An Overview of the Federal Investment in For-Profit Education
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S. HRG. 111–1000 EMERGING RISK? AN OVERVIEW OF THE FEDERAL INVESTMENT IN FOR-PROFIT EDUCATION HEARING OF THE COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS UNITED STATES SENATE ONE HUNDRED ELEVENTH CONGRESS SECOND SESSION ON EXAMINING AN OVERVIEW OF THE FEDERAL INVESTMENT IN FOR- PROFIT EDUCATION JUNE 24, 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/ U.S. GOVERNMENT PRINTING OFFICE 57–222 PDF WASHINGTON : 2011 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 11:26 Jul 26, 2011 Jkt 035165 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\DOCS\57222.TXT DENISE COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS TOM HARKIN, Iowa, Chairman CHRISTOPHER J. DODD, Connecticut MICHAEL B. ENZI, Wyoming BARBARA A. MIKULSKI, Maryland JUDD GREGG, New Hampshire JEFF BINGAMAN, New Mexico LAMAR ALEXANDER, Tennessee PATTY MURRAY, Washington RICHARD BURR, North Carolina JACK REED, Rhode Island JOHNNY ISAKSON, Georgia BERNARD SANDERS (I), Vermont JOHN MCCAIN, Arizona SHERROD BROWN, Ohio ORRIN G. HATCH, Utah ROBERT P. CASEY, JR., Pennsylvania LISA MURKOWSKI, Alaska KAY R. HAGAN, North Carolina TOM COBURN, M.D., Oklahoma JEFF MERKLEY, Oregon PAT ROBERTS, Kansas AL FRANKEN, Minnesota MICHAEL F. BENNET, Colorado DANIEL SMITH, Staff Director FRANK MACCHIAROLA, Republican Staff Director and Chief Counsel (II) VerDate Nov 24 2008 11:26 Jul 26, 2011 Jkt 035165 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\DOCS\57222.TXT DENISE CONTENTS STATEMENTS THURSDAY, JUNE 24, 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 .............................................................................................................. 32 Tighe, Kathleen S., Inspector General, Office of the Inspector General, U.S. Department of Education, Washington, DC ...................................................... 34 Prepared statement .......................................................................................... 36 Franken, Hon. Al, a U.S. Senator from the State of Minnesota .......................... 45 Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee ................ 47 Brown, Hon. Sherrod, a U.S. Senator from the State of Ohio ............................. 48 Prepared statement .......................................................................................... 49 Merkley, Hon. Jeff, a U.S. Senator from the State of Oregon ............................. 52 Bennet, Hon. Michael F., a U.S. Senator from the State of Colorado ................. 53 Hagan, Hon. Kay R., a U.S. Senator from the State of North Carolina ............. 55 Issa, Yasmine, Former Sanford-Brown Institute Student, Yonkers, NY ............ 56 Reiter, Margaret, Former Supervising Deputy Attorney General, Office of the Attorney General, California Department of Justice, San Francisco, CA .......................................................................................................................... 58 Prepared statement .......................................................................................... 61 Parrott, Sharon Thomas, Senior Vice President, Government and Regulatory Affairs and Chief Compliance Officer, DeVry, Inc., Chicago, IL ...................... 70 Prepared statement .......................................................................................... 71 Eisman, Steven, Portfolio Manager, FrontPoint Financial Services Fund, LP, New York, NY ...................................................................................................... 83 Prepared statement .......................................................................................... 85 Murray, Hon. Patty, a U.S. Senator from the State of Washington ................... 111 Prepared statement .......................................................................................... 112 Sanders, Hon. Bernard, a U.S. Senator from the State of Vermont ................... 113 ADDITIONAL MATERIAL Statements, articles, publications, letters, etc.: Emerging Risk?: An Overview of Growth, Spending, Student Debt and Unanswered Questions in For-Profit Higher Education, report by Senator Harkin ............................................................................................. 4 Bloomberg News articles (by Daniel Golden): Marine Can’t Recall His Lessons at For-Profit College (Update 2), December 15, 2009 ................................................................................. 16 Apollo Suffers New York Snub as SEC Probes Phoenix (Update 3), January 19, 2010 ................................................................................... 22 Homeless High School Dropouts Lured by For-Profit Colleges, April 30, 2010 .................................................................................................. 28 Senator Casey, prepared statement ................................................................ 132 Letters from: Kathleen Tighe .......................................................................................... 132 Margaret Reiter ......................................................................................... 140 Sharon Thomas Parrott ............................................................................ 178 (III) VerDate Nov 24 2008 11:26 Jul 26, 2011 Jkt 035165 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\DOCS\57222.TXT DENISE Response to questions of Senator Harkin Sharon Thomas Parrott ............................................................................ 178 Steven Eisman ........................................................................................... 229 Response to questions of Senator Enzi Kathleen Tighe .......................................................................................... 132 Margaret Reiter ......................................................................................... 148 Sharon Thomas Parrott ............................................................................ 184 Steven Eisman ........................................................................................... 230 Response to questions of Senator Dodd Kathleen Tighe .......................................................................................... 133 Sharon Thomas Parrott ............................................................................ 185 Steven Eisman ........................................................................................... 231 Response to questions of Senator Brown Kathleen Tighe .......................................................................................... 133 Margaret Reiter ......................................................................................... 150 Steven Eisman ........................................................................................... 235 Response to questions of Senator Casey Kathleen Tighe .......................................................................................... 134 Yasmine Issa .............................................................................................. 139 Margaret Reiter ......................................................................................... 158 Sharon Thomas Parrott ............................................................................ 187 Steven Eisman ........................................................................................... 232 Response to questions of Senator Hagan Kathleen Tighe .......................................................................................... 135 Yasmine Issa .............................................................................................. 139 Margaret Reiter ......................................................................................... 167 Sharon Thomas Parrott ............................................................................ 189 Steven Eisman ........................................................................................... 233 Response to questions of Senator Alexander Kathleen Tighe .......................................................................................... 136 Sharon Thomas Parrott ............................................................................ 194 Response to questions of Senator Coburn Kathleen Tighe .......................................................................................... 137 Margaret Reiter ......................................................................................... 175 Sharon Thomas Parrott ............................................................................ 195 Steven Eisman ........................................................................................... 235 (IV) VerDate Nov 24 2008 11:26 Jul 26, 2011 Jkt 035165 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\DOCS\57222.TXT DENISE EMERGING RISK? AN OVERVIEW OF THE FED- ERAL INVESTMENT IN FOR-PROFIT EDU- CATION THURSDAY, JUNE 24, 2010 U.S. SENATE, COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, Washington, DC. The committee met, pursuant to notice, at 10:07 a.m. in Room SD–124, Dirksen Senate Office Building, Hon.