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Senate Proceeding on May 19th, 2011 :: 7:19:00 to 7:43:50
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Tom Harkin

7:18:57 to 7:19:18( Edit History Discussion )

Tom Harkin: ongoing investigation by the health and human services into the for-profit education committees and the growing role they play in higher education. this investigation has been now ongoing for over a year. today i would like to focus my remarks on our men and women in uniform and how the for-profit

Tom Harkin

7:19:00 to 7:43:50( Edit History Discussion )
Speech By: Tom Harkin

Tom Harkin

7:19:19 to 7:19:39( Edit History Discussion )

Tom Harkin: schools are focusing on recruiting them to their schools. and what this means for the taxpayers of america. mr. president, the first g.i. bill made it possible for thousands of service members returning from world war ii to go to college.

Tom Harkin

7:19:40 to 7:20:00( Edit History Discussion )

Tom Harkin: in the process, that ushered in a new era of american prosperity. that g.i. bill continued, of course, through korea, the cold war, and through vietnam. i, myself, used the g.i. bill after my service time so i could go to law school. over the decades we've built on

Tom Harkin

7:20:01 to 7:20:21( Edit History Discussion )

Tom Harkin: that success by federal financial aid to active duty members of our armed forces and indeed to all americans who seek to build a better life through higher education. on the whole, has proven to be one of the federal government's smartest investments, an investment in human capital that has produced

Tom Harkin

7:20:22 to 7:20:43( Edit History Discussion )

Tom Harkin: huge benefits for our we in congress have been eying attorney sure that this new generation of veterans returning from iraq and afghanistan are getting the education benefits they earned and the quality of education they deserve. led by senator webb and others, we have enacted new laws and

Tom Harkin

7:20:44 to 7:21:05( Edit History Discussion )

Tom Harkin: expanded existing programs to provide generous new educational benefits to veterans, to active duty service members, and to their families. this is an historic achievement, and i am sure that all of us were proud to support this. implemented in august of 2009, the post-9/11 g.i. bill provides

Tom Harkin

7:21:06 to 7:21:26( Edit History Discussion )

Tom Harkin: that veterans who serve 90 days or more on active duty after september 10, 2001, are eligible for up to 31 months of educational benefits and for the first time ever in history, veterans can transfer these benefits to a spouse or to a child. and over the last drksd the

Tom Harkin

7:21:27 to 7:21:49( Edit History Discussion )

Tom Harkin: department of defense has -- and over the last decade, the department of defense has also expanded this to active duty airmen. this program will pay up to a maximum of $4,550 a year toward a service member's classes.

Tom Harkin

7:21:50 to 7:22:10( Edit History Discussion )

Tom Harkin: in 2009, congress created the military spouse career advancement accounts designed to expand employment and portable career opportunities for active duty spouses that provides for a grant of $400 over a three-year period of time. so when the congress acted to

Tom Harkin

7:22:11 to 7:22:33( Edit History Discussion )

Tom Harkin: give new and better benefits to veterans and active duty members and their families, we fully expected that for-profit schools might have an important role to play in providing higher education. obviously, they are flexible and some of the primary work done is suited to veterans and to

Tom Harkin

7:22:34 to 7:22:56( Edit History Discussion )

Tom Harkin: veterans juggling work and family obligations. during my time in the military, of course, we had the university of maryland that still obviously provides a lot of online work. at that time it was called distance learning. did you it by mail. and the university of maryland provided a lot of educational benefits for many years to

Tom Harkin

7:22:57 to 7:23:18( Edit History Discussion )

Tom Harkin: active duty personnel serving in far-flung places around the world. now, of course, that was not a for-profit school. that is a -- that was a nonprofit school. now, unfortunately, when we enacted this whole new benefits package for service members and veterans and their families, we did not anticipate what would happen by opening up a new

Tom Harkin

7:23:19 to 7:23:39( Edit History Discussion )

Tom Harkin: stream of funding to the for-profit schools. we didn't foresee that the for-profit sector, eager to please wall street investors, would go after this new funding aggressively in ways not in the best interests of veterans and service members. we didn't recognize that by allowing service members to

Tom Harkin

7:23:40 to 7:24:01( Edit History Discussion )

Tom Harkin: combine, transfer, and borrow against these various federal benefit packages, we were giving for-profit schools an opening to enroll service members, veterans, and service members in very expensive educational programs. my committee's investigation over the past year has revealed an industry dominated by the

Tom Harkin

7:24:02 to 7:24:23( Edit History Discussion )

Tom Harkin: very same wall street companies and equity investors who brought about the subprime mortgage crisis. these investors are focused on rapid growth, quick profits, and in relatively short order, for-profit universities have succeeded in enrolling 10% of

Tom Harkin

7:24:24 to 7:24:47( Edit History Discussion )

Tom Harkin: the students and claiming fully 25% of the federal financial aid budget, including $7 billion a year in pell grants. so the for-profit sector higher education has 10% of all of the students in the country in higher ed. they get 25% of all federal financial aid. many of these companies generate

Tom Harkin

7:24:48 to 7:25:09( Edit History Discussion )

Tom Harkin: big profits and there is a big problem: the committee has compiled data from 30 companies that own the for-profit schools, including the 15 largest publicly traded ones, showing that more than half the studen students that these institutions enroll drop out

Tom Harkin

7:25:10 to 7:25:32( Edit History Discussion )

Tom Harkin: within the first year. two-thirds of the students who are there for a two-year program drop out in the first year. institutions have been the most aggressive to enroll service members and veterans. because profitability in the for-profit education industry is

Tom Harkin

7:25:33 to 7:25:53( Edit History Discussion )

Tom Harkin: driven by enrollment growth, my comm focused largely on extraordinarily aggressive marketing at these schools. building on the findings of last year's undercover investigation by the general accounting office, which found abusive recruitment practices at each of

Tom Harkin

7:25:54 to 7:26:15( Edit History Discussion )

Tom Harkin: 15 campuses visited, we have uncovered additional evidence that misleading and deceptive recruitment tactics are not the exception but the norm. several months ago here on the floor i spoke about uncovered in my investigation. those documents instruct recruiters in tactics designed

Tom Harkin

7:26:16 to 7:26:37( Edit History Discussion )

Tom Harkin: to manipulate and emotionally exploit potential students in order to convince them to enroll. and again i will show today, later in my talk, i will show a chart and i will show a document that shows now they're going after military people -- military active duty and

Tom Harkin

7:26:38 to 7:26:58( Edit History Discussion )

Tom Harkin: veterans -- to exploit fear, uncertainty, and doubt. that's their recruiting tactics. well, we should be concerned that congress may have unintentionally created an opening for the current generation of veterans and active duty services to be victimized by these abuses.

Tom Harkin

7:26:59 to 7:27:20( Edit History Discussion )

Tom Harkin: simply because of their eligibility for expanded federal aid that we put -- enacted here in the congress. my committee found evidence that large for-profit schools are adegrees civil recruiting active duty service members and veterans expressly -- expressly -- because of their generous educational benefits packages.

Tom Harkin

7:27:21 to 7:27:41( Edit History Discussion )

Tom Harkin: it's not just that these military benefits provide a new revenue stream for the companies; the point is especially valuable kind of revenue stream for these companies, more valuable than even going after non-veterans and nong.i.'s. now, why is that?

Tom Harkin

7:27:42 to 7:28:02( Edit History Discussion )

Tom Harkin: well, listen. military money helps these for-profit schools to meet a key statutor more than 90% of their can come from federal financial programs. okay, that's in the law. no more than 90% of the income

Tom Harkin

7:28:03 to 7:28:23( Edit History Discussion )

Tom Harkin: coming into a for-profit school can be from financial -- federal financial programs. well, if a school is getting close to that 90%, ghast they do? -- guess what they do? they go out after military people. and why is that? because a military person,

Tom Harkin

7:28:24 to 7:28:44( Edit History Discussion )

Tom Harkin: active duty or veteran, enrolled in a for-profit school, that does not count for their 90%. it counts on the 10% side. so a school could actually have -- and there are some -- 92%-94% of all their money coming from federal financial programs, even though the law says you can only

Tom Harkin

7:28:45 to 7:29:06( Edit History Discussion )

Tom Harkin: get 90%, because military doesn't count. so you can see why, if they're close to 90%, they're going after the military. and that's exactly what's happened. that's exactly what happened.

Tom Harkin

7:29:07 to 7:29:28( Edit History Discussion )

Tom Harkin: with their eyes on this 9.10 ratio, they have created marketing plans and a sales force specifically designed to target and enroll as many veterans, service members, and family members as possible. schools spend billions on sophisticated marketing campaigns and large sales teams to get those students in the door.

Tom Harkin

7:29:29 to 7:29:49( Edit History Discussion )

Tom Harkin: documents obtained by the "help" committee paint a picture of an industry with a laser-like focus on enrolling military students. for example, i have a 56-page

Tom Harkin

7:29:50 to 7:30:10( Edit History Discussion )

Tom Harkin: document here from kaplan military university, used to be just called kaplan university. now they've added kaplan military university. nice -- nice touch. but this lays out their strategy for recruiting military students.

Tom Harkin

7:30:11 to 7:30:33( Edit History Discussion )

Tom Harkin: now, if you go through this it here, you'll see their objective number one -- i -- as i said, that is laser-like focus going after military people. objective number one: "grow our military enrollments to 9,000 per year by 2011." end quote.

Tom Harkin

7:30:34 to 7:30:56( Edit History Discussion )

Tom Harkin: at the time, kaplan has signed up about 2,200 military students each year so they were aiming at more than a fourfold increase in the military. the document goes on to lay out the marketing and sales plans for achieving this enormous growth. quote -- and this is in this document -- quote "drive

Tom Harkin

7:30:57 to 7:31:19( Edit History Discussion )

Tom Harkin: awareness sri appear print advertising in key military publications and targeting key military installations." to do this, the document suggests that kaplan planned to spend $30 million over three years for new military-specific recruiting staff, advertising and public relations.

Tom Harkin

7:31:20 to 7:31:41( Edit History Discussion )

Tom Harkin: just on the military. in a later brainst exchange between kaplan executives, the number-one item on the list of initiatives to deal with kaplan's 90-10 situation -- because they were getting close to that 90% -- was was -- quote -- "accelerate military billings/collection.

Tom Harkin

7:31:42 to 7:32:03( Edit History Discussion )

Tom Harkin: go to d.c. and pick up the check if you have to." go get that military money so we don't go over that 90% limit. at education management corporation -- another for-profit school -- the story is similar. let me quote from a 2010

Tom Harkin

7:32:04 to 7:32:25( Edit History Discussion )

Tom Harkin: memorandum prepared by a consultant to the c.e.o. of e.m.c., education management corporation. the memo begins -- quote -- "thanks for the call outlining the interest of edmc in learning more about potential areas of funding that could add revenue that would also address the

Tom Harkin

7:32:26 to 7:32:46( Edit History Discussion )

Tom Harkin: 90-10 issue." number one on the list says -- quote -- "probably one of the most important potential short- and long-term targets for edmc are the 800,000-plus military spouses who have author italics -- "for the first time

Tom Harkin

7:32:47 to 7:33:07( Edit History Discussion )

Tom Harkin: in history for a one-time entitlement of up to $6,000. an aggressive effort to reach these spouses at the military bases with various career fairs, direct communications, and visibility with the office of military families in washington

Tom Harkin

7:33:08 to 7:33:28( Edit History Discussion )

Tom Harkin: would be very important." a subsequent e-mail message between edmc's executives recommends that the company should be -- quote -- "leveraging military spouse benefits to the fullest extent possible" in order to overcome

Tom Harkin

7:33:29 to 7:33:50( Edit History Discussion )

Tom Harkin: the 90-10 regulation. executives of for-profit schools are candid about the value of military students in trying to ease investors' concern about regulatory compliance. the c.e.o. of bridgepoint education told investors -- quote -- "our military

Tom Harkin

7:33:51 to 7:34:16( Edit History Discussion )

Tom Harkin: enrollment grew from 1% in 2007 to 17% at the end of september 2009." he went on to say -- quote -- "we believe that when we are able to report our 90-10 for 2009 that it should decrease due to our penetration in particular

Tom Harkin

7:34:17 to 7:34:37( Edit History Discussion )

Tom Harkin: into the military market." so we know that these for-profit schools in their own words are aggressively pursuing military personnel and their families. now, how are they enticing them to enroll? a kaplan traing manual entitled "military learning

Tom Harkin

7:34:38 to 7:34:59( Edit History Discussion )

Tom Harkin: modules" tells recruiters how to utilize fear, uncertainty, and doubt in the sales process with regards to competitors' offerings and teaches them how to overcome objections that potential students may raise in signing an enrollment agreement."

Tom Harkin

7:35:00 to 7:35:20( Edit History Discussion )

Tom Harkin: and this is the one from kaplan. "fear, uncertainty, doubt." "this technique was originally created within the computer hardware industry and uses these emotions to attempt to influence perceptions or beliefs. the technique is especially effective when prospects

Tom Harkin

7:35:21 to 7:35:42( Edit History Discussion )

Tom Harkin: introduce the 'need to examine other on-line schools.'." in other words, a kaplan recruiter calls up a -- a veteran or a military person on active duty, wants to get them to enroll f. that person says, "well, okay, i might look, i've seen some ads for phoenix, i've seen some adds for i.t. and

Tom Harkin

7:35:43 to 7:36:06( Edit History Discussion )

Tom Harkin: others, maybe i'll look those up up." they want to use this fear, uncertainty and doubt when prospects introduce the -- quote -- "need to examine other on-line schools. statements such as the following instill fear, uncertainty and doubt regarding the features of competitors' programs." it's one thing when you're doing this and you're selling, you

Tom Harkin

7:36:07 to 7:36:28( Edit History Discussion )

Tom Harkin: know a keyboard or a hard drive or, what was that it said, computer hardware. that's one thing. but when you're doing it to enroll a young man or woman whose family may never have gone to college, they've enlisted in the military out of patriotic sense of duty, they've had no

Tom Harkin

7:36:29 to 7:36:49( Edit History Discussion )

Tom Harkin: college experience whatsoever, maybe they didn't do all that well in high school. but now near the military and they're thinking about what they're going to do -- but now they're in the military and they're thinking about what to do and they get hit with this. that's what i find really objectionable. when these for-profit schools

Tom Harkin

7:36:50 to 7:37:11( Edit History Discussion )

Tom Harkin: exploit fear and doubt -- fear, uncertainty and doubt in our young military people -- and i'll have nor say about that and give you some examples of just how -- and i'll have more to say about that and give you some examples of just how onerous is this. when they do this, get them to sign up in their school, take tack pairs' money and then go out and borrow some more -- taxpayers' money and then go out

Tom Harkin

7:37:12 to 7:37:32( Edit History Discussion )

Tom Harkin: and borrow some more money, turn over to the school, then find out they have no support, nothing to help them, they drop out within a year. they've got debt, they've gotten -- they went through their military benefits, which they can never get again, and the for-profit schools have the money. a military recruiter at colorado

Tom Harkin

7:37:33 to 7:37:56( Edit History Discussion )

Tom Harkin: technical university -- another for-profit school -- it's owned by the publicly traded career education corporation, told "the new york times" -- quote -- "there is such pressure to simply enroll more vets. we knew that most of them would drop out after the firs session. instead of helping people, too often i felt like we were almost

Tom Harkin

7:37:57 to 7:38:17( Edit History Discussion )

Tom Harkin: tricking them." robert songer, the coordinator of all education programs for service members at camp lejeune marine corps base in north carolina expressed his reservations to the bloomberg news service quote -- "some of these schools prey on marines. day and night they call you,

Tom Harkin

7:38:18 to 7:38:39( Edit History Discussion )

Tom Harkin: they e-mail you. these servicemen get caught in that. nobody in their families ever went to college. they don't know about college." mr. president, these recruiting tactics are nothing short of disgraceful. when students are enrolled through deception or fear, not only are they being tricked,

Tom Harkin

7:38:40 to 7:39:01( Edit History Discussion )

Tom Harkin: they're also more likely to be unprepared for the challenges of college. these strongarm, emotionally abusive tactics are indicative of schools that see students strictly as a means to an end of higher profits. they appear to have little or no interest in providing students the academic help and support

Tom Harkin

7:39:02 to 7:39:22( Edit History Discussion )

Tom Harkin: they need to succeed. the end result is that service members and veterans and their spouses end up enrolling in high-cost programs, dropping out in staggering numbers, often winding up with a mountain of student debt. and this often happens despite the availability of similar or

Tom Harkin

7:39:23 to 7:39:44( Edit History Discussion )

Tom Harkin: better quality programs in the public and nonprofit sectors of higher education. now, the tactics have certainly paid off for the company's bottom line. i released a report last december documenting the absolutely tremendous increase in the amount of money these companies are receiving from

Tom Harkin

7:39:45 to 7:40:06( Edit History Discussion )

Tom Harkin: military education programs. building on the already substantial growth in revenues generated from the traditional federal financial aid programs, which went, by the way, from $14 billion in 2005 to $2 billion in 2009 -- to $29 billion in 2009.

Tom Harkin

7:40:07 to 7:40:29( Edit History Discussion )

Tom Harkin: the relentless focus that for-profits have brought to military recruiting has yielded an astonishing growth in the funds they get both from the department of defense and from the department of veterans affairs. again, keep in mind, we're talking about two entities: active-duty personnel and veterans.

Tom Harkin

7:40:30 to 7:40:50( Edit History Discussion )

Tom Harkin: as the new post-9/11 g.i. bill was implemented, 18 large for-profit operators pushed their intake of v.a. dollars from $26 million in 2006 to an astonishing $286 million in 2010 2010. this is what happened. this chart illustrates what

Tom Harkin

7:40:51 to 7:41:12( Edit History Discussion )

Tom Harkin: happened in v.a. here we are at $26 million in 2006, $25 million in 2007, $27.6 million in 2008, in 2009, when we passed the bill, it kind of goes up to $55 million. look what happened in one year,

Tom Harkin

7:41:13 to 7:41:35( Edit History Discussion )

Tom Harkin: from 2009, $55 million to $28 $285.8 million in one year. by the way, that's -- that's the profit they took in. that's the amount of money they took in these same companies -- now, that's the veterans. the same companies increased their collection of department

Tom Harkin

7:41:36 to 7:41:56( Edit History Discussion )

Tom Harkin: of defense benefits by 337%, $40 million in 2006 to $175 million in 2010. now, again, this is for active duty. you see the steady increase here all the way up and, again, up into 2010, from $40 million in 2006 to $175 million in 2010.

Tom Harkin

7:41:57 to 7:42:17( Edit History Discussion )

Tom Harkin: this didn't just happen. it's happened because the for-profit companies decided they were going to go after military because they were getting close to their 90% threshold. and keep in mind, these dollars don't count for that and so they can keep by getting more military people. again, let's be clear.

Tom Harkin

7:42:18 to 7:42:39( Edit History Discussion )

Tom Harkin: these exorbitant amount of federal dollars are not going to small family-owned institutions. they're going to some of the largest wall street-owned companies. out of the $640 million in post-9/11 g.i. bill benefits that flowed to for-profit schools in just 2009 and 2010 --

Tom Harkin

7:42:40 to 7:43:00( Edit History Discussion )

Tom Harkin: that's half a billion, $640 million, over a half a billion dollars in one year -- $439 million went to the 15 publicly traded companies. this amount is equal to 69% of the military money flowing to for-profit schools and 25% of all post-9/11 g.i. bill benefits.

Tom Harkin

7:43:01 to 7:43:22( Edit History Discussion )

Tom Harkin: let me repeat that. let's just say this. 25%, one-fourth of all of the g.i. bill benefits post-9/11 went to 15 publicly traded companies. it would be one thing if the for-profit schools were using this for educational expenses. but, unfortunately, the lion's

Tom Harkin

7:43:23 to 7:43:44( Edit History Discussion )

Tom Harkin: share of that money -- taxpayers' dollars, taxpayers' dollars -- went into profits, marketing and, guess what? wall street executive salaries and bonuses. what are we getting in return for this enormous investment of taxpayers' dollars? well, we're getting a lot of

Tom Harkin

7:43:45 to 7:43:51( Edit History Discussion )

Tom Harkin: questions. we're getting a lot of questions. i will go on right after i yield to the leader.

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