HEARING OF HOUSE COMMITTEE ON EDUCATION AND THE WORKFORCE:ENFORCEMENT OF FEDERAL ANTI-FRAUD LAWS IN FOR-PROFIT EDUCATION
March 1, 2005
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Mr. Bishop. Thank you, Mr. Chairman. And I want to thank all the panelists for their testimony.
I also want to just thank and commend Mr. Rhodes. I was an administrator at a college in New York for 29 years, and I have long been an admirer for the work at your school, and I want to commend you for that.
I want to go back to a discussion of the 90/10 rule. And I will just say at the outset that its proposed elimination troubles me greatly. The whole issue of access and affordability historically has been a partnership, a partnership shared in by the Federal Government, in some cases the State government, in some cases the family if they are up to that partnership, and in some cases the institution. And, in fact, for 7 of the 29 years that I was a college administrator, I was a director of financial aid, and I remember very clearly receiving formal directives from the Department of Education telling us that we were to administer Title IV funds in a fashion that, quote, supplemented and did not supplant existing institutional effort--I think I am quoting it exactly.
So my question is if we were to eliminate the 90/10 rule--and I guess this is for Mr. Glakas--what does that say about existing institutional effort in the proprietary sector?
Mr. Glakas. If we eliminate the 90/10 rule, what other protections are there?
Mr. Bishop. No, that is not my question. My question is that--I guess the core of my question is do we not, each of us as institutions, have a responsibility to assist in affordability and access? And if we were to eliminate 90/10, we would be placing 100 percent of the responsibility for access on the Federal Government in the case of this sector; is that not true?
Mr. Glakas. I am not sure I understand the implications, but let me give you a practical example, Mr. Bishop. I am a native Washingtonian, lived here all my life, seen the city grow. I now see the suburbs having for-profits universities established everywhere, DCPI Technical, ITT, Strayer growing, now having 32 campuses around, Stratford University, University of Phoenix. Nobody is moving into Anacostia. Why is that? Why isn't anybody moving into Anacostia? And the reason why is the 90/10 rule. They will not take a chance on educating students in Anacostia, all of whom could qualify, for example, for a Pell and a Stafford loan that would put the school out of business.
Let me give you a very specific example, and I apologize for the simplicity of it.
Mr. Bishop. I generally do well with simplicity.
Mr. Glakas. Let's just say we were to talk ITT into moving into Anacostia, and they said they wanted to go slow; small building, 10 students, tuition $3,000. Each of the 10 students gets their 1,500 Pell and their 1,500 Stafford loan. The school is not in violation of the 90/10 rule. They push two students out in order to bring two other students in----
Mr. Bishop. Let me put the other side of the coin. Let us look at Long Island University, the Brooklyn campus, in the heart of downtown Brooklyn, Flatbush. That is an area that I would suggest to you is similar to Anacostia. It is a school that discounts its tuition from its own resources in the neighborhood of 20 to 25 percent. They are stepping up to their responsibility to encourage access.
And so my question is why is that a responsibility that is uniquely held by the not-for-profit sector, but under the terms of the elimination of 90/10 would not be held by the profit-making sector?
Mr. Glakas. That might change, that might change.
You know, Mr. Bishop, I will give you, to me, the real issue here, the nub of what we are talking about.
I came back from Vietnam in 1969. I went to Georgetown Law School on the GI bill. At that time it was only $2,500. GI bill paid for everything. It didn't say, we will pay for 90 percent of it; you come up with 10 percent to show us that Georgetown Law School is a good school. GI bill is the greatest piece of legislation this Congress ever came up with, and the Higher Education Act was the second, because it is trying to put students who need financial assistance through school.
Mr. Bishop. Let me ask this question directly. In terms of the sector in general, what level of tuition is discounted by the institution? I mean, I come from an institution that discounted tuition at the rate of 35 percent. So what is the average discount rate within the for-profit sector?
Mr. Glakas. I don't have the answer to that. I do know that the Education Department doesn't let institutional scholarships count under 90/10.
Mr. Bishop. My question is what level of--if a school has a budget of $30 million, or their tuition revenue is 25 million for the year, what level of that is discounted by the institution as a way of creating access?
Mr. Glakas. I can only tell you that I will have to come back with a written response, but I will.
Mr. Bishop. Thank you; I appreciate that.
[The information referred to has been retained in the Committee's official files.]
Mr. Bishop. My time is up. Chairman, thank you.
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