Federal Legislative Outlook

1. Federal Legislative Outlook Brian Moran, Executive VP of Government Relations, CCA August 12, 2010

2. Gainful Employment Strategy • Localize the Regulation • Members of Congress need to hear from constituents: our schools and students meet that need. • Asking our members to reach out to Members of Congress who represent the Districts where schools are located. • Schools can have the most impact in their District, where the Member of Congress can see and feel the positive impacts of private sector colleges and universities on the community.

3. Congressional Contacts List • Create a “Target List” of Congressional Members • Washington Group and Federal Legislative Committee. • Schools located in “Democratic” Districts. • Ask schools to request that Members of Congress submit letters/comments regarding Gainful Employment Regulation. • Measuring our progress • Create and maintain spreadsheet to track response from our schools and Members of Congress as well.

4. HELP Oversight Hearings/GAO Report • June 24, 2010--Federal Aid to Students • August 4, 2010-- Recruitment • Dramatic sector enrollment growth • Disproportionate share of Federal Aid • Higher CDR rates than traditional schools • Spend about 10% less on educational expenses than traditional schools • Compliance and training • Accreditation

5. CCA’s Mythbusters • Lawmakers deserve credit for enacting legislation that has opened higher education to a far greater number of students, but misplaced criticism of our schools is unproductive and contrary to educational goals. • The student receives Federal Aid and determine where to use it, i.e students vote with their feet. Secondly, changes in the law have increased aid eligibility and the dollar amount of that aid. In fact, 75% of Pell Grant recipients attended non profit colleges and universities as opposed to 25% at for profit colleges and universities. • Cohort Default Rates at for profit schools are very similar to those at community colleges and HBCU’s where the demographics are more closely aligned. No level of default is acceptable and CCA will continue to work in concert with the Department of Education to improve default prevention strategies.

6. Mythbusters (cont.) • Private sector schools spend more substantial amounts on student support, counseling, placement, and outcome related factors. • Compliance is an ongoing effort and CCA is working to implement a “top-down” movement to meet standards of compliance. • Accreditation is one part of the triad. Historically, it has not been used to investigate fraud, but Congress may alter the focus of accreditation.

7. Remarks by Senate Majority Whip, Richard Durbin (D-IL) • “There is growing concern that we could be looking at a repeat of the subprime mortgage fiasco, with low-income, high-risk students mortgaging their futures – not on overpriced homes this time, but on worthless diplomas.” • “There are also a lot of bad for-profit schools that are raking in huge amounts of federal dollars while leaving students poorly trained and over their heads in debt.” • “Two-thirds of for-profit students receive federal Pell grants, which target low-income students and don’t have to be repaid.” • “According to the College Board, borrowers who graduated from for-profit four-year programs had an average debt of $33,000. That’s nearly $13,000 more than public-college graduates – and $5,000 more than graduates of non-profit, private colleges.”

8. Remarks by Senate Majority Whip, Richard Durbin (D-IL) • “The goal seems to be to bring in as many students as possible – regardless of their ability to succeed or graduate – load them up with loans, and leave taxpayers on the hook if students default.” • “Defining gainful employment would be a direct test of whether the for-profit education industry is fulfilling the role it claims for itself…” • “They hate it like the devil hates holy water” (referring to gainful employment proposal).

9. Remarks by Steve Eisman • The for-profit education industry accounts for 9% of the students, 25% of all Title IV disbursements but 44% of all defaults.” • “The industry has every incentive to grow at all costs, compensate employees based on enrollment, influence key regulatory bodies and manipulate reported statistics – ALL TO MAINTAIN ACCESS TO THE GOVERNMENT’S MONEY.” • “These companies are marketing machines masquerading as universities.” • “The industry controls the national accrediting bodies.” • “The lunatics are running the asylum…” • “Like in subprime lending, rather than having a fundamentally sound industry with a few bad actors, you have a fundamentally unsound industry with few good ones.”

10. GAO Study • GAO Study requested by: Rep. George Miller (D-CA), Sen. Tom Harkin (D-IA), Sen. Richard Durbin (D-IL), Rep. Timothy Bishop (D-NY) and Rep. Ruben Hinojosa (D-TX). • It is suggested that study should touch on issues of key importance, including educational quality, outcomes, students’ ability to repay loans, and oversight.  • CCA action: study addressing comparison of for-profit and traditional schools with students in similar situations; and, study risk factors of students.

11. Contact Information • Brian J. Moran • Executive Vice President of Government Relations • BrianM@career.org • (202) 336-6817 • Deepti Taneja • Executive Assistant, Government Relations • Deepti.Taneja@career.org • (202) 336-6701