University of Phoenix

Floor Speech

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Mr. McCAIN. Mr. President, I come to the floor for a very unusual reason this afternoon. It has to do with an attack on for-profit colleges by a longstanding campaign by certain groups and individuals who have been opposed to for-profit colleges. They were able to destroy one out in California, and they are continuing to attempt to make those attacks work on other for-profit colleges.

This is a very unusual situation because what we are seeing take place are conclusions being drawn and action being taken--in this case by the Department of Defense--without due process, as a result of pressure exerted by a Member and Members of the Senate, which then has resulted in action without due process.

Last week there was a very interesting editorial in the Wall Street Journal entitled ``Obama's For-Profit Stealth Attack. The Pentagon punishes Phoenix on orders from Senate headquarters.''

Earlier this month the Defense Department cut off military tuition assistance to new students at the for-profit University of Phoenix, which enrolls about 9,300 service members at its 105 campuses nationwide.

Defense's reasons for discharging Phoenix are vague: A review ``in response to allegations published by the Center for Investigative Reporting'' in a June drive-by on the college found minor breaches in decorum.

Let me emphasize that. I say to my colleagues, there was a story written by an outfit called the Center for Investigative Reporting--I don't know anything about them, and I am sure the Department of Defense does not. But as a result of an investigation by an outfit that none have ever heard of, then action was taken by the Department of Defense. It was not a Department investigation. There was no scrutiny. This is a remarkable case of the Senate exerting influence in a way which is, I think, almost unprecedented.

To wit, Phoenix had distributed unauthorized ``challenge coins,'' which commonly denote tokens of recognition, with military insignia. Yet many non-military outfits including the University of Miami, Boeing and Intel-- And I would point out Southern Illinois University--hand out such coins. It is not an uncommon practice to hand out coins. Phoenix's real offense, according to the Center for Investigative Reporting-- Remember, this has nothing to do with the Government of the United States-- is using the coin to ``imply military support'' for the college.

My friends, at least 100 institutions in America give out challenge coins. I wonder if those institutions have committed grievous crime in the view of the CIR.

Defense also censured Phoenix for failing to obtain approvals from the ``responsible education advisor'' to sponsor events on military bases.

First, it is good to sponsor military events on military bases. Lots of organizations, lots of companies, lots of corporations sponsor events on military bases. In this case, although the responsible education advisor was not consulted, the commanding officer of the base was consulted and gave his approval.

Yet as the CIR article showed, military officials have welcomed the university onto their bases.

They welcomed them because they were honoring those who serve--remarkable.

Phoenix didn't navigate all the correct bureaucratic channels.

In any case, as Defense acknowledges, ``the University of Phoenix has responded to these infractions with appropriate corrective action at this time.''

So as minor as these offenses may have been and technical in nature, they have taken the corrective action, but still a Senator wants them punished.

But political general Dick Durbin, the Illinois Democrat who is leading the charge against for-profits in the Senate, nonetheless commanded the Pentagon to ``bar the company from further access to service members.''

So the department is putting Phoenix on ``probation'' because it finds the ``scope of these previous violations'' to be ``disconcerting.'' What's really disconcerting-- According to the Wall Street Journal --is the Obama Administration's politicization of military policy. Defense also cites ``inquiries'' by the Federal Trade Commission and California Attorney General Kamala Harris.

To be clear, Phoenix hasn't been charged with wrongdoing. According to the Defense Department, 96% of the university's service members successfully completed courses, a higher rate than the public Central Texas College ..... and nonprofit Liberty University. ..... In essence, the Obama Administration's military tribunal is punishing Phoenix for being a target of the political left.

Yet this is the White House standard of due process, so Phoenix should be nervous.

I say to my friends and colleagues, they are nervous.

Last year the Education Department, Consumer Financial Protection Bureau and Ms. Harris mounted a coordinated campaign that drove for-profit Corinthian College out of business without ever proving misconduct.

This is why I say to my colleagues that I am on the floor because clearly, without any proof of misconduct, with the power of the U.S. Senate, the Department of Education, the Consumer Financial Protection Bureau, and Ms. Harris, they were able to drive a college out of business. And it is obvious what this is really all about. This is all about the constant attacks on for-profit colleges, which is an anathema to some.

Continuing:

Over the last five years, Phoenix enrollment has dropped by half to 220,000 students due largely to the left's assault on for-profit education, which has knee-capped recruiting. ..... Military tuition assistance makes up less than 1% of Phoenix's revenues. However, many service members who are seeking vocational skills later pursue bachelor's and masters degrees at the university under the GI Bill. Veterans make up 20% of the university's enrollment, and many need the flexibility of Phoenix's online courses as they earn a living while going to school.

Most of our veterans, because of their age, have to earn a living while going to school.

The article continues:

The Administration's ostensible goal is to discredit Phoenix and choke off veteran recruitment. But the casualties of its attack will be service members who will now have fewer educational options and opportunities.

Meantime, General Durbin has commanded the Education Department and Department of Veterans Affairs to ``take appropriate action'' against the company. Bombs away.

I wish to point out that recently Senator Alexander, the chairman of the HELP Committee, Senator Flake, and I wrote a letter to Secretary Carter. I will quote from it:

We strongly believe that these earned benefits and educational opportunities for our service members should not be jeopardized because of political or ideological opinions of some Members of Congress regarding the types of institutions that provide postsecondary education to our troops. ..... However, it is our understanding that Ms. Bilodeau's decision-- She is the person who is the DOD's voluntary education partnership head-- and threats of termination of participation in the TA program rely on overly technical violations of the MOU.

What we are saying is we want due process, and these questions that have been asked--we hope we can get an answer sooner rather than later.

Because Senator Durbin wrote also to other agencies of government, we are also writing to them.

Mr. President, I ask unanimous consent to have printed in the Record the letter to the Secretary of Defense from Senator Alexander, Senator Flake, and me.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

U.S. SENATE,

Washington, DC, October 22, 2015.
Hon. ASHTON CARTER,
Secretary, Department of Defense,
Defense Pentagon, Washington, DC.

DEAR SECRETARY CARTER: We write to ask that you review an October 7, 2015, decision by Ms. Dawn Bilodeau, Chief of Voluntary Education for the Department of Defense (``DoD''), to place the University of Phoenix (``the University'') on probationary and potential termination status with respect to its participation in the DoD Tuition Assistance (TA) Program for active duty military personnel. We strongly support efforts to monitor the integrity of colleges and universities serving our nation's service members. However, based on our review of the relevant documents associated with this decision, we are concerned that the DoD's decision is unfair, requires additional review, and may warrant reconsideration.

The TA program is an important benefit that enables active duty military personnel to choose a postsecondary education program that best fits their needs to enhance both career and personal goals. The program also serves as an important tool for the DoD to further the recruitment and retention efforts of our nation's volunteer armed forces. We strongly believe that these earned benefits and educational opportunities for our service members should not be jeopardized because of political or ideological opinions of some Members of Congress regarding the types of institutions that provide postsecondary education to our troops.

As you know, the University of Phoenix participates in the TA program through the DoD's Voluntary Education Partnership Memorandum of Understanding (MOU), which conveys the commitments and agreements between colleges and universities and DoD and ensures that the TA funds are spent wisely to support service members attending quality educational programs. However, it is our understanding that Ms. Bilodeau's decision and threats of termination of participation in the TA program rely on overly technical violations of the MOU, fail to acknowledge any of the University's corrective action or pledged cooperation and are based, in part, on unsubstantiated allegations associated with inquiries not initiated by the DoD.

With respect to the University's violation of DoD policies on the use of official seals or other trademark insignia with ``challenge coins,'' Ms. Bilodeau's letter concedes that ``the University of Phoenix has responded to infractions with appropriate corrective action at this time.'' While the University has remedied this infraction, we are concerned that traditional public or private, non-profit universities, including Southern Illinois University, utilize similar challenge coins with impunity. (See attached photographs.) We remain skeptical that the DoD is evenly and uniformly enforcing its policies on all institutions of higher education and appears to be unfairly singling out certain institutions of higher education based on a letter from the Vice Chairman of the Defense Subcommittee of the Senate Appropriations Subcommittee. (See Letter to Secretary of Defense, June 30, 2015, attached.) It has also come to our attention that on the evening of October 20th, DoD issued additional new guidance on the use of these coins clearly indicating that the regulatory field remained vague and was not settled.

With respect to the University's apparent failure to obtain specific approval for conducting partnership activities at several military installations, it is our understanding that the University obtained approval from the respective base leadership to sponsor, sometimes at their request, partnership events. While the University may have technically violated the MOU's requirement that the University coordinate with the Education Services Officer, those who have served in the military readily understand and respect the chain of command. Approval from the base leadership should be sufficient to meet the requirements of the MOU regardless of the Education Services Officer's involvement and, should not be cited as a basis for probation and possible termination.

More concerning, however, is Ms. Bilodeau's rationale to suspend participation in the TA program based on requests for University documents by two government agencies that are not in fact the DoD. It is worth noting that a request of documents does not indicate a violation or admittance of guilt. In fact, Ms. Bilodeau appears to agree, indicating that the allegations by other entities have not yet been substantiated. However, without fair warning or a sufficient opportunity to be heard, the DoD informed the University of Phoenix that, among other things, ``no new or transfer students at your institution will be permitted to receive DoD [tuition assistance]'' and it is actively considering terminating its MOU with the University. Ms. Bilodeau's decision to give the University fourteen (14) days to respond to the probation decision effectively puts the University in the position of having to respond to reviews undertaken by agencies other than the DoD. These actions seemingly assume the guilt of the University before they are proven and ignore the remedied infractions identified by and directly within the jurisdiction of the DoD.

The University of Phoenix has a long history of serving working adults and others for whom traditional university schooling is unavailable, including more than 200,000 enrolled civilian and military students spread out across more than 100 locations in 17 states. With almost 20,000 faculty and 8,800 staff in every state and the territories as well as just over 1,400 faculty and 6,300 staff in Arizona alone, the University of Phoenix is a significant member of the Arizona and broader higher education community. Like any organization that chooses to partner with the DoD to serve our servicemembers, the University has a legitimate expectation to be dealt with fairly and reasonably. Given our aforementioned concerns, we believe that the DoD's decision should be evaluated for considerations of fairness and cooperation and ask that you independently and carefully review this bold decision.

To help us obtain a better understanding of the DoD's actions in this matter, and to help ensure that all institutions of higher education--for-profit, public and private, non-profit colleges and universities--are held to the same standard of conduct relative to DoD rules and regulations, we ask that you provide us with the following information by October 30th before you take any additional action on this matter:

1).What are the specific, factual, and evidentiary bases for the DoD's recent decision to place the University of Phoenix on probationary status?

2).Did anyone besides Ms. Bilodeau review this decision? Please provide any internal decision memorandum that reflects that decision when it was originally made.

3).Please describe why the DoD official who reviewed the decision believes he/she can place the University on probation when, as Ms. Bilodeau stipulates in her October 7th letter, the University has already remedied identified infractions of the MOU?

4).Please provide all documents, including communications from Members of Congress, or their staff, and any outside party regarding the University of Phoenix and this matter. Also, provide the guidelines relating to the establishment of a probation sanction or imposition of probationary status against the University of Phoenix.

5).Please provide a list of all institutions of higher education participating in the DoD's Voluntary Education Partnership and/or Tuition Assistance programs that have been placed on probationary status in connection with a violation of their MOU; the reasons each of those schools were placed on probationary status; and whether each such school was given opportunity to make corrective actions before being placed on probationary status.

6).Please provide a list of those schools where the DoD MOU was terminated and the reasons for such termination.

7).Is it the DoD's practice to place both for-profit and not-for profit universities on probation when another federal or state agency makes a civil investigative demand for documents? If so, please identify other instances where this has taken place and the reasons for taking such action.

8).Please list those schools that currently use or previously used challenge coins with DoD official seals or other trademark insignia; indicate whether such schools obtained prior DoD authorization for such use; describe any sanctions imposed for such use; and provide any documents or correspondence relating to such use or sanction determination.

9).Please describe the military chain of command as it relates to the MOU and a decision by the base leadership to permit an institution to sponsor an event on base.

10).If this probationary period is extended or the MOU with the University of Phoenix is terminated, how many active duty military personnel do you estimate will be impacted by this decision?

The TA program is critical to our nation's service members' educational and career opportunities, primarily to prepare them to serve in positions of increased responsibility within the military, but also to prepare them to transition to productive civilian careers. While we support efforts to root out waste, fraud, and abuse, we hope that you will review this situation with great caution and care. The Senate Committee on Health, Education, Labor and Pensions is additionally in the process of reauthorizing the Higher Education Act and exploring ways to ensure quality at all of our colleges and universities is of utmost importance and concern.

We look forward to your timely response and should you have additional questions, please feel free to ask your staff to contact our Chiefs of Staff Pablo E. Carrillo (Senator McCain), at (202) 224-7123; Chandler Morse (Senator Flake), at (202) 224-4521; and David Cleary (Senator Alexander) at (202) 224-8798.

Sincerely,

John McCain,
U.S. Senator.

Jeff Flake,
U.S. Senator.

Lamar Alexander,
U.S. Senator.

Mr. McCAIN. We sent these letters to the Veterans' Administration and to the Department of Education requesting that they notify us if further action is taken against the university. We sent these letters because we feel that the Department of Defense's decision and threats of termination of participation by the University of Phoenix in this program were done simply because the Senator from Illinois sent a letter to the Department of Defense highlighting an outside investigative report--an outside investigative report--suggesting wrongdoing on the part of the University of Phoenix.

Let's be clear again. There was no due process here. That is what I want--due process. If the University of Phoenix is guilty of some wrongdoing, I want to be one of the first to make sure the proper penalties are enacted. I do not--I repeat--I do not believe that on the basis of a single investigative report, that action should be taken.

With this in mind, I was stunned to hear once again that the Senator from Illinois is insisting that the DOD not reverse its decision. Given his own involvement in the matter, his suggestion that the DOD not reverse its decision just because Members of this body conveyed concern about the merits of its probationary decision and the fundamentally unfair way that the DOD made it is, in fact, ridiculous.

The whole matter arose from the Senator from Illinois pressuring the DOD to take adverse action against the university. His case was based not on an affirmative finding by the Department that the university engaged in any newly identified acts of substantial misconduct but a report by an outside investigative group. He then sent letters to the Department of Education and Department of Veterans Affairs asking for similar action.

After further review of the DOD's decision, it is my opinion that, No. 1, it relies on overly technical violations of a memorandum of understanding that the university signed with the Department of Defense regarding its participation in the Tuition Assistance Program; No. 2, it fails to reflect the actions the university has taken to correct and identify violations; and No. 3, it is based in part on unsubstantiated allegations associated with inquiries for information by other agencies, not findings of new violations.

In other words, with our letter, we asked Secretary Carter to review a lower level decision to put the university on probation where even the DOD conceded, in its very letter to the university announcing its decision, that ``the University of Phoenix has responded to infractions with appropriate corrective action at this time.''

With respect to the university's proposed violations of DOD policies on the use of official seals or other trademark insignia with ``challenge coins,'' we understand the university has remedied this infraction. But it is worth noting that traditional public or nonprofit universities, including Southern Illinois University, utilize similar challenge coins with impunity. I remain skeptical that the DOD is evenly and uniformly enforcing its policies on all institutions of higher education and appears to be unfairly singling out certain institutions of higher education based on a letter from the Senator from Illinois.

With respect to the university's apparent failure to obtain specific approval for conducting partnership activities at several military installations, it is our understanding that the university obtained approval from the respective base leadership to sponsor, sometimes at their request, partnership events. While the university may have technically violated the MOU's requirement that the university coordinate with the education services officer, those who have served in the military readily understand and respect the chain of command. Approval from the base leadership should be sufficient to meet the requirements of the MOU regardless of the education service officer's involvement.

By the way, the education service officer did not turn this down; they just were not consulted.

In the absence of significant, substantiated findings regarding new, uncorrected violations, the Department of Defense decided to suspend the university from participating in the Tuition Assistance Program based on document requests by two government agencies that are not, in fact, the Department of Defense and does not indicate a violation or admittance of guilt.

We call on our service men and women to serve and protect our interests, often at great cost to themselves and their families. Yet the Senator from Illinois suggests that they are not capable of choosing their own path when determining their postsecondary educational needs.

By the way, on a technical violation of the budget agreement, the Senator from Illinois was one of the leaders in voting against the Defense authorization bill, which was the result of many years of work.

In all cases, opinions should absolutely not be used to essentially target a valued member of Arizona's education community. The University of Phoenix has a long history of serving nontraditional students, such as Active-Duty military and others who tend to delay enrollment after high school, work full time, have dependents, or are single parents for whom traditional university schooling is unavailable. The University of Phoenix has graduated more than 80,000 military and veteran students with postsecondary degrees.

A recent Wall Street Journal article I quoted--and contrary to the preference of this administration, and for the sake of our service members who earned and rely on this educational benefit, I promise I will not let this issue go.

The State of Arizona is proud to have the University of Phoenix as a member of its higher education community.

As the questions that I posted in this letter show, I will continue to look into this action based on the merits of DOD's decision, not ideological grandstanding.

Recently, as a result of this, I received letters from three students who recently graduated from the University of Phoenix.

Andrew Workman of North Carolina said:

University of Phoenix allowed me to work 50 hours a week and pursue my degree at the same time.

Ryan Zulkoski of Nebraska received his master's in nursing informatics in 2013. He said:

I loved my experience and UOPX has opened so many doors for me.

Jim Wallace of Florida said:

I am a UOPX graduate, MBA 2006 and veteran of the US Navy Reserve. In my opinion UOPX led the way in educating working professionals. At the time I started my program, no other institutions offered the ability for me to successfully complete my studies, care for my family and work a demanding job. The bottom line is that it was challenging and I worked hard to complete my degree.

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Andrew Workman (North Carolina) joined the United States Navy in 2006. After serving 4 years on active duty he is transitioned into the United States Navy Reserve in which he continues to serve not only his country but his fellow Sailors through the Hire Heroes USA organization. ``University of Phoenix allowed me to work 50 hours a week and pursue my degree at the same time.'' Andrew attended a ground campus and found the classes to be diverse and challenging. ``The team projects and presentations helped build my confidence and laid a foundation for me to be successful in the workplace. You have to work with people from all walks of life in the real-world and University of Phoenix built that into their curriculum.''

Ryan Zulkoski (Nebraska) received his Master's in Nursing Informatics in 2013. Ryan has been in the Army National Guard for 12 years and served one deployment to Iraq in 2005 and has many other accomplishments and memberships, including a humanitarian deployment to Nicaragua and participation in Army Honor Guard. He used every last benefit to receive his bachelor's in nursing from University of Nebraska and his master's degree with UOPX. ``UOPX has helped me build an educational foundation to work in a field that I am extremely passionate about.'' Ryan found the quality of the program to be on par with his undergraduate from University of Nebraska. ``I graduated from UOPX in 2013 and have doubled my salary as a Nurse in less than 2 years. I also have 4 children and a wife, so attending a traditional onsite program was impossible. I loved my experience and UOPX has opened so many doors for me.''

Jim Wallace (Florida)--``I am a UOPX graduate, MBA 2006 and veteran of the US Navy Reserve. In my opinion UOPX led the way in educating working professionals. At the time I started my program, no other institutions offered the ability for me to successfully complete my studies, care for my family and work a demanding job. The bottom line is that it was challenging and I worked hard to complete my degree.''

Mr. McCAIN. Mr. President, again, I can only point out what the Wall Street Journal said. This is Obama's for-profit stealth attack. It is being orchestrated and carried out by the Senator from Illinois, who has a well-known record of not supporting the men and women who are serving in the military by his latest opposing of the Defense authorization bill on the grounds of OCO. So the men and women who are serving in the military and those who have served with honor obviously have a lower priority for him than his vendetta against for-profit universities. I think it is shameful.

I yield the floor.

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