Committee on Education and the Workforce

Testimony of Mr. David Moore
Chairman & CEO
Corinthian Colleges, Inc.

U.S. House of Representatives
Committee on Education and the Workforce

Full Committee Hearing on
"H.R. 4283, the College Access & Opportunity Act: Are Students at Proprietary Institutions Treated Equitably Under Current Law?"

June 16, 2004

Mr. Chairman and Members of the Committee, thank you for the opportunity to testify about "Higher Education Act Reauthorization: Are Students at Proprietary Students Treated Equitably Under Current Law?" I am David G. Moore, Chairman and Chief Executive Officer of Corinthian Colleges, Inc. I have over 20 years of experience in both public and for-profit higher education. From 1980 to 1992, I worked at Mott Community College in Flint, Michigan, where I served as President for eight years. I then pursued a career in for-profit higher education at National Education Centers and DeVry Institute of Technology, before helping to found Corinthian and leading it to become one of the largest postsecondary education companies in the United States. Corinthian operates 88 colleges in 21 states in the United Sates, and 45 colleges and 15 corporate training centers in seven provinces in Canada. Our institutions of higher education serve the large and growing segment of the population seeking to acquire career-oriented education and training to become more qualified and marketable in today’s increasingly demanding workplace. Corinthian’s colleges offer Master’s, Bachelor’s and Associate’s degrees, and diploma programs in a variety of fields, with a concentration in health care, business, criminal justice and technology. We currently educate and train over 66,000 students.

To answer the question posed by today’s hearing – students who are pursuing their education and training at Corinthian’s colleges and other for-profit institutions are clearly not treated equitably under current law. Reforms are badly needed in a number of areas, especially (1) elimination of the 90/10 rule, (2) removal of the 50 percent restrictions on institutions offering online education programs, (3) elimination of unfair, costly and anti-competitive transfer of credit practices in higher education, and (4) restructuring the multiple definitions of an institution of higher education to end the two-tier classifications of these institutions and their students.

I.  Two Key Factors – The Predominance of Nontraditional Students and Renewed Focus on the Workforce Preparation Purpose of HEA

To understand why these reforms are critically needed, I believe that it would be helpful to establish at the outset of my testimony two propositions that are highly relevant to the subject matter of this hearing and that have profound implications for making good public policy in this Reauthorization of the Higher Education Act programs.

First, the traditional student is no longer the norm. Only a small percentage of the postsecondary student population now answers to the model of what I suspect many still have of higher education. Individuals who earn a high school diploma, enroll full-time in college immediately after finishing high school, depend upon parents at least in part for financial support, and either do not work during the school year or work part-time are now the exception rather than the rule. As reported by the National Center for Education Statistics, just 27 percent of undergraduates met all of these criteria in 1999-2000. Thus, 73 percent of all undergraduates were in some way nontraditional. These students are older, have family and work responsibilities, and are concerned with preparation for entry into the workforce or advancing their careers.

With a high school diploma increasingly inadequate to ensure that an individual can become a productive participant in the economy on a long-term basis and substantial demographic shifts occurring, we must abandon the notion that higher education today means spending an extended period on a traditional college or university campus and pursuing traditional academic subjects. While this approach may work well for approximately one-quarter of the postsecondary population, it cannot drive good public policy. To be sure, institutions that have such a mission will continue to play an important role in higher education. That role will be, as it has consistently been for over 50 years, to educate and prepare about 20 percent of the workforce for entry into professional ranks. But, with the growing demand for a skilled workforce, institutions that have a mission of workforce education and training have a more valuable role than ever to play in higher education. That role is to educate and train nontraditional students to fill skilled workforce needs. Institutions that serve these nontraditional students should be encouraged and facilitated, not hamstrung with outdated and outmoded restrictions.

Second, the federal student financial assistance programs exist to serve a purpose. That purpose is not to subsidize institutions or to accord some of them special treatment because of the nobility of the missions that they have established for themselves. Rather, from their inception, the federal student aid programs in the Higher Education Act have been geared toward a more concrete objective: the education and training of students for productive involvement in our economy. The legislative history of the 1965 Higher Education Act, which established the student aid programs as we know them, focused on "how best to increase the supply of trained manpower" and the need for "competent, well-trained professional and technical personnel." The bill that became law ensured that training for gainful employment in a recognized occupation was among the objectives that eligible institutions pursue. In reexamining provisions of the law and proposals for reform, Congress should, I respectfully submit, test them against whether they meet these original purposes of the student aid programs.

Indeed, these purposes are more vital today than ever before. As Alan Greenspan, the Chairman of the Federal Reserve Board, testified before this Committee on March 11, 2004, postsecondary education and training is critically needed to increase the supply of highly skilled workers. In response to a question from Congressman McKeon, Chairman of the 21st Century Competitiveness Subcommittee, on whether Congress should remove restrictions on distance education and for-profit institutions to better accomplish this end, Chairman Greenspan replied that Congress should use "any means available" and find new ways to education and train such workers. Chairman Greenspan’s statement has even greater force because of the severe constraints on public and nonprofit institutions’ ability to expand to meet this need.

The ownership structure of institutions of higher education – whether they be non-profit, public or for-profit – is irrelevant. The question is whether provisions in the law, which perhaps had some rationale or basis in an earlier time under different conditions, now meet the pressing need to fulfill the purpose of supplying our economy with highly skilled workers or whether they stand in the way of that objective. If they present impediments, these provisions should be removed or modified.

With these two propositions in mind, it becomes readily apparent why for-profit institutions should play a key role – and be at least an equal participant – in the student financial assistance programs. For-profit institutions address the needs of the nontraditional student population, and prepare and certify them as ready for entry and advancement in the work force. For-profit colleges enroll a disproportionate number of minority, lower-income and other nontraditional students compared to nonprofit and public institutions. For-profit institutions also account for a disproportionate share of degrees earned by minority students. Moreover, nontraditional students have greater success at for-profit institutions as measured by such outcomes as student completion rates.

Data on students who attend Corinthian’s colleges also demonstrate how our types of institutions serve the nontraditional student. Of our 66,000 students, approximately 73 percent are female, 70 percent are over 21 years of age, and about one-half are minorities. Our institutions must meet minimum quantitative standards for completion and placement established by our national accrediting agencies, all of which are recognized by the Secretary of Education. Company-wide, 82 percent of our students obtain employment in the field for which they were trained within six months of graduation.

These data are important to the development of sound public policy. However, it is necessary to remember that behind these data are real people, with aspirations, obstacles to overcome, and achievements. An example is Shirley Williams, a recent graduate of the medical assisting program at our Olympia Career Training Institute in Kalamazoo, Michigan. Prior to enrolling, she was not employed. To meet her goal of entering the healthcare field, she needed concentrated training. A traditional two or four-year program would not have met her needs. Ms. Williams is a mother of three school-age children, and worked part-time at an assisted living facility while in school. She just graduated this May and was an honor roll student. Federal student aid was critical to her. All of her tuition and fees – 100 percent – was covered by aid, with about one-third coming from Pell Grants. She is now employed as a medical assistant at Marshall Internal and Family Medicine in Marshall, Michigan, a six-doctor practice group which serves that community. Ms. Williams is a good example of how Corinthian’s colleges and other for-profit institutions serve the nontraditional student.

She is also a good example of how Corinthian’s colleges and for-profit institutions are meeting the purposes of the student financial assistance programs. These purposes, as I have noted above, are to supply our economy’s demand for well-educated and highly skilled employees. With the advent of a truly global economy and the rapid advance of technology, this need has become even more acute. Organizations like the U.S. Chamber of Commerce, the world’s largest business federation representing over three million businesses of every size, sector and region, now recognize the importance of workforce preparation to maintain our competitiveness and preserve our economic security. They have also recognized that, as businesses seek to hire, train, and retain qualified employees and to keep pace with an evolving market place, deficiencies in our higher education system have been exposed. There is a shortage of well-educated and highly skilled workers to meet the needs of employers. Accordingly, the Chamber of Commerce has made Reauthorization one of its top legislative priorities.

In looking for effective solutions, the Chamber has turned to the for-profit sector of higher education because enterprising, market-oriented for-profit postsecondary education and training companies like Corinthian have identified needs underserved by traditional higher education institutions and evolved to supply the demand for educated and skilled employees. We are pleased that the Chamber has chosen to partner with us and with other leaders in the for-profit sector – Kaplan, Inc., DeVry, Inc., and Capella University. With the Chamber, we have created the Coalition for a Competitive American Workforce to address provisions in the Higher Education Act that are outdated and obstruct the ability of for-profit postsecondary education companies to provide innovative solutions to America’s workforce needs. The impediments in the current law that prevent us from being even more effective in serving students and thereby promoting workforce development are the very measures identified by H.R. 4283, the College Access and Opportunity Act, as in need of reform – the 90/10 rule, the 50 percent restrictions on online education, transfer of credit practices, and the multiple definitions of an institution of higher education. I will address these issues specifically in the remainder of my testimony.

II. Repeal of 90/10 Rule

The Higher Education Act currently requires for-profit institutions, and them alone, to obtain at least 10 percent of their revenues from sources other than the federal student financial assistance programs. Nonprofit and public institutions, even though they are advantaged through favorable tax treatment and public subsidies, are free to secure all their revenues from the student financial assistance programs. For-profit institutions, in contrast, return funds to the federal government in the form of taxes.

The 90/10 rule and its predecessor, the 85/15 rule, were enacted at a time of substantial and justified concern about fraud and abuse perpetrated by certain for-profit institutions. A host of other measures to protect the financial aid programs and federal funds were enacted during this period. These included:

  • Caps on excessive cohort default rates,

  • Requirements for strengthened accreditation standards and procedures,

  • Federal financial responsibility standards and letters of credit,

  • Annual reporting of audited financial statements and financial aid audits,

  • Student satisfactory academic progress requirements,

  • Provisional certification by the Department of Education to limit an institution’s participation in the Title IV programs,

  • Reimbursement and heightened cash monitoring requirements that the Department may impose to limit an institution’s access to federal funds to ensure that they are being properly administered,

  • Incentive compensation limitations on student recruitment,

  • Federal requirements for ability-to-benefit tests,

  • Return to Title IV requirements,

  • Completion and placement rate requirements for short-term programs,

  • Definition of an "academic year,"

  • Limitations on branch campuses,

  • Periodic recertification requirements, and

  • Pre-certification training regulations.

  • Congress thus attempted to put in place a wide array of measures to curb fraud and abuse. Overall, the good news is that the problem has been effectively addressed. For example, default rates, which averaged 22.4 percent in 1990, have fallen substantially. Since the height of the concerns about fraud and abuse in the late 1980’s and early 1990’s, over 1,000 institutions have lost their eligibility to participate in the Title IV programs.

    As the American Council on Education (ACE) recently commented, the system will never be perfect. In a complex regulatory environment, instances of noncompliance will always come to light. The real issue, I submit, is whether the institutions participating in the Title IV system take their obligations seriously and have mechanisms established to try to achieve full compliance – to detect noncompliance and to rectify it when noncompliance is found. At Corinthian, we do, and so do the great majority of other organizational institutions.

    It would be surprising if all of the measures enacted over 10 year ago had been equally effective. Imposed during a time of crisis, these were the best judgments of Congress at the time as to how to address a major problem in the student aid programs. With the benefit of over ten years of experience, it should now be possible to examine how these measures have worked and fine-tune the law to retain those that have proven most effective and to reexamine and, if justified, remove those that have been ineffective or, still worse, have had deleterious effects. I submit that the 90/10 rule falls into the latter category.

    The hypothesis supporting the enactment of the 90/10 rule and its predecessor, the 85/15 rule, was that students’ willingness to pay some portion of their own money would be an indication of the quality of for-profit institutions. At best, this was an unproven supposition. The rule never purported to examine the quality of these institutions directly. Instead, it relied upon an inference about student payments that could just have easily been explained by other factors – particularly socioeconomic status. The 90/10 rule also involved a second-guessing of the decisions of accrediting agencies that have the responsibility for assessing educational quality in the Title IV system. As noted above, however, accrediting agencies themselves have been obliged to strengthen their standards and procedures since 1992 and to become more effective gatekeepers to the student financial assistance programs. Their improved performance alone ought to justify the elimination of the 90/10 rule. In this regard, we agree with the recent statements of the ACE that accreditation "assures students and the public that institutions participating in the federal student aid programs have been thoroughly evaluated and offer a high quality education." If this is so, and we believe it is, there is no longer any need for the 90/10 rule, given its premise.

    Furthermore, experience gained in the implementation of the 90/10 and 85/15 rule has shown that, rather than measuring educational quality, it does indeed measure only the financial need of the student population that an institution serves. The more students that are in need, the more federal student financial aid the students will qualify for and receive. The more aid that students receive, the greater is an institution’s 90/10 ratio. And, as an institution’s 90/10 ratio increases, the greater is the peril that it will exceed the 90 percent limitation and lose its ability, without any opportunity for remediation, to participate in the federal student aid programs.

    The 90/10 rule thus creates disincentives for institutions to serve those most in need of student financial assistance, especially the poor, minorities and women. These are the groups who most heavily use need-based grant assistance, particularly Pell Grants, to gain access to higher education. Institutions are precluded from denying access to this financial aid for students who qualify. Yet, the heavy usage of such Title IV aid puts an institution at risk of violating the 90/10 rule. Institutions are therefore incentivized to reorient their missions and programs away from students who are most in need of assistance – the very students the student aid programs are designed to serve. These incentives will only be heightened if authorizations for Pell Grants and loan limits are increased.

    The 90/10 rule also undercuts the aim of improving the affordability of higher education. The rule creates incentives for institutions to seek funds that are not covered by financial assistance under Title IV. Since such aid is limited under the Higher Education Act, institutions can most easily obtain additional non-Title IV revenue by raising their tuition and fees. This cuts completely against the widely-recognized problem of affordability in higher education.

    The perverse incentives created by the 90/10 rule and its failure as a measure of quality and integrity can readily be seen at Corinthian’s colleges. Corinthian owns and operates the Georgia Medical Institute, which has campuses in downtown Atlanta and Marietta, Georgia. Both are accredited and offer virtually the same programs in allied health. The downtown Atlanta campus has a student population that is almost 100 percent minority and 94 percent female. The school president maintains an emergency pantry so that students – primarily single parent African American women – will be able to feed themselves and their children and stay in school. In contrast, the Marietta campus serves a more suburban student population and a significantly lower percentage of minority students. At the end of our third fiscal quarter in March of this year, the downtown Atlanta campus had a 90/10 percentage of 90.25 percent. The Marietta campus had a 90/10 percentage of 81.9 percent.

    The difference clearly has nothing to do with the two institutions’ quality or integrity. They are accredited by recognized accrediting agencies, offer virtually the same programs, and are owned and managed by the same company. The only significant difference between the two campuses is the percentage of the revenues derived from Pell Grants – 44.5 percent for the Atlanta school and 33.4 percent for the Marietta school. This reflects the location and student population served by the two schools, not their quality or integrity of operations.

    Our Western Business College campuses in Portland, Oregon and Vancouver, Washington, tell a similar story. They are only twenty minutes apart, but serve very different student populations. The schools offer similar programs in business, information technology and allied health. They are each accredited by the Accrediting Council for Independent Colleges and Schools (ACICS), a recognized accrediting agency. The Portland campus is located downtown and has a minority population that is 26 percent of the total students. The Vancouver campus has a minority population that is only 11 percent of the total. The Portland school has a 90/10 percentage of 86.75. The Vancouver campus has a 90/10 percentage of 74.51. Once again, financial need is the explanation for this 12-point difference. At the Portland campus, 75 percent of the students qualify for Pell and SEOG funds. At the Vancouver campus, 59 percent qualify. One more example makes the point. Our Bryman College in San Bernardino, California, serves an area that has had a depressed economy. Its student population is 60 percent Hispanic and African American, and 33.3 percent of its revenues come from Pell Grants and SEOG funds. Its 90/10 percentage at the end of our third quarter was 87.3 percent. In contrast, our Bryman College in Anaheim, California, is more of a commuter school, and about half of its students are Hispanic or other minorities. At the end of the third quarter, 26.4 percent of this school’s revenues came from Pell Grants and SEOG funds, and it had a 90/10 percentage of 79.9 percent. With accreditation at both campuses from a recognized accrediting agency, similar program offerings, and identical ownership and management, the two schools nonetheless have approximately a 7 percent difference in their 90/10 ratio. As is the case at the Georgia Medical Institutes and Western Business Colleges, the percentage difference in the revenues derived by the two schools from Pell Grants and SEOG funds, which are a good proxy for the need of the student population served, parallel their differences in 90/10 percentages.

    These examples make clear that the 90/10 rule has missed the mark. Rather than ensuring institutional quality and integrity, it threatens access for poor and minority students. The time has come to end this experiment in public policy, and not to mend it. H.R. 4283 takes a well-justified and much-needed step in eliminating the 90/10 rule.

    III. 50 Percent Rule and Online Education

    Other outdated and outmoded provisions in the Higher Education Act restrict the availability of financial assistance to students in online courses of study. The 50 percent limitations on courses and students were among the protective measures enacted over ten years ago. However, they were aimed at restricting the availability of Title IV aid to correspondence institutions; online education was not even in existence at that time. These limitations, and other restrictions in the Act applicable to students attending institutions that are predominantly diploma and certificate-granting, have been extended to online education by equating telecommunications and correspondence courses and programs.

    The need for reform in this area is now beyond question. The findings of the Web-Based Education Commission, and H.R. 1992, passed by the House of Representatives in the last Congress, clearly made the case for change. More recently, the Department of Education released its Second Report to Congress on the Distance Education Demonstration Program. The Demonstration Program was a stop-gap measure passed in the last Reauthorization in 1998 as a temporary solution to allow the Department to gather more facts and experience with online education for the Congress to consider in making changes to the law in this Reauthorization. The Department has now found that it has uncovered no evidence that waiving the current restrictions in the Higher Education Act and the Department’s regulations that impede online education has had negative consequences. On the contrary, the Department has stated that "[b]ased upon the experience gained to date through the demonstration program, and the trends that are evident in the development of distance education generally, the Department recognizes the need to amend the laws and regulations governing Title IV student financial assistance in order to expand distance education opportunities." The Department also stated that there was a growing consensus that the quality of distance education programs should be assessed through the same accreditation process that governs on-campus programs.

    This conclusion has been reinforced by every bill that has been introduced to address online education in this Congress – S. 1203, introduced by Senators Enzi and Bingaman, H.R. 2913, introduced by Congressmen Andrews and Kildee, H.R. 3039 introduced by Congressman Cole, and now H.R. 4283, introduced by Chairmen Boehner and McKeon. Authors of all of these bills have concluded that an accreditation-based approach should be used to allow online education to become Title IV eligible. The accreditation community has stepped forward and demonstrated its willingness and ability to take on the responsibility for appropriate gatekeeping for online education. The accrediting agencies that accredit Corinthian’s colleges have developed standards and procedures that address the special issues raised by online education, and the Council of Regional Accrediting Commissions (CRAC) has stated its support for the accreditation provisions of the College Access and Opportunity Act.

    Online education is one of the most promising developments to have occurred in higher education in recent times. It leverages the power of technology to enrich learning and create new educational opportunities. A substantial and growing body of research demonstrates that online instruction produces quality learning outcomes comparable to, and perhaps even better than, traditional education programs. Literally millions of students, especially working adults, will have higher education opened to them. The accreditation-based approach of H.R. 4283 provides the right solution to ensure that accrediting agencies effectively serve as the gatekeepers to expanding access through this exciting mode of educational delivery.

    IV. Transfer of Credit

    Transfer of credit practices in higher education are another significant way that students attending for-profit institutions are treated inequitably. Here, the problem is not with what the law says, but with what it fails to address. While we are in agreement with those who contend that the federal government should not intrude upon institutions’ academic decision making, the rhetoric to this effect masks the real issue. The problem is not whether transfer of credit practices would be federalized under H.R. 4283, but whether the academy should be indulged in practices that are unfair, costly and anticompetitive. The answer is that it clearly should not. The academy’s failure meaningfully to address the problem, despite years of talk, mandates a solution in federal law, especially when federal funds are being wasted.

    Contrary to the contention there is not a "sufficient problem with transfer of credit" to merit the provisions in the College Access and Opportunity Act, transfer of credit has been a real and urgent problem for some time. Even though proprietary school students attend institutions accredited by agencies recognized by the Secretary of Education (most of which are national accrediting agencies), they have long encountered blanket refusals even to evaluate the credits they have earned when they seek to transfer to public and nonprofit institutions accredited by regional accrediting agencies. These institutions have been encouraged to adopt and engage in these categorical restrictions by their own desires to enhance the revenues they receive by forcing students to retake courses already successfully completed and by discriminatory policies and practices of their own accrediting agencies.

    In 1997, the U.S. Department of Justice was obliged to intervene in the re-recognition proceedings for the Southern Association of Colleges and Schools (SACS) before the Department of Education because SACS’ policies and practices made it difficult for students to transfer credits from an institution accredited by a non-SACS agency to an SACS-accredited institution. As the Justice Department stated in comments filed with the Department of Education:

    The Department of Justice submits this comment because of its concern that SACS’ revised transfer of credit criteria may injure competition, competitors, consumers, and government agencies funding postsecondary education. SACS’ revised transfer of credit criteria … most adversely affect technical, occupational, and vocational students, who wish to continue their education, but who may be the least able to bear the burden of unnecessary and redundant courses. They may also cause the waste of educational resources by placing unnecessary restrictions on transfer credits that are bad competition, educational, and public policy.

    SACS agreed to change its transfer of credit criteria "voluntarily" in order to secure renewal of its recognition as an accrediting agency from the Secretary of Education.

    Restrictive and discriminatory transfer of credit practices have not been limited to SACS. In 2000 and 2001, the National Advisory Committee on Institutional Quality and Integrity (NACIQI), a committee that advises the Secretary of Education on accreditation and other institutional eligibility issues, held a series of hearings on the problems associated with transfer of credit. While some may seek to dismiss the evidence of transfer of credit problems as anecdotal, instance after instance was presented to NACIQI of arbitrary and inexplicable refusals by institutions to accept validly earned credits. These include not only refusals to accept credits earned by proprietary school students by traditional, regionally-accredited institutions, but also refusals by such institutions to accept each other’s credits. Witnesses noted examples of public institutions in the same state university and college system that would not except credits from each other.

    The transfer of credit problem is, in fact, systemic and widespread. In December 2001, the Career Training Foundation commissioned the Institute for Higher Education Policy, a nonprofit, nonpartisan research organization, to conduct a study of transfer of credit. The study combined the results of an original survey of almost 300 nationally accredited, degree-granting institutions with an analysis of policies on transfer of credit, with a particular focus on national guidelines embodied in a publication by the American Association of Collegiate Registrars and Admissions Officers (AACRAO) – Transfer Credit Practices of Designated Educational Institutions: An Information Exchange (TCP). The study concluded that substantial numbers of students from nationally accredited institutions reported that they were unable to transfer credit solely due to the sending institution’s accreditation. In addition, nationally accredited institutions reported that they had been unable to develop articulation agreements, which can facilitate transfer of credit, solely because of their accreditation. Moreover, the study found that the TCP revealed a marked contrast between national and regional accreditation with regard to acceptance of transfer credit, with a pattern of negative treatment of nationally accredited institutions. Only 18 percent of nationally accredited, degree-granting institutions were found to have their credits generally accepted.

    At Corinthian, we have recently experienced first-hand why we need changes to federal law to address transfer of credit. In April, we were sued in Florida state court by a former student of our Florida Metropolitan University (FMU), an institution offering programs up to the Master’s degree that is accredited by the Accrediting Council for Independent Colleges and Schools (ACICS). ACICS has long been recognized by the Secretary of Education and, more recently, by the Council for Higher Education Accreditation (CHEA). The student had earned an Associate’s degree at FMU and contacted three SACS-accredited institutions to determine whether the credits that she had earned at FMU could be applied toward a Bachelor’s degree program that she wished to pursue. All three of these SACS-accredited institutions informed this single African American parent that they would not accept credits from a non-SACS-accredited institution like FMU. Rather than direct her justifiable ire at those who had unjustly refused even to examine her credits, the student has sued FMU and Corinthian. We are, of course, defending the case (we had disclosed to the student the possibility that her credits might not be able to be transferred), but the case vividly illustrates why the higher education community has been unable or unwilling to solve the transfer of credit problem effectively and why a federal solution is needed.

    H.R. 4283 provides that solution. Contrary to the alarmist rhetoric directed at these provisions of the bill, the core point that the bill would establish is that institutions receiving the public’s funds in the form of Title IV aid may not deny credit transfers solely on the basis of the accreditation of the sending institution, provided that the institution is accredited by an agency recognized by the Secretary of Education. The bill would not mandate the acceptance of credit transfers. Rather, it would de-legitimize what is plainly an illegitimate practice – the blanket rules institutions still utilize to refuse even to consider credit transfers, notwithstanding that the transferor institutions are accredited by established, recognized accrediting agencies.

    It is difficult to understand why the higher education community could object to this principle. CHEA, which organizations representing traditional institutions look to for good practices in accreditation, adopted a statement on transfer of credit in 2000 which said that "institutions and accreditors need to assure that transfer decisions are not made solely on the source of accreditation of a sending program or institution." This statement is consistent with the position recently expressed by ACE and other higher education organizations that accreditation "assures students and the public that institutions participating in the federal student aid programs have been thoroughly evaluated and offer a high quality education." As this position makes no distinction – and could make no distinction – between recognized national and regional institutional accreditation, there can be no legitimate objection to a rule that would preclude denials based on accreditation.

    Accordingly, the College Access and Opportunity Act addresses a real problem and provides an appropriate, carefully crafted solution. It also provides the right mechanism to effectuate this solution. By requiring institutions to have a clear and forthright policy so that prospective students may understand the criteria by which their requests for credit transfers will be judged and by giving accrediting agencies – not the federal government – the responsibility to evaluate whether these policies are being followed, the bill would avoid the very federal intrusion that its critics in the traditional higher education community have already begun to bemoan. Furthermore, the reporting provisions on transfer of credit will give us the data, which opponents of these provisions contend is lacking, to determine the ongoing scope of the problem and whether it is being adequately addressed. I urge the adoption of the transfer of credit provisions in H.R. 4283.

    V. Single Definition of Institution of Higher Education

    Finally, I support the adoption of a unified definition of an institution of higher education in H.R. 4283. The criticisms that have been directed at this proposal are, once again, grossly overdrawn, and ignore the incremental nature of this step and the important conditions and limitations that are attached to it.

    The single definition proposal represents an additional step in a direction that Congress began five years ago in the last Reauthorization in recognition of the changes that were occurring in higher education. Those trends, such as the predominance of the nontraditional student and the maturation of for-profit institutions, have continued and accelerated. It thus makes little sense to perpetuate distinctions that are rooted in history and that represent the imperatives of institutions rather than the goals and needs of students. In the Higher Education Amendments of 1998, Congress transferred all definitions of an institution of higher education from four different sections of the Higher Education Act to two sections in a new Title I. This transfer and consolidation recognized that the purpose of all such institutions is to provide access to higher education. Furthermore, it made plain that the same core requirements apply to all institutions – authorization by a state in which the institution operates, accreditation by an agency recognized by the Secretary of Education, and certification of eligibility to participate in the Title IV student financial assistance programs by the Department of Education. Nonetheless, distinctions between for-profit institutions and traditional institutions continued.

    The College Access and Opportunity Act takes another step in this evolutionary process. Very simply, an institution of higher education would be defined in a single section of the Higher Education Act. However, important restrictions would be continued or enacted that would limit the ability of for-profit institutions to participate in federal funding programs. The "two-year" rule would continue to apply only to for-profit institutions, i.e., they must be in existence for two years before they may be certified as eligible to participate in the Title IV programs. In addition, for-profit institutions would not be eligible for funds under Title III of the Higher Education Act for the building of institutional infrastructure or the support of endowments. Moreover, for-profit institutions could never be considered Historically Black Colleges and Universities or tribally controlled colleges, as those institutions are defined in the Act.

    All that H.R. 4283 would do is make for-profit institutions eligible to compete for certain grants that may be awarded to institutions from other funding sources. Even then, only two-year, degree-granting for-profit institutions could apply. Given all these restrictions, I believe that fewer than 10 percent of all Title IV eligible for-profit institutions would be able to file competitive grant applications. Based upon my experience, it is unlikely that more than a fraction of these relatively few institutions would apply. The amount of funding that would be available and the involved process of putting competitive applications together would simply not make it worthwhile for many for-profit institutions to pursue such grants. Nevertheless, it is important to recall that all of our higher education programs, directly or indirectly, are for the benefit of students. If a for-profit institution, for example, were to have a substantial number of low income Hispanic students, and it were to submit an application for funds that would meet their needs, it ought at least to receive consideration.

    This suggests what is truly at issue with the proposal for a single definition of an institution of higher education and pertinent to the topic of this hearing – the equitable treatment of students at proprietary institutions under current law. A single definition would send an important signal to these students that for-profit institutions represent an equally valid option for the pursuit of their higher education and training. It would say to these students that, if they choose to seek the education, training, and skills that they need to become productive members of the economy at these institutions, they will not be regarded under federal law as second class citizens.