Testimony of CCA Chairman Mark Dreyfus

Thank you for giving me this opportunity to speak to you on behalf of the Career College Association concerning some of the access barriers to higher education. CCA is a voluntary membership association of private, postsecondary schools, institutes, colleges, and universities that comprise the for-profit sector of higher education. CCA's 1,100 members educate and support more than a million students each year for employment in over 200 occupational fields. Our member institutions cover the full gamut of postsecondary education, from short-term certificate and diploma programs to two and four-year associate and baccalaureate degrees, to master¿s and doctoral programs. Overall, the for-profit sector encompasses 46% of all postsecondary educational institutions in the United States, enrolling approximately 1.3 million students receiving Title IV federal student aid. Career colleges and universities serve a wide variety of students. In many ways, they serve a population similar to traditional postsecondary institutions, yet CCA member colleges remain an important source of education for both working adults and lower socioeconomic students, making CCA uniquely qualified to speak to the issue of access to postsecondary education and the barriers students encounter in achieving their goals.

As President of ECPI College of Technology, with 14 regionally and nationally accredited campuses in Virginia, North Carolina and South Carolina, I also approach this hearing as one who has been intimately involved in the education of thousands of students over the course of 20 years.

As one who has been through three previous reauthorizations of the Higher Education Act, I would like to specifically address four issues that pose significant barriers to students seeking postsecondary education. They are:

1. Obstacles to transfer of credit;

2. Current restrictions to providers of distance education;

3. The 90-10 rule; and

4. Limitations in the federal investment of postsecondary education.

Let me now take a few minutes to explain these issues in more detail.

Transfer of Credit

According to a study conducted by the National Center for Education Statistics, almost half of all postsecondary students will attend more than one institution before completing their degree. The higher education community, the Department of Education and Congress are aware of numerous instances in which traditional colleges and universities have refused to permit students to transfer credits earned in courses and programs completed at career schools and colleges. During the 1998 Amendments to the Higher Education Act, Congress instructed the Department of Education to conduct a study on the Transfer of Credit issue. To date, this study has not been completed.

Therefore, the Career College Association's Foundation commissioned the Institute for Higher Education Policy to study the experiences of students who attempt to transfer credits from nationally accredited institutions to regionally accredited institutions. The study found significant obstacles regarding transfer of credit from nationally accredited institutions to regionally accredited institutions. Simply stated, only a small percentage (18%) of institutions accredited by national accrediting bodies had their credits recognized. Conversely, virtually all regionally accredited institutions (94%) had their credits fully accepted. Most regionally accredited colleges and universities have an informal policy that limits the credits considered for transfer to those earned at other regionally accredited institutions. This means credits earned at nationally accredited colleges are often not considered for transfer to these institutions, even if the college has the same curricula, faculty qualifications, and resources as a regionally accredited institution.

The bottom line is that when a student is not permitted to transfer credits, he or she must repeat courses, which costs both time and money. In many cases, students are forced to seek additional financial aid and incur additional debt simply to repeat courses they have already passed. Similarly, taxpayers are required to provide additional state and federal financial aid when a student's credits are not accepted by another accredited institution.

Recommendations:

· First, accrediting agencies should be required to adopt and enforce standards or policies that require institutions to presume the academic quality of credits earned at an institution that is accredited by an agency recognized by the Secretary of Education. This would not require institutions to accept all proffered credits; institutions would still be free to assess the comparability of the course as well as the student¿s level of mastery.

· Additionally, a new requirement should be added to the program participation agreement signed by institutions participating in Title IV student aid programs that would require institutions to presume the academic quality of credits earned at an institution that is accredited by an agency recognized by the Secretary of Education. As noted above, institutions should be left the discretion to decide credit transfers on a case-by-case basis on issues such as course content and student mastery.

Distance Education

During the 1992 HEA amendments, Congress enacted the 50% telecommunications rule. The rule stipulates that institutions are not eligible to participate in Title IV programs if they offer more than 50% of their courses via telecommunications or correspondence or if 50% or more of their regularly enrolled students are enrolled in telecommunications or correspondence courses. The 50% rule presents a significant risk to institutions that may consider a move into distance education on a broad scale. Student enrollment in distance education programs must be monitored carefully to ensure that on-line enrollees do not surge to a level that could jeopardize an institution¿s eligibility to participate in the Title IV programs. The Congressional Web-based Education Commission was concerned about such limitations to distance education and recommended a full review and, if necessary, a revision of the 50% rule to reduce barriers to institutions and students interested in furthering their educational goals. The high-tech realities of today will allow for the delivery of educational programs tailored in a way best-suited to assist a student in learning, and can also reach many individuals who otherwise would be unable to obtain a postsecondary education. The potential to improve lives through technology-mediated learning will not be fully realized under the current limitations of the 50% rule as set forth in the HEA. Accordingly, change is clearly in order.

Recommendations:

· First, define telecommunications courses and correspondence courses separately, with the current limitations remaining on correspondence courses and students.

· Second, require distance education programs to be accredited by an agency or association that specifically has distance education programs within the scope of its recognition by the Secretary of Education. To have this recognition, the agency would be required to demonstrate to the Secretary that it assesses the following factors of the distance education program: student achievement; student and faculty preparedness for participation; the quality of interaction between students and faculty; learning resources and student support services; and the integrity of student participation.

· Finally, an institution wishing to offer distance education under these provisions should be required to meet several criteria relating to its administration of the Title IV programs. The institution may not have had participation under the HEA limited, suspended or terminated within the preceding five years, or have been found to be in material noncompliance in the submission of audit reports in that time. The institution may not have had or failed to resolve an audit finding or program review finding in the preceding two years requiring repayment of 10% of the funds received under the Act. Finally, the institution must be deemed financially responsible under the Secretary¿s regulations.


The 90-10 Rule

The 90-10 rule states that a for-profit institution of higher education may not receive more than 90% of its tuition revenue from Title IV grants and loans. This rule was established as a way of measuring the "quality" of an institution. The rationale behind this rule is that if a college is deriving no more than 90% of its revenue from Title IV, it is a quality institution that is able to attract students willing to invest some portion of their own funds in the institution and the education it provides.

CCA believes that the Department disregarded the clear intent of Congress in defining through regulation the process of calculating an institution¿s compliance with this rule. A central problem with the Department¿s current interpretation of the 90-10 policy is the presumption that Title IV funds are credited toward a student¿s institutional charges, even if some portion of those funds has been disbursed to the student for living expenses. This assumption is centered on the idea that those excess funds could be used as cash by a student to pay institutional charges. The current regulations include only a small number of narrowly defined types of revenue to be counted toward the 10% of non-Title IV funds. For example, the regulations do not allow an institution to demonstrate the fact that a student has used some non-Title IV funds, such as proceeds from a Section 529 tax-favored state tuition savings plan, to pay any portion of institutional charges.

CCA recently contracted with the American Economics Group to conduct a comprehensive study of the effect of the 90-10 rule on students and institutions. The study measured the amount of non-Title IV revenues collected by institutions that are not permitted to be counted towards compliance with the rule and examined the costs to students of the various strategies for compliance used by institutions. In short, the preliminary results show that the 90-10 rule creates a barrier to institutions serving those students who would be fully eligible for Title IV aid to assist in achieving their postsecondary goals.

Recommendations:

· Remove the 90-10 requirement from the definition of a for-profit institution of higher education and instead include it in the program participation section. Modification of the 90-10 rule to make it a matter of administrative capability rather than eligibility would reduce some of the burden on both institutions and students. Instead of jeopardizing institutional eligibility to participate in Title IV aid programs, failure to meet the rule would be a cause for fine or liability, thus ensuring institutions will still have compelling incentive to remain in compliance.

· Ensure that all non-Title IV funds that are paid towards institutional expenses are counted toward 90-10 compliance.


Federal Investment in Postsecondary Education

CCA strongly supports federal programs that allow students to achieve their highest educational goals without excessive debt. The Higher Education Act, which forms the basis of the current financial aid system, embodies the principle that all qualified students should be able to attend college, regardless of financial means. Today, almost 70 percent of all high school graduates continue on to postsecondary education, which benefits not only the individual, but the country as a whole since a highly educated workforce has become an essential component of economic growth and competitiveness. Federal funds currently provide for approximately 72 percent of all financial aid for colleges, including grants, work-study, and student loans.

The 1992 reauthorization of the HEA opened up new student loan opportunities for both dependent and independent students for subsidized and unsubsidized loans. The federal Pell Grant program, which is designed to help the neediest undergraduate students, assisted nearly 4 million students in the 1999-2000 academic year. In short, the federal investment in student aid is significant and has contributed to the economic and social well being of the country, but greater assistance is required. We applaud the policymakers who have created additional postsecondary educational opportunities for students through federal aid programs. However, federal financial assistance per student has not kept pace with inflation, creating a troubling shortfall for students in financing their education.

Recommendations:

· Congress should continue its efforts to make significant funding increases to the Pell Grant program and to explore innovative proposals such as the concept of "front-loading" federal grant aid to provide increased assistance to students during their first two years of postsecondary education.

· The Pell Grant program should be modified to allow students who participate in year-round programs to obtain additional grant funding as they complete each academic year, without regard to whether they have crossed over into a new award year. This would help students who are trying to complete their educational programs in the minimum calendar time.

· Subsidized and unsubsidized student loan limits should be increased as much as feasible within the constraints of budget considerations, with special emphasis given to students who are in years one and two where assistance is often most needed. CCA supports an increase in the loan limits so that there is one loan limit for all undergraduate borrowers rather than the current first-year, second-year, and third- and fourth-year limits. Additionally, institutions should have the authority to implement lower loan limits for students than the statutory maximums. At the college¿s discretion, such lower limits could be devised in three ways: school-wide, class level, and academic program. A statutory provision should be placed into the law prohibiting any judicial review of a college¿s decision to have lower limits than the federal maximums. This is particularly important to for-profit institutions, as it would be an additional tool to assist in compliance with the 90-10 rule.

· Finally, CCA supports an increased federal investment in campus-based financial aid programs such as Supplemental Education Opportunity Grants, Federal Work-Study, and Perkins Loans. These programs allow colleges to design packages of assistance tailored to students¿ individual needs.

Thank you again for this opportunity to speak with you about barriers to access in postsecondary education. I would be happy to answer any questions you may have.

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