' it 
chose to remove ``on request'' because of its conclusion that 
institutions could simply refer students who asked for a completion or 
graduation rate to their Web site that contained this information. 
Specifically, Education explained that ``institutions typically compile 
and make the information available on their Web sites, but possibly in 
paper form as well. Consequently, [Education] view[s] the inclusion of 
the phrase ``upon request'' to mean that this information is readily 
available to students who wish to see it. As a matter of course, 
students coming to an institution's Web site to learn about the 
institution should be able to find this information, and students 
inquiring directly may be referred to the Web site or provided with the 
information on paper.'' 74 Fed. Reg. 55,902 (Oct. 29, 2009). For this 
reason, in our testimony we specifically noted when completion or 
graduation information was available on the Web sites of the colleges 
we visited, and further explained that those that did list the 
information on the Web sites were in compliance with Education 
regulations.
    The method by which institutions must calculate completion or 
graduation rates is explained in 20 U.S.C. Sec. 1092(a)(3)-(7). In 
summary, a student must be counted as a completion or graduation if, 
within 150 percent of the normal time for completion of or graduation 
from the program, the student has completed or graduated from the 
program, or enrolled in any program of an eligible institution for 
which the prior program provides substantial preparation. Institutions 
may exclude from this calculation students who leave to serve in the 
Armed Forces, on official church missions, or with a recognized foreign 
aid service of the Federal Government (such as the Peace Corps). 
Educations regulations at 34 CFR Sec. 668.45 further clarify the proper 
method to calculate completion or graduation rates.
    Finally, institutions have additional completion and graduation 
rate disclosure requirements that are applicable to current students 
and prospective student-athletes that may receive athletically related 
student aid. Our undercover tests were not designed to test these 
scenarios, and thus we have not fully analyzed the legal framework that 
would apply.

    Question 5. According to your testimony, Federal statutes and 
regulations require colleges to make available information on financial 
assistance programs to all current and prospective students. Please 
explain your understanding of what constitutes information on financial 
assistance programs and how this differs from a financial aid package.
    Answer 5. The terms ``financial assistance program'' and 
``financial aid package'' are not specifically defined in title IV 
statutes or regulations. ``Financial aid package,'' in fact, is never 
used in title IV statutes, and appears only once in regulations (34 CFR 
Sec. 668.59(c)(1)(ii), which deals with the consequences of a change in 
financial aid application information). Use of the term ``financial 
assistance program'' in our testimony was intended to cover all 
financial assistance-related information in statutes and regulations 
which institutions are required to make available to any prospective 
student.
    Specifically, pursuant to 20 U.S.C. Sec. 1092(a)(1)(A)-(F) and (M), 
institutions that participate in title IV are required to produce and 
make readily available upon request, through appropriate publications, 
mailings, and electronic media to any prospective student a number of 
financial assistance-related pieces of information. These include: the 
student financial assistance programs available to students who enroll; 
the methods by which such assistance is distributed among student 
recipients who enroll at such institution; any means, including forms, 
by which application for student financial assistance is made and 
requirements for accurately preparing such application; the rights and 
responsibilities of students receiving financial assistance; the cost 
of attending the institution (including tuition and fees, books and 
supplies, estimates of typical student room and board costs or typical 
commuting costs, and any additional cost of the program in which the 
student is enrolled or expresses a specific interest); the requirements 
of any refund policy with which the institution is required to comply 
and the requirements for the return of grant or loan assistance 
provided; and the terms and conditions of the loans that students 
receive under title IV. Under Sec. 1092(c), each institution is 
required to designate employees who ``shall be available on a full-time 
basis to assist students or potential students in obtaining'' the 
financial assistance-related information described above.
    Furthermore, pursuant to Sec. 1092(d), Education must make 
available to institutions information regarding Federal student 
assistance programs in order to assist students in gaining information 
through the institutions and to assist institutions in carrying out 
their responsibilities. Under the statute, ``such information shall 
include information to enable students and prospective students to 
assess the debt burden and monthly and total repayment obligations that 
will be incurred as a result of receiving loans of varying amounts 
under'' title IV. Institutions must also determine each specific 
student's eligibility for free; under 20 U.S.C. Sec. 1094(a)(3), 
institutions are required to enter into program participation 
agreements with Education, one provision of which prohibits the 
institution from charging any student a fee for processing or handling 
any application, form, or data required to determine the student's 
eligibility for assistance under title IV or the amount of such 
assistance.
    Finally, Education has promulgated regulations that further 
implement the above, including 34 CFR Sec. 668.42.

    Question 6. During your ``secret shopper'' investigation, how many 
admissions representatives did the undercover students meet with and at 
which schools? How many financial aid representatives did the 
undercover students meet with and at which schools?
    Answer 6. During our investigation we visited a total of 15 
schools. We visited each school at least twice, once posing as a 
student eligible for Pell grants and subsidized student loans, and once 
posing as a student with a $250,000 inheritance and a salary high 
enough to disqualify the student from receiving Pell grants and 
subsidized loans. Sometimes our fictitious students were told by campus 
representatives to return on another day. In these cases, we visited 
the campus twice, under one scenario. Our aim was to speak with both an 
admissions representative and a financial aid representative at each 
school. This was not possible in all cases. For example, at some 
schools we asked to speak to a financial aid representative but were 
not able to because a financial aid representative was not available. 
At other schools, our student was told they had to enroll in the school 
before speaking with financial aid. In total we spoke with 32 
admissions representatives and 14 financial aid representatives. We did 
not use outside sources to confirm the job positions the 
representatives held.
    The following table provides details on the number of admissions 
and financial aid representatives spoken to during undercover tests.


----------------------------------------------------------------------------------------------------------------
                                                                                   Number of        Number of
                                                                                   admission      financial aid
                    State                                Case Number            representatives  representatives
                                                                                   with whom        with whom
                                                                                 student spoke    student spoke
----------------------------------------------------------------------------------------------------------------
AZ...........................................  Case 1, applicant 1............               1                0
AZ...........................................  Case 1, applicant 2............               1                0
AZ...........................................  Case 2, applicant 1............               1                1
AZ...........................................  Case 2, applicant 2............               1                1
CA...........................................  Case 3, applicant 1............               1                1
CA...........................................  Case 3, applicant 2............               1                1
CA...........................................  Case 4, applicant 1............               1                0
CA...........................................  Case 4, applicant 2............               1                0
DC...........................................  Case 5, applicant 1............               1                1
DC...........................................  Case 5, applicant 2............               1                0
DC...........................................  Case 6, applicant 1............               1                1
DC...........................................  Case 6, applicant 2............               1                1
FL...........................................  Case 7, applicant 1............               1                1
FL...........................................  Case 7, applicant 2............               1                1
FL...........................................  Case 8, applicant 1............               2                0
FL...........................................  Case 8, applicant 2............               2                0
IL...........................................  Case 9, applicant 1............               1                0
IL...........................................  Case 9, applicant 2............               1                0
IL...........................................  Case 10, applicant 1...........               1                0
IL...........................................  Case 10, applicant 2...........               1                0
PA...........................................  Case 11, applicant 1...........               1                0
PA...........................................  Case 11, applicant 2...........               1                0
PA...........................................  Case 12, applicant 1...........               1                0
PA...........................................  Case 12, applicant 2...........               1                1
TX...........................................  Case 13, applicant 1...........               1                0
TX...........................................  Case 13, applicant 2...........               1                1
TX...........................................  Case 14, applicant 1...........               1                1
TX...........................................  Case 14, applicant 2...........               1                1
TX...........................................  Case 15, applicant 1...........               1                0
TX...........................................  Case 15, applicant 2...........               1                1
----------------------------------------------------------------------------------------------------------------


    Question 7. During your testimony, you described how your 
undercover students signed up on Internet lead generators to be matched 
with schools offering programs they were interested in. You testified 
that the undercover students subsequently received numerous calls from 
a variety of schools. You illustrated the frequency of calls with the 
``Hi Amy'' video. However, your video provided no information about the 
content of the calls. Please provide the following information about 
the calls arising from the use of the lead generator by the undercover 
students. What are the names of the schools that placed calls to the 
undercover students? How many times would each school call? How long 
did the conversations between the schools and the undercover students 
last? What type of information did each of the schools that called 
provide in their phone conversations with the undercover students? Did 
any of the undercover students ask not to be called again? Did any of 
the schools call again if the student asked not to be called? Did only 
schools offering programs the student expressed interest in place 
calls?
    Answer 7. We were not able to confirm the identities of some 
schools contacting our undercover students because the representatives 
did not identify where they were calling from in a voicemail or because 
we were unable to trace the call back to a specific individual or 
business. However, we were able to confirm that the following schools 
called our undercover students: American InterContinental University, 
Anthem College Online, Art Institute, Ashford University, Bryant & 
Stratton College, DeVry University, Herzing College, Jones Companies, 
Jones International University, Kaplan University, Keiser University, 
Laureate Ed Inc., Liberty, Miller-Motte Co, My Little College, 
Pennsylvania Culinary Institute Le Cordon Bleu, Redstone, Strayer 
University, University of Maryland University College, University of 
Phoenix, Virginia College, Western Governors University, and Westwood 
College.
    The following table documents at least how many times a school/
entity called each student. If the cell is blank, then the student did 
not receive a phone call from the school/entity. In some cases, 
students received calls, but we were unable to identify who called.


------------------------------------------------------------------------
     College/entity name      Student 1  Student 2  Student 3  Student 4
------------------------------------------------------------------------
American InterContinental     .........  .........         15  .........
 University.................
Anthem College Online.......  .........  .........  .........          5
Art Institute...............  .........          1  .........  .........
Ashford University..........  .........  .........         48  .........
Bryant & Stratton College...  .........  .........         11  .........
DeVry University............  .........  .........  .........          7
Education Management          .........          1  .........  .........
 Corporation................
Herzing College.............  .........  .........          2         13
Jones Companies.............  .........  .........          1          4
Jones International           .........  .........         25         10
 University.................
Kaplan University...........  .........  .........  .........         20
Keiser University...........  .........  .........         19  .........
Laureate Ed Inc.............  .........  .........          5  .........
Liberty.....................  .........  .........         15  .........
Miller-Motte Co.............  .........  .........  .........         54
My Little College...........  .........  .........          1  .........
Pennsylvania Culinary         .........          4  .........  .........
 Institute Le Cordon Bleu...
Redstone....................  .........  .........  .........          3
Strayer University..........  .........  .........         21          5
University of Maryland        .........  .........          5  .........
 University College.........
University of Phoenix.......  .........  .........  .........         25
Virginia College............  .........         12  .........  .........
Western Governors University  .........  .........          6  .........
Westwood College............  .........  .........  .........          1
Unknown Callers.............          3         54          8         32
                             -------------------------------------------
  Total.....................          3         72        182        179
------------------------------------------------------------------------

    When schools representatives called our undercover students, the 
initial phone call was not answered. Schools did, on occasion, leave 
voice mails which lasted on average 30 seconds. In the voice mails, the 
school representative typically stated his/her name, the school he/she 
was affiliated with, the program he/she was calling about, and a call 
back telephone number. Our undercover students did call back several 
schools. The call back conversations lasted for approximately 15 
minutes. During these conversations, the school representative 
discussed the student's current situation, why the student wanted to 
enroll in the program, and program details such as program length and 
types of classes. In addition, some school representatives asked the 
student to come in for a campus visit to further discuss enrolling. 
None of the students asked the schools not to be called back. According 
to the voice mails, only schools offering programs the student 
expressed interest in placed calls.
                             senator hagan
    Question 1. Given the prevalence of abuses in the relatively small 
sample of schools you investigated, is it your belief that these 
questionable practices are widespread throughout the for-profit 
industry? As the ``congressional watchdog,'' tasked with investigating 
how the Federal Government spends taxpayer dollars and advising 
Congress on ways to make government more efficient, effective and 
ethical, what comes next for GAO? Do you intend to make specific 
recommendations to Congress?
    Answer 1. Our work was not designed to be able to project the 
results of our undercover tests to the entire population of for-profit 
colleges, and therefore we cannot make a definitive statement about the 
prevalence of abusive practices throughout the industry. However, given 
that all 15 schools we visited engaged in some type of questionable 
behavior, and given the numerous allegations of abuses occurring at 
other for-profit colleges that we have received subsequent to the 
hearing on August 4, it is clear that the problems we identified are 
likely not limited to the schools we visited.
    In addition, GAO does not have specific recommendations for 
Congress or the Department of Education (Education) as a result of our 
investigation. However, during corrective action briefings with 
Education, GAO and Education officials discussed our methodologies and 
potential ways that Education personnel could perform similar tests in 
order to increase compliance with existing regulations. We have 
referred the four cases of fraud to the Department of Education Office 
of Inspector General. We will be referring information from all 30 
visits to the Department of Education for program staff to review. 
Based on a review of existing laws and regulations associated with 
title IV funds, many of the abusive and questionable behaviors 
exhibited by for-profit college personnel, such as the failure to 
disclose program graduation rates, are already covered by existing law. 
Therefore, in many cases efforts to ensure greater compliance with 
existing laws and regulations may be necessary.

    Question 2. While your report indicates that schools are required 
to present tuition information upon request, has the GAO examined 
whether existing Department of Education guidelines are sufficient to 
ensure that this information is presented in a clear and accurate 
manner?
    Answer 2. GAO has not examined whether Education's guidelines as 
specified in 34 CFR 668.43 are sufficient to ensure that information 
about tuition is provided to students in a clear and accurate manner.

    Question 3. Has the GAO examined whether there are sufficient 
guidelines in place to ensure that this information is READILY 
available to prospective students?
    Answer 3. GAO has not examined whether there are sufficient 
guidelines in place to ensure that information about tuition is readily 
available to prospective students.

    Question 4. Has the GAO examined enforcement mechanisms at the 
Department of Education to ensure that taxpayer dollars are used to 
support only institutions that are complying with the law? How might we 
improve the agency's ability to enforce these rules?
    Answer 4. We have reviewed Education's monitoring and enforcement 
efforts in several areas. Specifically, we have examined Education's 
oversight of schools with regard to enforcement of Federal student aid 
eligibility requirements and compliance with the ban on inducements.
    In 2009, we reported weaknesses in Education's oversight of student 
eligibility requirements.\3\ In particular, we found vulnerabilities in 
Education's oversight of the ability to benefit test process, which 
enables students without a high school diploma or GED to gain access to 
Federal student aid funds if they pass a test of basic math and English 
skills. In addition, we found that Education did not provide guidance 
to prevent Federal student aid funds from going to students with fake 
high school diplomas. Accordingly, we made recommendations to Education 
to improve oversight in these areas.
---------------------------------------------------------------------------
    \3\ Proprietary Schools: Stronger Department of Education Oversight 
Needed to Help Ensure Only Eligible Students Receive Federal Student 
Aid, GAO-09-600, August 17, 2009.
---------------------------------------------------------------------------
    In 2007, we found that Education lacked oversight tools to 
proactively detect violations of the ban on improper gifts or 
inducements between student loan companies and schools.\4\ 
Consequently, we made recommendations to improve Education's oversight 
of lenders and schools. Congress recently terminated the authority to 
make new loans under the Federal Family Education Loan Program.
---------------------------------------------------------------------------
    \4\ Federal Family Education Loan Program: Increased Department of 
Education Oversight of Lender and School Activities Needed to Help 
Ensure Program Compliance, GAO-07-750, July 31, 2007.

    Question 5. Has the GAO prepared an assessment of financial aid 
counseling at non-profit institutions?
    Answer 5. We have not conducted a broad assessment of financial aid 
counseling. However, our work completed at non-profit institutions has 
considered what has been done to assist students in understanding the 
various Federal student aid options for financing their postsecondary 
educations. For instance, in 2007, we reported on the challenges Asian 
Americans and Pacific Islanders face in completing postsecondary 
education degrees.\5\ To help students overcome these challenges, we 
found that some non-profit institutions provided additional financial 
aid counseling to this group of students. Additionally, when we 
reviewed options for simplifying the application process for financial 
aid in 2009, some GAO study group participants told us that any 
simplification efforts needed to be accompanied by increased outreach 
to the States and the general public on college affordability, aid 
eligibility, and the process of applying for financial aid.\6\
---------------------------------------------------------------------------
    \5\ Higher Education: Information Sharing Could Help Institutions 
Identify and Address Challenges Some Asian Americans and Pacific 
Islander Students Face, GAO-07-925, July 25, 2007.
    \6\ Federal Student Aid: Highlights of a Study Group on Simplifying 
the Free Application for Federal Student Aid, GAO-10-29, October 29, 
2009. In addition, in 2009 we recommended that the Department undertake 
similar outreach efforts to States and high schools for the purposes of 
announcing targeted grants for students (see Federal Student Aid: 
Recent Changes to Eligibility Requirements and Additional Efforts to 
Promote Awareness Could Increase Academic Competitiveness and SMART 
Grant Participation GAO-09-343, March 25, 2009).
---------------------------------------------------------------------------
                           senator alexander
    Question 1. What conditions would you need to apply to be able to 
make this a representative sample that could provide extrapolations 
beyond the schools you surveyed? Would it be possible for you to 
conduct a similar review of non-profit institutions of higher education 
using the same methodology to determine if these practices are limited 
to one sector or the other? What would the methodology for that project 
look like?
    Answer 1. In order to be able to extrapolate the results of similar 
tests, several steps would need to be taken. At a minimum, schools 
would have to be selected at random. Given that there are approximately 
2,000 for-profit colleges, operating in 50 States and the District of 
Columbia, it is possible that a random sample would require site visits 
in all 50 States and DC. In addition, the number of schools tested 
would likely have to be increased significantly in order to create an 
acceptable confidence interval for test results, and a standard set of 
questions would have to be asked at all tested locations to ensure 
comparability between the different schools tested. Given the fluid 
nature of undercover testing and our experience with certain schools 
not allowing students to obtain answers concerning financial aid 
questions, a statistical sample with projectable results would require 
a substantial increase from the scope, timeframes, and resources 
associated with the investigative results presented at the August 4 
hearing.
    In addition, if requested to do so, GAO could conduct similar 
undercover tests at non-profit colleges offering bachelors degrees, 
associates degrees, and certificates. GAO has not researched all 
requirements for admissions into the various public and private non-
profit colleges, but based on our general understanding, at least some 
4-year non-profit colleges require extensive application processes and 
have many more applicants than classroom seats available. This 
situation is different than many for-profit colleges that operate under 
an open enrollment policy which allowed our investigators to apply for 
admissions and be accepted in the same visit. Therefore the methodology 
for testing non-profit colleges could differ substantially.

    Question 2. The Department of Education has recently proposed 
regulations on misrepresentation to crack down on misleading 
advertising, misrepresentation by an institution, and other forms of 
fraud that hurt students and the taxpayer. Do you think that these 
proposed regulations will prevent the types of misrepresentation that 
your investigators have discovered?
    Answer 2. Although GAO is not in a position to comment on the 
proposed rules, we believe that it is important for Education to take 
steps to strengthen its oversight in this area.
   Response to Questions of Senator Enzi, Senator Hagan, and Senator 
                       Alexander by David Hawkins
                              senator enzi
    Question 1. What is the role of an admissions officer?
    Answer 1. The primary function of an admission officer/counselor is 
to counsel students and families through the admission process, from 
search to selection and enrollment, aiming to match students' talents, 
interests, and abilities with an institution. Admission officers meet 
with students individually or in small and large groups at on-campus 
visitation events and at high schools and college fairs to communicate 
information about the admission process in general and the details 
about admission to their institution. Providing general information, 
the level of which is determined by the students' knowledge of the 
college admission process, and institutional details enables students 
to begin determining if a college/university will match their goals and 
be a good ``fit.'' While admission officers generate interest to create 
an application pool for their institution, they focus on the interests 
of the student during the admission process and counsel students on 
fit, even if it means directing students to another institution.
    In addition to representing the institution to students and 
families, admission officers work to establish relationships with 
secondary school counselors and community-based organizations in their 
assigned recruitment territories and local communities by providing 
information that will help the students served by those professionals 
learn about their institutions when working to find the right fit for 
postsecondary education.
    Establishing internal relationships at the college/university is 
equally important in counseling students through the admission process. 
Full admission offices and individual admission counselors communicate 
frequently with offices of student financial aid, academic affairs, 
student life, housing, and the registrar; the exchange of information 
enables admission counselors to provide updated and accurate general 
information to students and families, as well as know where to direct 
students with detailed and specific questions for each of these 
offices. Such questions include those regarding cost and financial aid 
options, program offerings and faculty, involvement opportunities, and 
academic advising and course selection.
    Admission counselors review applications for purposes of selecting 
an appropriate class for the institution. Factors used in the process 
help counselors craft a class by selecting students who are predicted 
to be successful at the institution and return each year through degree 
completion and graduation.\1\
---------------------------------------------------------------------------
    \1\ For more information on factors in the admission decision, see 
NACAC State of College Admission report, 2009.
---------------------------------------------------------------------------
    Admission counselors also provide administrative support, based on 
their interest and area of expertise, to office operations, such as 
work in communications and publications, event planning, data 
management and analysis, institutional strategic planning, and 
institutional committees.
    In our written testimony to the committee, we attached the NACAC 
Statement on the Counseling Dimension of the Admission Process at the 
College/University level. For the committee's purposes, this statement, 
which we link again below, represents a critical element of the 
admission process that is largely absent in the current for-profit 
admission business model.
    NACAC Statement on the Counseling Dimension of the Admission 
Process at the College/University Level: http://www.nacacnet.org/
AboutNACAC/Policies/Documents/StmtCounsDimAdPrcsCol_UnivLvlNEW.pdf.

    Question 2. What is the role of a financial aid officer? \2\
---------------------------------------------------------------------------
    \2\ Responses to Senator Enzi's questions nos. 2-5 were completed 
in conjunction with the National Association of Student Financial Aid 
Administrators (NASFAA).
---------------------------------------------------------------------------
    Answer 2. Financial aid administrators (FAAs) coordinate Federal, 
State, institutional and private sources of aid, ensuring that 
eligibility criteria are met, students' financial need is met, and 
overawards are avoided. This process is generally known as 
``packaging'' and includes formulating costs of attendance. FAA 
responsibilities include verifying, when required or otherwise 
necessary, the family's financial data on the Free Application for 
Federal Student Aid (FAFSA). FAAs also counsel students regarding 
financing options and terms and conditions of aid. FAAs exercise 
professional judgment to adjust normal expectations for family 
contributions and costs of attendance if a family's circumstances 
deviate from the usual and warrant such treatment. FAAs also ensure 
that reporting requirements to the Department of Education are met and 
that allocations are fully and properly utilized.

    Question 3. Please describe the circumstances under which an 
admissions officer may take on the responsibilities of a financial aid 
officer.
    Answer 3. In practice, the functions of admission and financial aid 
officers are largely separate. Exceptions include senior-level managers 
who may serve as dean of admission and financial aid, or vice president 
for enrollment management and financial aid. In addition, admission 
counselors may be asked questions by students and families about 
financial aid. Admission officers are well-versed in general 
information pertaining to aid, and will often refer families to 
financial aid officers if the questions are of sufficient detail or 
complexity.
    Generally speaking, admission and financial aid are separate 
professions and require different expertise. Good practice and ethical 
considerations dictate a degree of separation between recruitment and 
financial aid functions.

    Question 4. What types of financial aid information are required to 
be provided to prospective students? Does this require schools to 
provide prospective students with estimates on specific amounts of aid 
that may be awarded?
    Answer 4. Federal title IV regulations require disclosure of 
certain financial aid information to prospective and current students, 
as shown below. Although criteria for selecting aid recipients and 
determining the amount of a student's award must be disclosed, an 
estimate of specific amounts of aid for a given student is not 
required; in many cases, it would not be possible or even desirable to 
do so unless the student has specifically applied for aid and a 
financial aid package has been developed.
    Schools typically include allowable ranges of aid (minimum, if 
there is one, and maximum) in student consumer information. Schools 
typically send tentative or actual award packages to students who have 
been accepted for admission, recognizing that financial assistance is 
one of the essential factors a student uses to decide where to attend. 
Once an aid award (package) is sent, regulations under cash management 
rules require additional information, also cited below.

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

Subpart D--Student Consumer Information Services

Sec. 668.42 Financial assistance information.

        (a)(1) Information on financial assistance that the institution 
must publish and make readily available to current and prospective 
students under this subpart includes, but is not limited to, a 
description of all the Federal, State, local, private and institutional 
student financial assistance programs available to students who enroll 
at that institution.
        (2) These programs include both need-based and non-need-based 
programs.
        (3) The institution may describe its own financial assistance 
programs by listing them in general categories.
        (4) The institution must describe the terms and conditions of 
the loans students receive under the Federal Family Education Loan 
Program, the William D. Ford Federal Direct Student Loan Program, and 
the Federal Perkins Loan Program.
        (b) For each program referred to in paragraph (a) of this 
section, the information provided by the institution must describe--
        (1) The procedures and forms by which students apply for 
assistance;
        (2) The student eligibility requirements;
        (3) The criteria for selecting recipients from the group of 
eligible applicants; and
        (4) The criteria for determining the amount of a student's 
award.
        (c) The institution must describe the rights and 
responsibilities of students receiving financial assistance and, 
specifically, assistance under the title IV, HEA programs. This 
description must include specific information regarding--
        (1) Criteria for continued student eligibility under each 
program;
        (2)(i) Standards which the student must maintain in order to be 
considered to be making satisfactory progress in his or her course of 
study for the purpose of receiving financial assistance; and
        (ii) Criteria by which the student who has failed to maintain 
satisfactory progress may re-establish his or her eligibility for 
financial assistance;
        (3) The method by which financial assistance disbursements will 
be made to the students and the frequency of those disbursements;
        (4) The terms of any loan received by a student as part of the 
student's financial assistance package, a sample loan repayment 
schedule for sample loans and the necessity for repaying loans;
        (5) The general conditions and terms applicable to any 
employment provided to a student as part of the student's financial 
assistance package; and
        (6) The exit counseling information the institution provides 
and collects as required by 34 CFR 674.42 for borrowers under the 
Federal Perkins Loan Program, by 34 CFR 685.304 for borrowers under the 
William D. Ford Federal Direct Loan Program, and by 34 CFR 682.604 for 
borrowers under the Federal Stafford Loan Program.

Subpart K--Cash Management

Sec. 668.165 Notices and authorizations.

(a) Notices. (1) Before an institution disburses title IV, HEA program 
funds for any award year, the institution must notify a student of the 
amount of funds that the student or his or her parent can expect to 
receive under each title IV, HEA program, and how and when those funds 
will be disbursed. If those funds include Direct Loan or FFEL Program 
funds, the notice must indicate which funds are from subsidized loans 
and which are from unsubsidized loans.
          * * * * * * *
In addition, NACAC's Statement of Principles of Good Practice contains 
the following references to financial aid:
Introduction
To enable all students to make the dream of higher education a reality, 
these institutions and individuals develop and provide programs and 
services in postsecondary counseling, admission and financial aid.
Member Conventions
        3. Members will provide accurate admission and financial aid 
information to students, empowering all participants in the process to 
act responsibly.
        6. Members will strive to provide equal access for qualified 
students through education about financial aid processes and 
institutional financial aid policies.
All Members--Mandatory Practices
B. Admission, Financial Aid and Testing Policies and Procedures
        Members agree that they will:

        1. not publicly announce the amount of need-based aid awarded 
to any student without his/her permission;
        2. not guarantee admission or specific college placement or 
make guarantees of any financial aid or scholarship awards prior to an 
application being submitted, except when pre-existing criteria are 
stated in official publications;
        3. not make unethical or unprofessional requests of other 
admission counseling professionals;
        4. send and receive information about candidates in confidence;
        6. not use minimum test scores as the sole criterion for 
admission, advising or for the awarding of financial aid;
Post-Secondary Members--Mandatory Practices
        1. state clearly the requirements for the first-year and 
transfer admission and enrollment processes, including secondary school 
preparation, standardized testing, financial aid, housing and 
notification deadlines, and refund procedures;

B. Admission, Financial Aid and Testing Policies and Procedures
        Postsecondary members agree that they will:

        1. accept full responsibility for admission and financial aid 
decisions and for proper notification of those decisions to candidates;
        3. permit first-year candidates for fall admission to choose, 
without penalty, among offers of admission and financial aid until May 
1. (Candidates admitted under an Early Decision program are a 
recognized exception to this provision);
        5. work with their institutions' senior administrative officers 
to ensure that financial aid and scholarship offers and housing options 
are not used to manipulate commitments prior to May 1;
        7. state the specific relationship among admission and 
financial aid practices and policies;
        8. notify accepted aid applicants of financial aid decisions 
before the enrollment confirmation deadline, assuming all requested 
application forms are received on time;
        9. clearly state policies on renewal of financial aid that will 
typically include a review of students' current financial 
circumstances;
        10. not knowingly offer financial aid packages to students who 
are committed to attend other institutions, unless the students 
initiate such inquiries. Athletic scholarships, which adhere to 
nationally-established signing periods, are a recognized exception to 
this provision;
All members--Interpretations of Mandatory Practice
B. Admission, Financial Aid and Testing Policies and Procedures
All members agree that they will:

        6. Financial aid is defined as grants, loans, work-study and 
scholarships. This practice does not apply to scholarship and financial 
aid programs that fall under state mandates.

    Early Decision (ED) is the application process in which students 
make a commitment to a first-choice institution where, if admitted, 
they definitely will enroll. While pursuing admission under an Early 
Decision plan, students may apply to other institutions, but may have 
only one Early Decision application pending at any time. Should a 
student who applies for financial aid not be offered an award that 
makes attendance possible, the student may decline the offer of 
admission and be released from the Early Decision commitment. The 
institution must notify the applicant of the decision within a 
reasonable and clearly stated period of time after the Early Decision 
deadline. Usually, a nonrefundable deposit must be made well in advance 
of May 1. The institution will respond to an application for financial 
aid at or near the time of an offer of admission.
Interpretations of Mandatory Practices--Postsecondary Members
A. Promotion and Recruitment
All postsecondary members agree that they will:

        1. state clearly the requirements for the first-year and 
transfer admission and enrollment processes, including secondary school 
preparation, standardized testing, financial aid, housing and 
notification deadlines, and refund procedures by:

            d. providing students, families and secondary schools with 
        the most comprehensive information about costs of attendance 
        and opportunities for all types of financial aid, and state the 
        specific relationship between and among admission and financial 
        aid practices and policies;
            i. clearly stating all deadlines for application, 
        notification, housing, and candidates' reply requirements for 
        both admission and financial aid;

B. Admission, Financial Aid and Testing Policies and Procedures
All postsecondary members agree that they will:

        3. permit first-year candidates for fall admission to choose, 
without penalty, among offers of admission and financial aid until May 
1. Candidates admitted under an Early Decision program are a recognized 
exception to this provision.
            a. It is understood that May 1 will be viewed as the 
        postmark date and/or the receipt date for electronic 
        submissions. Colleges that solicit commitments to offers of 
        admission and/or financial assistance prior to May 1 may do so 
        provided those offers include a clear statement in the original 
        offer that written requests for extensions and admission 
        deposit refunds until May 1 will be granted, and that such 
        requests will not jeopardize a student's status for admission 
        or financial aid;
            b. When May 1 falls on a Sunday or holiday, May 2 becomes 
        the recognized date.
        4. not offer exclusive incentives that provide opportunities 
for students applying or admitted Early Decision that are not available 
to students admitted under other admission options. Examples of 
exclusive incentives include special dorms for ED admits; honors 
programs only for ED admits; full, need-based financial aid packages 
for ED admits only; special scholarships for ED admits only; or any 
promise of an advantage in the admission process if student(s) convert 
from Regular Admission to Early Decision.
        7. state the specific relationship among admission and 
financial aid practices and policies. Colleges and universities may 
apply enrollment strategies to decisions to admit, wait list or deny 
students on the basis of stated or unstated financial need.

        Examples include:

            a. colleges that might prioritize wait lists by students' 
        level of financial need;
            b. institutions that employ ``need aware'' admission for 
        the bottom 10 percent of the class.
        10. not knowingly offer financial aid packages to students who 
are committed to attend other institutions, unless the students 
initiate such inquiries. Athletic scholarships, which adhere to 
nationally established signing periods, are a recognized exception. The 
National Collegiate Athletic Association (NCAA) has established bylaws, 
operational manuals and legislative directives guiding Division I, II, 
and III sports for men and women. Each NCAA division has its own set of 
rules and bylaws that govern intercollegiate athletics. In addition to 
divisional regulations, there are playing rules committees that set 
rules for specific sports. Each sport includes calendars regulating 
quiet periods, dead periods, evaluation periods, contact periods, and 
eventually, National Letter of Intent signing dates that occur in 
November, February and April. All such dates are in advance of May 1, 
the National Candidates Reply Date for admission. NACAC will continue 
to work with the NCAA to recognize May 1 as a critical date on the 
admission calendar. For more information on NCAA deadlines, dates and 
requirements, visit www.NCAA.org.
II. Postsecondary Members--Best Practices
B. Admission, Financial Aid and Testing Policies and Procedures
All postsecondary members should:

        1. provide in the notification letter of those applicants 
offered a place on the wait list a history that describes the number of 
students offered places on the wait lists, the number accepting places, 
the number offered admission, and the availability of financial aid and 
housing;
        5. admit candidates on the basis of academic and personal 
criteria rather than financial need. This provision does not apply to 
international students ineligible for Federal student assistance;
        9. view financial aid as supplementary to the efforts of 
students' families when students are not self-supporting;
        10. meet the full need of accepted students to the extent 
possible, within the institution's capabilities;
        11. should state that eligibility for, and packaging of, need-
based and merit aid will be comparable for students admitted under 
Early and Regular programs;
        12. utilize an equitable process of needs analysis methodology 
in making expected estimates or awards of the amount of financial aid 
that may be available to students after documentation is provided;
        13. notify accepted aid applicants of financial aid decisions 
as soon as possible before the enrollment notification deadline date, 
assuming all requested application forms are received on time;
II. Postsecondary Members--Interpretations and Monitoring
B. Admission, Financial Aid and Testing Policies and Procedures
        All postsecondary members agree that they will:

        3. permit first-year candidates for fall admission to choose, 
without penalty, among offers of admission and financial aid until May 
1. Candidates admitted under an Early Decision program are a recognized 
exception to this provision.

                    a. It is understood that May 1 will be viewed as 
                the postmark date and/or the receipt date for 
                electronic submissions. Colleges that solicit 
                commitments to offers of admission and/or financial 
                assistance prior to May 1 may do so provided those 
                offers include a clear statement in the original offer 
                that written requests for extensions and admission 
                deposit refunds until May 1 will be granted, and that 
                such requests will not jeopardize a student's status 
                for admission or financial aid;
                    b. When May 1 falls on a Sunday or holiday, May 2 
                becomes the recognized date.

        4. not offer exclusive incentives that provide opportunities 
for students applying or admitted Early Decision that are not available 
to students admitted under other admission options. Examples of 
exclusive incentives include special dorms for ED admits; honors 
programs only for ED admits; full, need-based financial aid packages 
for ED admits only; special scholarships for ED admits only; or any 
promise of an advantage in the admission process if student(s) convert 
from Regular Admission to Early Decision.
        7. state the specific relationship among admission and 
financial aid practices and policies. Colleges and universities may 
apply enrollment strategies to decisions to admit, wait list or deny 
students on the basis of stated or unstated financial need.
        Examples include:

                    a. colleges that might prioritize wait lists by 
                students' level of financial need;
                    b. institutions that employ ``need aware'' 
                admission for the bottom 10 percent of the class.

        10. not knowingly offer financial aid packages to students who 
are committed to attend other institutions, unless the students 
initiate such inquiries. Athletic scholarships, which adhere to 
nationally established signing periods, are a recognized exception. The 
National Collegiate Athletic Association (NCAA) has established bylaws, 
operational manuals and legislative directives guiding Division I, II, 
and III sports for men and women. Each NCAA division has its own set of 
rules and bylaws that govern intercollegiate athletics. In addition to 
divisional regulations, there are playing rules committees that set 
rules for specific sports. Each sport includes calendars regulating 
quiet periods, dead periods, evaluation periods, contact periods, and 
eventually, National Letter of Intent signing dates that occur in 
November, February and April. All such dates are in advance of May 1, 
the National Candidates Reply Date for admission. NACAC will continue 
to work with the NCAA to recognize May 1 as a critical date on the 
admission calendar. For more information on NCAA deadlines, dates and 
requirements, visit www.NCAA.org.
II. Postsecondary Members--Best Practices
B. Admission, Financial Aid and Testing Policies and Procedures

        All postsecondary members should:

        1. provide in the notification letter of those applicants 
offered a place on the wait list a history that describes the number of 
students offered places on the wait lists, the number accepting places, 
the number offered admission, and the availability of financial aid and 
housing;
        5. admit candidates on the basis of academic and personal 
criteria rather than financial need. This provision does not apply to 
international students ineligible for Federal student assistance;
        9. view financial aid as supplementary to the efforts of 
students' families when students are not self-supporting;
        10. meet the full need of accepted students to the extent 
possible, within the institution's capabilities;
        11. should state that eligibility for, and packaging of, need-
based and merit aid will be comparable for students admitted under 
Early and Regular programs;
        12. utilize an equitable process of needs analysis methodology 
in making expected estimates or awards of the amount of financial aid 
that may be available to students after documentation is provided;
        13. notify accepted aid applicants of financial aid decisions 
as soon as possible before the enrollment notification deadline date, 
assuming all requested application forms are received on time;
III. Counseling Members--Best Practices
A. Admission, Financial Aid and Testing Policies and Procedures
Counseling members should:

        3. provide information about opportunities and requirements for 
financial aid;
        13. refrain from encouraging students to apply to particular 
colleges and universities to enhance the high schools' statistical 
records regarding the number or amount of scholarship awards received;

    Question 5. Please describe the information a financial aid officer 
would be able to accurately provide a student who has neither applied 
nor enrolled.
    Answer 5. This question could encompass a number of scenarios, 
depending on whether ``applied'' refers to application for admission to 
the school or application for financial assistance, and on whether 
``enrolled'' means the student has accepted the offer of admission or 
has actually registered for classes.
    Typically, a student who has not applied for assistance (i.e., 
filed a FAFSA) can be provided accurate information only regarding the 
general student consumer information described in Q&A #4, above.
    A student who has filed a FAFSA but has not applied for or accepted 
an offer of admission may be provided a tentative aid package or not, 
depending on school policy. A student who has applied for aid but not 
for admission would likely get only general student consumer 
information. A student who has applied for aid and has been offered 
admission would probably be offered an aid package, as that is part of 
the student's decisionmaking process.
    These likelihoods result from the limited nature of at least some 
forms of aid: given limited available amounts, a school would not be 
able to accurately determine individual student awards unless it knows 
roughly how many students will likely attend. So, a balance must be 
achieved between providing specific award amounts and offering funds to 
the students most likely to attend the school. Thus, some schools would 
offer a financial aid package including estimated award amounts to all 
accepted students who applied for aid, having based those amounts on an 
analysis of past experience with numbers of admitted students who 
actually attend, while other schools would offer an aid package only 
after a student has accepted the offer of admission.

    Question 6. One of NACAC's strategic goals is to ``proactively 
encourage, welcome and value diverse perspectives in membership.'' 
(http://www.nacacnet.org/AboutNACAC/Pages/strategicpriorities.aspx) 
NACAC appears to restrict its institutional and counselor membership to 
only non-profit organizations and admissions personnel. Do you have any 
members from for-profit schools in any other membership categories? Why 
does NACAC restrict its membership to non-profit and public schools? 
Wouldn't for-profit schools and counselors also benefit from NACAC's 
programs and training?
    Answer 6. At present, NACAC's bylaws only allow for non-profit 
institutional membership for postsecondary institutions. Twice in the 
last decade, the NACAC membership has voted on proposals to allow for-
profit colleges to become members. On both occasions, the measure 
failed by relatively close margins. Members do generally believe that 
admission professionals at for-profit colleges could benefit from 
NACAC's programs and services. Perhaps more importantly, a large number 
of members believe that the students who are potentially interested in 
for-profit colleges stand to benefit from a more ethical recruiting 
environment. However, a majority of members on both occasions were 
unconvinced, given the state of practice at many for-profit 
institutions and the apparently widespread disregard for Federal laws, 
that for-profit institutions would be seriously committed to ethical 
practice.
    A large number of our members, as well as our leadership and staff, 
remain open to for-profit membership in the future, particularly if 
institutions demonstrate a commitment to ethical practice in admission 
and recruiting.

    Question 7. Does NACAC take a position on the fact that tuition at 
all higher education institutions is increasing at above the rate of 
inflation and has been for many years? Does NACAC believe higher 
education is providing the same value for the money as it did in 1992? 
Please explain.
    Answer 7. NACAC believes in the value of higher education, and 
believe that it continues to be a worthwhile investment. Data from the 
Census Bureau's Current Population Survey (http://www.census.gov/
compendia/statab/2010/tables/10s0227.pdf) continues to suggest that 
individuals who obtain a Bachelor's degree earn nearly twice as much in 
annual salary as those who hold only a high school diploma.
    While we know college costs are a major challenge to many families 
in the United States, we also understand that the circumstances that 
have led to the current college pricing structure are complex and not 
easily reversed. Several important factors for the committee to 
consider include \3\:
---------------------------------------------------------------------------
    \3\ Excerpted from the College Board's Trends in College Pricing, 
2009.* http://www.trends-collegeboard.com/college_pricing/
highlights.html.
---------------------------------------------------------------------------

Published Tuition and Fee and Room and Board Charges

    Published tuition and fees at public 4-year colleges and 
universities rose at an average annual rate of 4.9 percent per year 
beyond general inflation from 1999-2000 to 2009-10, more rapidly than 
in either of the previous two decades. The rate of growth of published 
prices at both private not-for-profit 4-year and public 2-year 
institutions was lower from 1999-2000 to 2009-10 than in either of the 
previous two decades.

     Published charges do not reflect the prices most students 
pay. About one-third of full-time students pay without the assistance 
of grant aid, and some of these students receive Federal tax credits 
and deductions to help cover expenses.
     Published in-state tuition and fees at public 4-year 
institutions average $7,020 in 2009-10, $429 (6.5 percent) higher than 
in 2008-9. Average total charges, including tuition and fees and room 
and board, are $15,213, up 5.9 percent.
     Published out-of-state tuition and fees at public 4-year 
colleges and universities average $18,548, $1,088 (6.2 percent) higher 
than in 2008-9. Average total charges are $26,741, up 6.0 percent.
     Published tuition and fees at public 2-year colleges 
average $2,544, $172 (7.3 percent) higher than in 2008-9.
     Published tuition and fees at private not-for-profit 4-
year colleges and universities average $26,273 in 2009-10, $1,096 (4.4 
percent) higher than in 2008-9. Average total charges are $35,636, up 
4.3 percent.
     Estimated published tuition and fees at private for-profit 
institutions average $14,174, $859 (6.5 percent) higher than in 2008-9.
     Largely due to fluctuating energy prices, the Consumer 
Price Index (CPI) declined by 4.0 percent from July 2008 to January 
2009 and then rose by 2.0 percent from January 2009 to July 2009, 
yielding a decline of 2.1 percent for the year. This decline means that 
inflation-adjusted increases in prices this year are larger than 
current dollar increases.
     All students, whether they live in campus housing or not, 
must buy books and supplies and pay for food, housing and other living 
expenses while in school. They would face many similar expenses if they 
were not in school, but would be able to devote more time to the labor 
force.

Variation in Tuition and Fees

    Half of all full-time public and private not-for-profit 4-year 
college students attend institutions charging tuition and fees less 
than $8,679, and half attend institutions with higher published prices.

     In 2009-10, published in-State tuition and fees at public 
doctorate-granting universities are $7,797, compared to $6,094 at 
public master's universities, and $5,930 at public baccalaureate 
colleges.

     About 24 percent of all full-time students attending 4-
year colleges are enrolled in institutions with published prices below 
$6,000 per year. This includes 33 percent of public college students 
and 5 percent of private college students.
     About a quarter of full-time 4-year college students are 
enrolled in institutions with published prices of $21,000 per year or 
higher. These students attend either private institutions or public 
institutions outside their states of residence.
     Although the average increase in tuition and fees at 
public 4-year colleges in 2009-10 is 6.5 percent for in-State students 
and 6.2 percent for out-of-state students, 15 percent of full-time 
students in this sector attend institutions that increased their 
published prices by 12 percent or more, and 17 percent attend 
institutions that increased their prices by less than 3 percent.
     In 2009-10, the New England region has the highest average 
public 4-year prices and the South has the lowest.

Institutional Finances

    The $7,953 State tax appropriations per student in 2008-9 were 12 
percent ($1,100) lower in constant dollars than a decade earlier.

     Nationally, State appropriations per $1,000 in personal 
income declined from $9.74 in 1989-90 to $7.36 in 1999-2000, and $6.50 
in 2008-9.
     As of June 2008, 18 private colleges and universities had 
endowment assets exceeding $500,000 per student. The vast majority of 
the more than 1,600 private not-for-profit institutions and more than 
650 public 4-year institutions had much lower endowments or no 
endowments at all.
     In 2007-8, average salaries for full-time faculty members 
at public 2-year colleges were the same in inflation adjusted dollars 
as they had been in 1991-92. Average salaries had increased 4 percent 
at public 4-year and 11 percent at private not-for-profit 4-year 
institutions over these 16 years.

    Question 8. According to NACAC's Web site: The average student loan 
debt nearly doubled from 1992 to 2004. Does NACAC believe the current 
average debt levels of students attending non-profit and public higher 
education are appropriate?
    Answer 8. NACAC has been concerned about rising debt levels for all 
students, regardless of the type of institution. We believe that in 
general, students are being asked to shoulder a much larger burden than 
they have in the past. Accordingly, we have advocated for reforms to 
student aid programs to attempt to lower such debt. Among the positions 
NACAC has adopted include support for:

     Establishment of Income Based Repayment (IBR);
     Enactment of the Health Care and Education Reconciliation 
Act, which made historic investments in Federal need-based aid;
     Allowing student loans to be dischargeable in bankruptcy;
     Increased need-based financial aid, such as the Pell 
grant;
     Reductions in student loan interest rates; and
     Limitations on credit card marketing on college campuses.

    Of particular concern to this committee, though, is a trend 
identified in a College Board analysis of student borrowing data from 
the National Postsecondary Student Aid Survey (NPSAS). According to the 
College Board, ``between 2003-4 and 2007-8, debt levels increased 
rapidly for students in the for-profit sector and for all of those 
earning certificates and two-year degrees. However, the increase was 
relatively small for bachelor's degree recipients in public and private 
four-year colleges.'' (http://professionals.collegeboard.com/
profdownload/cb-policy-brief-college-stu-borrowing-aug-2009.pdf).

    Question 9. Does NACAC take a position on declining higher 
education completion rates? For example, many supposedly 4-year 
programs at some institutions take the average student 6 years or more 
to complete. Does NACAC advise its members to provide transparent 
information on actual completion rates and time to complete programs of 
higher education before students are admitted?
    Answer 9. NACAC does not take a position on higher education 
completion rates. NACAC does recommend that institutions offer such 
information to students, particularly in light of the Higher Education 
Act requirements that institutions report completion rates to 
prospective students. NACAC served on an advisory committee to the 
National Postsecondary Education Cooperative (NPEC) in its effort to 
establish the ``Information Required to Be Disclosed Under the Higher 
Education Act of 1965: Suggestions for Dissemination.'' (http://
nces.ed.gov/pubs2010/2010831rev.pdf) Earlier this year, we circulated 
the publication to our membership to help promote understanding of the 
requirements for providing information to prospective students. The 
following is an excerpt from the NPEC guidance on graduation rate 
disclosures required under the Higher Education Act.

          ``Each institution must annually make available to 
        prospective and enrolled students the completion or graduation 
        rate of certificate--or degree-seeking, first-time, full-time, 
        undergraduate students. The data are to be available by July 1 
        each year for the most recent cohort that has had 150 percent 
        of normal time for completion by August 31 of the prior year.
          If the information is requested by a prospective student, it 
        must be made available prior to the student's enrolling or 
        entering into any financial obligation with the institution.
          Note: Institutions may add other information to their 
        completion/graduation rate disclosures (e.g., graduation rates 
        for other timeframes, but the HEA-
        required information must be identifiable and separate from any 
        additional information).
          An institution that determines that its mission includes 
        providing substantial preparation for students to enroll in 
        another title IV, HEA-eligible institution must disclose a 
        transfer-out rate for each cohort. A student shall be counted 
        as a completion or graduation if the student earns a degree or 
        certificate or completes a transfer-preparatory program within 
        150 percent of normal time for the student's program. Note: 
        These data are collected in the IPEDS Graduation Rate Survey 
        (GRS).
          The HEOA (Sec. 488(a)(3)) added a provision requiring that 
        the completion or graduation rates must be disaggregated by

         gender;
         major racial and ethnic subgroup (as defined in 
        IPEDS);
         recipients of a Federal Pell grant;
         recipients of a subsidized Stafford Loan who did not 
        receive a Pell grant; and
         students how did not receive either a Pell grant; or a 
        subsidized loan.

          Students are to be considered to have received a grant or 
        loan if they received it [for] the period used for determining 
        the cohort--fall term or full year.
          These disaggregated rates are to be disclosed only If the 
        number of students in each group is sufficient to yield 
        statistically reliable information and not reveal personally 
        identifiable information about an individual student. The 
        requirement for disaggregation does not apply to 2-year degree-
        granting institutions until academic year 2011-2012.
          Institutions are allowed to exclude from completion/
        graduation or transfer-out rate calculations those students who 
        leave school to serve in the Armed Forces, on official church 
        missions, or with a Federal foreign aid service, or are 
        deceased or totally and permanently disabled.
          The HEOA (Sec. 488(a)(2)) added a provision that applies to 
        institutions for which students who leave school to serve in 
        the Armed Forces, on official church missions, or with a 
        recognized Federal foreign aid service represent 20 percent or 
        more of the certificate- or degree-seeking, full-time 
        undergraduates at the institution. Those institutions may 
        include the students who leave for such service in their 
        completion/graduation rate calculations but allow for the time 
        the students were not enrolled due to their service by adding 
        the time period the students were not enrolled due to their 
        service to the 150 percent of normal time used in the 
        calculations.''

    Question 10. Do NACAC members review or advise students on filling 
out the Free Application for Federal Student Aid (FAFSA)? What sort of 
training does NACAC provide for its members on the FAFSA? Are NACAC 
members required to verify data on a FAFSA they assist a student with?
    Answer 10. Postsecondary NACAC members do not review students' 
FAFSA or advise students on filling out the FAFSA. Admission counselors 
simply encourage students to complete the FAFSA by the recommended 
institutional, State, and Federal filing dates. Institutional student 
financial aid and admission offices often partner to host financial aid 
workshops for prospective students and families to learn about the 
types of available institutional, State, and Federal aid options, the 
EFC, and the necessary FAFSA documents, as well as walk through the 
FAFSA and/or FAFSA on the Web Worksheet.
    Secondary NACAC members, independent counselors, and community-
based organization staff may help first-generation, low-income, and 
minority students and their families, who may lack ``college 
knowledge,'' complete the FAFSA to overcome this known college access 
barrier for under-represented students. Counselors will advise families 
to gather the necessary documents to complete the FAFSA; however, they 
do not aim to verify this personal family information.
    At the annual NACAC conference and the annual conferences of 
NACAC's 23 State and regional affiliates, financial aid sessions are 
held on a wide variety of topics. The content of sessions may include 
aid research, award distribution, and tools for helping students fund 
their education. A staple of the conferences is a session on the 
practical changes to the FAFSA based on statutory and regulatory 
changes in Federal student aid. FAFSA session presenters include U.S. 
Department of Education staff, State education agency staff, vice 
presidents/deans/directors of enrollment management, and deans/
directors of financial aid. NACAC has also provided free online 
seminars for its members on topics such as ``The Basics of Borrowing'' 
and ``Understanding the Financial Aid Award Notification Letter and 
Working with Financial Aid Offices.''
    In addition, NACAC urges members to participate in conferences, 
workshops, and webinars offered by Federal Student Aid to broaden their 
knowledge base and be prepared to answer basic and intermediate-level 
questions about Higher Education Act Title IV aid programs. NACAC helps 
to facilitate such training by its partnership in the ``National 
Training for Counselors and Mentors'' (NT4CM) effort in conjunction 
with FSA, financial aid administrators, community-based organizations, 
counselors, and guaranty agencies.

    Question 11. Has NACAC taken action against any members who violate 
NACAC ethical codes, including anyone involved in National Collegiate 
Athletic Association athletic recruiting violations? Please provide a 
summary of any actions taken against institutions or individual members 
in the last 5 years.
    Answer 11. NACAC's Statement of Principles of Good Practice (http:/
/www.nacacnet.org/AboutNACAC/Policies/Documents/SPGP.pdf) is comprised 
of Mandatory Practices, Interpretations of Mandatory Practices and Best 
Practices. Mandatory practices are enforceable for NACAC member 
institutions. The following is a list of actions taken by NACAC during 
the past 5 years, organized by the mandatory practice constituting the 
basis for the action. (Notes: Names of specific institutions have been 
omitted for purposes of confidentiality. The control and state of the 
institution are provided to afford the committee an opportunity to see 
the types of institutions involved. ``Resolved'' indicates that 
institution agreed to bring practice into compliance with NACAC 
standards.)
    Ranking Choices: Postsecondary members agree that they will not 
require or ask candidates or their secondary schools to indicate the 
order of the candidates' college or university preferences, except 
under Early Decision.

    2006: Private college (Florida) application asked for rank order of 
choices (resolved)

    2007: Private College (New York) online application ask for rank 
order of choices (resolved)

    2008-09: Private college (Virginia) online application asked for 
rank order of choices (resolved)

    2008-09: Private college (New Hampshire) application asked for rank 
order of choices (resolved)

    May 1--National Candidates Reply Date: Members agree that they will 
permit candidates for fall admission to choose among offers of 
admission, financial aid and scholarships until May 1 and will state 
this deadline explicitly in their offers of admission.

    2006: Private college (Michigan) (resolved)

    2006: Public college (Virginia)--scholarship offer with early reply 
requirement (resolved)

    2006: Public college (Michigan)--scholarships--requested early 
notification of acceptance (resolved)

    2007: Private college (New Jersey)--acceptance letter did not 
indicate May 1 (resolved)

    2007: Private college (Ohio)--scholarship competition--students had 
to pay $100 to compete and that was due prior to May 1 (resolved)

    2008: Private college (Illinois)--encouraging students to deposit 
by April 18th to receive on time tuition discount (resolved)

    2008: Public college (Texas) scholarship office sent letter 
requiring response by March 21 (resolved)

    2008-09: Public College (Arizona)--aggressive tactics to ``close 
the deal'' before May 1 (resolved)

    2008-09: Private college (Utah)--Institution required students to 
commit within 30 days of admission offer--Institution terminated 
membership in NACAC

    2008-09: Private college (Tennessee)--Scholarship offer required 
response before May 1 (resolved)

    2008-09: Public college (West Virginia)--asked students to deposit 
immediately or risk being deferred (resolved)

    2008-09: Private college (Alabama)--non-refundable enrollment fee 
to hold place ASAP (resolved)

    2009: Public college (Tennessee)--Scholarship requirement to 
respond by April 15 (resolved)

    2010: Private college (North Carolina)--reservation form required 
earlier response (resolved)

    2010: Private college (Louisiana)--scholarship award letter 
requiring response and deposit by March 31 (resolved)

    2010: Public college (Louisiana)--scholarship letter requiring 
acceptance by February and not May 1 (resolved)

    2010: Private college (Florida)--inappropriate deposit requirement 
(resolved)

    2010: Public college (Connecticut)--inappropriate deposit 
requirement (status pending)

    Manipulating Commitments Prior to May 1: Postsecondary members 
agree that they will work with their institutions' senior 
administrative officers to ensure that financial aid and scholarship 
offers and housing are not used to manipulate commitments prior to May 
1.

    2009: Public college (Alabama)--housing deposit and registering for 
orientation prior to May 1 (resolved)

    Use of Incentives: Members agree that they will not offer or accept 
any reward or remuneration from a secondary school, college, 
university, agency, or organization for placement or recruitment of 
students.

    2006: Private college (Illinois)--referral awards for students 
(resolved)

    2007: Private college (Ohio)--Pharmacy program commitment 
(resolved)

    2009: Private college (Pennsylvania)--after May 1 respond date and 
decline--sent student an email offering additional scholarship money 
(status pending)

    2010: Private college (Virginia)--student accepted to two Virginia 
colleges was offered an additional scholarship of $3,000 to attend one 
over the other (resolved)

    2010: Private college (Alabama)--In Early Action letter the 
institution offered iPods or iPhone to first 500 applicants submitting 
a nonrefundable deposit by October 15 (resolved)

    Student Information Privacy: Members agree that they will be 
responsible for compliance with applicable laws and regulations with 
respect to the students' rights to privacy.

    2006: Public college (Illinois)--sharing student information with 
branch campus (resolved)

    Accurately Representing Institutional Information: Members agree 
that they will accurately represent and promote their schools, 
institutions, organizations and services. Members agree that they will 
state clearly the requirements for the first year and transfer 
admission and enrollment processes, including secondary school 
preparation, standardized testing, financial aid, housing and 
notification deadlines, and refund procedures

    2007: Public college (New York) (resolved)

    2007: Public college (New York)--students in a special program were 
not told they had to purchase books and computers (resolved)

    2009: Private college (New York)--``Guaranteed Transfer'' offer 
(resolved)

    Waitlist: Postsecondary members agree that they will establish wait 
list procedures that ensures that no student on any wait list is asked 
for a deposit in order to remain on the wait list or for a commitment 
to enroll prior to receiving an official written offer of admission.

    2007: Private college (Minnesota) resolved)

    2010: Private college (Massachusetts)--letter to wait list 
applicants requesting a deposit to stay on the list (resolved)

    2010: Private college (Tennessee) sent acceptance letter to 
waitlisted students and had to correct error (resolved)
    Admission based on test scores only: Postsecondary members agree 
that they will not use minimum test scores as the sole criterion for 
admission, advising or for the awarding of financial aid.

    2009: Public college (Kansas) resolved

    Application Deadlines before October 15th: Postsecondary members 
agree that they will not establish any application deadlines for first 
year candidates for fall admission prior to October 15 and will give 
equal consideration to all applications received by that date.

    2009: Public college (South Carolina) resolved

    2010: Public College (Georgia)--Early Action deadline is October 1 
(resolved)

    Disparaging Comparisons: Postsecondary members agree that they will 
not use disparaging comparisons of secondary or postsecondary 
institutions

    2008--Private college (Texas) made disparaging remarks about 
private college (Indiana) resolved

    Question 12. In 2007, NACAC surveyed public and non-profit 
institutions and found that 60 percent of respondents had received 
applications from undocumented students/illegal aliens. Did NACAC also 
ask if any of those institutions admitted such students and whether 
they received any form of aid? Does NACAC support allowing illegal 
aliens to attend U.S. schools of higher education? Should illegal 
aliens receive State or Federal financial aid to attend college or be 
treated as in-State for State university tuition purposes?
    Answer 12. NACAC's 2007 survey did not inquire as to whether 
undocumented students were admitted or awarded aid.
    NACAC supports the DREAM Act (S. 729), which would resolve an 
inconsistency in Federal law facing students who have graduated from 
U.S. high schools and are interested in attending college. Passage of 
the DREAM Act would afford proper documentation for such students. The 
DREAM Act would also allow States to make decisions about whether to 
treat such students as residents for purposes of determining tuition.

    Question 13. Please provide a breakdown of NACAC's membership by 
member categories: Institutional Membership, School District or 
University System Membership, Individual Membership, Organization or 
Agency Membership, Independent Counselor Membership. Please include the 
total public sector versus private sector members in each category and 
voting versus non-voting (where appropriate).

    Answer 13.


----------------------------------------------------------------------------------------------------------------
                                                                                                       Did not
                  Member rate type                      All     Voting    Non-    Public    Private     self-
                                                      members            voting   sector    sector     identify
----------------------------------------------------------------------------------------------------------------
Total Institutional Memberships....................     3,643    3,643        0     1,346     1,962          335
Total School District or University System                 80       80        0        47        10           23
 Memberships.......................................
Total Individual Memberships.......................     6,566    5,595      971     1,680     3,772        1,114
Total Organization or Agency Memberships...........       215       88      127         4         3          208
Total Independent Counselor Memberships............       411      411        0         3         2          406
----------------------------------------------------------------------------------------------------------------
As of 8-17-2010 Total--All NACAC Memberships.......    10,915    9,817    1,098     3,080     5,749        2,086
----------------------------------------------------------------------------------------------------------------

                             senator hagan
    Question 1. As you probably know, title IV aid is technically 
provided to students--not the school--and therefore the Federal 
Government places no restrictions on how this revenue can be used by 
schools. In short, there is no requirement that a school devote any 
portion of title IV dollars to the education of their students. 
Instead, they can choose to use this money on marketing, recruitment or 
any administrative expense that they choose.
    I think we can agree that the primary goal of an institute of 
higher education is to provide a quality education to every student 
that enrolls. This goal is evident in your testimony and through the 
work that you are doing as the director of public policy at NACAC. What 
are your thoughts on how we might change the mindset of these 
institutions that are so focused on bringing a high volume of students 
in their front door but may be failing to provide them with the best 
education possible?
    Answer 1. The key transaction that Congress should be concerned 
about is the use of Federal taxpayer funds to support the profit motive 
in for-profit colleges. Indeed, the purpose of many Higher Education 
Act program integrity protections seek to mitigate the effects of the 
profit motive by applying rules specific to the sector.
    In the evolution of the participation of for-profit colleges in 
student aid programs, it seems apparent that the over-reliance of these 
institutions on Federal aid for profit--often at the expense of 
students who enroll--is the key policy problem. As you suggest, the 
for-profit sector has successfully rolled back many protections that 
Congress and the Department of Education put in place to safeguard the 
integrity of taxpayer funds. As the Department's Inspector General 
testified in 2005, protections that are eliminated must be replaced by 
other safeguards against waste, fraud and abuse.

          ``I know there has been discussion about doing away with this 
        rule or that rule, and the question I would always ask when you 
        are doing away with a rule is what abuse was it designed to 
        stop? And then if you are eliminating a rule, if there is a 
        concern that the abuse will return, then what alternative would 
        you offer for that rule?'' (Thomas Carter, Deputy Inspector 
        General, U.S. Department of Education, Hearing of the House 
        Education & Workforce Committee, March 1, 2005)

    Below are some of the key challenges for Congress, and areas where 
statutory changes may reduce the chance of regulations that bend to the 
political winds later.

     Use of funds for advertising and marketing: Many for-
profit institutions spend vast amounts of money on advertising and 
marketing. While marketing is important for all colleges and 
universities, there may be common sense limits that Congress could 
place on the use of taxpayer funds for such purposes.
     Expansion of 90-10 (or subsequent limit) rule to include 
ALL taxpayer funds: At present, the Higher Education Act only requires 
that for-profit institutions not receive more than 90 percent of their 
revenue from title IV sources. The remaining 10 percent can be gathered 
from other Federal sources, such as Veterans' benefits and workforce 
investment funds.
     Rethink the 90-10 rule: The Higher Education Act requires 
that for-profit colleges earn no more than 90 percent of their total 
revenue from title IV sources. At present, many for-profit institutions 
earn nearly 90 percent of their revenue from Federal title IV funds. 
One step Congress could take is to lower the threshold of Federal funds 
from which for-profit colleges can derive their revenue.
     Define new controls for distance education: The 
elimination of the 50 percent rule has allowed the proliferation of 
exclusively online education programs. Because the absence of classroom 
instruction was an initial program integrity concern for Congress in 
establishing the 50 percent rule, it may be appropriate to reinstate a 
class time requirement or explore other controls to ensure program 
integrity in exclusively online programs.
     Adjust statute to reinforce proposed regulations: While 
the Department of Education's proposed regulations are rooted in 
existing statute, adopting statutory language that makes clear the 
legislature's agreement with the intent of the regulatory purpose would 
help ensure against future efforts to deregulate. Areas including, but 
not limited to, gainful employment, incentive compensation, 
misrepresentation, and accreditation may warrant further consideration 
by Congress.

    Question 2. According to a February 23, 2010 GAO report regarding 
incentive compensation violations, unethical and fraudulent practices 
occurred between 1998 and 2002 when the ban on incentive pay was in 
place (prior to the safe harbor rules). This seems to indicate that 
there was, and is, a widespread disregard for congressional oversight 
by schools.
    I know that the Department of Education's recent Notice of Proposed 
Rulemaking (NPRM) would eliminate the ``safe harbor'' provisions and 
restore the Federal Government's protection against this recurring and 
unethical practice.
    My concern is that in a different political environment we may 
again be faced with another set of ``safe harbor'' rules. Do you think 
that Congress should do something different to ensure that these rules 
stick this time?
    Answer 2. It is possible that Congress could adopt stricter 
language in the statute to safeguard against the future pursuit of 
``clarity,'' or loopholes. One of the ostensible bases for enacting the 
safe harbors in 2002 was that some interest groups and institutions 
felt there was a lack of ``clarity'' in the statute. NACAC has 
maintained throughout the years that the statute seems amply clear. But 
we recognize that other organizations and institutions may have 
different opinions, whatever their motives. NACAC would be glad to work 
with the committee if it decides to pursue a revision to strengthen the 
statutory ban on incentive compensation.
                           senator alexander
    Question. You strongly support Secretary Duncan's proposed 
regulation on incentive compensation and believe that it will help 
reduce harmful incentives by recruiters. Should Congress be examining 
practices in all sectors of higher education and determine whether 
additional steps are necessary?
    Answer. Because the statutory ban on incentive compensation applies 
to all institutions participating in title IV programs, and since non-
profit institutions have occasionally run afoul of the statute, we 
believe the Department's actions are suitably focused on all 
institutions.
    Based on preponderance of evidence of unethical and illegal 
recruiting practices in for-profit higher education, we believe that 
the committee is rightfully concerned with safeguarding the integrity 
of taxpayer funds as they are currently being spent in the for-profit 
sector. Congress' job of triage in this case, as Senator Franken noted, 
is to eliminate the glaring problems first. To that end, there may well 
be more the committee can do statutorily to limit the potential for 
fraud and abuse in the Federal aid programs.
   Response to Questions of Senator Enzi, Senator Hagan, and Senator 
                 Alexander by Michale S. McComis, Ed.D.
                                       U.S. Senate,
                           Committee on Health, Education, 
                                       Labor, and Pensions,
                                 Washington, DC 20510-6300,
                                                    April 16, 2010.
Mr. Michale S. McComis, Ed.D.,
Executive Director,
Accrediting Commission of Career Schools and Colleges,
2101 Wilson Blvd., Suite 302,
Arlington, VA 22201.

    Dear Mr. McComis: Thank you for your testimony at the Senate 
Committee on Health, Education, Labor, and Pensions hearing on ``For-
Profit Schools: The Student Recruitment Experience'' held August 4, 
2010. Attached are written questions from members of the committee. The 
committee looks forward to including your answers to these questions, 
along with your hearing testimony, in the formal committee record.
    Please help us complete a timely and accurate hearing record by 
sending your written responses no later than Monday, August 23, to my 
office, attention Terri Roney and Chris Eyler, Senate HELP Committee, 
428 Dirksen Senate Office Building, Washington, DC 20510. Please also 
send an electronic version of your responses to Terri Roney at 
[email protected] and [email protected]
.gov.
    If circumstances make it impossible to comply by the August 23 date 
provided for submission of answers, witnesses may explain in writing 
and request an extension of time to reply.
    Again, thank you for your participation. If you have any questions, 
please contact Terri Roney at (202) 224-5375.
            Sincerely,
                                                Tom Harkin,
                                                          Chairman.

                                                 Mike Enzi,
                                                    Ranking Member.
                                 ______
                                 
      Accrediting Commission of Career Schools and 
                                  Colleges (ACCSC),
           Wilson Boulevard, Suite 302 Arlington, VA 22201,
                                                September 10, 2010.

Senator Tom Harkin, Chairman,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.

Senator Mike Enzi, Ranking Member,
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
428 Dirksen Senate Office Building,
Washington, DC 20510.
    Dear Senators: Attached to this letter you will find my responses 
to the questions set forth in the August 16, 2010 request from the 
Senate Health, Education, Labor, and Pensions (``HELP'') Committee. As 
per HELP Committee staff, the due date to submit the responses was 
extended to September 10, 2010.
    I am hopeful that my responses have answered the Senators' 
questions sufficiently. If I can be of further assistance, please do 
not hesitate to contact me directly at (703) 247-4520 or 
[email protected]
            Sincerely,
                                 Michale S. McComis, Ed.D.,
                                                Executive Director.
                                 ______
                                 
                              senator enzi
    Question 1. Please explain what obligations the Higher Education 
Act prescribes for accrediting agencies. Who has the primary 
responsibility for ensuring that institutions of higher education 
comply with the law? What role do accreditors have in policing 
institutions of higher education to prevent behavior like that revealed 
in the GAO investigation?
    Answer 1. The historical role of accreditation in the oversight of 
the Higher Education Act (``HEA'') as first established by Congress is 
to serve as a non-governmental authority upon which governmental 
partners can rely to assess the quality of education. This partnership 
among Federal Government, State government, and accrediting agencies is 
known as the ``triad.'' Each member of the triad is responsible for its 
area of expertise and authority. The primary role of accreditation in 
the regulatory triad, in partnership with the States and the Federal 
Government, is to be a valid and reliable authority on quality 
education assessment. An accrediting agency has no legal or ceded 
authority to enforce law or another agency's regulations. It is the 
role of each agency in the triad to enforce its own rules, regulations, 
and applicable laws. Having said that, accrediting agencies recognized 
by the Secretary do have an obligation to report to the U.S. Department 
of Education (``the Department'') if the agency has reason to believe 
that an institution is not complying with title IV program 
requirements, and accrediting agencies should be expected to fulfill 
this obligation. Again, however, it is not appropriate for an 
accrediting agency to enforce Federal regulations.
    Section 496 of the HEA and the accompanying regulations set forth 
the criteria that accrediting agencies must follow in order to be 
recognized by the Secretary of Education. This section requires a 
demonstration by accrediting agencies of several attributes, including:

     Experience in accreditation and acceptance of the agency 
by others.
     Sound administrative and fiscal administration of the 
agency.
     Sound application of standards that meet HEA's 
requirements, in reaching an accrediting decision.
     Consistency in decisionmaking.
     Monitoring and reevaluation of accredited institutions and 
programs.
     Enforcement of its standards.
     Review and updating of standards.
     Substantive change requirements for institutions.
     Operating procedures compliant with HEA's requirements.
     Due process standards.
     Notification procedures of accrediting decisions to 
schools, the Department and States.
     Regard for decisions of States and other accrediting 
agencies.

    With regard to the behavior discovered by the GAO Report, 
accrediting agencies are required to have effective standards in the 
area of recruitment and admissions practices and to enforce those 
standards. Therefore, accreditors have an obligation to set standards, 
review an institution's compliance with those standards, and to take 
appropriate enforcement actions when an agency finds an institution to 
be out of compliance with those standards.

    Question 2. How often do accrediting agencies evaluate institutions 
of higher education? Between evaluations, do accrediting agencies 
perform any type of regular review of institutions of higher education 
that have been granted accreditation by the agency? Do accrediting 
agencies ever utilize ``secret shopper'' practices in their evaluations 
of institutions of higher education?
    Answer 2. Typically, a grant of accreditation can be for a term of 
3 to 10 years, depending on the type of accreditor and the type of 
institution being accredited. ACCSC grants a term of initial 
accreditation for no longer than 3 years and a renewal grant of 
accreditation for no longer than 5 years and reserves the right to 
grant a shorter term as deemed appropriate.
    Between evaluations, an accrediting agency recognized by the 
Department must:

          demonstrate it has, and effectively applies, a set of 
        monitoring and evaluation approaches that enables the agency to 
        identify problems with an institution's or program's continued 
        compliance with agency standards and that takes into account 
        institutional or program strengths and stability. These 
        approaches must include periodic reports, and collection and 
        analysis of key data and indicators, identified by the agency, 
        including, but not limited to, fiscal information and measures 
        of student achievement, consistent with the provisions of 
        Sec. 602.16(f). This provision does not require institutions or 
        programs to provide annual reports on each specific 
        accreditation criterion (34 CFR Sec. 602.19 (b).

    In addition, between evaluations, an accrediting agency recognized 
by the Department must monitor overall growth of the institutions or 
programs it accredits and, at least annually, collect headcount 
enrollment data from those institutions or programs and must monitor 
the growth of programs at institutions experiencing significant 
enrollment growth, as reasonably defined by the agency (34 CFR 
Sec. 602.19 (c-d).
    ACCSC requires institutions to provide annual reports that meet the 
above regulatory requirements and that also require institutions to 
provide, among other things, information regarding graduation and 
employment rates for each program offered and annual cohort default 
rates. In addition, ACCSC requires approval of new programs at its 
institutions, including a site visit for this purpose, and the agency 
annually reviews cohort default rates.
    To my knowledge accreditors are not required to utilize ``secret 
shopper'' practices in their evaluations of institutions of higher 
education, nor do they. I do not advocate that accreditors be asked to 
take on this function because accrediting agencies generally lack the 
investigative tools and expertise to root out non-compliance with 
Federal laws and regulations. Federal regulations currently exist to 
govern how a school represents itself and its educational programs to 
prospective students. Therefore, an alternative approach would be to 
require all institutions to undergo an evaluation, secret or other, by 
an independent third party auditor as a part of the Federal Program 
Participation Agreement in order to demonstrate compliance with 
applicable Federal law and regulation pertaining to misrepresentation. 
Title IV compliance audits are already required, and a review of an 
institution's conduct in the area of recruitment would seem to be an 
appropriate extension of those title IV audits.

    Question 3. What sort of recourse is available to individuals who 
believe an institution of higher education has violated the law?
    Answer 3. An individual who believes that an institution has 
violated law has several options of recourse. The student may utilize 
resources internal to the institution or external to the institution to 
lodge an allegation against a school. Internal recourse would be to 
follow an institution's complaint or grievance policy and to speak with 
schools administrators. A student may also send allegations of a 
violation of law to the appropriate law enforcement agencies, State 
department of education, State Attorney General, U.S. Department of 
Education, and the institution's accrediting agency. Although ACCSC has 
no authority to enforce law, the agency's standards provide that the 
Commission will refer a complainant to the appropriate Federal or State 
agency or private entity with jurisdiction over the subject matter of 
the allegation.

    Question 4. How many regional and national agencies are there? Who 
``certifies'' the accrediting agencies? Are all accrediting agencies 
recognized by the U.S. Department of Education?
    Answer 4. According to the Commission on Higher Education 
Accreditation (``CHEA'') and information gathered from the Department's 
Web site, it appears that there are eight regional institutional 
accrediting agencies and 11 national institutional accrediting 
agencies, of which seven are focused on career-oriented education. In 
addition, there are numerous specialized or programmatic accrediting 
agencies, some of which accredit single-program institutions. All of 
these regional and national agencies are recognized by the Secretary of 
Education and many are also recognized by CHEA. Not all accrediting 
agencies are recognized by the Secretary insofar as recognition is only 
required in order for an institution to participate in Federal title IV 
programs.
    The Department is the best resource to describe how each agency is 
recognized and the scope of each agency's recognition. The list of 
accrediting agencies that are authorized by the Department to enable 
the institutions they accredit to establish eligibility to participate 
in Federal title IV programs can be found here: http://www2.ed.gov/
admins/finaid/accred/accreditation_pg9.html.
    The Department's list of regional and national accrediting agencies 
can be found here: http://www2.ed.gov/admins/tinaid/accred/
accreditation_pg6.html.
    I have attached CHEA's compilation of recognized accrediting 
organizations as Appendix I.

    Question 5. What differences are there, if any, between the 
accreditation process/procedures for private non-profit and public 
institutions of higher education, and the process/procedures used with 
for-profit schools? Are there differences in the membership of an 
accreditation review team for for-profit schools?
    Answer 5. Accrediting agencies recognized by the Department, 
regardless of the type of institutions accredited, fundamentally 
operate in the same manner. The Higher Education Act requires all 
agencies, regardless of mission or types of institutions they accredit, 
to meet the same requirements for recognition. The fundamental 
components of the accreditation process include an introspective self-
study, an on-site evaluation comprised of peer-review evaluators, and a 
review by a Board or Commission comprised of peers with appropriate 
experience to make accreditation decisions. In addition, accreditors 
focus on ongoing assessment to ensure that institutions continuously 
enhance their operations and the quality of education delivered to 
students. Because of these fundamental similarities in the mission of 
accreditation for private non-profit, public, and for-profit 
institutions, I do not believe there is a significant difference in the 
membership of the accreditation review teams for these schools. One 
exception to this statement is that national accreditors for for-profit 
institutions tend to have a specialized review process for an 
institution's financial statements. For example, because ACCSC 
accredits primarily for-profit institutions, the agency has highly 
specific rules that institutions must follow in preparing and 
submitting financial statements. ACCSC also has a Financial Review 
Committee that reviews all financials for institutions seeking initial 
and renewal of accreditation and annually monitors the financial 
statements of all institutions. This is an important analysis and one 
that, in my opinion, is necessary for all accreditors of for-profit 
institutions to engage in because the financial health of an 
institution is key to evaluating performance and the institution's on-
going ability to fulfill obligations to students.
    Accrediting agencies establish processes/procedures and standards 
that best serve to evaluate the institutions they accredit. Therefore, 
differences do exist amongst agencies due to the diversity of higher 
education institutions in the United States. These differences are 
appropriate and reflect the specific needs of quality education 
assessment across a broad spectrum of institutions. For example, 
because ACCSC accredits career and vocationally oriented institutions, 
the agency's standards focus on student learning, competency 
attainment, and graduation and employment rates as indicators of 
institutional success and student achievement. Agencies that accredit 
institutions with a more diverse range of missions may focus on 
different yet still appropriate processes to evaluate student 
achievement.

    Question 6. Are there for-profit schools that are accredited by 
both regional and national accrediting agencies?
    Answer 6. Institutions are only required to be accredited by one 
institutional agency recognized by the Department. Therefore, 
institutions are not typically accredited by more than one agency. 
However, some for-profit companies operate more than one institution 
and, in those instances, some of the company's schools may be 
accredited by a national agency, while others may be accredited by a 
regional or a different national agency. Also, an institution may have 
programmatic or specialized accreditation, in addition to its 
institutional accreditation.
    Question 7. For students to be eligible to receive Federal student 
financial assistance they must attend an institution that is 
accredited. Are there additional requirements for for-profit schools to 
meet before students who attend them are eligible to receive Federal 
assistance? Must all programs also be accredited? Is that also true for 
institutions of higher education other than for-profits?
    Answer 7. Yes, there are additional or at the very least different 
requirements that for-profit schools must meet before students who 
attend those institutions are eligible to receive Federal assistance. 
The definitions of institutions of higher education, financial 
responsibility tests, and the 90/10 rule are good examples where the 
Federal regulations set forth different requirements that only apply to 
for-profit institutions. However, my area of expertise is in 
accreditation, and I would defer a more detailed discussion on this 
question to the Department.
    All programs are not required to be individually ``accredited;'' 
however, all programs must be recognized/approved as within an 
institution's scope of institutional accreditation, which is true for 
all institutions. The processes by which accreditors recognize/approve 
programs, however, do vary. ACCSC requires specific programmatic 
approval as part of its institutional accreditation.

    Question 8. What information in the Program Participation Agreement 
(PPA) for for-profit schools is different than the information required 
for all other types of institutions of higher education?
    Answer 8. I would defer to the Department to answer this question. 
As an accreditor, ACCSC's focus is only on title IV provisions 
affecting accreditation of an institution, and not on specific HEA 
eligibility requirements included in the PPA.

    Question 9. What is to be done to improve marketing/recruiting 
procedures used by for-profit schools to reduce the potential 
malfeasance found by the GAO in its secret shopper investigation? What 
steps is your organization taking in light of the GAO investigation?
    Answer 9. Enforcement of current law, regulation, and accrediting 
standards is an appropriate route for the triad to take to reduce the 
potential wrongdoing found by the GAO in its secret shopper 
investigation. This requires all entities in the regulatory oversight 
triad to work toward such enforcement. As I have stated earlier, 
however, governmental agencies in the triad are responsible for law and 
regulation, whereas nongovernmental accreditors are responsible for 
setting and enforcing standards of best practice. Oversight entities 
should review often their requirements and practices to ensure they are 
sufficient. Equally important, all higher education institutions, 
regardless of type, must take a very hard look at their recruitment and 
marketing practices as a means to ensure that the best interests of 
students are served in all cases. Each school should institute codes of 
conduct for recruiters and strong internal audit and review processes 
in order to ensure best practices are met and ongoing compliance is 
achieved. In my experience, overactive marketing and student 
recruitment is not limited to the for-profit sector of education. 
Having said that, for-profit institutions now bear the burden of proof 
to show that the findings of the GAO report are not industry-wide 
practices.
    ACCSC has taken several steps in light of the GAO investigation. 
First, ACCSC requested information regarding the investigation from the 
GAO. Unfortunately, the GAO denied this request because the GAO did not 
receive authorization from the congressional requester to release the 
records. This denial has hampered our efforts to investigate 
effectively the specific findings of the GAO report or to cite specific 
findings of non-compliance based solely on the written report. Second, 
ACCSC created a special Task Force to (a) review the recruiting 
practices of the institutions cited in the GAO report as well as a 
review of recruiting practices across institutions generally, (b) make 
action recommendations based on the findings of its review, and (c) 
make recommendations regarding improvements to ACCSC's standards and 
processes in the areas of recruitment, advertising, and admissions. 
Thus far, ACCSC has conducted several unannounced visits to its 
accredited institutions with more unannounced visits planned. Lastly, 
ACCSC has placed Westwood College-Denver North on probation. While this 
action is not solely predicated on the findings of the GAO report, 
ACCSC did cite the GAO report in the Probation Order and is interested 
in obtaining information regarding the recruitment practices of 
Westwood College and its affiliated institutions.

    Question 10. Financing and membership of accreditation review teams 
came under question at the hearing. What differences are there, if any, 
between the membership of an accreditation review team that reviews a 
for-profit school and one that reviews other institutions of higher 
education? Are there any differences in the financing of agencies that 
accredit for-profit schools versus accrediting agencies that accredit 
private nonprofit and public schools?
    Answer 10. While all accrediting agencies can set their own 
financing and membership fee requirements, I believe that all agencies, 
regardless of the type of institution accredited, adhere to the same 
fundamental practices that require institutions to pay an annual fee, 
pay fees to process certain reports and applications (e.g., substantive 
change applications), and finance all or a significant portion of on-
site evaluations. Federal regulations portray an understanding of this 
fundamental dues structure in 34 CFR Sec. 602.14(b)(4). In general, 
accrediting agencies receive no financing from State or Federal 
Governmental agencies to conduct their work and rely on a sizable cadre 
of experienced volunteers to supplement the work of paid staff experts 
to conduct the peer-review process of accreditation. The fact that 
institutions finance the peer-review work of accrediting agencies, in 
my opinion and experience, has no bearing on the types of actions taken 
by accrediting agencies.

    Question 11. Concerns about conflict of interest have been raised 
about the individuals who serve on your organizations Board of 
Directors. How are these individuals selected/elected? Is this 
different from the membership of other accrediting agencies, whether 
for for-profit schools or for other institutions of higher education?
    Answer 11. First, let me say that, in my opinion and experience, 
conflict of interest in the accreditation process has not been an issue 
for my agency due to the checks and balances that we have established 
and due to the high-level of integrity demonstrated by Board members. 
Federal regulations govern this area and require agencies to have clear 
and effective controls governing conflict of interest polices and 
appropriate policies for the selection and election of Board members. 
The Department of Education and National Advisory Committee on 
Institutional Quality and Integrity (NACIQI) should continue to be 
mindful of the importance of the Federal regulations in this area and 
should hold accrediting agencies accountable if they do not possess 
sufficiently effective conflict of interest controls.
    ACCSC Board members are comprised of three groups: elected members 
representing ACCSC-accredited institutions (8), an appointed member 
representing an ACCSC-accredited institution (1), and appointed members 
representing the public (4).
                            elected members
    Elected members of the Board are proprietors or bona fide 
executives of an ACCSC member institution. Those individuals interested 
in serving on the Board must submit a nomination application, which is 
vetted by a Nominating Committee comprised of two current Board 
members, appointed members, and two elected members. The Nominating 
Committee interviews each viable candidate and then forwards at least 
two candidates for each vacant position to the ACCSC membership for 
election. The candidates with the high vote tallies are then appointed 
to the Board. Elected members of the Board serve a 4-year term.
                            selected members
    ACCSC allows for one school representative seat to be filled by 
appointment by the Board once every 4 years, the normal term for a 
Board member. This appointment is to help foster diversity on the Board 
and to ensure well-rounded representation on the Board.
    Four Board members representing the public are appointed to the 
Board by the sitting Board members. Public members are defined as:

          ``persons with an interest and expertise in employment, 
        education and training who (i) have been engaged as employers, 
        in government, postsecondary education, public, adult or 
        vocational education and in similar or allied fields; (ii) are 
        not employees, members of the governing board, owners, 
        shareholders, or consultants of an institution that either is 
        accredited by the Commission or has applied for accreditation 
        by the Commission; and (iii) have been appointed to serve on 
        the Commission'' (Article I (Section 1.01)(c), AACSC Bylaws).

    These four selected members of the public must complete a 
nomination application, which is vetted by the ACCSC Nominating 
Committee (described above). The Nominating Committee interviews each 
candidate and forwards to the ACCSC membership for comments on the 
resume/C.V. for two public candidates for each vacant seat to be 
filled. The sitting Board members review any comments submitted, 
interviews each candidate, and votes on each appointment. Selected 
public members serve a 4-year term.
    In addition to the these election and selection processes, ACCSC 
has conflict of interest policies for all Board members, staff, and 
other individuals that contribute to the accreditation process (e.g., 
Appeals Panel members, committee members, etc.). As a best practice, no 
individual may participate in the accreditation process for any 
institution with which the individual is affiliated or for any 
institution that the individual has special knowledge of or bias 
toward. For example, ACCSC has a recusal process where a Board member 
that has any kind of conflict of interest, real or perceived, may not 
participate in the review of or vote pertaining to the accreditation of 
that institution. The Department has reviewed ACCSC's policies in this 
area and has determined these policies to be acceptable and in 
compliance with Federal requirements.
                             senator hagan
    Question 1. You yourself state that while accrediting agencies are 
private, independent entities you are linked to the Federal student 
financial aid program in that institutions eligible for title IV funds 
must be accredited by an agency that is recognized by the U.S. 
Secretary of Education.
    In my opinion when Federal dollars are involved, there needs to be 
oversight on how this money is spent and by whom. That said, could you 
please describe the process by which the U.S. Department of Education 
ensures that as an accrediting body, you are providing an impartial and 
responsible review of an institution's practices, as well as academic 
and financial standing?
    Answer 1. I would like to refer the committee back to my responses 
to the questions asked by Senators Enzi and Alexander with regard to 
HEA's recognition requirements for accrediting agencies. I would, 
however, like to again emphasize not only the rigorous and robust 
nature of the Department's recognition process, but also that the 
Department recently provided itself more tools and a greater 
opportunity to investigate an accrediting agency's potential violation 
of Federal recognition regulations through the new regulations that 
went into effect July 1, 2010. 34 CFR Sec. 602.33 states that 
Department staff may review the compliance of a recognized agency with 
the criteria for recognition at any time at the request of NACIQI or 
based on any information that, as determined by Department staff, 
appears credible and raises issues relevant to recognition. This new 
regulation gives the Department far greater latitude than previously 
existed to provide sound oversight of accrediting agencies and the 
compliance by those agencies with Federal regulations and mirrors the 
discretion that accrediting agencies have to investigate the compliance 
of their accredited schools.

    Question 2a. In your testimony you provide us with examples of how 
the Commission holds itself accountable to its standards by 
implementing a multistep process that allows you to evaluate an 
institution's compliance with accrediting standards.
    You also mention that between accreditation cycles, ACCSC relies on 
an interim monitoring process in which you direct an institution to 
submit reports demonstrating compliance. You also mention that ACCSC 
relies on a ``robust complaint process'' in which a student who may 
feel that he or she has been misled can submit a complaint to ACCSC.
    How often does ACCSC evaluate an institution's compliance with 
accrediting standards?
    Answer 2a. ACCSC's initial grant of accreditation is for no longer 
than 3 years and a renewal grant of accreditation is for no longer than 
5 years. The Commission, however, reserves the right to grant shorter 
terms of accreditation as deemed appropriate. I would also refer the 
committee to my prior responses regarding the types of interim 
monitoring accrediting agencies, and ACCSC in particular, conduct in 
between accreditation cycles.

    Question 2b. Who are the peer-reviewers involved in this process? 
What steps do you take to ensure that they are 100 percent objective?
    Answer 2b. The peer-reviewers in the process of accreditation come 
from other accredited institutions; members of the public with special 
knowledge or expertise in education, accreditation, industry, and/or 
regulation; and individuals with special knowledge of a specific career 
field. As I have indicated in a previous response, ACCSC has 
established clear and effective controls governing conflict of interest 
polices and does not allow individuals to participate in the 
accreditation process for any institution with which the individual is 
affiliated or for any institution that the individual has special 
knowledge of or bias toward. The Department has previously reviewed 
ACCSC's policies in this area and has determined these polices to be 
acceptable and in compliance with Federal regulations.

    Question 2c. Define what the ``robust complaint process'' means. 
How many complaints from students must you receive before determining 
that there is a problem with a school?
    Answer 2c. I refer to ACCSC's complaint process as ``robust'' 
because, in accordance with Federal regulations, ACCSC ``will review in 
a timely manner any complaint that sets forth information or 
allegations that reasonably suggest that a school may not be in 
compliance with ACCSC standards or requirements'' (Section VI 
(A)(1)(b), Rules of Process and Procedures, Standards of 
Accreditation). Therefore, pertaining to the Senator's specific 
question, one complaint alleging a violation of an accrediting standard 
will open an inquiry into an institution's compliance. Additional 
complaints or findings through the inquiry would trigger a broader 
review. In fact, ACCSC has denied a school's application for initial 
accreditation based solely upon a complaint received regarding the 
school's advertising practices.
    I would like to take the opportunity here to correct one point in 
my written testimony. Due to a calculation error, I overstated the 
number of complaints ACCSC received, which resulted in an 
understatement of the percentage of complaints that dealt with issues 
pertaining to recruitment, advertising, and admissions practices. ACCSC 
is analyzing this data and has taken this as an opportunity to put into 
place better tracking methods pertaining to the specific issues filed 
in each complaint so that the Commission can more readily identify 
trends and recurring issues amongst its accredited institutions.

    Question 2d. Given that you are basing an institution's re-
accreditation on its Self-Evaluation Report, do you verify the 
information that is provided to you in the report? What steps do you 
take to ensure that the information provided to you is accurate?
    Answer 2d. With regard to the Self-Evaluation Report, one of the 
primary functions of the on-site evaluation is to verify the 
information contained in this report. This verification takes the form 
of interviews with school administrators and faculty; resource and 
equipment reviews; student file review; student surveys; classroom 
observations; graduation and employment verification; interviews with 
external advisory committee members and other evaluative techniques.

    Question 3. In your testimony you state that ACCSC believes that 
its standards on recruiting and advertising are amongst the most 
rigorous in the higher education community and can serve as a model for 
other accreditors. Can you share the practices of other accreditors and 
how their standards differ and compare to your own?
    Answer 3. My testimony stems from feedback received from 
institutions or groups of affiliated institutions that have had 
experiences across multiple accreditors and that have told me directly 
that they find ACCSC standards and processes, in most areas, to be 
among the most rigorous. Insofar as there are over 80 recognized 
accrediting agencies, it would be a difficult task to provide specific 
comparisons. However, I would note that some agencies, such as ACCSC, 
have specific standards, while other agencies have more general 
``guidelines'' in these areas. While I believe that agencies need to 
have the freedom to establish accreditation standards in consultation 
with their accredited institutions as part of the peer review process, 
I would also continue to advocate for the Department and NACIQI to 
create a level playing field amongst accreditors through the Federal 
recognition process as a means to ensure that all agencies operate 
within generally accepted practices and to focus on providing the best 
educational opportunities for students.
                           senator alexander
    Question 1. I'm concerned that there seems to be a lot of confusion 
about the role and purpose of accreditation. To me, the value of 
independent accrediting agencies is a vital tool in keeping our system 
of 6,000 independent autonomous institutions of higher education 
strong.
    Could you explain to us how an agency like yours goes about 
becoming an approved accreditor by the Secretary of Education? What 
does the approval process entail and what are you held accountable for 
by the Secretary?
    Answer 1. The Secretary's process of recognition is similar to the 
accreditation process. Essentially, an accrediting agency must 
demonstrate compliance with Federal regulations in the following 
primary areas (34 CFR Sec. 602):

     Experience in accreditation and acceptance of the agency 
by others.
     Sound administrative and fiscal administration of the 
agency.
     Sound application of standards that meet HEA's 
requirements, in reaching an accrediting decision.
     Consistency in decisionmaking.
     Monitoring and reevaluation of accredited institutions and 
programs.
     Enforcement of its standards.
     Review and updating of standards.
     Substantive change requirements for institutions.
     Operating procedures compliant with HEA's requirements.
     Due process standards.
    Notification procedures of accrediting decisions to 
schools, the Department and States.
     Regard for decisions of States and other accrediting 
agencies.

    An agency seeking recognition from the Secretary must complete a 
Petition for Recognition, which essentially requires the agency to 
demonstrate compliance with every applicable Federal regulation. For 
Example, 34 CFR Sec. 602.16 (a)(I)(i) states the following:

    (1) The agency's accreditation standards effectively address the 
quality of the institution or program in the following areas:

    (i) Success with respect to student achievement in relation to the 
institution's mission, which may include different standards for 
different institutions or programs, as established by the institution, 
including, as appropriate, consideration of State licensing 
examinations, course completion, and job placement rates.

    Based on this requirement, an agency would provide copies of its 
standards that cover this area and describe the effectiveness of those 
standards in addressing educational quality. The agency must be 
detailed in its response and provide evidence to support its answers. 
In the case of ACCSC's most recent Petition for Recognition, the agency 
provided a detailed explanation of required graduation and employment 
benchmarks and the process used to establish those benchmarks and 
described the effectiveness of these standards in relation to the 
agency's independent third-party systematic review process conducted as 
a means to validate ACCSC's standards and assessment processes.
    Once the Petition for Recognition is complete, the agency undergoes 
an evaluation by a Department analyst who attends and observes a Board 
meeting, accompanies on-site evaluation teams to observe that process, 
visits the agency's office to conduct a file review, or other 
activities as deemed appropriate to the review process. Department 
staff prepare a report outlining all areas where an agency may not be 
in compliance with Federal regulations, and the agency has an 
opportunity to respond to that report. The report and the agency's 
response are then reviewed by NACIQI and acted upon during a public 
hearing. NACIQI has the opportunity to ask questions of the agency and 
to make determinations of compliance or non-compliance with the Federal 
regulations. If NACIQI finds the agency in compliance with Federal 
regulations, it can recommend a 5-year recognition period without 
condition to Secretary, as was the case the last time ACCSC went 
through this process. NACIQI can also recommend a 5-year recognition 
period with condition, can defer acting on an agency's Petition until 
the agency demonstrates compliance, or, if the agency fails to do so 
can recommend to the Secretary that the agency's Petition for 
Recognition be denied.
    The recognition process is a rigorous and robust one that the 
Congress should continue to rely upon as a means to determine an 
agency's reliability to assess and determine the educational quality of 
a higher education institution.

    Question 2. My understanding of the accreditation process of an 
individual school is that it is a rather robust process that includes a 
rigorous self-study process as well as a thorough peer-review 
examination that looks at all facets of an institution's financial 
operations, student learning, and recruitment and admissions practices.
    Could you explain to us the process for an individual school to 
become accredited? What types of standards do you put in place to 
ensure program quality? How do you enforce those standards?
    Answer 2. The accreditation process is robust and relies upon 
detailed policies and procedures for quality assessment, rigorous 
standards, and rigorous enforcement of those standards. Generally, the 
first step in the process is the submission of an application and 
detailed introspective self-evaluation report that requires an 
institution to describe itself, the success of the institution at 
meeting its mission, the success of its students, and the institution's 
compliance with all of the accrediting agency's accrediting standards. 
Once these documents have been submitted, an on-site evaluation team 
comprised of several experts in educational administration, educational 
delivery, and the specific fields offered by the institution visit the 
institution to evaluate the institution's self-evaluation report and 
verify the information contained therein, assess institutional success 
and student achievement, and to evaluate the institution's compliance 
with accrediting standards. The on-site evaluation team prepares a 
report to which the institution has an opportunity to respond, and this 
information is forwarded to the decisionmaking body to take action with 
respect to the institution's application for accreditation. As you can 
see, this is a fulsome process.
    With regard to the types of standards required by accrediting 
agencies, these standards vary in their specific requirements across 
accrediting agencies. Generally, however, accrediting standards of 
institutional accrediting agencies cover the following areas:

     Administration, management capacity, and governance;
     Institutional improvement assessment and planning;
     Facilities;
     Program requirements to include:

           Program length,
            Equipment and learning resource materials (e.g., 
        laboratory and library resources), and
           Program and degree completion requirements.

     Faculty Qualifications;
     Recruiting, advertising, and admissions practices;
     Student services to include student complaint processes;
     Student achievement to include learning assessment and 
student progress monitoring;
    Separate facilities; and
    Distance education, where applicable.

    As stated above, once an assessment has been made by the 
decisionmaking body with regard to the types of standards listed above, 
an agency typically has several enforcement actions available to ensure 
compliance. Of course, if an institution is found to be in compliance 
with standards, no enforcement action is taken and the institution is 
granted accreditation/reaccreditation. If, however, additional 
information is required for an institution to demonstrate compliance or 
if an institution is found to not comply with standards, an accrediting 
agency can defer action, require additional monitoring or reporting, 
direct an institution to show cause as to why accreditation should not 
be denied/withdrawn, place an institution on probation or some other 
sanction (e.g., revoke program approval, restrict substantive change 
applications, etc.), or deny or revoke accreditation.
    In addition to the initial accreditation and re-accreditation 
processes, accrediting agencies monitor their institutions on an 
interim basis in a number of ways. As indicated in response to Senator 
Enzi's question #2, accrediting agencies for example require annual 
reporting, monitor the growth in enrollments of their institutions, and 
other important areas.
    Throughout the process, a primary function of accreditation actions 
is to allow for institutional improvement that leads to compliance with 
accrediting standards and to instill effective due process in the 
enforcement of accreditation standards. It is not reasonable to expect 
accreditors to revoke accreditation for findings of non-
compliance without first giving the institution an opportunity to 
achieve compliance and better itself for the delivery of its education 
to students.
    It is important to note, however, that the fundamental goal of 
accreditation is not to act as a police force but instead to drive 
institutions to achieve high-levels of success and in doing so to 
create better educational opportunities for students. Other agencies 
have the responsibility of enforcing Federal laws and regulations, and 
the different responsibilities of Federal Government, State government, 
and accrediting agencies are each important for fulfilling the original 
intent of the regulatory triad. Thus, the Congress should refrain from 
using accreditation for purposes other than that for which it is 
intended.

    Question 3. In the last Higher Education Act reauthorization, back 
in 2007, Congress made some changes to the accreditation process. We 
changed the makeup of NACIQI that approves accreditors, we made some 
changes to due process for accreditors, and we prevented the Secretary 
from regulating accrediting agency standards on student learning 
outcomes.
    Are there things that we should be looking at to improve the Higher 
Education Act to strengthen the hands of accreditors to help them hold 
their institutions accountable for both students and the taxpayers?
    Answer 3. There are three areas that immediately come to mind. The 
first has to do with the due process requirements established in the 
last reauthorization of the Higher Education Act. While the Congress 
was well-intentioned in the changes made, the changes to the statutes 
and ensuing regulations have made the appeal process that accreditors 
must engage in more complex and disjointed. While the new requirements 
are more beneficial to institutions, the requirements for two separate 
decisionmaking bodies has the potential to hamper the ability of 
accreditors to revoke accreditation and to act swiftly. I would 
recommend returning to the due process requirements in place prior to 
the recent reauthorization.
    Second, the Higher Education Act does not require accreditors to 
evaluate all facilities (e.g., branch campuses or additional locations 
as classified by the Department). I believe, and ACCSC requires, that 
every facility that provides education to students must be evaluated 
for compliance with accrediting standards. I would suggest that the 
Congress look at this issue in the next reauthorization and move toward 
defining better requirements for the assessment of institutions and 
each of the separate facilities operated by that institution and to 
strengthen an institution's responsibility for the success of not only 
the main campus, but all campuses.
    Third, the Congress should revisit student achievement outcomes as 
a means to understand better the relationship between institutional 
success and student success. I go into this issue in more detail in 
response to question #8 below.

    Question 4. Is accreditation approval granted to each individual 
school or to an entire company and all of its schools? Are there 
circumstances where a concern at a specific school would lead you to 
taking action against all schools owned by the parent company?
    For contrast, could you please explain the process for providing 
accreditation to public university systems? Do accreditors provide 
accreditation to the system as a whole for each individual campus?
    Answer 4. These practices vary across accrediting agencies. ACCSC 
has taken the approach that each campus, including main schools and 
branch campuses, must achieve individual accredited status and undergo 
the full accreditation process on their own merits. This process allows 
for far greater accountability across a system of institutions. 
Accreditors for traditional higher education institutions have taken an 
approach to accredit a single main campus to which the accreditation 
for all branch campuses attach. This can be problematic because, as I 
indicated in my response to question #3, accreditors are not required 
to evaluate every separate facility, only a ``representative sample.''
    In addition, ACCSC has taken action across a system of institutions 
when a pattern of non-compliance has been found through the 
accreditation process. As per the committee's request, I have attached 
to this document three examples of system-wide actions taken by ACCSC 
in Appendix II. This has been a very effective method of holding groups 
of affiliated institutions accountable to make determinations regarding 
system-wide practices, particularly those that require significant 
improvement. Again, this is an area of the HEA where improvements can 
be made to require accreditors to better hold systems of institutions 
accountable.

    Question 5. Can you describe your due process procedures within 
your organization and what impact that has on your ability to revoke an 
institution's accreditation without recourse?
    Answer 5. Due process is an important part of the accreditation 
process, and Federal regulations set forth specific requirements in 
this area for accrediting agencies to follow. The primary components of 
due process are to:

     Define those actions which are appealable;
     Define the grounds of the appeal (e.g., arbitrary, 
capricious, erroneous, in contravention of rules, etc.)
     Allow for the institution to submit evidence that supports 
the grounds for appeal and in some cases new information not previously 
reviewed;
     Allow for a hearing before an independent appeals panel 
considered to be a decisionmaking body; and
     Take action by the appeals panel to uphold, amend, remand, 
or reverse the original decision.

    The fact that an accrediting agency has strict due process 
requirements in itself has no impact on the ability to revoke 
accreditation, and an institution remains accredited while the original 
revocation action is under appeal. Due process does have an impact on 
how swiftly the revocation can be achieved. Moreover, the new 
requirements that the appeals body must be a separate decisionmaking 
entity does make the appeals process much more complex and I suspect 
will hamper even more an accrediting agency's ability to take swift 
action.

    Question 6. You mentioned the idea of the regulatory triad to 
provide oversight of higher education--accreditors, the U.S. Department 
of Education, and State agencies. What is the role of each of these 
actors to provide oversight and enforce the law? In terms of the GAO 
report and its findings whose role is it to uncover these specific 
types of abuses?
    Answer 6. I would refer you to my previous answers above regarding 
the regulatory triad (e.g., response to Senator Enzi's first question). 
In terms of the specific findings of the GAO report, it is the role of 
law enforcement and governmental agencies to investigate and enforce 
law and regulation. It is the role of accreditation as a non-
governmental entity to set standards of best practice, to enforce those 
standards, and, when violations of law or regulation are suspected, to 
forward that information on to the appropriate governmental oversight 
agency.

    Question 7. Can you tell me how many schools you visit every year 
and how many findings of any kind you make in a given year?
    Answer 7. In calendar year 2009, ACCSC conducted approximately 292 
on-site evaluations with 737 findings. In 2008, ACCSC conducted 
approximately 315 on-site evaluations with 1,002 findings.

    Question 8. I voted against the Higher Education Opportunity Act, 
the 2007 reauthorization of the Higher Education Act, because I believe 
that it produces too many unnecessary and onerous regulations and 
didn't improve the Federal Government's oversight of institutions of 
higher education. Boxes and boxes of meaningless reporting requirements 
unrelated to the Federal dollars were added to the stack that was 
already seven boxes high.
    What should Congress be looking at to improve accountability for 
students and taxpayers and to hold institutions accountable for the 
Federal investment we provide them? What are the important questions 
that students and taxpayers need answered?
    Answer 8. The short answer is student achievement outcomes. The 
Congress should look to have an open dialogue on student achievement 
outcomes, not for the purpose of having the Federal Government mandate 
metrics and benchmarks, but to better articulate expectations about 
institutional and student success as well as the role of accreditors 
and the obligations of institutions regarding these outcomes. ACCSC has 
been using programmatic student achievement outcomes as an indicator of 
success and as an indicator of the need for intervention for over a 
decade. The agency has found that student achievement assessment, 
particularly at the programmatic level, is a powerful tool both for the 
purposes of identifying success but also for identifying the areas that 
serve as root causes for low rates of graduation and employment and 
that need improvement. I do not advocate for these student achievement 
benchmarks to be a floor, but instead a tool to be used to identify 
problems and opportunities for improvement. However, when the rates are 
continuously low over time with no signs of improvement, then 
accountability and enforcement become the more primary tandem to the 
student achievement rates.
                                 ______
                                 
     Appendix I--CHEA List of Recognized Accrediting Organizations
        recognized accrediting organizations (as of august 2010)
    This chart lists regional, national faith-related, national career-
related and programmatic accreditors that are or have been recognized 
by the Council for Higher Education Accreditation (CHEA) or the U.S. 
Department of Education (USDE) or both. Organizations identified by 
() are recognized; (--) indicates those not currently 
recognized. An asterisk (*) identifies accrediting organizations that 
were formerly recognized.
    CHEA-recognized organizations must meet CHEA eligibility standards 
(www.
chea.org/recognition/recognition.asp). Accreditors exercise independent 
judgment about whether to seek CHEA recognition. For USDE recognition, 
accreditation from the organization is used by an Institution or 
program to establish eligibility to participate in Federal student aid 
or other Federal programs (www.edgov/about/offices/list/ope/
index.html). Some accreditors cannot be considered for USDE recognition 
because they do not provide access to Federal funds. Other accreditors 
have chosen not to pursue USDE recognition.
    Because CHEA affiliation and USDE recognition depend on a range of 
factors, readers are strongly cautioned against making judgments about 
the quality of an accrediting organization and its institutions and 
programs based solely on CHEA or USDE status. Additional inquiry is 
essential. If you have questions about the CHEA or USDE recognition 
status of an accreditor, please contact the accrediting organization.


------------------------------------------------------------------------
                                                  CHEA          USDE
               Accreditor \1\                  recognized    recognized
                                              organization  organization
------------------------------------------------------------------------
Regional Accrediting Organizations:

  Middle States Association of Colleges and           
   Schools Middle States Commission on
   Higher Education.........................
  New England Association of Schools and              
   Colleges Commission on Institutions of
   Higher Education.........................
  New England Association of Schools and                *     
   Colleges Commission on Technical and
   Career Institutions......................
  North Central Association of Colleges and           
   Schools The Higher Learning Commission...
  Northwest Commission on Colleges and                
   Universities.............................
  Southern Association of Colleges and                
   Schools Commission on Colleges...........
  Western Association of Schools and                  
   Colleges Accrediting Commission for
   Community and Junior Colleges............
  Western Association of Schools and                  
   Colleges Accrediting Commission for
   Senior Colleges and Universities.........

National Faith-Related Accrediting
 Organizations:

  Association for Biblical Higher Education           
   Commission on Accreditation..............
  Association of Advanced Rabbinical and              
   Talmudic Schools Accreditation Commission
  Commission on Accrediting of the                    
   Association of Theological Schools in the
   United States and Canada.................
  Transnational Association of Christian              
   Colleges and Schools Accreditation
   Commission...............................

National Career-Related Accrediting
 Organizations:

  Accrediting Bureau of Health Education               --     
   Schools..................................
  Accrediting Commission of Career Schools             --     
   and Colleges of Technology...............
  Accrediting Council for Continuing                   --     
   Education and Training...................
  Accrediting Council for Independent                 
   Colleges and Schools.....................
  Council on Occupational Education.........           --     
  Distance Education and Training Council             
   Accrediting Commission...................
  National Accrediting Commission of                   --     
   Cosmetology Arts and Sciences, Inc.......

Programmatic Accrediting Organizations:

  AACSB International--The Association to                     *
   Advance Collegiate Schools of Business...
  ABET, Inc.................................                  *
  Accreditation Commission for Acupuncture             --     
   and Oriental Medicine....................
  Accreditation Council for Business Schools                  *
   and Programs.............................
  Accreditation Council for Midwifery                  --     
   Education................................
  Accreditation Council for Pharmacy                  
   Education................................
  Accreditation Review Commission on                         --
   Education for the Physician Assistant,
   Inc......................................
  Accrediting Council on Education in                         *
   Journalism and Mass Communications.......
  American Academy for Liberal Education....           --     
  American Association for Marriage and               
   Family Therapy...........................
  Commission on Accreditation for Marriage
   and Family Therapy Education.............
  American Association of Family and                         --
   Consumer Sciences Council for
   Accreditation............................
  American Bar Association Council of the              --     
   Section of Legal Education and Admissions
   to the Bar...............................
  American Board of Funeral Service                   
   Education Committee on Accreditation.....
  American Council for Construction                           *
   Education................................
  American Culinary Federation's Education                    *
   Foundation, Inc. Accrediting Commission..
  American Dental Association Commission on            --     
   Dental Accreditation.....................
  American Dietetic Association Commission            
   on Accreditation for Dietetics Education.
  American Library Association Committee on                   *
   Accreditation............................
  American Occupational Therapy Association           
   Accreditation Council for Occupational
   Therapy Education........................
  American Optometric Association                     
   Accreditation Council on Optometric
   Education................................
  American Osteopathic Association                      *     
   Commission on Osteopathic College
   Accreditation............................
  American Physical Therapy Association               
   Commission on Accreditation in Physical
   Therapy Education........................
  American Podiatric Medical Association              
   Council on Podiatric Medical Education...
  American Psychological Association                  
   Committee on Accreditation...............
  American Society for Microbiology American           --             *
   College of Microbiology..................
  American Society of Landscape Architects                    *
   Landscape Architectural Accreditation
   Board....................................
  American Speech-Language-Hearing                    
   Association Council on Academic
   Accreditation in Audiology and Speech-
   Language Pathology.......................
  American Veterinary Medical Association             
   Council on Education.....................
  Association for Clinical Pastoral                    --     
   Education, Inc., Accreditation Commission
  Association of Technology, Management, and                  *
   Applied Engineering......................
  Aviation Accreditation Board International                 --
  Commission on Accreditation of Allied                       *
   Health Education Programs................
  Commission on Accreditation of Healthcare           
   Management Education.....................
  Commission on Collegiate Nursing Education          
  Commission on English Language Program               --     
   Accreditation............................
  Commission on Massage Therapy                        --     
   Accreditation............................
  Commission on Opticianry Accreditation....                  *
  Council for Accreditation of Counseling                    --
   and Related Educational Programs.........
  Council for Interior Design Accreditation.                  *
  Council on Accreditation of Nurse                   
   Anesthesia Educational Programs..........
  Council on Accreditation of Parks,                         --
   Recreation, Tourism, and Related
   Professions..............................
  Council on Chiropractic Education                   
   Commission on Accreditation..............
  Council on Education for Public Health....           --     
  Council on NaturopathIc Medical Education.           --     
  Council on Rehabilitation Education                         *
   Commission on Standards and Accreditation
  Council on Social Work Education Office of                  *
   Social Work Accreditation and Educational
   Excellence...............................
  Joint Review Committee on Education                 
   Programs in Radiologic Technology........
  Joint Review Committee on Educational               
   Programs in Nuclear Medicine Technology..
  Liaison Committee on Medical Education....           --     
  Midwifery Education Accreditation Council.           --     
  Montessori Accreditation Council for                 --     
   Teacher Education........................
  National Accrediting Agency for Clinical                    *
   Laboratory Sciences......................
  National Architectural Accrediting Board,            --             *
   Inc......................................
  National Association of Nurse                        --     
   Practitioners in Women's Health Council
   on Accreditation.........................
  National Association of Schools of Art and          
   Design Commission on Accreditation.......
  National Association of Schools of Dance            
   Commission on Accreditation..............
  National Association of Schools of Music            
   Commission on Accreditation and
   Commission on Community/Junior College
   Accreditation............................
  National Association of Schools of Public                  --
   Affairs and Administration Commission on
   Peer Review and Accreditation............
  National Association of Schools of Theatre          
   Commission on Accreditation..............
  National Council for Accreditation of               
   Teacher Education........................
  National Environmental Health Science and            --             *
   Protection Accreditation Council.........
  National League for Nursing Accrediting             
   Commission, Inc..........................
  Planning Accreditation Board..............                 --
  Society of American Foresters.............                  *
  Teacher Education Accreditation Council             
   Accreditation Committee..................
  United Slates Conference of Catholic                 --             *
   Bishops Commission on Certification and
   Accreditation............................
------------------------------------------------------------------------
\1\ This chart is updated when the CHEA Board of Directors recognizes or
  withdraws recognition of an accrediting organization and when the U.S.
  Secretary of Education recognizes or withdraws recognition of an
  accrediting organization. Please visit the CHEA Web site at
  www.chea.org.

      Appendix II--ACCSC Sample System-Wide Accreditation Actions
           Accrediting Commission of Career Schools
               and Colleges of Technology (ACCSCT),
                                                  December 6, 2002.
Stewart A, Smith, Sr.,
President/CEO,
Stewart Smith Schools Corporate Office,
McComb, MS 39648-1367.

    Dear Mr. Smith: On November 25, 2002, the Accrediting Commission of 
Career Schools and Colleges of Technology (``ACCSCT'' or ``the 
Commission'') convened via conference call to consider its previous 
actions to order all of the schools under your supervision and control 
to show cause why the accreditation of these schools should not be 
withdrawn. The Commission carefully reviewed the entire record to date, 
which includes the June 19, 2002, July 3, 2002 and August 27, 2002 Show 
Cause and Continued Show Cause Orders, the report of the Commission 
Directed Unannounced Visits dated October 17, 2002, and the response to 
that report and other correspondence submitted on behalf of the 
schools. This is to inform you that upon review of this record, the 
Commission voted to revoke the accreditation of these schools and 
remove the schools listed below from the ACCSCT list of accredited 
institutions:

    Avanti Hair Tech (M001287)--Lakeland, FL
    Avanti Hair Tech (B070425)--Hollywood, FL
    Avanti Hair Tech (M056678)--Tampa, FL
    Omni Technical School (M066238)--Akron, OH \1\
---------------------------------------------------------------------------
    \1\ On November 20, 2002 ACCSCT received notice that the last day 
of operation for this school would be Wednesday, November 20, 2001. 
This effectively ceases the operation of this main school's branch in 
Hialeah (#B070123) and satellite in Miami (#S460113), as of that date.
---------------------------------------------------------------------------
    Omni Technical School (B070123)--Hialeah, FL
    Omni Technical School (S460113)--Miami, FL
    Euro Hair Design Institute (M001310)--Tallahassee, FL
    Euro Hair Design Institute (B070126)--Jacksonville, FL
    Euro Hair Design Institute (S460122)--Jacksonville, FL
    Euro Hair School (M064136)--Corpus Christi, TX
    Euro Hair School II (B070410)--Corpus Christi, Texas
    Euro Hair School (B070128)--Dallas, TX
    RTI Technical Institute (M001427)--Pensacola, FL
    RTI Technical Institute (B070356)--Miami, FL
    RHDC Flair Design College (M067348)--Fort Worth, TX
                   history of the commission's action
    The Commission's review of the schools began in June 2002 when by 
letter dated June 19, 2002, ACCSCT informed you that five institutions 
under your ownership and control were delinquent in filing the 
applications and reports required for continued accreditation.\2\ The 
Commission reminded you that it relies on the timely submission of 
complete and accurate reports in order to make judgments relative to 
the institutions' continued compliance with accreditation standards and 
requirements. Further, the Commission informed you that the inability 
of these institutions to meet the Commission's reporting requirements 
also raised concerns about the adequacy of management and resources at 
each institution and their ability to continue to meet educational 
objectives on a continuous basis, a fundamental requirement of the 
Standards of Accreditation. Thus, the Commission ordered the delinquent 
institutions to show cause why accreditation should not be withdrawn 
for failure to submit timely applications or to attend required 
accreditation workshops.
---------------------------------------------------------------------------
    \2\ See the Show Cause Order dated June 19, 2002.
---------------------------------------------------------------------------
    The Commission also noted that its concerns related to the 
management and administrative capabilities of these institutions had 
been exacerbated by recent enforcement actions by regulatory agencies, 
including the action taken by the U.S. Department of Education 
(``USDE'') to transfer Omni Technical Institute in Akron, OH (#M066238) 
and its branch campus in Hialeah, FL (B070123) and satellite location 
in Miami, FL (S460113) to the reimbursement system of payment as a 
result of actions taken by the Ohio State Cosmetology Board.\3\ Based 
upon this information, the Commission expressed concern that systemic 
management failures were impeding the capacity of all 15 institutions 
owned and operated by you to meet ACCSCT accrediting standards on a 
continuous basis. The Commission, therefore, required Stewart Smith 
Schools to submit a description of how each school is managed, 
corporate organization charts detailing the lines of authority and 
oversight of each institution, a detailed narrative demonstrating that 
all owners, senior or executive managers, and administrative employees 
are qualified for their specific roles in each school and a Staff 
Personnel Report for the full-time, on-site director at each main 
school and branch campus demonstrating that these individuals are 
experienced in educational leadership or that the directors have other 
school management experience or documented equivalent training.
---------------------------------------------------------------------------
    \3\ See the Commission's letter of May 29, 2002 acknowledging 
receipt of notice of enforcement actions by US DE.
---------------------------------------------------------------------------
    At its June 20, 2002 Conference Call, the Commission reviewed a 
June 17, 2002 notice from the USDE Atlanta Case Team terminating the 
Provisional Program Participation Agreement for Avanti Hair Tech 
located in Winter Park (#M001287) and the branch location in West Palm 
Beach (#B070275). The Commission found that the serious nature of the 
allegations and findings of non-compliance by the USDE raised concerns 
that similar compliance issues may exist in other ACCSCT-accredited 
institutions under your ownership and control. In addition, the 
Commission expressed concern about the overall capacity of the other 
ACCSCT-accredited institutions to meet accrediting standards on a 
continuous basis as required. Consequently, the Commission acted to 
expand its prior Show Cause Order of June 19, 2002 to all of the ACCSCT 
accredited institutions under your supervision and control.\4\
---------------------------------------------------------------------------
    \4\ See the expanded Show Cause Order dated July 3, 2002.
---------------------------------------------------------------------------
    At its August 2002 meeting, the Commission considered its previous 
decision to order all 15 of the institutions under your supervision and 
control to show cause as to why accreditation should not be withdrawn. 
Upon review of the entire record, including the Show Cause Orders dated 
June 19, 2002 and July 3, 2002 and the responses to the Show Cause 
Orders, the Commission deferred action and voted to direct fact-finding 
reviews and record verification visits to 5 of the 15 institutions. The 
Commission also directed a fact-finding review and record verification 
at the corporate office located in McComb, MS. Although the responses 
to the June 19, 2002 and July 3, 2002 Show Cause Orders provided the 
delinquent school applications and reports as well as some information 
related to the management and oversight of the schools, the 
institutions' responses did not allay the Commission's concerns that 
the institutions were being adequately managed and may not have the 
ability to meet accrediting standards on an ongoing basis or the 
capacity to operate successfully as ACCSCT-accredited institutions 
(Section VIII, Standards of Accreditation).
    On August 17-18, 2002 the Commission Directed Unannounced Visits 
took place at the following locations:

     Corporate Office--McComb, MS
      Omni Technical Institute--Hialeah, FL (branch location of 
Akron Main School ``MS'')
     RTI Technical Institute--Miami, FL (branch location of 
Pensacola MS)
     Avanti Hair Tech--Hollywood, FL (branch location of 
Lakeland MS)
      Euro Hair School--Corpus Christi, TX (branch location of 
the Corpus Christi MS)
     RHDC Hair Design College--Fort Worth, TX (Main School)

    The findings of these on-site evaluations were consolidated into 
one report dated October 17, 2002 which was sent to you and the 
institutions. The schools were required to respond to the report by 
November 11, 2002.
    On November 6, 2002, ACCSCT received notice from you that you 
intended to close Omni Technical Institute in Hialeah, Omni Technical 
Institute in Miami and Avanti Hair Tech in Hollywood within the next 60 
days and assured ACCSCT that you would ``adhere to the prescribed 
close-out procedures and send the necessary documentation under 
separate cover.'' However, on November 15, 2002, the Commission office 
received multiple calls from the USDE that you had precipitously closed 
Avanti Hair Tech in Hollywood, leaving 104 enrolled students without an 
approved plan in place to complete their training or any representation 
by the school to assist students or receive questions. On November 18, 
2002, ACCSCT learned that you had also closed the Omni Technical 
Institutes in Hialeah and Miami without arranging an acceptable teach-
out for the nearly 300 students enrolled at both locations.
    The Commission office did receive a fax from you which stated your 
willingness to transfer students from the three closed Florida campuses 
to RTI Technical Institute in Miami. However, this cursory offer fell 
well short of a Teach Out Plan and agreement that could be approved and 
was not prepared in accordance with accreditation standards. As noted 
in our letter of November 20, 2002, RTI's infrastructure simply could 
not support the nearly 400 students transferring from other locations 
in addition to the 190 students already enrolled there. Moreover, 
compliance issues raised during the recent unannounced visit by the 
Commission to RTI--Miami had not been resolved and caused additional 
concern regarding RTI's capacity to carry out any teach out plan 
effectively.
    The Commission's standards for Teach-Out Plans and Agreements 
require that students will receive adequate and timely notice of an 
institution's intention to close so that a teach out or transfer to 
another institution may proceed in an orderly fashion and without any 
material disruption to the students' training. An accredited 
institution has an affirmative duty to meet its obligations to 
students. The manner in which you precipitously closed the Hollywood, 
Hialeah and Cutler Ridge campuses revealed such a fundamental lack of 
respect for students and the Commission's standards that this matter 
was brought to the Commission's immediate attention. In addition, by 
letter dated November 20, 2002, you were warned that the precipitous 
closure of three campuses, the inability to provide a viable plan for 
training out students enrolled at those campuses, and the unwillingness 
to provide precise information regarding the (PP. 4 & 5 missing from 
submission).

    (a) Changes in individual tuition charged to students are not bona 
fide (Section VIII (C)(1), Standards of Accreditation). During the on-
site evaluations, a review of student files from the Pensacola, 
Hollywood, Miami and Hialeah schools revealed the practice of 
``charging off '' tuition at the end of a student's term of enrollment. 
For example, one student received a $283.00 charge off of tuition on 7/
26/02, 5 days before the student graduated on 7/31/02. The visiting 
team could find no documentation or explanation in the student's file 
for this reduction in the tuition. The visiting team was informed that 
in some instances a ``charge off '' of tuition is given to ensure that 
students remain in school, which appears to be a cash incentive for the 
purposes of maintaining student retention. In the absence of any clear 
explanation of school's policy related to the ``charge off '' of 
tuition the visiting team believed that this practice called into 
question the fairness of the school's tuition policies and led the team 
to raise concerns that this practice may not be a bona fide change in 
tuition. The visiting team noted this practice in the files for at 
least seven other students.
    In response to this finding by the visiting team, the schools 
explained that,

          ``[t]he Hialeah and Miami locations use the charge off 
        procedures as a grant to the students to help them after 
        graduation with certification and related expenses which are 
        estimated at about $300.''

    The schools contended that ``[t]his grant was never used as an 
incentive to get students, keep students or a tuition reduction. ``It 
was only a [sic] aid to help them that took the time and initiative to 
go to school and graduate, complete their certification process and 
begin employment.'' Even if the schools' characterization of the 
``charge-off '' or ``grant'' were accepted, the response acknowledges 
the arbitrary nature of the practice. The effect of this practice is to 
reduce tuition for certain students without any regularity as to 
specified effective dates, documentation in enrollment agreements or 
reasonable advance notice to students. While the Commission does not 
specify what tuition a school may charge, or prohibit bona fide 
discounts, it does require regularity and clarity in a school's tuition 
policies so students can reasonably know what tuition will be charged.
    (b) Admissions requirements are not consistently applied with 
respect to acceptance of credit transfers. The manner in which the 
schools accept transfer credits for students gaining admission appears 
to be structured to maximize the amount of Federal student financial 
aid (i.e., title IV funding) that the student is eligible to receive 
rather then on a consistent and fair application of admissions 
standards designed to assess whether students are qualified and capable 
of benefiting from the training (See Sections V(2) and VIII(C)(2), 
Standards of Accreditation). During the on-site evaluations, the 
visiting team found no evidence that the schools have written policies 
and procedures for reducing tuition when accepting credits for previous 
training, and have not disclosed those discounts to prospective 
students. The school catalogs do not contain any information regarding 
the evaluation of previous training, recognizing clock hours completed 
at other institutions, or the concomitant reduction of tuition. As an 
example, one student received 944 clock hours of instruction in 
cosmetology from Lively Technical Center. Despite documentation in the 
file indicating that the student scored an 81 out of a possible 100 
points on a credit transfer assessment test, the school accepted only 
600 of those hours in transfer. The visiting team was unable to 
determine the criteria that the schools used to evaluate the previous 
training, or the impact of the acceptance of previous training on the 
tuition charged; however, the visiting team noted that by accepting 
only 600 of the 944 previous clock hours earned, the student 
demonstrated eligibility for additional Federal financial assistance 
(Pell grant = $2,500 and SEOG = $200). The visiting team noted that the 
files of seven students did not contain any documentation of the 
criteria used in the evaluation of previous training or the specifics 
regarding transfer of credits.\5\
---------------------------------------------------------------------------
    \5\ The students were enrolled at the schools located in Orlando, 
Hollywood, Tallahassee and Miami.
---------------------------------------------------------------------------
    The school's response to this finding did not provide any 
explanation for how the schools evaluate transfers of credit and stated 
that,

          ``[d]ecisions concerning the acceptance of credits by any 
        institution other than the granting institution are made at the 
        sole discretion of the receiving institution and no 
        representation is made whatsoever concerning the 
        transferability of any credits to any institution.''

    The Commission found that the response lacked any description of 
criteria used to evaluate prior training and transfer of credit, such 
as course outlines, transcripts, or the transfer assessment test. The 
absence of any clear explanation as to how previous training is 
evaluated for the purposes of transferring credit led the Commission to 
conclude that the schools' practice in this regard is to maximize the 
amount of Federal financial assistance that can be drawn for a transfer 
student.
    (c) Scholarships are not based upon recognized and acceptable 
purposes (Section VIII (C)(7), Standards of Accreditation). The 
Commission found, as described by school officials to the visiting 
team, that the schools award a ``school scholarship'' at the sole 
discretion of the school on-site director and that this scholarship is 
used to assist students financially so that they may remain enrolled in 
school. These scholarship funds appear to be provided by the school to 
match title IV SEOG funds. While the visiting team found this practice 
to be for a recognized and acceptable purpose, the visiting team could 
find no documentation either in the students' files or in the schools 
records to confirm that there are any established criteria for the 
award of this scholarship. For example, one student received a Pell 
grant in the amount of $3,458.00, a transfer of clock hour credits in 
the amount of $1,794.50 and a school scholarship in the amount of 
$667.00 paid on 5/4/02--4 days before the student graduated on 5/8/02. 
This covered the entire amount of the student's tuition. The visiting 
team could find no documentation in the student's file to demonstrate 
the criteria used for the award of this scholarship, the student's 
request for a scholarship, or even a scholarship award letter given to 
the student.
    As another example, a student received a Pell grant in the amount 
of $4,775.00, an SEOG grant in the amount of $530.00 and a school 
scholarship in the amount of $200.00. The total amount of the student's 
financial aid equaled $5,505.00--$285.00 more than the student's total 
tuition and fees. The student also paid $100.00 towards tuition as well 
as $41.63 in overtime charges. Thus, this student actually received a 
refund that was paid subsequent to his graduation in the amount of 
$343.37. Again, the visiting team could find no documentation in the 
student's file to demonstrate the criteria used for the award of this 
``school scholarship,'' the student's request for a scholarship, or 
even a scholarship award letter given to the student.
    In addition, the visiting team received conflicting information 
regarding school scholarships. In one instance, the visiting team was 
informed that awarding this scholarship is at the sole discretion of 
the on-site director who draws from a pool of money equivalent to 25 
percent of the total amount of SEOG disbursed by that campus. The 
visiting team was later informed that the directors make 
recommendations to the corporate office regarding which students should 
receive the scholarship. In the absence of any clear explanation of the 
schools' policy related to the award of this scholarship, the visiting 
team expressed concern that the schools' practices do not appear to be 
in compliance with accreditation standards that require scholarships to 
be bona fide reductions in tuition and awarded for recognized and 
acceptable purposes. These concerns were noted in the files for 12 
students from 7 different schools.\6\
---------------------------------------------------------------------------
    \6\ These schools are the Lakeland, Tampa, Corpus Christi, Hialeah, 
Miami, Tallahassee and Hollywood locations.
---------------------------------------------------------------------------
    In response to this concern by the visiting team, the schools 
provided an excerpt from the Department of Education regulations for 
PSEOG and copies of C. Lanis Scholarship vouchers that were signed by 
the schools' scholarship committee officials. The schools also stated 
that three types of scholarships are awarded: SEOG Scholarships, C. 
Lanis Scholarships and Work Scholarships. The explanation of the 
schools' criteria for the scholarships was limited, and the samples 
submitted by the schools failed to show that the scholarship criteria 
are applied or documented on a consistent basis. The only explanation 
that the Commission could discern is that the scholarships are awarded 
in order to compensate for tuition that is not covered by Pell grants. 
The Commission, therefore, determined that the schools failed to 
establish that the scholarships are bona fide and are awarded for 
recognized and acceptable purposes.
    Participation in the process of accreditation is voluntary on the 
part of the school. The integrity and honesty of a school are 
fundamental and critical to the process (Introduction Section, 
Standards of Accreditation). The documented incapacity of the 15 
schools under your ownership and control to comply with accreditation 
standards, the precipitous closures of three schools, the inability to 
provide a viable plan for training out students enrolled at those 
campuses and the schools' unwillingness to provide precise information 
regarding the closure dates as repeatedly requested by the Commission's 
staff all demonstrated the schools had failed to fulfill these 
fundamental precepts of accreditation. The Commission, therefore, has 
acted to withdraw the accreditation of all 15 institutions under your 
supervision and control.
            appeal and reapplication process and procedures
    The schools may either appeal the Commission's decision to revoke 
the school's accreditation or reapply for accreditation after a period 
of 9 months. The reapplication and appeal procedures are outlined in 
the Process and Procedures section of the Standards of Accreditation. 
Should any of the schools elect to appeal this decision, a letter 
outlining the intent to appeal, along with the Appeal Expense Fee of 
$5,000.00, must be submitted to the Commission office by December 16, 
2002, The Grounds for Appeal, with the Application for Appeal of 
Commission Decision attached as a cover sheet, must be submitted to the 
Commission office by January 6, 2002. If any of the schools elects to 
appeal, its accredited status continues until the final disposition of 
the appeal (See Appeals Panel, Process and Procedures, Standards of 
Accreditation). Please note, however, that a school's eligibility to 
appeal is predicated on its continued operation under its current 
ownership. By ceasing operation, it ceases to be a ``school,'' the 
entity that is entitled to appeal a revocation decision. Accordingly, 
all schools under your ownership and control that have ceased operation 
will be ineligible to appeal. The Commission's decision to withdraw 
accreditation in these instances will have become final.
    In addition, we informed you in our letter of November 25, 2002 
that since the Show Cause Order had been decided against the schools, 
no changes or additions (e.g., changes of ownership, changes of 
location, special requests, etc.) would be considered for these schools 
pending the school's decision whether to appeal the Commission's 
decision or the disposition of any appeal they may undertake. Please be 
reminded that Commission approval is required before accreditation may 
transfer upon a change of ownership. Failure to secure prior Commission 
approval results in a lapse of accreditation (Change of Ownership, 
Accreditation Reviews, Standards of Accreditation).
    For additional information or assistance, please contact Leah 
Basham at (703) 247-4512.
            Sincerely,
                                             Elise Scanlon,
                                                Executive Director.
                                 ______
                                 
          Accrediting Commission of Career Schools 
                        and Colleges of Technology,
                                           August 23, 2005.
Harrison Commisso,
Chief Executive Officer,
Harrison Career Institute,
1605 Evesham Road,
Voorhees, NJ 08043.

RE:  Harrison Career Institute: DeIran, NJ (School #M001183); Harrison 
Career Institute: Deptford, NJ (School #M056777); Harrison Career 
Institute: Reading, PA (School #B057766); Harrison Career Institute: 
South Orange, NJ (School #B070516); Harrison Career Institute; Jersey 
City, NJ (School #B059302); Harrison Career Institute: Clifton, NJ 
(School #B070644); Harrison Career Institute: Vineland, NJ (School 
#M051407); Harrison Career Institute: Oakhurst, NJ (School #M062342); 
Harrison Career Institute: Wilmington, DE (School #M055556); Harrison 
Career Institute: Allentown, PA (School #B062656); Harrison Career 
Institute: Baltimore, MD (School #B070658); Harrison Career Institute: 
Philadelphia, PA (School #M070106); Harrison Career Institute: Ewing, 
NJ (School #B070203); Harrison Career Institute: Washington, District 
of Columbia (School #B070770)

    Dear Mr. Commisso: The Accrediting Commission of Career Schools and 
Colleges of Technology (``ACCSCT'' or ``the Commission'') has 
considered its previous decision to order the campuses of Harrison 
Career Institute (``HCI'' or ``the Corporation'') accredited by ACCSCT 
to show cause as to why accreditation should not be revoked.\1\ In 
addition, the Commission reviewed a notice dated August 18, 2005 from 
the U.S. Department of Education (``the Department'') to HCI informing 
the Corporation that it is imposing an emergency action and intends to 
terminate the eligibility of the schools to participate in financial 
aid programs authorized under Title IV of the Higher Education Act. 
Upon review of the entire record of this matter to date, including the 
July 14, 2005 Show Cause Order and the response from HCI dated July 25, 
2005, the Commission voted effective as of the date of this letter to 
vacate the Show Cause Order and place all ACCSCT accredited HCI 
campuses on Probation. The procedural history of this matter and the 
reasons for this decision are set forth below.\2\
---------------------------------------------------------------------------
    \1\ See the July 14, 2005 Show Cause Order for more specific 
information pertaining to the Commission's decision in this regard.
    \2\ The Commission initiated a review of HCI on a system-wide basis 
in November 2004 in order to conduct a comprehensive review of the 
schools' compliance with accreditation standards. HCI was informed 
through on-site evaluation reports of compliance concerns at certain 
campuses and has responded to those concerns. These matters are still 
under consideration by the Commission.
---------------------------------------------------------------------------
                   history of the commission's action
    The Commission received notice on July 5, 2005 that the schools had 
been transferred to the Heightened Cash Monitoring--Level 2 (``HCM2'') 
reimbursement system of Federal financial aid funding by the 
Department. The ACCSCT Standards of Accreditation require schools to be 
in compliance with Federal, State and local government requirements 
(Sections I (B)(3) & I (D)(3), Standards of Accreditation). Because the 
action taken by the Department raised serious concerns regarding the 
school's compliance with Federal regulations and the manner in which 
HCI distributed Federal financial aid, the Commission ordered HCI to 
show cause as to why accreditation should not be withdrawn. In 
addition, the Commission directed HCI to demonstrate how the 
Corporation would be able to sustain financial soundness and the 
operation of the HCI schools with resources sufficient for the proper 
operation of the schools and the discharge of obligations to students 
given the HCM2 action taken by the Department (Section VIII (C)(I); 
formerly Section VIII (B)(1); Standards of Accreditation). Finally, the 
Commission directed HCI to submit a Teach-Out plan for each school 
prepared in accordance with ACCSCT's accreditation standards. HCI's 
response was received on July 25, 2005.
                     august 2005 review and action
    Upon review of the record before it, which included the August 18, 
2005 notice from the Department, the Commission voted to place all 
ACCSCT accredited HCI schools on Probation for the following reasons:

    1. HCI has not demonstrated that it operates in compliance with 
Federal regulations (Sections I (B)(3) & (D)(3), Standards of 
Accreditation). The Commission understands that the Department's 
decision to terminate HCI's participation in title IV, HEA programs is 
predicated on its findings in the following areas: falsification of the 
90/10 calculation; falsification of student withdrawals; falsification 
of student eligibility documentation; illegal retention of unearned 
tuition and student credit balances; failure to provide the programs of 
study as contracted; illegal use of title IV loan funds; 
misrepresentation of information critical to students' education: and 
maintenance of inaccurate records. These findings by the Department 
raise serious questions regarding the manner in which the HCI schools 
complied with Federal student financial aid rules and requirements 
while accredited by ACCSCT. HCI must therefore provide the Commission 
with a detailed written response to the findings listed in the August 
18, 2005 letter from the Department including information pertaining to 
any appeal of the Department's action, HCI must also provide copies of 
any appeal documents submitted to the Department which demonstrate that 
the schools complied with Federal regulations while accredited by 
ACCSCT.
    2. HCI has not demonstrated that it is financially sound with 
resources sufficient for the proper operation of the schools and the 
discharge of obligations to students (Section VIII (C)(1); formerly 
section VIII (B)(1), Standards of Accreditation). In the response to 
the July 14, 2005 Show Cause Order, HCI indicated that while it had 
$1.5 million in its operating account and a line of credit up to $2.5 
million, it also anticipated receiving an initial disbursement of funds 
from the Department in August 2005 while operating under HCM2. Due to 
the action by the Department to terminate HCI's participation in 
financial aid programs, it appears that no distribution of Federal 
student aid funds will be forthcoming. Given the length of time that 
the school has operated without receiving a disbursement from the 
Department, the $4 million in the school's operating account and line 
of credit does not appear sufficient to sustain the on-going operations 
of the schools. HCI must therefore submit:

    a. an internally prepared interim financial statement for the 8-
month period ending August 31, 2005 to include a balance sheet and 
income statement;
    b. an explanation of the status of HCI's letter of credit and a 
confirmation that the line of credit remains available in light of the 
Department's termination decision; and
    c. an update to its plan to finance the ongoing operation of the 
schools beyond August 2005.

    3. HCI must submit additional information regarding the signed 
Teach-out Agreement submitted in response to the July 14, 2005 Show 
Cause Order. The agreement states that Lee Educational Enterprises, 
Inc. will assume responsibility for completing the training of the 
nearly 2,000 students that would be affected by a closure of HCI. This 
information, however, did not include sufficient information regarding 
the ability of Lee Educational Enterprises, Inc. to successfully assume 
the burden set forth in this agreement. Therefore, HCI must provide 
additional details regarding the capacity of Lee Educational 
Enterprises, Inc. to complete the training of HCI students including:

    a. the names of, the educational institution(s) owned and operated 
by Lee Educational Enterprises, Inc., and the institutions' accrediting 
agency if applicable;
    b. information regarding the ownership of Lee Educational 
Enterprises, Inc., to include the names of any individual stockholders 
and the percentages of ownership;
    c. a description of any asset transfers from HCI to Lee Educational 
Enterprises, Inc. during the period January 1, 2005 though August 31, 
2005; and
    d. information regarding the approval of this Teach-out Agreement 
by the State licensing agencies for Pennsylvania, New Jersey, Delaware, 
Maryland and Virginia.

    4. In order for the HCI schools to maintain their eligibility for 
accreditation, the schools must be in continuous compliance with 
accrediting standards and requirements which includes, among other 
things, that the schools must be in continuous operation, training 
students in accordance with their primary objective, with the exception 
of any regularly scheduled vacation periods, and pay all required 
sustaining fees (Section I (B)(3), Standards of Accreditation). Either 
an unscheduled break in operation or the non-payment of sustaining fees 
would generally be considered a violation of the Commission's 
requirement for maintaining accreditation eligibility. Therefore, 
please provide the information and payment of fees as set forth below.

    a. HCI must submit evidence that the ACCSCT-accredited schools have 
maintained continuous operation since August 18, 2005 such as student 
attendance and employee payroll records. Should any of the schools 
suspend operations for any period of time, the Commission directs HCI 
to provide notice of such action to ACCSCT within 24 hours.
    b. HCI must submit payment of the required sustaining fees \3\ on 
or before September 2, 2005 in the amount of $54,785.
---------------------------------------------------------------------------
    \3\ The sustaining fees were originally due in the Commission 
office no later than June 30, 2005.

    HCI must respond to the Commission's concerns as directed in this 
letter and provide documentation of corrective action and compliance 
with accrediting standards. The Commission's concerns should appear 
prior to HCI's response. The response must be bound, dated, and tabbed, 
and must include a signed certification attesting to the accuracy of 
the information. Five (5) copies of the school's response should be 
submitted. Alternatively, HCI may submit its response in an electronic 
format. Instructions for submitting a response electronically can be 
found at the Commission's Web site www.accsct.org.
    The response must be received in the Commission office on or before 
September 23, 2005 for review at the next Commission meeting. Payment 
of the required sustaining fees must be received in the Commission 
office on or before September 2. 2005. If a response to this letter is 
not received in the Commission office on or before September 23, 2005 
the Commission will consider further appropriate action to include 
revocation of the schools' accreditation.
    In accordance with the Standards of Accreditation, no changes or 
additions (e.g., additions of separate facilities, substantive changes, 
special requests, etc.) will be considered while a school is operating 
under a Probation Order.
    Please note that the Commission is required to report all Probation 
Orders to the United States Department of Education. Thus a copy of 
this letter will be provided to the Department at the time HCI is 
notified of this Probation Order (34 CFR Sec. 602.26(b) (1)).
    If you need further assistance or information, please contact Leah 
Matthews at (703) 247-4512.
            Sincerely,
                                             Elise Scanlon,
                                                Executive Director.
                                 ______
                                 
          Accrediting Commission of Career Schools 
               and Colleges of Technology (ACCSCT),
                                          January 16, 2007.
Marilyn Pobiak,
Vice-President,
High-Tech Institute, Inc.,
Phoenix, AZ 85029.

    Dear Ms. Pobiak: By letter of March 10, 2006, the Accrediting 
Commission of Career Schools and Colleges of Technology (``ACCSCT'' or 
``the Commission'') notified you of its decision to undertake a 
comprehensive review of the complete High-Tech Institutes, Inc. 
(``HTI'') educational system due to concerns that the institutions were 
not in compliance with the Commission's standards governing faculty 
qualifications or the design and content of degree programs. The 
Commission was also concerned with the operation of Anthem College 
Online--A Division of HTI--Phoenix as well as the manner in which 
Anthem College has been described in advertising to prospective 
students and the public.
    The Commission coupled this system-wide review with the individual 
school reviews that were pending for institutions in renewal of 
accreditation or substantive change processes. Upon review of the March 
10, 2006 letter, HTI's response to that letter as well as the record of 
other individual school evaluations detailed herein, the Commission has 
good cause to believe that these compliance concerns are systemic in 
nature. Accordingly, the Commission has placed all schools within the 
HTI system that are accredited by ACCSCT on probation. This letter 
includes the specific grounds for the Commission's action and the 
information HTI must submit in response to this Probation Order for 
review by the Commission at its August 2007 meeting. The Commission's 
decision is effective immediately. The institutions covered by the 
Commission's action are listed below.\1\
---------------------------------------------------------------------------
    \1\ January 19, 2007 Corrected Copy includes the Irvine, TX and 
Memphis, TN branch locations of the Bryman School.

---------------------------------------------------------------------------
Main School:

    High-Tech Institute--Phoenix, AZ (School #M001392)

Branch Campuses:

    High-Tech Institute--Sacramento, CA (School #B067810)
    High-Tech Institute--St. Louis Park, MN (School #B070184)
    High-Tech Institute--Nashville, TN (School #B070322)
    High-Tech Institute--Marietta, GA (School #B070520)
    High-Tech Institute--Kansas City, MO (School #B070636)
    Cambridge College--Bellevue, WA (School #B070781)

Main School:

    The Bryman School--Phoenix, AZ (School #M059048)

Branch Campuses:

    Cambridge College--Aurora, CO (School #B069310)
    High-Tech Institute--Orlando, FL (School #B070257)
    High-Tech Institute--Las Vegas, NV (School #B070605)
    The Bryman School--Tempe, AZ (School #B070784)
    High Tech Institute--Irving, TX (School #B070459)
    High Tech Institute--Memphis, TN (School #B070699)

Main School:

    The Chubb Institute--Parsippany, NJ (School #M000360)

Branch Campuses:

    The Chubb Institute--Jersey City, NJ (School #B056051)
    The Chubb Institute--North Brunswick, NJ (School #B070162)
                      Faculty Qualification Issues
    HTI must demonstrate that its faculty meet all qualifications set 
forth in Section III of the Standards of Accreditation. The March 10, 
2006 letter required HTI to submit an audit of all faculty employed by 
HTI to teach in the High-Tech Institute schools. A thorough review of 
this faculty audit showed a pattern through the ``High-Tech Institute'' 
cluster of schools of noncompliance with accrediting standards in 
regard to the qualifications of HTI faculty. What follows are the 
Commission's findings regarding the qualifications of HTI faculty from 
its review of the faculty audit.
           high-tech institute--phoenix (total faculty = 111)
General Education Faculty
     Thirty-five faculty; eighteen full-time; seventeen part-
time.
     Of the 35 faculty, 21 teach on-line courses; 8 full-time 
and 13 part-time.
     Of the 35 faculty listed as general education faculty, the 
following appear to be misclassified as general education faculty:

        1.  Ryan Bohlander is listed on the Faculty Personnel Report as 
        a general education instructor teaching GE 406 Business and 
        Consumer Marketing. This is not a general education course. He 
        is a technical/occupation faculty member.
        2.  Richard Koch is listed on the Faculty Personnel Report as a 
        general education instructor teaching GE 406 Business and 
        Consumer Marketing. This is not a general education course. He 
        is a technical/occupational faculty member.
        3.  Charles Shelton is listed on the Faculty Personnel Report 
        as a general education instructor teaching GE 402 Principles of 
        Management. This is not a general education course. He is a 
        technical/occupational faculty member with more than 4 years of 
        practical work experience.

     Of the 35 faculty members, the following appear to lack 
appropriate academic coursework and preparation to teach the specific 
general education courses assigned to them (Section III B(5), Standards 
of Accreditation):

        1.  Sue Bueker appears to lack appropriate academic coursework 
        and preparation \2\ to teach GE 104 Critical Thinking and GE 
        205 Engaging in Communication.
---------------------------------------------------------------------------
    \2\ Appropriate academic coursework and preparation is defined in 
Appendix I of the Standards of Accreditation as 15 semester credit 
hours (or the equivalent) in related subject areas that support the 
curriculum content.
---------------------------------------------------------------------------
        2.  Cynthia Espinoza appears to lack appropriate academic 
        coursework and preparation to teach GE 104 Critical Thinking 
        and GE 205 Engaging in Communications.
        3.  Richard Frederick appears to lack appropriate academic 
        coursework and preparation to teach GE 104 Critical Thinking.
        4.  Judith Green appears to lack appropriate academic 
        coursework and preparation to teach GE 104 Critical Thinking 
        and GE 205 Engaging in Communication.
        5.  Sam Rotella appears to lack appropriate academic coursework 
        and preparation to teach GE 114 Critical Thinking and Problem 
        Solving.
        6.  Phillip Thomas appears to lack appropriate academic 
        coursework and preparation to teach GE 104 Critical Thinking.
        7.  Tracy Thompson appears to lack appropriate academic 
        coursework and preparation to teach GE 104 Critical Thinking.
        8.  Lorraine Sanford appears to lack appropriate academic 
        coursework and preparation to teach GE 205 Engaging in 
        Communications.
        9.  Steve Good appears to lack appropriate academic coursework 
        and preparation to teach GE 230 Sociology.
        10.  Josh Turnbow appears to lack appropriate academic 
        coursework and preparation to teach GE 221 Human Relations.
        11.  Pam Womack appears to lack appropriate academic coursework 
        and preparation to teach GE 220 Human Relations.

     There is no evidence, as recorded on the Faculty Personnel 
Reports, that the following faculty have been trained in instructional 
methods and teaching skills prior to assuming primary instructional 
responsibilities: (Section III (A)(8), Standards of Accreditation)

    1. Kim Baily*
    2. Sue Bueker*
    3. Cynthia Espinoza*
    4. Shanel Fisher
    5. Richard Frederick*
    6. Barbara Gonzalez
    7. Judith Green*
    8. Tasha Levy
    9. Lorraine Sanford
    10. Charles Shelton
    11. Sean Taylor*
    12. Tracy Thompson*
    13. Charles Winzer III*

     Of the faculty members listed above, those indicated by an 
``*'' took on-line courses offered at HTI--Phoenix, listed the 
course(s) in the Instructor Training section of the Faculty Personnel 
Report, and then were assigned to teach the course(s) as indicated on 
the Courses Taught section of the Faculty Personnel Report. Taking an 
on-line course may not fully meet the standard for training in 
instructional methods and teaching skills and does not qualify a 
faculty member to teach that particular course.
     Of the faculty listed above, the following six teach in an 
on-line environment. It is unclear from the record that any of these 
faculty members have the qualifications, experience and training to 
teach in an on-line environment that meets the requirements of Section 
XI (D)(1) and (2), Standards of Accreditation.

    1. Barbara Gonzalez
    2. Lorraine Sanford
    3. Charles Shelton
    4. Sean Taylor
    5. Tracy Thompson
    6. Charles Winzer III

Technical/Occupation Faculty
     Seventy-six faculty; seventy-five full-time; one part-
time.
     Of the 76 faculty, 10 teach on-line courses; 5 full-time 
and 5 part-time.
     There was no Faculty Personnel Report submitted for Marla 
Peacock.
     The following technical faculty who currently appear to 
have the required educational credentials, were hired prior to earning 
the required degree:

    1. Michelle Hughes: Hired 8/25/05; earned AA Medical Billing and 
Coding degree 8/06; there is some question as to the accuracy on the 
Faculty Personnel Report and of the degree earned.
    2. Sandy McVety: Hired 9/01/05; earned AS Medical Billing and 
Coding degree 5/06 from HTI--Phoenix.

     The following technical faculty do not appear to have the 
practical experience or preparation required to teach technical courses 
under the grandfather provision \3\:
---------------------------------------------------------------------------
    \3\ Instructors teaching technical courses in a degree program 
shall have a minimum of 3 years of practical experience or equivalent 
training in the field being taught (ACCSCT Standards of Accreditation, 
Appendix I).

    1. Kenneth Dworshak: Hired 6/01/98; earned AOS Computer Networking 
degree 7/99 from HTI--Phoenix. It is unclear whether he has 3 years of 
practical experience in computers outside of his teaching experience at 
HTI--Phoenix.
    2. Octavio Martinez: Hired 7/01/99; earned AOS Computer Electronics 
degree 11/99 from HTI--Phoenix; while he was working at Las Vegas Golf 
and Tennis in Glendale, AZ and teaching. The record indicates that he 
was hired with 6 months experience in 1999, not the required 3 years.
    3. Steve Pagan: Hired 7/30/01; earned AS Computer Networking 12/04 
from HTI--Phoenix; has less than the required 3 years of practical work 
experience in the field before he was hired and it is unclear whether 
he has it now (see listing below).
    4. Kevin G. Scott: Hired 8/02/99; earned AS Graphic Design and 
Animation degree 7/05 from HTI--Phoenix; has less than 3 years of 
practical work experience in the field, and therefore, is not in 
compliance.

     According to the Faculty Personnel Reports, the following 
faculty member has not earned or does not possess a degree related to 
the courses he is currently teaching and there is no showing of 
outstanding professional experience or contributions to the 
occupational field of study. Therefore, the qualifications of this 
faculty member do not appear to be in compliance with Section III 
(B)(4) of the Standards of Accreditation for grandfathered faculty.

    1. Joe Hauptman: Hired 10/01/01; possesses M.Ed. degree, but there 
is no information regarding the specific area of study that qualifies 
him to teach computer networking courses. In addition, he has less than 
3 years of practical work experience in the field in which he is 
teaching, and is therefore out of compliance with Section III (B)(4) 
for grandfathered faculty (Standards of Accreditation, Appendix I).

     The following faculty members appear to have less than the 
required 3 or 4 years of practical work experience and therefore, are 
not in compliance with Section III (B)(4) of the Standards of 
Accreditation or the Commission's grandfather provisions for faculty.

    1. Joe Hauptman: Hired 10/01/01 (also listed in another category)
    2. Octavio Martinez: Hired 7/01/99 (also listed in another 
category)
    3. Steve Pagan: Hired 7/30/01 (also listed in another category)
    4. Kevin G. Scott: Hired 8/02/99 (also listed in another category)
    5. Steve March: Hired 2/27/04; does not have 3 years of practical 
experience to qualify him to teach GS 225 under the grandfather 
provision.
    6. Robert Reed: Hired 3/31/04; does not have 3 years of experience 
to qualify him to teach GS 225.
    7. Sam Rotella: Hired 2/22/06; does not have the requisite 4 years 
of experience to teach GS 120 Financial Principles.
    8. Steve Good: Hired 12/19/05; does not have the requisite 3 years 
of practical experience to teach GS 206, Computer Applications.
    9. Sean Taylor: Hired 12/13/04; it is not clear whether he has the 
requisite 3 years of practical experience to teach GS 120, Financial 
Principles.
    10. Tracy Thompson: Hired 8/30/04; it is not clear whether he has 
the requisite 3 years of practical experience to teach GS 120, 
Financial Principles.
    11. John Turnbow: Hired 1/3/06; does not have the requisite 3 years 
of practical experience to teach GS 206 Computer Applications.
    12. Wayne Whaley: Hired 11/8/04; does not have the requisite 4 
years of practical experience to teach GS 120, Financial Principles.
    13. Pamela Womack: Hired 1/25/06; does not have the requisite 4 
years of practical experience to teach GS 120, Financial Principles.

     The following faculty members, according to information 
recorded on the Faculty Personnel Reports, do not appear to possess 
adequate training in instructional methods and teaching skills and 
therefore are not in compliance with Section III (A)(8) of the 
Standards of Accreditation.

    1. Earl T. Ashmore
    2. Melinda Chappell
    3. Frank Conti
    4. Juno Taylor
    5. Timothy O'Koniewski
    6. Patricia Orr (also listed in another category)
    7. Krista Palmer
    8. Gary L. Robinson
    9. Sandy McVay (also listed in another category)
    10. Sylvia Waldon
         high-tech institute--kansas city (total faculty = 26)
General Education Faculty
     Seven full-time faculty and zero part-time faculty.
     Of the seven faculty members, the following four appear to 
lack appropriate academic coursework and preparation to teach the 
general education courses assigned to them (Section III (B)(5), 
Standards of Accreditation):

    1. Mark Collier appears to lack appropriate academic coursework and 
preparation to teach GE 104 Critical Thinking and GE 205 Engaging in 
Communications.
    2. Matthew Lewis, Jr. appears to lack appropriate academic 
coursework and preparation to teach GE 205 Engaging in Communications.
    3. Marsha Watson appears to lack appropriate academic coursework 
and preparation to teach GE 11-104 Critical Thinking and GE11-205 
Engaging in Communications.
    4. David West appears to lack appropriate academic coursework and 
preparation to teach GE11-104 Critical Thinking and Problem Solving and 
GE11-205 Engaging in Communications.
Technical/Occupational Faculty
     Eighteen full-time faculty and one part-time faculty.
     The following faculty member is listed on the roster as 
faculty teaching occupational/technical courses and did not have a 
Faculty Personnel Report:

    1. Matthew Lewis: Hired 5/23/05; does not have the requisite 
practical experience or training to teach GS 11, Financial Principles.

     According to the Faculty Personnel Reports, the following 
faculty members have not earned or do not possess a degree related to 
the courses they are currently teaching and there is no showing of 
outstanding professional experience or contributions to the 
occupational field of study. Therefore, the qualifications of these 
faculty do not appear to be in compliance with Section III (B)(4) of 
the Standards of Accreditation:

    1. Donna Contractor: Hired 3/15/06; earned LPN 1970 and has over 27 
years of practical work experience, but has not earned a related degree 
in Surgical Tech. HTI did not document outstanding contribution to the 
professional field.
    2. Tammy Grogan: Hired 3/13/06; responsible for externships and 
teaching in the Surgical Tech program; earned a certificate in Surgical 
Tech 1985 and has 14 years of practical work experience in the field, 
but has not earned a related degree. HTI did not document outstanding 
contribution to the professional field.
    3. Leah Moore: Hired 7/19/04; earned BA degree in Elementary 
Education and a diploma in Massage Therapy 2001, but has not earned a 
related degree in the field of Massage Therapy. The record indicates 
that she has only 5 years of practical experience as a licensed Massage 
Therapist.
    4. Rose Roberts: Hired 11/28/05; an AS degree in Business 
Management from the local community college is listed as in progress, 
but has not earned a related degree in Medical Billing & Coding and HTI 
did not document outstanding contribution to the professional field.
    5. Debbie Simmons: Hired 2/15/05; earned AS degree in Psychology 
from Wichita State University during the years of 8/84 through 8/85 
(appears to be a mistake on the Faculty Personnel Report), has over 20 
years of practical work experience in the health care field, and a 
certificate in Dental Assisting (no date), but has not earned a related 
degree in Dental Assisting and does not have 8 years of practical 
experience in dental assisting.
    6. Renee Talley: Hired 2/16/04; earned a certificate in Medical 
Assisting 1997 and a certificate in Respiratory Care 2001, but has not 
earned a related degree in the field of Medical Assisting. It is 
unclear if Ms. Talley has the required years of practical experience 
from the record. Accordingly, the Commission is requesting back up 
documentation of her professional experience to demonstrate compliance 
with the standards.
    7. John Thompson Jr.: Hired 7/28/03; listed as Extern Coordinator 
for the Surgical Tech program; earned a diploma in Surgical Tech 2000. 
It is unclear from the record whether Mr. Thompson has the requisite 
practical experience in Surgical Technology to meet the standard under 
the grandfather provision. Accordingly, the Commission is requesting 
backup documentation of his professional experience to demonstrate 
compliance with the standards.
    8. Darrin Wright: Hired 5/10/04; earned a BS degree in Religion 5/
03 and an MA in Spiritual Formation 5/05; he has over 15 years of 
practical work experience in the Surgical Tech field, but he has not 
earned a related degree in Surgical Tech and HTI did not document an 
outstanding contribution to the professional field.
           high-tech institute--marietta (total faculty = 33)
General Education Faculty
     Seven full-time faculty and zero part-time faculty.

         Of the seven full-time faculty:

          1.  LaMonica Martin lacks 15 semester credit hours or the 
        equivalent in Psychology and therefore does not meet the 
        standard to teach Psychology.
          2.  Pelham VanCooten appears to lack appropriate academic 
        coursework and preparation to teach GE 102 Ethics.

     Two new instructors Shawndel Springer (hired in 2005) and 
Pelham VanCooten (hired in 2006) do not appear to have been trained in 
instructional methods and teaching skills as reflected on the Faculty 
Personnel Reports and therefore, are not in compliance with Section III 
(A)(8) of the Standards of Accreditation.
Technical/Occupational Faculty
     Twenty-four full-time faculty and two part-time faculty.
     The following faculty members who currently have the 
required educational credentials appear to have been hired prior to 
earning the required degree. Some of these faculty fall within the 
grandfather provision, but are listed here because the record indicates 
that they earned their degrees from remote campuses of HTI while they 
were teaching in Marietta.

    1. Shelia Annette Enderle: Hired 9/22/03; earned AS degree in 
Computer Network & Security from HTI--Phoenix 8/05.
    2. Renee V. Fouche: Hired 11/22/04; earned AS degree in Surgical 
Tech from HTI--Nashville, Phoenix [sic] 2005. (It is unclear from which 
institution Ms. Fouche earned her degree.)
    3. Miriam Gresham: Hired 9/20/05; earned AS degree in Medical 
Billing & Coding from HTI--Phoenix 1/06.
    4. Lore Alexander-Mabry: Hired 3/7/05; earned AAS degree in 
Surgical Tech from HTI--Nashville 11/05.
    5. Cheryl M. Wilson: Hired 9/13/04; earned AAS degree in Surgical 
Tech from HTI--Nashville 2/05.
    6. Melanie Charvat: Hired 4/21/04; earned AS degree in Medical 
Assisting from HTI--Phoenix 3/05.

     According to the Faculty Personnel Reports, the following 
faculty members have not earned or do not possess a degree related to 
the courses they are currently teaching and there is no showing of 
outstanding professional experience or contributions to the 
occupational field of study. Therefore, the qualifications of these 
faculty do not appear to be in compliance with Section III (B)(4) of 
the Standards of Accreditation:

    1. Rhonda Clements-Davis: Hired 11/28/05; earned a certificate in 
Medical Assistant 3/95, but has not earned a related degree.
    2. William C. Miller: Hired 7/13/05; earned an associate degree 
(major is unclear) from HTI--Nashville 12/05 and earned two 
certificates in Massage Therapy 10/95 and 10/99 from Capelli Massage 
Therapy School. Mr. Miller has not earned a degree in or a degree 
related to Massage Therapy.

     The following faculty members, according to the Faculty 
Personnel Reports, appear to have less than the required 3 or 4 years 
of practical work experience in the field in which they are currently 
teaching and therefore are not in compliance with Section III B(4) of 
the Standards of Accreditation or the Commission's grand-
fathering provisions for faculty:

    1. Shelia Annette Enderle: Hired 9/22/03; has 2 years of teaching 
experience, but only 2 years and 1 month of practical work experience 
in the Computer Networking & Security field.
    2. Lori Alexander-Mabry: Hired 3/7/05; has a related degree and 8 
years of teaching experience, but only 8 months of practical work 
experience in the Surgical Tech field.
    3. Frederick Tookes: Hired 9/24/04; has 1.5 years of graduate 
teaching experience, but less than 2 years of practical work experience 
in Graphic Design and Animation field.

     The following faculty members, according to the Faculty 
Personnel Reports, do not appear to have received adequate training in 
instructional methods and teaching skills and therefore, are not in 
compliance with Section III (A)(8) of the Standards of Accreditation:

    1. Paul V. Berry
    2. Kwadwo A. Bonsu
    3. Hany Brockington
    4. Sandee Chamberlain
    5. Miriam Gresham
    6. Julian Herring
    7. Tiffany McNair
    8. William B. Stallings
    9. Deborah Tuminello
          high-tech institute--nashville (total faculty = 57)
General Education Faculty
     Nine full-time faculty and two part-time faculty.
     The following faculty members appear to lack appropriate 
academic coursework and preparation to teach the general education 
courses assigned to them (Section III (B)(5), Standards of 
Accreditation):

    1. Michael Brown appears to lack appropriate academic coursework 
and preparation to teach GE 104 Critical Thinking and Problem Solving.
    2. Christa Leslie appears to lack appropriate academic coursework 
and preparation to teach GE 205 Engaging in Communication.
    3. Jeff Lilienthal appears to lack appropriate academic coursework 
and preparation to teach GE 104 Critical Thinking and Problem Solving.
Technical/Occupational Faculty
     Forty-six full-time faculty.
     The following faculty appear to lack the requisite 
practical experience to teach technical courses:

    1. Brian Bigelow does not appear to have 3 years of practical 
experience or related coursework to qualify to teach GS 120, Financial 
Principles.
    2. Mike Brown does not appear to have 3 years of practical 
experience or related coursework to teach GS 120, Financial Principles.
    3. Christa Leslie does not appear to have the requisite years of 
practical experience to teach Computer Applications.

     The following faculty members who currently have the 
required educational credentials, were hired prior to earning the 
required degree. These degrees were earned from four remote campuses 
while these faculty members were teaching in Nashville. Four of these 
faculty members are grandfathered, but must show the requisite 
practical experience and/or equivalent training in the field for, as 
appropriate, academic or occupational degree programs. Accordingly, HTI 
must submit transcripts for the degrees conferred for the following 
faculty and evidence that they have the required academic background 
and experience to meet the Commission's faculty credentialing 
requirements under the current standards or grandfather provisions:

    1. Jeff Beck: Hired 6/28/04; earned AS degree in Computer 
Networking from HTI--Phoenix 10/04.
    2. T. Gail Fite: Hired 4/21/03; earned AS degree in Medical 
Assisting from HTI--Phoenix 10/04.
    3. Jennifer Hall: Hired 12/8/03; earned AS degree in Medical 
Assisting from HTI--Phoenix 1/05.
    4. Sherlynn J. Hesson: Hired 9/29/04; earned AS degree in Dental 
Assisting from the Bryman School--Phoenix 2005.
    5. Phyllis Lame: Hired 7/6/05; earned AS degree in Dental Assisting 
from the Bryman School, Phoenix 1/06.
    6. Gary Mason: Hired 4/11/05; earned AAS degree in Surgical Tech 
from High-Tech Institute, Nashville 3/06.
    7. Rachel Obptande: Hired 3/28/05; earned AS degree in Dental 
Assisting from Bryman School, Phoenix 11/05.
    8. Rhonda Shinn: Hired 1/21/02; earned AS degree in Medical 
Assistant from High-Tech Institute, Phoenix 11/03 and a BS degree in 
Health Care Management from HTI--Phoenix 12/05.
    9. Mary Elizabeth Watford: Hired 7/22/02; earned AAS degree in 
Massage Therapy from HTI--Phoenix 12/05.

     According to the Faculty Personnel Reports, the following 
faculty members have not earned or do not possess a degree related to 
the courses they are currently teaching and there is no showing of 
outstanding professional experience or contributions to the 
occupational field of study. Therefore, the qualifications of these 
faculty do not appear to be in compliance with Section III (B)(4) of 
the Standards of Accreditation:

    1. Jennifer Campbell: Hired 3/27/06; as listed under 
responsibilities on her Faculty Personnel Report that she is 
responsible for externship and teaching courses in the Surgical Tech 
program; earned a certificate in Surgical Tech (5/95), but has not 
earned a related degree. In addition, she is not in compliance with 
qualifications for supervising externships under Section II 
(A)(6)(c)(2) of the Standards of Accreditation. The record did not 
include evidence of an extraordinary contribution to the professional 
field.
    2. Jennifer Cassel: Hired 8/8/05; as listed under responsibilities 
on her Faculty Personnel Report she is responsible for externship and 
teaching courses in the Surgical Tech program; earned a certificate in 
Surgical Tech (5/95), but has not earned a related degree. In addition, 
she is not in compliance with the Section II (A)(6)(c)(2) of the 
Standards of Accreditation and the qualifications for supervising 
externships. The record did not include documentation of extraordinary 
contribution to the professional field.
        high-tech institute--st. louis park (total faculty = 29)
General Education Faculty
     Seven full-time faculty and one part-time faculty.
     All faculty appear to be in compliance with Section III 
(B)(5) of the Standards of Accreditation for teaching general education 
courses.
Technical/Occupational Faculty
     Twenty full-time faculty; one part-time faculty.
    According to the Faculty Personnel Reports, the following 
faculty member has not earned or does not possess a degree related to 
the courses currently being taught and there is no showing of 
outstanding professional experience and contributions to the 
occupational field of study. Therefore, the qualifications of this 
faculty member does not appear to be in compliance with Section III 
(B)(4) of the Standards of Accreditation.

    1. Rob Olson: Hired 1/9/06; earned a BS degree in Education (8/90) 
and a certificate in Massage Therapy (4/02), but has not earned a 
related degree at the same level of the courses he is teaching.
          high-tech institute--sacramento (total faculty = 2 )
     Computer Networking & Security program is being 
discontinued at the end of November 2006.
General Education Faculty
     One full-time faculty.
     Stephanie Sandahl appears to lack appropriate academic 
coursework and preparation to teach GE 250 Engaging in Communication 
and therefore, is not in compliance with Section III (B)(5) of the 
Standards of Accreditation.
Technical/Occupational Faculty
     One full-time faculty.
     Jarnail Hayer appears to have 3 years and 6 months of 
teaching, but less than two (2) years of practical work experience in 
computer networking and therefore, is not in compliance with Section 
III (B)(4) of the Standards of Accreditation.
          Faculty Qualification Issues--Response Requirements
    Based on the foregoing, the Commission requires each school listed 
on pages 1-2 of this letter to submit the following documentation that 
shows the background and qualifications of faculty teaching in each 
program in the following format:

    a. Each school must supply the Commission with a narrative 
explanation regarding the findings contained in this letter as well as 
an overall description of the school's current state of compliance with 
ACCSCT faculty qualification standards as cited.
    b. Each school must complete the enclosed Faculty Qualification 
Evaluation Matrix for all general education, applied general education, 
and technical/occupationally related course faculty as well as an 
ACCSCT Faculty Personnel Report for each faculty member. A detailed 
explanation of faculty qualifications can be appended to the Faculty 
Personnel Report for any faculty member whose background/qualifications 
are not readily apparent from the information required by that form. An 
electronic version of the Faculty Qualification Evaluation Matrix can 
be obtained via email by contacting Leah Matthews at 
[email protected]
    c. Each school must also include a course outline for each program 
listing each individual course and course description and the faculty 
assigned to teach that course.
    d. Each school must submit comprehensive policies, procedures and 
hiring criteria for all faculty positions and submit evidence of 
implementation.

    The school's response must demonstrate that appropriate changes 
have been made in teaching assignments so that all faculty meet 
accreditation standards governing qualifications, experience, and 
preparation. Grandfather provisions and the professional contribution 
exception set forth in Section III(B)(4) are to be used judiciously and 
must be supported with documentation.
                        general education issues
    HTI must demonstrate that the general education courses offered by 
HTI schools meet ACCSCT accreditation requirements under Section II (B) 
of the Standards of Accreditation. A careful review of courses listed 
as general education and offered at the HTI schools indicates that not 
all courses may qualify as college-level courses; or meet the 
Commission's requirements/definition for general education courses 
under Section II (B)(1)(g) of the Standards of Accreditation. Degree 
programs may not include an appropriate mix of general education and 
technical course work as required.
A. General Education Classifications
    Several courses listed by HTI as within its general education 
framework do not appear to meet the Commission's definition of general 
education and appear to be more in line with the Commission's 
definition of technical or occupationally related courses when reviewed 
within the context of the schools' degree programs (Section II 
(B)(1)(g-i) of the Standards of Accreditation). The Commission found 
that the following courses should be removed by HTI from the general 
education classification within its degree programs and not counted 
toward the required credit hours to satisfy the general education 
requirement. The Commission determined that these courses are directly 
related to the occupational objectives of the degree programs and thus 
do not meet the Commission's definition of general education \4\:
---------------------------------------------------------------------------
    \4\  HTI's continued classification of these courses as General 
Education may impact the determination of faculty qualification issues 
raised above.

     GS 120 Financial Principles
     GS 202 Risk Management
     GS 206 Computer Application
     GE 406 Business Consumers
     GE 406 Principles of Business
     GE 402 Principles of Management
     GE 401 Environmental Design Trends
     GE 320 Advanced Financial Principles
B. General Education Course Content
    The Commission determined that there are several courses listed in 
the general education curriculum that need further review to determine 
if they meet the Commission's requirements (Section II (B)(1)(b & g-i), 
Standards of Accreditation). Several of the HTI general education 
course descriptions are vague as to the primary content of the course 
and do not clearly show that the courses are appropriately categorized 
as general education or that the courses include content expected at 
the college level. Therefore, additional information is necessary to 
include the syllabi, course content, specific learning objectives, and 
textbooks to determine if the courses in question meet accepted 
requirements for college-level work.

     When reviewing the general education offerings at HTI, it 
was necessary to differentiate between courses that were general 
education and those courses that were better categorized as applied 
general education, and technical/occupational courses. To accomplish 
this task, course descriptions were analyzed and matched to the 
appropriate standards--Sections II B (1)(b) & (g-i), Standards of 
Accreditation.
     When reviewing the general education course offerings at 
HTI, the Commission found that many courses have different course 
numbers, but identical course descriptions. Although not specifically 
required by accrediting standards, an HTI system-wide common course 
numbering system would enhance the organizational structure of the 
general education curriculum and could facilitate student transfer from 
one campus to another.
     GE 101 English offered at HTI--Phoenix and GE 131 English 
offered at HTI--St. Louis Park have identical course descriptions. As 
outlined in the course description, however, the course content deals 
with grammar and mechanical accuracy and therefore, appears to be more 
of a remedial course rather than a general education course, A further 
analysis of syllabi, course content, specific learning objectives and a 
listing of the course textbook(s) needs to be conducted prior to 
accepting GE 101 English and GE 131 English as college-level general 
education courses.
     GE 104 Critical Thinking and Problem Solving is offered at 
HTI--Marietta and HTI--Kansas City, GE 114 Critical Thinking and 
Problem Solving is offered at HTI--Phoenix and HTI--St. Louis Park, and 
GE 206 Critical Thinking and Problem Solving is offered at HTI--
Sacramento. All of the courses have the same course description. As 
outlined in the course description, the course appears to deal with 
making decisions based on interpretation of human communication. Since 
the course level and content is vague, a further analysis of the course 
syllabi, course content, specific learning objectives, and a listing of 
the course textbook(s) is necessary prior to accepting GE 104, GE 114, 
and GE 206 Critical Thinking and Problem Solving as college-level 
general education courses.
     GE 205 Engaging in Communication offered at HTI--Phoenix, 
HTI--Kansas City, and HTI--Nashville; GE 225 Engaging in Communication 
offered at HTI--Phoenix; and GE 250 Engaging in Communication offered 
at HTI--Sacramento all have the same course description. From the 
course descriptions and Faculty Personnel Reports, it appears that 
HTI--Phoenix offers the course under two different numbers. As outlined 
in the course description, the course content appears to deal more with 
basic spoken communication skills. A further analysis of course 
syllabi, course content, specific learning, objectives, and a listing 
of the course textbook(s) needs to be conducted to determine the 
specific course content and prior to accepting GE 205, GE 225 and GE 
250 Engaging in Communication as a college-level general education 
course.
     GE 209 College Math and GE 209 and 229 Quantitative 
Literacy have the same course description. This course offered at HTI--
Phoenix, HTI--Marietta and HTI--St. Louis Park does not appear to meet 
the universally accepted requirements for a college-level general 
education course. As outlined in the course description, the course 
content appears to deal with a survey of different mathematical tools 
and areas of study. A further analysis of syllabi, course content, 
specific learning objectives, and a listing of the course textbook(s) 
needs to be conducted prior to accepting GE 209 College Math as a 
college-level general education course.
     GE 210, GE 221 and GE 270 Dimensions of Human Relations 
have the same course description. This course, though it has been 
listed within the Social and Behavioral Sciences area of study for the 
purposes of this review, warrants further review of the syllabi, course 
content, specific learning objectives, and course textbook(s) to 
determine if the course should more appropriately be categorized as 
Technical/Occupational.
C. General Education Scope
    The review of the general education curriculum indicates that none 
of the HTI schools are in compliance with accrediting standards that 
require that academic degree programs include general education courses 
in written and oral communication and quantitative principles with the 
remainder of general education courses providing an appropriate balance 
of physical and natural science, social and behavioral sciences, and 
humanities and fine arts (Section II (B)(2)(d)(1) & II (B)(3)(a), 
Standards of Accreditation).
    As shown in the General Education Curriculum Matrix below, the 
majority of general education courses offered at each institution fall 
into two categories, written and oral communication and social and 
behavioral sciences. Only three institutions offer general education 
courses in quantitative principles: Phoenix (GE 209 College Math); 
Marietta (GE 209 Quantitative Literacy); St. Louis Park (GE 229 
Quantitative Literacy). Only one institution offers a general education 
course in physical and natural sciences: Phoenix (GE 303 Human 
Biology). None of the institutions offer general education courses in 
the Humanities and Fine Arts. Only two institutions offer a general 
education course in ethics, HTI--Marietta (GE 102 Ethics) and HTI--St. 
Louis Park (GE 122 Ethics).
  HTI--General Education Curriculum Matrix General Education Courses 
                        Offered by Area of Study
    This matrix aligns the general education coursework with each 
campus. Based upon the material submitted by the schools, it does not 
appear that general education curricula is offered in a consistent 
fashion or that the scope meets the Commissions requirements under 
Sections II (B)(2)(d)(I) & II (B)(3)(a) of the Standards of 
Accreditation.


----------------------------------------------------------------------------------------------------------------
                                        Phoenix       Sacramento   St. Louis   Nashville   Marietta     Kansas
----------------------------------------------------------------------------------------------------------------
Written & Oral Communication:
  101 English...................  x.................  ..........  ..........  ..........  ..........  ..........
  104 Critical Thinking.........  x.................  ..........  ..........          x           x           x
  105 Public Speaking...........  ..................  ..........  ..........  ..........          x   ..........
  114 Critical Thinking.........  x.................       260*           x   ..........  ..........  ..........
  131 English...................  ..................  ..........          x   ..........  ..........  ..........
  205 Engage in Communication...  x.................       250*   ..........          x   ..........          x
  225 Engage in Communication...  x.................  ..........  ..........  ..........  ..........  ..........
Quantitative Principles:
  209 College Math..............  x.................  ..........  ..........  ..........  ..........  ..........
  209 Quantitative Literacy.....  ..................  ..........  ..........  ..........          x   ..........
  229 Quantitative Literacy.....  ..................  ..........          x   ..........  ..........          x
Physical & Natural Science:
  303 Human Biology.............  x.................  ..........  ..........  ..........  ..........  ..........
Social & Behavioral Science:
  122 Ethics....................  ..................  ..........          x   ..........       102*   ..........
  203 General Psychology........  x.................       240*   ..........          x           x           x
  210 Dimension of Hum Relations  ..................       270*   ..........          x           x           x
  215 Intro to Sociology........  x.................  ..........  ..........          x   ..........          x
  221 Dimension of Hum Relations  x.................  ..........  ..........  ..........  ..........  ..........
  223 Gen Psychology............  x.................  ..........  ..........          x   ..........  ..........
  230 Intro to Sociology........  x.................  ..........          x   ..........  ..........  ..........
  301 Life Span of Hum Dev......  x.................  ..........  ..........  ..........  ..........  ..........
Humainties & Fine Arts:
  None..........................
----------------------------------------------------------------------------------------------------------------
* Offered at another HTI campus with a different number.

General Education Issues--Response Requirements
    Based on the foregoing, the Commission requires each school listed 
on pages 1-2 one of this letter to submit the following documentation 
as applicable:

    a. Each school must supply the Commission with a narrative 
explanation regarding the findings contained in this letter as well as 
an overall description of the school's current state of compliance with 
ACCSCT degree content and general education standards as cited.
    b. A course outline for each degree program offered that highlights 
the courses classified as general education;
    c. A detailed course description and the syllabus and textbook(s) 
used for each general education course;
    d. A detailed explanation from the school as to why:

    1. The school believes each course is appropriate to be classified 
as general education under the Commission's definitions and given the 
overall objectives of the degree program of which it is a part;
    2. Why the school believes the collection of general education 
courses required for each degree program meets the requirements of 
Sections II (B)(2)(d)(l) and II (B)(3)(c) of the Standards of 
Accreditation as applicable; and
    3. Why the school believes each general education course represents 
instruction appropriate to the level and type of degree awarded 
(Section II (B)(I)(b), Standards of Accreditation).
                  integrity of degrees awarded issues
    In reviewing the credentials of faculty members, the Commission 
noted that a number of HTI faculty members have earned their degrees at 
HTI campuses, many of them through the on-line division--Anthem 
College. In its review of the faculty credential audit submitted by 
HTI, it appears that 37 faculty earned their degrees from HTI (see the 
Faculty Credentials Matrix below). The Commission found this number to 
be unusually high and thus looked more closely at the manner in which 
these degrees were conferred. In its review, the Commission found 
several questionable practices which have highlighted concerns relative 
to HTI's overall compliance with Section II (B) of the Standards of 
Accreditation specifically regarding (a) the manner in which HTI awards 
credits and degrees and (b) the overall integrity of the degrees 
awarded. Moreover, the Commission questions whether HTI used its online 
division to award degrees to faculty simply to meet ACCSCT faculty 
credentialing requirements. In its review, the Commission noted that 
the amount of time required for its faculty members to complete their 
degrees was so short that serious questions arise as to the integrity 
and rigor of the programs. The Commission has included several specific 
examples of its concerns below:

Example #1--Janet Prettyman
    Janet Prettyman is the Massage Therapy Program Manager/Instructor/
Externship Supervisor for the associate degree and diploma programs at 
The Bryman School in Tempe, AZ. Ms. Prettyman's transcript indicates 
the following:

     Ms. Prettyman earned her AAS degree in less than 5 months 
from HTI--Nashville.
     44 credit hours--Eleven 4-credit hour courses--presumably 
were transferred into the program, for which she received a grade of 
``E.''
     The remaining seven courses were completed between the 
dates of February 6, 2006 and July 21, 2006, according to the following 
schedule:

          From February 6, 2006 through March 7, 2006, Ms. 
        Prettyman completed Critical Thinking and Problem Solving (4.7 
        credit hours);
          From March 13, 2006 through April 12, 2006, Ms. 
        Prettyman completed Engaging in Communication (4.7 credit 
        hours);
          From April 17 through May 18, 2006, Ms. Prettyman 
        completed General Psychology (4.7 credit hours);
          From May 22, 2006 until June 21, 2006, Ms. Prettyman 
        completed Dimensions of Human Relations (4.7 credit hours); 
        Financial Principles (4.3 credit hours); Risk Management (4.3 
        credit hours); and Computer Applications (3.5 credit hours).

    Based upon the school's information, it is unclear from where the 
44 credit hours were transferred and what the ``E'' grade means. In 
addition, Ms. Prettyman would have had to complete four courses, 
totaling 16.8 credit hours during a period of approximately 5 weeks, 
presumably while working full-time at the Bryman School in Tempe, AZ. 
(According to Ms. Prettyman's Faculty Personnel Report she was 
initially hired at the school as a full-time employee on September 4, 
2001.) Therefore, it appears that Ms. Prettyman would have been a full-
time employee in Tempe, AZ during the time when she was completing her 
degree at High-Tech, Nashville. It is unclear how Ms. Prettyman could 
have completed her degree at the High-Tech, Nashville campus while 
working full-time at The Bryman School in Tempe, AZ. The High-Tech, 
Nashville campus does not have a distance education program.
    In addition, the Commission found the school's practice of awarding 
3.5 to 4.7 credits per class to be unusual, particularly given the 
short periods of time in which those credits appear to have been 
earned/awarded by HTI. This practice does not appear to be aligned with 
general practices in higher education for the award of degrees and the 
Commission is unsure if it is even feasible to earn the number of 
credits awarded to Ms. Prettyman in just 5 weeks.
Example #2--Erin Mariano (Openshaw)
    Erin Mariano is a faculty member at The Bryman School in Tempe, AZ. 
In response to a concern cited by an on-site evaluation team regarding 
Ms. Mariano's qualifications and the award of an associate degree from 
HTI through its on-line division, the school indicated that Ms. Mariano 
earned her associate's degree from HTI's on-line division in May 2006 
and that the granting of her associate's degree was based on credits 
earned at another institution, previous work experience, a passing 
score on an examination, and credits she earned at High-Tech 
Institute's on-line division. A review of this information, however, 
shows the following:

     Ms. Mariano's (Openshaw) transcript from Occupational 
Training Center in Phoenix, AZ indicates she was enrolled from November 
20, 1996 to May 7, 1996;
     Ms. Mariano's (Openshaw) transcript from Mesa Community 
College shows that she failed 4 courses, received a ``D'' grade in 4 
courses, withdrew from 11 courses, and received a grade of ``C'' or 
higher in only 9 courses;
     The school submitted no evidence of prior work experience 
or how that was evaluated for the award of academic credit; and
     The school submitted no evidence of coursework completed 
at HTI's on-line division or a transcript of courses taken or 
transferred in for the award of Ms. Mariano's degree.

    The response did not satisfactorily explain the basis for the award 
of a degree to Ms. Mariano in the context of the on-site evaluation 
team's original concern. The response did not explain the acceptance of 
Ms. Mariano's work experience for credit at HTI--particularly in light 
of the fact that the Commission does not allow for prior work 
experience to be awarded for academic credit. Moreover, the Commission 
could not understand why the credits she earned at Mesa Community 
College--where she performed poorly--were accepted for transfer or 
which HTI required courses were substituted for those taken at Mesa 
Community College. Overall, the Commission could not find that Ms. 
Mariano earned the degree awarded by HTI.
Example #3--Virginia Berney
    Virginia Berney, a medical billing coding instructor at High-Tech, 
St. Louis Park, completed an AS degree through the distance education 
program at High-Tech, Phoenix in 4 months. Although her faculty 
personnel report indicates that she began the program in January 2006, 
her transcript states that she began the program on February 10, 2006 
and graduated on May 12, 2006. The program length given on the 
transcript is 1,210 clock hours.
    The record submitted by HTI shows that Ms. Berney transferred in 
eight courses and received a grade of E for each of the transfer 
courses. The courses were credited as follows:


------------------------------------------------------------------------
                      Course Title                       Credits   Hours
------------------------------------------------------------------------
Professional Coding Practice...........................      3.5      70
Healthcare Delivery and Insurance Management...........      3.5      70
Healthcare Reimbursement and Legal Issues..............      3.5      70
Medical Records and Documentation......................      3.0      70
Medical Office Procedures..............................      3.5      70
Health Information Technology..........................      3.0      70
Medical billing coding.................................      3.5      70
Externship.............................................      3.5     160
------------------------------------------------------------------------

    These courses apparently transferred into the technical portion of 
the program and fully satisfied the requirements. As noted in the Team 
Summary Report, it is not clear how HTI determined that, that the 
credits from the University of Minnesota transferred into the HTI 
associate degree. The school's response states that Ms. Berney was 
hired to teach due to her more than 20 years of experience in the field 
and her active participation in the American Association of Health Care 
Administrative Management (``AAHAM''). This response does not answer 
the team's question regarding the determination of the transferability 
of Ms. Berney's credits from her 1962 certificate in Laboratory 
Assisting into the 2006 medical billing coding AS degree at HTI.
    According to the transcript, Ms. Berney completed 8 courses in 13 
weeks with a 4.0 cumulative grade point average. These courses were 
completed as follows:

     From February 6, 2006 until March 3, 2006, Ms Berney took 
Critical Thinking and Problem Solving for 4.7 credits (70 hours); 
General Psychology for 4.7 credits (70 hours); and Engaging in 
Communication for 4.7 credits (70 hours).
     Thus, in a period of 5 weeks, Ms Berney completed three 
courses worth a total of 14.1 credits (210 hours.)
     From March 13, 2006 until April 7, 2006, Ms. Berney 
completed Dimensions of Human Relations for 4.7 credits (70 hours).
     From March 13, 2006 until April 12, 2006, Ms. Berney 
completed Financial Principles for 4.3 credits (70 hours).
     From March 13, 2006 until May 9, 2006, Ms. Berney 
completed Risk Management for 4.3 credits (70 hours).
     From April 17, 2006 until May 11, 2006, Ms. Berney 
completed Computer Applications for 3.5 credits (70 hours) and 
Professional Development for 3.8 credits (70 hours).
     Thus, in a period of 9 weeks, Ms. Berney completed five 
courses worth a total of 20.6 credits (350 hours).

    As with Ms. Prettyman, the Commission could not see how Ms. Berney, 
who presumably was teaching full-time and according to her Faculty 
Personnel Report, was working 40 hours each week, could have completed 
eight courses worth 34.7 credits (560 hours) in 13 weeks. Moreover, as 
in the previous two examples, the Commission could not see how Ms. 
Berney credibly received credit for previous coursework or work 
experience.
Example #4--Mary Hartle
    In the July 12, 2006 Team Summary Report (for an on-site evaluation 
conducted at HTI--St. Louis Park, MN), the on-site evaluation team 
cited the inability to verify that Ms. Hartle was qualified to teach in 
the AAS degree program when she was hired to teach at HTI--St. Louis 
Park. According to the Team Summary Report, Ms. Hartle's file indicated 
that she had completed her associate degree at HTI--Phoenix from 
September 2005 to December 2005, but that the on-site evaluation team 
could not verify how HTI had determined that Ms. Hartle's previous 
educational experience had transferred into their associate degree.
    The school responded to the team's concern stating that Ms. Hartle 
was hired as an assistant and was not given responsibility for teaching 
classes until she had completed her degree. The response also provided 
an explanation as to how the school evaluated Ms. Hartle's previous 
work experience to determine that she met the standard of ``outstanding 
contribution to the field,'' which school managers believed qualified 
Ms. Hartle to teach regardless of the fact that she did not have a 
degree. The Commission found these explanations to be contradictory. 
The school made both claims as described above, but did not explain 
why, if school administrators believed Ms. Hartle met the requirements 
through her outstanding contributions to the field, she was not 
permitted to teach until after she had finished the HTI associate 
degree program.
    Moreover, according to the Faculty Personnel Reports submitted with 
the May 24, 2006 faculty credential audit, Mary Hartle was initially 
employed at HTI--St. Louis Park on June 6, 2005 and she earned her 
degree from September 2005 through December 2005 from HTI--Nashville 
while working full-time at HTI--St. Louis Park. It is unclear how Ms. 
Hartle was able to complete this degree at HTI--Nashville in such a 
short period of time while working full-time at St. Louis Park. The 
school's response does not include transcripts from Ms. Hartle's 1999 
certificate from Northern Lights School of Massage (for which credits 
were transferred into her AAS degree program), nor does it include a 
transcript for the Associate of Science from HTI--Nashville or HTI--
Phoenix.
Example #5--Eric Langness
    According to the Faculty Personnel Reports submitted with the May 
24, 2006 faculty credential audit, Eric Langness completed a degree at 
HTI--Nashville, while working full-time at HTI--St. Louis Park.
    According to Eric Langness's Faculty Personnel Report, Mr. Langness 
began employment as a full-time instructor at HTI, St. Louis Park on 
March 22, 2005. Mr. Langness completed an Associate Degree in X-Ray 
Technology at HTI--Nashville beginning in September in 2004 and 
graduating in June 2005. It is unclear how Mr. Langness was able to 
complete this degree at HTI--Nashville in such a short period of time 
and while working full-time at HTI--St, Louis Park.
    While the examples listed above provide specific details regarding 
the Commission's findings, the matrix below lists other faculty members 
who were awarded a degree credential from HTI, many under what appear 
to be similar circumstances.
                     hti faculty credential matrix

                            High-Tech Institute--Phoenix, AZ (ACCSCT School #M001392)
----------------------------------------------------------------------------------------------------------------
                                                      Institution
          Instructor                 Program        awarding  degree   Start date    End date      Credential
----------------------------------------------------------------------------------------------------------------
Craig Tibbetts................  CAD/Drafting       HTI--Phoenix.....     6/1/1998     9/1/1999  AOS
                                 Technology.
Floyd McWilliams..............  CAD/Drafting       HTI--Phoenix.....     6/1/1994     9/1/1995  AOS
                                 Technology.
Don Hunter                      CAD/Drafting       HTI--Phoenix.....     1/1/1987     3/1/1988  AOS
                                 Technology.
Ed Argusta                      CAD/Drafting       HTI--Phoenix.....    12/1/1995    12/1/1996  AOS
                                 Technology.
Steve Pagan                     Computer           HTI--Phoenix.....     6/1/2004    12/1/2004  AS
                                 Networking &
                                 Security.
Eddy Fox                        Computer           HTI--Phoenix.....     5/1/2005    10/1/2005  AOS
                                 Networking &
                                 Security.
Kenneth Dworshak                Computer           HTI--Phoenix.....     4/1/1998     7/1/1999  AOS
                                 Networking &
                                 Security.
Octavio Martinez                Electronics        HTI--Phoenix.....     8/1/1998    11/1/1999  AOS
                                 Technology.
Kevin Scott                     Graphic Design &   HTI--Phoenix.....     4/1/2004     7/1/2005  AS
                                 Animation.
Juanita Andrade                 Medical Assistant  HTI--Phoenix.....      6/12004     2/1/2005  AS
Michelle Hughes                 Medical Billing &  HTI--Phoenix.....     1/1/2005     8/1/2006  AA
                                 Coding.
Sandy McVety                    Medical Billing &  HTI--Phoenix.....     9/1/2005     5/1/2006  AS
                                 Coding.
----------------------------------------------------------------------------------------------------------------


                          High-Tech Institute--Kansas City, MO (ACCSCT School #B070636)
----------------------------------------------------------------------------------------------------------------
                                                      Institution
          Instructor                 Program        awarding  degree   Start date    End date      Credential
----------------------------------------------------------------------------------------------------------------
Tanya S. Galusha..............  Massage Therapy..  HTI--Nashville...     2/1/2004     9/1/2004  AAS
Ella Moore-Ashley.............  Medical Billing &  HTI--Phoenix.....     8/1/2004     1/1/2006  AS
                                 Coding.
Candyce Overbay...............  Surgical           HTI--Nashville...    11/1/2004     1/1/2005  AAS
                                 Technology.
----------------------------------------------------------------------------------------------------------------


                           High-Tech Institute--Marietta, GA (ACCSCT School #B070520)
----------------------------------------------------------------------------------------------------------------
                                                      Institution
          Instructor                 Program        awarding  degree   Start date    End date      Credential
----------------------------------------------------------------------------------------------------------------
Shelia Annette Enderle........  Computer Network   HTI--Phoenix.....     2/1/2005     8/1/2005  AS
                                 & Security.
William C. Miller.............  Massage Therapy..  HTI--Nashville...    9/18/2005   12/23/2005  AAS
Paul V. Berry.................  Massage Therapy..  HTI--Nashville...     7/1/2003     4/1/2004  AAS
Melanie Charvat...............  Medical Assisting  HTI--Phoenix.....     1/1/2005     3/1/2005  AS
Miriam Gresham................  Medical Billing &  HTI--Phoenix.....     9/1/2005     1/1/2006  AS
                                 Coding.
Cheryl M. Wilson..............  Surgical           HTI--Nashville...    12/1/2004     2/1/2005  AAS
                                 Technology.
Lori Alexander-Mabry..........  Surgical           HTI--Nashville...     8/1/2005    11/1/2005  AAS
                                 Technology.
Renee V. Fouche...............  Surgical           HTI--Nashville,           2005         2005  AS
                                 Technology.        Phoenix, AZ.
----------------------------------------------------------------------------------------------------------------


                           High-Tech Institute--Nashville, TN (ACCSCT School #B070322)
----------------------------------------------------------------------------------------------------------------
                                                      Institution
          Instructor                 Program        awarding  degree   Start date    End date      Credential
----------------------------------------------------------------------------------------------------------------
Jeff Beck.....................  Computer           HTI--Phoenix.....     7/1/2004    10/1/2004  AS
                                 Networking.
Phyllis Lame..................  Dental Assistant.  The Bryman            8/1/2005     1/1/2006  AS
                                                    School--Phoenix.
Rachel Obptande...............  Dental Assistant.  The Bryman            7/1/2005    11/1/2005  AS
                                                    School--Phoenix.
Mary E. Watford...............  Massage Therapy..  HTI--Nashville...     6/1/2005    12/1/2006  AAS
T Gail Fite...................  Medical Assistant  HTI--Phoenix.....     1/1/2004    10/1/2004  AS
Rhonda Shinn..................  Medical Assistant  HTI--Phoenix.....    11/1/2002    11/1/2003  AS
Rhonda Shinn (same)...........  Medical Assistant  HTI--Phoenix.....     4/1/2005     4/1/2006  BS
Gary Mason....................  Surgical           HTI--Nashville...     9/1/2005     3/1/2006  AAS
                                 Technology.
----------------------------------------------------------------------------------------------------------------


                        High-Tech Institute--St. Louis Park, MN (ACCSCT School #B070184)
----------------------------------------------------------------------------------------------------------------
                                                      Institution
          Instructor                 Program        awarding  degree   Start date    End date      Credential
----------------------------------------------------------------------------------------------------------------
Brian Leff....................  Computer           HTI--St. Louis        4/1/2003    10/1/2003  AS
                                 Networking &       Park.
                                 Security.
Eric Langness.................  Limited Scope X-   HTI--Nashville...     9/1/2004     6/1/2005  AS
                                 Ray.
Mary Hartle...................  Massage Therapy..  HTI--Nashville...     9/1/2005    12/1/2005  AS
Thomas Wesley.................  Medical Assistant  HTI--Phoenix.....     6/1/2004    12/1/2004  AS
Sara Sell.....................  Medical Assistant  HTI--Phoenix.....     5/1/2005     8/1/2005  AA
Virginia Berney...............  Medical Billing &  HTI--Phoenix.....     1/1/2006     5/1/2006  AS
                                 Coding.
----------------------------------------------------------------------------------------------------------------

Integrity of Decrees Awarded Issues--Response Requirements
    Based upon the foregoing, the Commission has several questions as 
to the award of degrees by HTI to its faculty and in general. 
Therefore, the Commission directs the submission of the following 
information:

    a. A detailed explanation of the process used to enroll and award 
degrees to HTI's faculty;
    b. An explanation regarding the award of credit for ``life or work 
experience'' and why the school believes this is an appropriate 
practice given that the Commission's standards do not allow such a 
practice;
    c. An explanation of the school's transfer of credit policy and why 
the school believes this policy is appropriate--particularly with 
respect to awarding credit for academic coursework completed many years 
in the past (e.g., the transfer of credit for Ms. Berman from her 1962 
diploma in Laboratory Assisting in the 2006 AS degree in medical 
billing coding);
    d. A copy of the transcript for every HTI faculty member who 
received a degree from HTI with evidence for each one that all 
admissions requirements were met, a detailed explanation with evidence 
for each one regarding all credit transferred in or applied to the 
degree, and evidence for each one of completed coursework for all 
credit awarded by HTI;
    e. A detailed explanation as to how faculty earned degrees from HTI 
in what appear in some cases to be an unreasonably short period of 
time--particularly when working full-time as a faculty member at HTI 
(e.g., a copy of Ms. Berman's work and class schedules at High-Tech, 
St. Louis Park during the period beginning January 2006 and ending May 
2006);
    f. A clock hour to credit hour conversion for every degree program;
    g. A detailed explanation as to how HTI awards credit through its 
online division and the credit formula used for the award of all 
credits through its online division; and
    h. A detailed explanation as to why the school is awarding such 
credit amounts as 4.7 credits in as little as 4-5 weeks and how the 
school determined this to be appropriate given its credit award 
formulas.
                         anthem college issues
    In its March 10, 2006 letter to HTI, the Commission indicated that 
it had reviewed the Web site for High-Tech Institute and found that the 
description of Anthem College Online may be misleading with respect to 
Anthem College, its relationship to High-Tech Institute, its training 
and services, and its accredited status (Section IV (D)(1), Standards 
of Accreditation). As first stated in the March 10, 2006 letter, the 
Commission remains concerned that the school's advertising practices 
mislead consumers to believe that Anthem College On-line operates as a 
separate institution and has separate accredited status. The basis for 
the Commission's concern is the continuing inquiries regarding the 
accreditation of Anthem College from various sources who are confused 
about Anthem College and its affiliation with HTI. This has led the 
Commission to conclude that HTI has not taken the steps necessary to 
(a) ensure its compliance with Section IV (D)(1) of the Standards of 
Accreditation or (b) to ensure that students are fully informed of the 
HTI's accreditation status (i.e., Anthem College is not an accredited 
entity). Accordingly, the Commission directs HTI to submit the 
following:

    a. An explanation from HTI regarding the steps it has taken to 
ensure the clear and accurate depiction of its operations and why the 
school believes its advertising complies with accreditation 
requirements and expectations;
    b. Copies of all forms of advertising used by HTI for the promotion 
of its distance education programs and Anthem College.

    If HTI does not show that necessary corrective action has been 
taken on this issue, after having had numerous warnings from ACCSCT, 
this may become a ground for an adverse action, to include the 
revocation of the school's distance education approval or revocation of 
HTI--Phoenix's accreditation.
                       individual school actions
    As stated in the opening paragraph of this letter, the Commission 
also reviewed several HTI schools independent of the faculty audit. The 
Commission took additional actions, in addition to the system-wide 
Probation Order and the grounds listed above, for the following schools 
(details for each school follow on the chart):


--------------------------------------------------------------------------------------------------------------------------------------------------------
               School                         City                     St                   School #          Reason for review     November 2006 action
--------------------------------------------------------------------------------------------------------------------------------------------------------
High-Tech Institute................  Phoenix...............  AZ....................  M001392..............  Faculty Audit/         Systemwide Probation;
                                                                                                             Stipulation Review/    Defer Final Action
                                                                                                             Substantive Change     on Stipulation
                                                                                                             Evaluations            Review, Application
                                                                                                             (Distance Education    for a Branch--Part I
                                                                                                             Application and        and Distance
                                                                                                             Branch Campus          Education report.
                                                                                                             Application Part I.
High-Tech Institute................  St. Louis Park........  MN....................  B070184..............  Faculty Audit/         Systemwide Probation
                                                                                                             Deferral of            (Continued
                                                                                                             Probation from         Probation).
                                                                                                             August 2006 meeting/
                                                                                                             Application for
                                                                                                             Renewal of
                                                                                                             Accreditation/
                                                                                                             Substantive Change
                                                                                                             Evaluations (Degree
                                                                                                             and Unrelated New
                                                                                                             Non-Degree Programs).
High-Tech Institute................  Marietta..............  GA....................  B070520..............  Faculty Audit/         Systemwide Probation;
                                                                                                             Application for        Defer Final Action
                                                                                                             Renewal of             on Application for
                                                                                                             Accreditation/         Renewal of
                                                                                                             Substantive Change     Accreditation;
                                                                                                             Evaluations (Degree    Degree Program,
                                                                                                             and Unrelated New      Unrelated New
                                                                                                             Non-Degree Programs/   Program; Outcomes
                                                                                                             Outcomes and Faculty   Report; and Faculty
                                                                                                             Retention Report/      Retention Report.
                                                                                                             Anonymous Complaint).
High-Tech Institute................  Orlando...............  FL....................  B070257..............  Outcomes Report/2005   Systemwide Probation,
                                                                                                             Annual Report          Outcomes Reporting.
                                                                                                             Outcomes Data.
High-Tech Institute................  Las Vegas.............  NV....................  B070605..............  2005 Annual Report...  Systemwide Probation,
                                                                                                                                    Outcomes Reporting.
High-Tech Institute................  Kansas City...........  MO....................  B070636..............  Faculty Audit/         Systemwide Probation,
                                                                                                             Substantive Change     Defer Final Action
                                                                                                             Evaluation (Degree     on Substantive
                                                                                                             Program).              Change Applications.
High-Tech Institute................  Sacramento............  CA....................  B067810..............  Faculty Audit/         Systemwide Probation,
                                                                                                             Outcomes Report/       Remove from
                                                                                                             Program Advisory       Reporting.
                                                                                                             Committee Report.
High-Tech Institute................  Nashville.............  TN....................  B070322..............  Faculty Audit/2005     Systemwide Probation,
                                                                                                             Annual Report.         Accept Report.
The Bryman School..................  Phoenix...............  AZ....................  M059048..............  Unresolved Complaint/  Systemwide Probation;
                                                                                                             2005 Annual Report     Close Complaints;
                                                                                                             Outcomes Data.         Externship
                                                                                                                                    Reporting; Outcomes
                                                                                                                                    Reporting.
The Bryman School..................  Tempe.................  AZ....................  B070784..............  Application for        Systemwide Probation,
                                                                                                             Renewal of             Defer Final Action
                                                                                                             Accreditation/         on the Application
                                                                                                             Stipulation            for Renewal of
                                                                                                             (November 2005         Accreditation.
                                                                                                             meeting).
Cambridge College..................  Bellevue..............  WA....................  B070781..............  Faculty Audit/         Systemwide Probation;
                                                                                                             Application for        Defer Final Action
                                                                                                             Renewal of             on the Application
                                                                                                             Accreditation--Stipu   for Renewal of
                                                                                                             lation Review/         Accreditation,
                                                                                                             Substantive Change     Stipulation Review,
                                                                                                             Evaluations (Branch    Substantive Change
                                                                                                             Campus Application     Applications.
                                                                                                             Part II and
                                                                                                             Unrelated New
                                                                                                             Programs).
Cambridge College..................  Aurora................  CO....................  B069310..............  Substantive Change     Systemwide Probation,
                                                                                                             Evaluation (Degree     Defer Final Action
                                                                                                             Program).              on Substantive
                                                                                                                                    Change Application.
--------------------------------------------------------------------------------------------------------------------------------------------------------

       high tech institute--phoenix, az (accsct school #m001392)
    At its November 2006 meeting, the Commission considered the 
Application for a Branch Part I, Distance Education Report, and the 
October 10, 2006 stipulation response submitted by HTI located in 
Phoenix, AZ.\5\ Upon review of the information, the Commission moved to 
defer action on the Application for a Branch-Part I and the Distance 
Education Report until February 2007 pending satisfaction of the 
September 14, 2005 stipulations and resolution of the system-wide 
Probation Order.
---------------------------------------------------------------------------
    \5\ At its August 2005 meeting, the Commission considered the 
Application for a Branch--Part 1 and the Outcomes Report for the 
Computer Electronics program submitted by HTI--St. Louis Park. Upon 
review of the April 21, 2005 on-site evaluation report, the school's 
May 10, 2005 response to the report, and the June 29, 2005 Outcomes 
Report, the Commission moved to accept the reports with four 
stipulations, including this stipulation that the school provide 
additional information about the city of Phoenix Scholarship.
---------------------------------------------------------------------------
    Upon review of HTI--Phoenix's response to the stipulations, the 
Commission determined that the school did not demonstrate that the city 
of Phoenix Scholarship was administered according to the guidelines set 
forth in the partnership agreement between HTI--Phoenix and the city of 
Phoenix (Section VIII (D)(2), Standards of Accreditation). 
Specifically, Ordinance #S18376 which is included in the school's 
response, defines the timeframe of the scholarship as a 10-year period 
beginning in March 1989, and limits the instruction provided by the 
scholarship to 900 hours of free electronics and drafting instruction. 
However, the list of scholarship recipients included in the response is 
dated 2004, and the advertisement for the scholarship is targeted at 
Medical Assisting students. Therefore, HTI--Phoenix must demonstrate 
that it has administered the scholarship according to the agreement 
between the school and the city of Phoenix. HTI--Phoenix must submit 
either an amended agreement between HTI--Phoenix and the city of 
Phoenix which indicates that the timeframe for the scholarship has been 
extended and that the definition of instruction has been expanded to 
include Medical Assisting instruction or documentation to demonstrate 
that the school has stopped awarding this scholarship.
High Tech Institute--St. Louis Park, MN (ACCSCT School #B070184)
    At its November 2006 meeting, the Commission considered its 
previous decision to continue HTI located in St. Louis Park, MN on 
Probation and the Application for Renewal of Accreditation. The 
Commission reviewed the following:

     Upon review of the September 8, 2006 Continued Probation 
Order and the school's response in conjunction with its previous 
actions,\6\ the Commission determined that the school has still not 
fully demonstrated compliance with accreditation standards and 
successful student achievement.
---------------------------------------------------------------------------
    \6\ At its August 2005 meeting, the Commission voted to place HTI--
St. Louis Park on probation. At its January 2006 meeting, the 
Commission voted to continue the school on Probation. At its August 
2006 meeting, the Commission voted to continue the school on probation 
with a good cause extension.
---------------------------------------------------------------------------
     Upon review of the July 12, 2006 Team Summary Report and 
the school's response to that report, the Commission determined that 
HTI--St. Louis Park did not fully demonstrate compliance with 
accreditation standards relative to Student Outcomes, Program Advisory 
Committees, and Student Satisfaction.

    Therefore, the Commission voted to continue the Probation Order 
with another good cause extension pending demonstration that the school 
has met the Standards of Accreditation with respect to Student 
Outcomes, Program Advisory Committees, and Student Satisfaction. This 
decision is in keeping with the Commission's maximum timeframe 
requirements (Process and Procedure, Commission Actions, Standards of 
Accreditation).\7\ The history of and reasons for the Commission's 
decision, in addition, to those already cited in this letter, are set 
forth below.
---------------------------------------------------------------------------
    \7\ In accordance with ACCSCT policies and standards, the 
Commission can extend the period of Probation where, as here, there is 
reason to believe that the institution has made progress toward full 
compliance with accreditation requirements.
---------------------------------------------------------------------------
History
    The Commission's review of HTI--St. Louis Park began at its 
February 2005 meeting. At that meeting, the Commission ordered HTI--St. 
Louis Park to show cause as to why its accreditation should not be 
revoked due to a pattern of non-compliance with ACCSCT student 
achievement standards. At its August 2005 meeting, the Commission 
determined that HTI--St. Louis Park had not demonstrated compliance in 
regard to student achievement and voted to place the school on 
Probation. At its February 2006 meeting, the Commission determined that 
HTI--St. Louis Park had not yet demonstrated compliance with the 
Standards of Accreditation in relation to student achievement and 
faculty qualifications and voted to continue the school on Probation 
until August 2006. At its August 2006 meeting, the Commission 
determined that the school had not fully resolved the concerns relative 
to student achievement; however, the Commission gave the school a good 
cause extension to its maximum timeframe to achieve compliance with 
accrediting standards.
November 2006 Review and Action
    1. HTI--St. Louis Park must demonstrate successful student 
achievement as required by Section VII (C) of the Standards of 
Accreditation. Upon review of the school's response to the July 12, 
2006 Team Summary Report, the Commission noted that the school, while 
demonstrating progress, still did not demonstrate rates of student 
achievement for all programs in compliance with the Standards of 
Accreditation as shown in the table below:


----------------------------------------------------------------------------------------------------------------
                                                                               ACCSCT                   ACCSCT
                                                        Length    HTI--SLP    required    HTI--SLP     required
                       Program                            in     graduation  graduation  employment   employment
                                                        months     rate [In    rate [In   rate [In     rate [In
                                                                  percent]    percent]    percent]     percent]
----------------------------------------------------------------------------------------------------------------
Medical Assisting Degree.............................        14          46          49          78           70
Surgical Technologist Degree.........................        19          46          38          71           70
Limited Scope X-ray Technologist Degree..............        15          39          49          82           70
Massage Therapy Degree...............................        17          44          49         100          100
----------------------------------------------------------------------------------------------------------------
Note 1: Rates in bold print represent those below the Commission's minimum requirements.
Note 2: The graduation and employment rates in the Surgical Technologist AAS degree have come into compliance,
  and the rates in the Medical Assisting AAS, Limited Scope X-Ray Technician AAS, and Massage Therapy AAS have
  improved, but do not yet meet the standard. HTI--St. Louis Park's October 10, 2006 response to the September
  8, 2006 Continued Probation Order contained the same Graduation and Employment data that had been previously
  submitted to the Commission.

    While the Commission recognizes the school's improvement in 
graduation rates, the Commission has determined that continued 
Probation and on-going monitoring of the school as it moves toward 
compliance with accrediting standards is the appropriate course of 
action. Due to the school's prolonged history of reporting, the 
Commission will continue the Probation Order until such time as the 
rates are fully in compliance with accrediting standards. If the school 
does not achieve compliance, the Commission may take an adverse action 
against HTI--St. Louis Park.
    Accordingly, HTI--St. Louis Park must submit the following:

    a. Graduation and Employment Charts for the Medical Assistant 
degree, Limited Scope X-Ray Technician degree, and Massage Therapy 
degree programs, prepared in accordance with the enclosed instructions. 
The school is directed to use a June 2007 Report Date when preparing 
the Graduation and Employment Charts. Please use the Graduation and 
Employment Chart found on the Commission's Web site at www.accsct.org.
    b. All necessary supporting documentation for each Graduation and 
Employment Chart organized according to the corresponding cohort start 
date reported on the chart (line #1).
    c. Supporting documentation for graduation rates which must include 
at a minimum, the name of each student enrolled and a corresponding 
program completion transcript for each student classified as a 
graduate.
    d. Supporting documentation for employment rates, which at a 
minimum, must include the name of the graduate, telephone number of the 
graduate, name of employer, contact person at the place of employment, 
employer telephone number, and information (e.g., job title, job brief 
description) that demonstrates that the employment is training related.
    e. HTI--St. Louis Park must support with appropriate and verifiable 
documentation any student classified as ``Unavailable for Graduation'' 
(line #6), ``Graduates--Further Education'' (line #11), ``Graduates--
Unavailable for Employment'' (line #12) or ``Non-Graduated Students Who 
Obtained Training Related Employment'' (line #19).

    If any reported graduation or employment rate falls more than one 
standard deviation below the mean for comparable programs, the school 
may attempt to take into account economic conditions, location, student 
population served, length of program, State requirements, and other 
external factors reasonably related to student achievement. A detailed 
explanation as to how these factors impact the institution's graduation 
and employment rates must be included (see Section VII (C), Standards 
of Accreditation).
    2. HTI--St. Louis Park must demonstrate that its Program Advisory 
Committees (``PACs'') have reviewed and commented on, at least 
annually, the objectives of each program, the adequacy of facilities 
and equipment and on student graduation and graduate employment rates 
as required by Section II (A)(4)(a & c) of the Standards of 
Accreditation. Upon review of the HTI--St. Louis Park's response to the 
July 12, 2006 Team Summary Report, the Commission determined that 
although the school submitted additional information regarding its PAC 
meetings, the school's response also indicated that future PAC meeting 
minutes will include the results of surveys completed by PAC members to 
ensure documentation of the review and comments of the members. Given 
the school's history of noncompliance with this requirement and the 
importance of the role that PACs play in a school's operations--
particularly with respect to aiding in successful student achievement--
the Commission determined that additional monitoring is required. 
Therefore, the Commission directs HTI--St. Louis Park to conduct at 
least one set of PAC meetings (one for each program area) prior to the 
date that the school's response to this letter is due and to show a 
nexus between these meetings and the PAC review and comments from 
previous meetings and to explain how the school has used its PACs in an 
effective way aimed toward institutional improvement and student 
achievement.
    3. In the July 12, 2006 Team Summary Report, the team expressed 
concerns in the following areas based on information received from the 
student surveys \8\:
---------------------------------------------------------------------------
    \8\ The school correctly pointed to a miscalculation on the part of 
the team in figuring out the percentages of negative responses to these 
questions on the surveys. The Commission acknowledges the errors on the 
part of the team; however, these errors notwithstanding, the Commission 
still found sufficient cause to require additional follow-up and 
monitoring in the areas cited by the on-site evaluation team.

    a. Does the school accurately provide all necessary facts and 
details about the school in the admissions process? (Section IV, 
Statement of Purpose, Standards of Accreditation);
    b. Is the library readily accessible during and beyond classroom 
hours? (Section II (A)(5) Standards of Accreditation);
    c. Are instructional materials sufficient, comprehensive, and 
reflect current occupational knowledge and practice? (Section II (A)(3) 
(a & d), Standards of Accreditation); and
    d. Is the training equipment sufficiently up-to-date and kept in 
good repair? (Section VI, Statement of Purpose, Standards of 
Accreditation).

    The Commission reviewed the school's responses to these questions, 
and recognizes that the school has taken the survey results into 
consideration and appears to have begun to use the student survey 
results to enhance Institutional Assessment and Improvement planning. 
However, the Commission determined that continued monitoring of 
implementation of improvement strategies is appropriate, given the on-
site evaluation team's findings. Therefore, the school must provide 
documentation of a new survey given to both students and faculty to 
show the current levels of satisfaction by students and faculty with 
respect to, minimally, the questions listed above. (The Commission, 
however, does believe that a survey that includes a broader array of 
questions beyond those listed above may provide better and more 
complete information with respect to the quality of the school's 
operations).
High-Tech Institute--Marietta, GA (ACCSCT School #B070520)
    At its November 2006 meeting, the Commission considered the 
Application for a Degree Program for the Pharmacy Technician (AS) 
program, New Program Report--Unrelated New Program for the Pharmacy 
Technician (diploma) program, Outcomes Report, and Faculty Retention 
Report submitted by HTI located in Marietta, GA.\9\ Upon review of the 
August 21, 2006 Team Summary Report, the school's October 5, 2006 
response and the December 5, 2006 Outcomes and Faculty Retention 
Reports, the Commission voted to defer final action on the above 
referenced substantive change reports. The reasons for the Commissions 
decision, in addition to those previously set forth in this letter, 
follows:
---------------------------------------------------------------------------
    \9\ The Outcomes Report and the Faculty Retention Report were 
required when the Commission voted at the February 2006 meeting to 
vacate the Show Cause Order and to place the school on Outcomes 
Reporting and Faculty Retention Reporting.

    1. HTI--Marietta must demonstrate successful student achievement as 
required by Section VII (C) of the Standards of Accreditation. The 
Commission determined that additional monitoring of student achievement 
is warranted because the school continues to report low graduation 
rates in the 16-month Medical Assisting Degree program, the 21-Month 
Surgical Technologist Degree Program and the 19- month Massage Therapy 
Program. The following chart records the graduation rates reported by 
HTI--Marietta to the Commission:


------------------------------------------------------------------------
                                                                ACCSCT
                                                    HTI        required
             Program                Length in    graduation   graduation
                                      months      rate [In     rate [In
                                                  percent]     percent]
------------------------------------------------------------------------
Medical Assistant Degree.........          16           47           49
 Surgical Technologist Degree....          21           34           43
 Massage Therapy Degree..........          19           36           43
------------------------------------------------------------------------
Note: Rates in bold print represent those below the Commission's minimum
  requirements.


    Based upon this information and the low rates of graduation 
reported by HTI--Marietta, the Commission directs the school to submit 
an Outcomes Report for the Medical Assisting degree, Surgical 
Technologist degree, and Massage Therapy degree programs as follows:

    a. A Graduation and Employment Chart for Medical Assistant degree, 
Surgical Technologist degree, and Massage Therapy degree programs, 
prepared in accordance with the enclosed instructions. The school is 
directed to use a June 2007 Report Date when preparing the Graduation 
and Employment Charts. Please use the Graduation and Employment Chart 
found on the Commission's Web site at www.accsct.org.
    b. All necessary supporting documentation for each Graduation and 
Employment Chart organized according to the corresponding cohort start 
date reported on the chart (line #1).
    c. Supporting documentation for graduation rates which must include 
minimally the name of each student enrolled and a corresponding program 
completion transcript for each student classified as a graduate.
    d. HTI--Marietta must support with appropriate and verifiable 
documentation any student classified as ``Unavailable for Graduation'' 
(line #6).

    If any reported graduation or employment rates fall more than one 
standard deviation below the mean for comparable programs, the school 
may attempt to take into account economic conditions, location, student 
population served, length of program, state requirements, and other 
external factors reasonably related to student achievement. A detailed 
explanation as to how these factors impact the institution's graduation 
and employment rates must be included (see Section VII (C), Standards 
of Accreditation).
    2. HTI--Marietta must demonstrate that students are not reported as 
graduates prior to completing any required externship (Section II 
(A)(6)(f), Standards of Accreditation). The Commission reviewed the 
school's response to the on-site evaluation team's concern in this 
regard and noted that the Pharmacy Technician Externship Report 
includes reported graduation dates for three students that were prior 
to the completion date of their externships. The school's response 
indicates that these incorrect dates represent projected dates which 
are not updated when a student graduates. The Commission determined 
that this process does not allow for an accurate accounting of a 
student's completion of all program requirements. Therefore, the 
Commission requires HTI--Marietta to change its procedure for reporting 
graduation dates so that students are not able to graduate prior to 
completion of their externships.
    3. HTI--Marietta must demonstrate compliance with Section II (A)(4) 
of the Standards of Accreditation and that its PACs are comprised of a 
majority of employers as required. Upon review of the school's PAC 
meeting minutes submitted with the school's response to the August 16, 
2006 Team Summary Report, the Commission did not find that the PAC 
minutes show in all instances a committee membership comprised of a 
majority (more than 50 percent) of employers representing the major 
occupation or occupations for which training is provided. Therefore, 
HTI--Marietta must submit the membership for each of its PACs and 
provide a detailed explanation as to how the school is in compliance 
with Section II (A)(4) of the Standards of Accreditation and the PAC 
membership requirements.
High-Tech Institute--Orlando, FL (ACCSCT School# R070257)
    At its November 2006 meeting, the Commission considered the March 
7, 2006 Outcomes Report, the 2005 Annual Report, and the additional 
information to supplement the 2005 Annual Report dated March 15, 2006 
submitted by HTI located in Orlando, FL.\10\ Upon review of the 
information, the Commission voted to continue HTI--Orlando on Outcomes 
Reporting. The reasons for the Commission's decision follows.
---------------------------------------------------------------------------
    \10\ The Outcomes Report was required by the Commission when it 
voted to place the school on Outcomes Reporting at its May 2005 
meeting. The Annual Report was required of all accredited schools in 
January 2006 and the supplemental information for the 2005 Annual 
Report is required of all schools that report Graduation and Employment 
rates below the Commission's requirements.
---------------------------------------------------------------------------
    The chart below includes the HTI--Orlando rates of graduation and 
employment as reported to the Commission:


----------------------------------------------------------------------------------------------------------------
                                                                                ACCSCT                   ACCST
                                                          Length      HTI      required       HTI      required
                        Program                             in    graduation  graduation  Employment  employment
                                                          months   rate  [In   rate  [In   rate  [In   rate  [In
                                                                   percent]    percent]    percent]    percent]
----------------------------------------------------------------------------------------------------------------
Surgical Technician....................................       13          57          49          33          70
Medical Massage Therapy................................       18          47          43          40          70
Massage Therapy........................................       11          94          59          56          70
----------------------------------------------------------------------------------------------------------------
Note: Rates in bold print represent those below the Commission's minimum requirements.

    Based on this information and the low rates of graduation and 
employment reported by HTI--Orlando, the Commission directs HTI--
Orlando to submit the following:

    a. A Graduation and Employment Chart for the Surgical Technician 
Diploma, Medical Massage Therapy, and Massage Therapy programs, 
prepared in accordance with the enclosed instructions. The school is 
directed to use a June 2007 Report Date when preparing the Graduation 
and Employment Charts. Please use the Graduation and Employment Chart 
found on the Commission's Web site at www.accsct.org.
    b. All necessary supporting documentation for each Graduation and 
Employment Chart organized according to the corresponding cohort start 
date reported on the chart (line #1).
    c. Supporting documentation for employment rates must include 
minimally, the name of the graduate, telephone number of the graduate, 
name of employer, contact person at the place of employment, employer 
telephone number, and information (e.g., job title, job brief 
description) that demonstrate that the employment is training related.
    d. HTI--Orlando must support with appropriate and verifiable 
documentation any student classified as ``Unavailable for Graduation'' 
(line #6), ``Graduates--Further Education'' (line #11), ``Graduates--
Unavailable for Employment'' (line #12) or ``Non-Graduated Students Who 
Obtained Training Related Employment'' (line #19).
    If any reported graduation or employment rates fall more than one 
standard deviation below the mean for comparable programs, the school 
may attempt to take into account economic conditions, location, student 
population served, length of program, State requirements, and other 
external factors reasonably related to student achievement. A detailed 
explanation as to how these factors impact the institution's graduation 
and employment rates must be included (see Section VII (C), Standards 
of Accreditation).
High-Tech Institute--Las Vegas, NV (ACCSCT School #B3070605)
    At its November 2006 meeting, the Commission reviewed the 2005 
Annual Report and supplemental information submitted by of HTI located 
in Las Vegas, Nevada. Upon review of the information, the Commission 
voted to place HTI--Las Vegas on Outcomes Reporting. The reasons for 
the Commission's decision follow.
    The following chart includes the HTI--Las Vegas rates of graduation 
as reported to the Commission:


------------------------------------------------------------------------
                                                                ACCSCT
                                                      HTI      required
               Program                 Length in  graduation  graduation
                                        months     rate [In    rate  [In
                                                   percent]    percent]
------------------------------------------------------------------------
Medical Assistant Diploma...........          10          57          59
Medical Assistant AS................          18          38          43
------------------------------------------------------------------------
Note: Rates in bold print represent those below the Commission's minimum
  requirements.

    Based on this information and the low rates of graduation and 
employment reported by HTI--Orlando, the Commission directs HTI--Las 
Vegas to submit the following:

    a. A Graduation and Employment Chart for the Medical Assistant 
(diploma) and Medical Assistant (AS) programs, prepared in accordance 
with the enclosed instructions. The school is directed to use a June 
2007 Report Date when preparing the Graduation and Employment Charts. 
Please use the Graduation and Employment Chart found on the 
Commission's Web site at www.accsct.org.
    b. All necessary supporting documentation for each Graduation and 
Employment Chart organized according to the corresponding cohort start 
date reported on the chart (line #1).
    c. Supporting documentation for graduation rates which must include 
minimally, the name of each student enrolled and a corresponding 
completion transcript for each student classified as a graduate.
    d. HTI--Las Vegas must support with appropriate and verifiable 
documentation any student classified as ``Unavailable for Graduation'' 
(line #6).

    If any reported graduation or employment rates fall more than one 
standard deviation below the mean for comparable programs, the school 
may attempt to take into account economic conditions, location, student 
population served, length of program, State requirements, and other 
external factors reasonably related to student achievement. A detailed 
explanation as to how these factors impact the institution's graduation 
and employment rates must be included (see Section VII (C), Standards 
of Accreditation).
High-Tech Institute--Kansas City, MO (ACCSCT School #B070636)
    At its November 2006 meeting, the Commission considered the 
Application for a Degree Program for the Criminal Justice (AAS) 
program, the August 8, 2006 Team Summary Report, and the school's 
response to that report. Upon review of the information, the Commission 
voted to defer final action on the Application for a Degree Program for 
the Criminal Justice (AAS) program pending resolution of the system-
wide Probation Order in effect regarding the HTI schools.
High Tech Institute--Sacramento, CA (ACCSCT School #B067810)
    At its November 2006 meeting, the Commission considered the 
Outcomes Report and the Program Advisory Committee (``PAC'') Report 
submitted by HTI located in Sacramento, CA. These reports were required 
by the Commission when it voted to continue the school on Outcomes 
Reporting and PAC Reporting at its May 2005 meeting. Upon review of the 
school's reports, the Commission voted to remove HTI--Sacramento from 
Outcomes and PAC Reporting.
High-Tech Institute--Nashville, TN (ACCSCT School #B070322)
    At its November 2006 meeting, the Commission reviewed the 2005 
Annual Report and supplemental graduation and employment data submitted 
by HTI located in Nashville, TN. Upon review of this information, the 
Commission voted to accept the report and supplemental information 
submitted by HTI--Nashville. No further action is required at this time 
in regard to this matter.
The Bryman School--Phoenix, AZ (ACCSCT School #M059048)
    At its November 2006 meeting, the Commission reviewed the school's 
2005 Annual Report and supplemental graduation and employment data as 
well as information pertaining to complaints filed by former students 
Angela Matics and Azalea Acosta against The Bryman School located in 
Phoenix, AZ (``Bryman--Phoenix'') and the school's responses to those 
complaints. Upon review of this information, the Commission determined 
that, although the complaints can be closed, further monitoring of 
student outcomes and externship availability is warranted.\11\ 
Accordingly, the Commission voted to close the complaints and to place 
the school on Outcomes Reporting and Externship Reporting for the 
reasons set forth below.
---------------------------------------------------------------------------
    \11\ The Commission found that the school had satisfactorily 
addressed the specific concerns of Ms. Acosta and Ms. Matics. However, 
upon review of the entire complaint response, the Commission noted that 
56 percent of the students included on the chart in the school's 
response had waited 1 month or longer after graduation to begin the 
externship. For this reason, the Commission voted to continue to 
monitor the availability of externships.

    1. In their complaints, the students alleged that the school did 
not place them at extern sites. The Commission reviewed the school's 
response to these complaints and determined that Bryman--Phoenix 
appeared to have taken appropriate steps to place the two complainants 
at externship sites. However, the complaints and the school's responses 
raised questions regarding the school's general procedures for placing 
students at externships. Therefore, Bryman--Phoenix must submit an 
Externship Report to document that externship sites are provided to 
students in a timely fashion. Specifically, the school must provide an 
externship report in the form of a table including all students who 
completed the program between January 1, 2007 and May 30, 2007. The 
school must provide the information using the following format:


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Coursework                              Extern site       Extern contact
          Student name               Date  started         completed      Extern start  date        address              phone         Graduation  date
--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------

    2. Bryman must demonstrate the on-going success and achievement of 
its students to include acceptable rates of student graduation and 
graduate employment in accordance with Section VII (C) of the Standards 
of Accreditation. Upon review of the school's 2005 Annual Report and 
supplemental graduation and employment data, the Commission noted that 
the school reported a low graduation rate in the 9-month Hospital Unit 
Coordinator Program and a low employment rate in the Surgical 
Technologist program as shown in the table below:


----------------------------------------------------------------------------------------------------------------
                                                                              ACCSCT                    ACCSCT
                                                                 Bryman      required      Bryman      required
                    Program                       Length  in   graduation   graduation   graduation   graduation
                                                    months     rate  [In    rate  [In    rate  [In    rate  [In
                                                                percent]     percent]     percent]     percent]
----------------------------------------------------------------------------------------------------------------
Hospital Unit Coordinator......................            9           57           59           75           70
Surgical Technologist..........................           18           54           43           65           70
----------------------------------------------------------------------------------------------------------------
Note: Rates in bold print represent those below the Commission's minimum requirements.

    Based upon this information, the Commission determined that 
additional monitoring of student achievement is warranted. Accordingly, 
Bryman--Phoenix must submit an Outcomes Report for the 9-month Hospital 
Unit Coordinator and 18-month Surgical Technologist programs, as 
follows:

    a. A Graduation and Employment Chart for the 9-month Hospital Unit 
Coordinator and 18-month Surgical Technologist programs, prepared in 
accordance with the enclosed instructions. The school is directed to 
use a June 2007 Report Date when preparing the Graduation and 
Employment Charts. Please use the Graduation and Employment Chart found 
on the Commission's Web site at www.accsct.org.
    b. All necessary supporting documentation for each Graduation and 
Employment chart organized according to the corresponding cohort start 
date reported on the chart (line #1).
    c. Supporting documentation for graduation rates for the 9-month 
Hospital Unit Coordinator program which must include minimally the name 
of each student enrolled and a corresponding program completion 
transcript for each student classified as a graduate.
    d. Supporting documentation for employment rates for the 18-month 
Surgical Technologist program must include minimally, the name of the 
graduate, telephone number of the graduate, name of employer, contact 
person at the place of employment, employer telephone number, and 
information (e.g., job title, job brief description) that demonstrates 
that the employment is training-related.
    e. Bryman--Phoenix must support with appropriate and verifiable 
documentation any student classified as ``Unavailable for Graduation'' 
(line #6), ``Graduates--Further Education'' (line #11), ``Graduates--
Unavailable for Employment'' (line #12) or ``Non-Graduated Students Who 
Obtained Training Related Employment'' (line #19).

    If any reported graduation or employment rates fall more than one 
standard deviation below the mean for comparable programs, the school 
may attempt to take into account economic conditions, location, student 
population served, length of program, State requirements, and other 
external factors reasonably related to student achievement. A detailed 
explanation as to how these factors impact the institution's graduation 
and employment rates must be included (see Section VII (C), Standards 
of Accreditation).
The Bryman School--Tempe, AZ (ACCSCT School #B070784)
    At its November 2006 meeting, the Commission considered the 
Application for Renewal of Accreditation submitted by The Bryman School 
located in Tempe, AZ (``Bryman--Tempe''). Upon review of the July 13, 
2006 Team Summary Report and the school's response to that report as 
well as the February 15, 2006 response to the December 9, 2005 
stipulation regarding the proper safeguarding of student files,\12\ the 
Commission voted to defer final action on the application until such 
time as the HTI system-wide Probation has been resolved. The reasons 
for the Commission's decision, in addition to those previously set 
forth in this letter, follow.
---------------------------------------------------------------------------
    \12\ At its November 2005 meeting, the Commission determined that 
the school had met the requirements for the Application for a Branch--
Part II within the school's scope of accreditation with three 
stipulations including the stipulation that the school must demonstrate 
that it provides adequate fire protection for student records. In the 
school's February 15, 2006 response, the school provided a statement 
from K&I Architects that indicates that the school's file room has a 
``1-hour'' rating.
---------------------------------------------------------------------------
    1. Bryman--Tempe must demonstrate that all faculty members possess 
the qualifications required by accreditation standards (Section III 
(B), Standards of Accreditation). Upon review of Bryman's response to 
the on-site evaluation team's concerns regarding the credentials of 
Erin Mariano and Janet Prettyman, and Jon Knight,\13\ and Benjamin 
Saucedo \14\ the Commission determined that further information is 
required to establish compliance with accrediting standards as 
previously described in this letter. The Commission will review the 
qualifications of these faculty as part of the faculty qualification 
audit required by Ground #1 in this letter.
---------------------------------------------------------------------------
    \13\ The school did not provide documentation in the form of a 
transcript for Mr. Knight's associate degree, which is the required 
credential for teaching technical courses in an academic associate's 
degree program. The Commission found that the items included as 
documentation for Mr. Knight's credentials did not constitute an 
exceptional case of outstanding professional experience and 
contributions to the professional field.
    \14\ Benjamin Saucedo is teaching both the Risk Management course 
and the Financial Principles course. However, the school did not 
demonstrate that Mr. Saucedo is properly qualified to teach either the 
Risk Management course or the Financial Principles course. (The 
Commission has determined that Risk Management is not a General 
Education course--see Ground #2a in this letter).
---------------------------------------------------------------------------
    2. Bryman--Tempe must demonstrate that student records are 
adequately protected against damage and loss as required by Section VI 
(B)(1), Standards of Accreditation. The Commission found that the 
school's February 15, 2006 response to the December 9, 2005 stipulation 
did not satisfy the Commission's directive or show compliance because 
there remains a question as to whether a ``1-Hour'' fireproof rating as 
described in the letter from K&I Architects constitutes adequate 
protection of student records. The Commission determined that there are 
additional steps the school can take to better protect student 
records--i.e., the purchase and use of fire-resistant cabinets that 
have a greater than 1-hour fireproof rating. Therefore, the Commission 
directs the school to take additional steps to ensure the adequate 
protection of student permanent educational records as required by 
Section VI (B)(1) of the Standards of Accreditation.
Cambridge College--Bellevue, WA (School #B070781)
    At its November 2006 meeting, the Commission considered the 
Application for Renewal of Accreditation and the February 20, 2006 
response to the December 9, 2005 stipulations \15\ submitted by 
Cambridge College located in Bellevue, WA (``Cambridge--Bellevue''). 
Upon review of the July 12, 2006 Team Summary Report, the school's 
response to that report, and the school's stipulation response, the 
Commission voted to defer final action on the Application for Renewal 
of Accreditation and the Applications for Branch II and Unrelated New 
Programs. The reasons for the Commission's decision, in addition to 
those set forth in previous sections of this letter, follow.
---------------------------------------------------------------------------
    \15\ This response was required when the Commission determined, at 
its November 2005 meeting, that the school and it's main school, High-
Tech Institute, located in Phoenix, AZ (School #M001392) met the 
requirements set forth in the Standards of Accreditation for the 
establishment of a branch campus separate facility and that Cambridge 
met the requirements for the addition of the Dental Assistant 
(diploma), Massage Therapy (diploma), Pharmacy Technician (diploma), 
and Pharmacy Technologist (diploma) within the school's scope of 
accreditation subject to stipulations.

    1. Cambridge--Bellevue must demonstrate the continuity of 
management and administrative capacity through the reasonable retention 
of management and administrative staff as required by Section VII 
(A)(4) of the Standards of Accreditation. Based upon its review of the 
pertinent information for Cambridge--Bellevue related to its compliance 
with Section VI (A)(4) of the Standards of Accreditation, the 
Commission determined that additional monitoring of the retention of 
management and administrative staff is warranted. Therefore, the school 
must submit a narrative description of the retention of management and 
administrative staff, Staff Personnel Reports for all management and 
administrative staff members hired since August 22, 2006, and provide a 
Staff Retention Report that shows the employment date, date of 
employment termination (if applicable), and reason for employment 
termination for all current management and administrative staff and all 
management and administrative staff hired since January 1, 2004.
    2. Cambridge--Bellevue must demonstrate that the continuity of 
instruction is ensured by the reasonable retention of faculty (Section 
III (A)(5) Standards of Accreditation). Therefore, the school must 
submit the following:

    a. A written and comprehensive plan which addresses Cambridge--
Bellevue's compliance with Section III (A)(5) of the Standards of 
Accreditation. This plan must address the continuity of instruction and 
faculty retention for each program;
    b. A Faculty Retention Report using the matrix below showing all 
current faculty members and those hired by the school since January 1, 
2004 and that includes a detailed explanation of the reasons why 
instructors are no longer employed at the institution; and
    c. Documentation to demonstrate how this plan has been implemented 
from the time of September 1, 2006 through March 30, 2007.


----------------------------------------------------------------------------------------------------------------
                                                                                Date of
         Instructor name           Program/full-time     Date of hire     termination (month/ Reason for leaving
                                     or part-time        (month/year)            year)          (if applicable)
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------

    3. Cambridge--Bellevue must demonstrate the consistent application 
of the maximum timeframe (1.5 times the normal duration of the program) 
for students to complete their program of study (Section VII (B)(3), 
Standards of Accreditation). The school must provide documentation to 
demonstrate that the students listed in the table under Concern #3 of 
the Team Summary Report have either finished the program within 1.5 
times the program length or have been dismissed as required by the 
school's policy. Furthermore, the school must provide documentation to 
demonstrate that students are not waiting for externship sites.
    4. Cambridge--Bellevue must demonstrate that the way in which the 
school's programs are organized is appropriate to allow students to 
achieve the announced program objectives (Section II (A)(2), Standards 
of Accreditation). Although the school provided a response to the 
team's concern in this matter, the Commission could not determine 
whether these programs are appropriately organized to achieve the 
announced program objectives. Specifically, in the Dental Assisting, 
Surgical Technician, Massage Therapy, and Medical Assisting programs, 
while each of these programs has detailed and organized outlines and 
course syllabi showing a scope of subject matter, the Commission 
questions whether the lack of course sequencing can allow students to 
achieve program objectives and master the material. Therefore, the 
Commission directs Cambridge--Bellevue to provide the following 
information:

    a. For each of the above-named programs, a detailed and cogent 
explanation as to the chosen program design;
    b. A PAC review of and comment as to the course sequencing and 
curriculum sequencing in each of these program areas;
    c. An internal review of the school's admissions procedures for the 
Surgical Technician Program and provide a demonstration that the 
admissions procedures for this program enable the school to make an 
informed judgment as to an applicant's ability to achieve the program's 
objectives (Section V Standards of Accreditation); and
    d. A report on the availability of externship sites for the 
Surgical Technology program.

    5. Cambridge--Bellevue must demonstrate that the learning resource 
center (``LRS'') is available to students and faculty during and beyond 
classroom hours and that school personnel orient, train, and assist 
students and faculty in the use of the LRS in a way that supports 
learning objectives (Section II (A)(5)(d), Standards of Accreditation). 
In order to fully ascertain the school's compliance with accrediting 
standards in this area, Cambridge--Bellevue must submit a schedule of 
the weekly library hours and indicate which qualified staff members are 
responsible for the library at all times when it is open as well as a 
narrative describing the assistance provided to students and the way 
the learning objectives are supported by the library personnel. 
Cambridge--Bellevue must also submit an outline of the training 
provided to staff by Ms. Connie Manson and copies of the ``completion 
certificates and information regarding the qualifications'' referred to 
in the school's response.
    6. Cambridge--Bellevue must demonstrate that the school's PACs have 
met all applicable accrediting requirements. Specifically, the school 
did not document at least two annual meetings for the Surgical 
Technology PAC (Section II (A)(4)(c), Standards of Accreditation). 
Therefore, the school must submit the minutes from the Surgical 
Technology PAC meeting that was scheduled to be held in September 2006.
Cambridge College--Aurora, CO (ACCSCT School #B069310)
    At its November 2006 meeting, the Commission considered the 
Application for Approval of a Degree Program for the Criminal Justice 
(AAS) program submitted by Cambridge College located in Aurora, CO 
(``Cambridge--Aurora''). Upon review of the July 12, 2006 on-site 
evaluation and the response to that report, the Commission voted to 
defer final action on the Application for Approval of a Degree Program 
until such time as the system-wide Probation Order is resolved. The 
reasons for the Commission's decision, in addition to those set forth 
in previous sections of this letter, follow.

    1. Cambridge--Aurora must demonstrate that the Director of 
Education, Ronnie Autry, has the experience and competence to manage 
the instructional program (Section III (A)(6), Standards of 
Accreditation). Specifically, the school did not demonstrate that the 
Director of Education has experience in teaching or managing an 
educational program or has the appropriate educational background or 
training to manage, maintain, and improve the educational staff. 
Although the school submitted a statement to the effect that Ronnie 
Autry has received additional training for the Director of Education 
position, the Commission determined that, given the high level of 
importance placed upon the Director of Education role in a school, 
further documentation of Mr. Autry's qualifications is required. 
Therefore, Cambridge--Aurora must submit an Individual Professional 
Development Plan for Ronnie Autry that includes a detailed description 
of content of the training he has received and provides detailed 
information regarding ongoing training plans.
    2. Cambridge--Aurora must submit the following with respect to its 
LRS:

    a. Information and documentation to show that the LRS is integrated 
into the school's curriculum and program requirements as a mechanism to 
enhance the educational process and to facilitate positive learning 
outcomes for students (Section II (A)(5)(b), Standards of 
Accreditation);
    b. Information and documentation to show that learning resources 
are easily and readily accessible to students and faculty during and 
beyond classroom hours, regardless of location or means of delivery 
(Section II (A)(5), Standards of Accreditation).
    c. An updated Institutional Assessment and Improvement Plan 
(``IAIP'') which includes a detailed library plan including the hours 
of operation when the LRS is covered by qualified staff.
    d. Information and documentation to show that the LRS is 
appropriately supervised (although the school submitted documentation 
of a newly hired librarian, the Staff Personnel Report for Charlene 
Olszonowicz indicates that she is also serving in a teaching and 
administrative capacity, working 40 hours a week).

    3. Cambridge--Aurora must demonstrate through the submission of the 
minutes from the most recent meeting, that the PAC for the Criminal 
Justice program is comprised of employers representing the major 
occupation or occupations for which training is provided as required in 
Section II (A)(4) of the Standards of Accreditation.
Complaint Issues
    The Commission understands that there are also several complaints 
in process and pending amongst the HTI schools. The Commission intends 
to process these complaints in the normal course and in accordance with 
ACCSCT complaint procedures; however, any complaints still pending when 
the Commission takes up its review of the school's response to this 
system-wide Probation Order will be incorporated into the Commission's 
review and corresponding action.
Response Details
    HTI must respond to the Commission's concerns as directed in this 
letter and provide documentation of corrective action and compliance 
with accrediting standards. The response should be prepared in 
accordance with the ACCSCT Instructions for the Submission of 
Electronic Documents and must be dated and bookmarked, and must include 
a signed certification attesting to the accuracy of the information. 
The Instructions for the Submission of Electronic Documents can be 
found at the Commission's Web site www.accsct.org. Alternatively, the 
school may submit five (5) paper copies of its response. The response 
must be received in the Commission office on or before June 5, 2007 for 
review at the August 2007 Commission meeting. If a response to this 
letter is not received in the Commission office on or before June 5, 
2007 the Commission will consider further appropriate actions to 
include revocation of the schools' accreditation.
    Please be advised that the Commission has established maximum 
timeframes for achieving compliance when the Commission has determined 
that a school is out of compliance with an accreditation standard or 
requirement through any process. The maximum period allotted to the 
school to remedy the noncompliance or cure the deficiency, together 
with the time for the Commission's final decision, is based on the 
length (in months) of the longest program offered by a school (see 
Process and Procedures, Commission Actions, Standards of 
Accreditation). The Commission may extend the maximum timeframe if the 
school can show good cause as to why the Commission should take such 
action. The school will be deemed to have demonstrated good cause if it 
has shown that during the period of review significant progress has 
been made toward achieving full compliance with accreditation standards 
and toward meeting all requirements set forth by the Commission.
    Please consider this letter as notice that the timeframe for some 
HTI schools has already begun and that the Commission is still in a 
fact-finding mode for the others. The Commission will provide more 
detailed notice for all HTI schools regarding their status in relation 
to the Commission's maximum timeframes to achieve compliance in a 
subsequent correspondence. If any HTI school does not achieve 
compliance within the period specified by the Commission or within the 
maximum timeframe described in the Standards of Accreditation, the 
Commission will take an adverse action. The Commission may take an 
adverse action against a school as circumstances warrant prior to the 
expiration of the maximum timeframes. The Commission will notify the 
school in writing of any adverse action, including the Commission's 
basis for taking the adverse action.
    In accordance with the Standards of Accreditation, no changes or 
additions (e.g., additions of separate facilities, substantive changes, 
special requests, etc.) will be considered while a school is operating 
under a Probation Order. Please note that the Commission is required to 
report all Probation Orders to the U.S. Department of Education.
    Thus a copy of this letter will be provided to the Department and 
other appropriate agencies at the time the school is notified of this 
Probation Order (34 CFR Sec. 602.26(b) (1)).
    If you need further assistance or information, please contact me at 
(703) 247-4518 or [email protected] or contact Michale S. McComis, 
Ed.D., Associate Executive Director at (703) 247-4520 or 
[email protected]
            Sincerely,
                                             Elise Scanlon,
                                                Executive Director.

    [Whereupon, at 1:54 p.m. the hearing was adjourned.]