Serial No. 105-116



Printed for the use of the Committee on Education

and the Workforce



















Tuesday, July 29, 1997

House of Representatives

Subcommittee on Postsecondary Education, Training and Life-Long Learning

Committee on Education and the Workforce

Washington, D.C.


The subcommittee met, pursuant to call, at 9:32 a.m., in Room 2175, Rayburn House Office Building, Hon. Howard P. "Buck" McKeon [chairman of the subcommittee] presiding.

Present: Representatives McKeon, Petri, Roukema, Barrett, Schaffer, Deal, Graham, Kildee, Andrews, Woolsey, Romero-Barcelo, Fattah, Hinojosa, McCarthy, Roemer, Ford and Kind.

Also Present: Representative Hoekstra.

Staff Present: Mark Brenner, Majority Professional Staff; Sally Stroup, Majority Professional Staff; George Conant Majority Professional Staff; Pam Davidson, Majority Staff Legislative Assistant; David Evans, Minority Professional Staff; Marshall Grigsby, Minority Professional staff; and June L. Harris, Minority Education Coordinator.


Chairman McKeon. Good morning. I would like to welcome the witnesses who have agreed to appear before us. Today we will hold the last of a series of programmatic hearings in Washington to bring together experts from across the country and hear those views on improving the Higher Education Act.

Let me take a moment to describe how I see higher education in the future. I would hope that men and women, young and old, will have access to postsecondary education when they need it. Some would go to college for undergraduate or graduate degrees. Others would choose to go to school or back to school for much shorter periods of time in order to improve or upgrade their skills for a better job and a better future. Many could just take a class or two from home over the Internet. But I want to see every American who so chooses to have the option of receiving a quality education at an affordable price.

This subcommittee has jurisdiction over the Higher Education Act, and we have a great deal of work ahead of us. The Higher Education Act is scheduled for reauthorization during the 105th Congress, and in general this means the Committee will be making determinations as to the effectiveness of existing programs as well as the need for programmatic changes which address specific problem areas.

One of our primary focuses throughout the entire process is keeping a quality postsecondary education affordable for students and families.

Our job this Congress is to improve on what is already working for students across the country, eliminate programs which are not working, and do it all in a way that ensures that precious taxpayer dollars are spent wisely.

As we reauthorize the Higher Education Act, our goals will be making higher education more affordable, simplifying the student aid system and stressing academic quality. If we stay true to these principles, we can improve on what is already working for students and families across the country.

Today's hearing will focus on the modernization of the student financial aid delivery system and on accreditation. The Department of Education currently has a dozen or so computer systems which aid in the delivery of roughly $40 billion in student financial aid every year. They are ultimately responsible for ensuring the repayment of $117 billion in student loans. Timely delivery of these funds are vital to ensuring that every American has the ability to pursue a postsecondary education. This is no small task. In fact, a financial services operation of this magnitude means that the Department of Education has a larger volume of outstanding loans than Citicorp, the largest private consumer lending institution in America. There are concerns that the Department's computer systems are out of date, vulnerable to fraud and abuse, and inordinately expensive to run.

Our first panel will give us their views as to how we can improve these systems to better serve students, parents and the taxpayer. Our second panel will focus on accreditation. In order to ensure that federal financial aid is used to purchase a quality postsecondary education, we require the schools which participate in these programs be accredited by an accrediting agency which is recognized by the Secretary. It should be noted that these agencies are fully private entities. However, without the approval of an accrediting agency, an institution, students are not eligible to receive federal financial aid. Our witnesses will give their views on the appropriate role of accrediting agencies and measures that we can take in reauthorization to ensure the integrity of our federal financial aid programs without imposing undue burdens on schools.

Our witnesses all have hands-on expertise in these complex subjects. They have the responsibility for making certain that our federal student aid programs function smoothly for students and parents and that the integrity of the system is maintained.


See Appendix A for the Opening Statement of Rep. Howard "Buck" McKeon


Chairman McKeon. Mr. Kildee.


Mr. Kildee. Thank you, Mr. Chairman. I appreciate having the hearing this morning. You will not see, obviously, as many Members that would ordinarily be here because of the funeral for Justice Brennan.

Mr. Chairman, I cannot stress too strongly the importance of this morning's hearing. The delivery of student aid and the management of our federal student aid programs are really matters of critical importance. We cannot expect to sustain and enhance these programs unless they are well run and the aid reaches the deserving students in a very expeditious and timely and responsible manner.

Both our delivery system and its management should be really the state of the art. For an institution of higher education, accreditation is important not only because it is the Good Housekeeping seal of approval, but also because it is a first step towards the flow of literally millions of dollars in federal student aid. We have every right, therefore, to expect that the accreditation process be above reproach, and this committee is deeply interested in that. We have an excellent set of witnesses in both these areas of our concern, and we look forward to the testimony this morning.

Thank you, Mr. Chairman.


The Committee did not receive the Opening Statement of Rep. Dale E. Kildee


Chairman McKeon. Thank you very much.


Chairman McKeon. We will hear first this morning from Mr. Thomas Bloom, Inspector General of the United States Department of Education here in Washington; then from Dr. David Longanecker, Assistant Secretary of the U.S. Department of Education here in Washington; then from Mr. Joel Willemssen Director of Information Resources Management, Accounting and Information Division of the U.S. General Accounting Office here in Washington; then from Dr. Brian Fitzgerald, Staff Director of the Advisory Committee on Student Financial Assistance in Washington; Mr. Stephen Biklen, the President/CEO of The Student Loan Corporation from Rochester New York; and finally, Mr. Barmak Nassirian, American Association of State Colleges and Universities here in Washington.


Chairman McKeon. Mr. Bloom.




Mr. Bloom. Thank you, Mr. Chairman and Members of the committee. It certainly is a pleasure to be here to talk about this very important subject. I have with me Jim Cornell, who is the director of my systems group in the Office of Inspector General, the Department of Education.

I once heard a CEO of a very large financial institution tell his shareholders that their company was really an information technology company, because how successful they were at managing their information through their systems would determine the successfulness of their business. He said if they failed at the systems technology, his business would surely fail.

The Department of Education's Student Financial Assistance Program is, in essence, really a large financial institution. They deliver over $40 billion per year in student financial aid and oversee a portfolio of almost $120 billion with millions of individual borrowers.

I would suggest that we take to heart what the banker said: If they fail at the systems technology, the program fails the American people. This is why I would guess we are having these hearings. The issues are that important.

Most of what I have to say can be found in my written testimony which I have submitted for the record. But there are a few points I would like to emphasize. First, there is no short-term fix. This is going to take a long-term investment of time, money, intellect and skills. It is the skill input that I want to discuss.

For the student financial assistance program to succeed, it needs the right people in the right slots. I have recommended before in testimony and in reports, and I will recommend until it finally happens, that the Department hire a chief operating officer to handle the business part of student financial assistance. Ideally this person would have significant experience leading a successful technology-driven financial services operation.

That person would then develop a team capable of designing, implementing and managing a technology-driven organization. We must make the investment in the right people at all levels, whatever the cost.

If we are going to continue to rely on contractors, we need people who can design quality specifications, write good, smart, fair contracts, and hold our contractors accountable if they fail.

We are about to get a disclaimer of opinion by our outside auditors Price Waterhouse for the second year in a row for the financial statements for the year ended 1996. The reason remains the same as last year: the inability to provide evidence of FFELP data accuracy. While there is reason to be cautiously optimistic that the FFELP data will not keep us from a clean opinion in 1997, we want to ensure that the direct loan program is not headed down the same path. Therefore, based on our audit work, we have made recommendations to the Department to fix the now minor data integrity problems in the direct loan programs before they become major problems.


Mr. Chairman, I compliment you on your choice of participants today. I look forward to hearing the comments of my fellow panelists. It should be very interesting. Thank you.


Chairman McKeon. Thank you very much.


See Appendix B for the Written Statement of Mr. Thomas R. Bloom


Chairman McKeon. Dr. Longanecker.




Mr. Longanecker. Thank you. Good morning Mr. Chairman. Thank you for the invitation. It is a pleasure to be here to talk about our efforts to modernize the delivery of student financial aid. I would ask that the full text of my prepared remarks be entered in the record. I will make a few remarks here.

I would also like to mention that I'm accompanied today on my left, by Betsy Hicks, who is the Deputy Assistant Secretary for Student Financial Aid; by Don Rappaport, who is sitting behind me, who is the chief financial officer and chief information officer for the Department; and by Jerry Rusimono, who is the director of our program system service. Betsy and Jerry are, in fact, two of the people that carry the heavy lifting for many of the issues that we are talking about here today.

I would tell you that the 1,200 people that work for Betsy and for Jerry and for myself work very hard every day to assure that the current student financial aid system serves the more than 7 million student aid recipients well and the taxpayers' dollars go for what they are intended.

I would also say we do pretty well at that, but pretty good really isn't good enough here. We want the federal student aid delivery system to be a model for others to follow, and to that end we have developed Project EASI, which stands for Easy Access for Students and Institutions. You already know much about EASI because in previous testimony we have talked about it a fair bit. But I want to quickly summarize what EASI is from the Department's perspective.

First, EASI is the process through which we will move to the use of advanced technologies integrating the many stovepipe systems that we have today into a comprehensive system to be developed over the next few years. Second, it is much more than simply what the Department does, it is a way of allowing the Department to interface effectively and comfortably with all of the systems and activities that are part of what our partners outside the federal government do. Third, it is essential to every systems and non-systems delivery system that we address in the Department. Fourth, EASI is not easy. Working with the community has proven to take time, and consensus is not easy to achieve. But we think it is worth the substantial effort that we have gone into.

Now, we have already begun to reap substantial benefits from the EASI process. The development of the NSLDS, the National Student Loan Data System, has progressed with EASI in mind ever since the inception of EASI, and it continues to do so.

Although NSLDS has not reached its full potential as a database, it already contains records for more than 34 million past and present student aid recipients, and we appreciate the benefits of that system every day. We also recently announced the availability of FAFSA on the Web, which we trust will become a major tool for students as they apply for financial aid in the future. There are tremendous advantages for applying for aid on the Web. For example, the process is designed to help students avoid making the most common mistakes that they do on the paper-and-pencil application.

We also assure you that we take seriously our responsibility to protect the privacy of individual applicants. We have been taking some licks from the community recently with regard to that, but we simply disagree. We think it is very important to have high levels of security for these individuals.

We continue to plan for the future. We have announced that we expect all institutions who participate in federal student assistance to be able to do so electronically with us next year. Project EASI's vision of integrating the data processing systems at the Department used for student aid has also prompted us to consider a radical change in the way in which we contract for programs, contract and the basis of function, rather than program.

But there is still an awful lot to do. By the end of the summer, we will have an architecture from the EASI Steering Committee to detail a map essentially for us to follow. Over the next few years, we will be able to essentially move toward that. So EASI is the key to the future. But we still have to deliver the best possible service today. Because we don't live in the future. We live in the present.

Last week I talked about management of the Direct Student Loan Program, and what we have been doing in that program, and how we think that provides a model for much of what we move for in the future. But despite our success in direct lending, we can also improve in that area. We recently have encountered difficulties with the transition from our original contractor to separate new contractors in direct lending. Unfortunately, some students and institutions suffered from the lack of service compared to the customer delight that they had had over the previous years. So we are working on that.

We are also working to continue to improve NSLDS. We are saving literally hundreds of millions of dollars per year with that program already. Indeed we are concerned about data quality there, and we are working hard on that. So we are working very hard, but as we do that, we also need to think about how we organize the Department to basically do that.

There are many ideas that are service surface. Some talk about a totally private mutual benefit corporation. Others like the concept of, if you will, a freed public agency, often called a performance-based organization. Others talk about reinventing the existing organization within the context of current federal guidelines.

We think this discussion is very useful, but we would caution against putting the cart before the horse. We think it is very important for us to complete our work on EASI and EASI architecture before we determine what is the best way to manage the organization. Until we have that architecture in front of us, we think it is premature to figure out what design is the best one. Sometimes we become enamored with new ideas about how to organize before we think about what the task is that we are trying to achieve.

I can assure you that we are dedicated to the task of making the changes that are necessary. We understand that we will need an absolutely different paradigm to operate in the future than we have in the past, and we are up to that task, and we look forward to working with you to help design it. Thank you.


See Appendix C for the Written Statement of Dr. David A. Longanecker


Chairman McKeon. Mr. Willemssen.




Mr. Willemssen. Thank you, Mr. Chairman, Ranking Member Kildee, Members of the subcommittee. Thank for you inviting the GAO to testify today on our recently completed review of the Department of Education's efforts to integrate NSLDS with its other financial aid information systems. As agreed, I will briefly summarize our statement.

To provide reliable information on students across programmatic boundaries, the Department of Education was required to integrate NSLDS with the databases of the program-specific title IV systems by January 1, 1994. As described in detail in the report of ours that is being issued today, the Department has made only limited progress in integrating NSLDS with these other systems. NSLDS is not readily compatible with most of the other title IV systems. These various systems have various types of hardware, application languages, database management systems, operating systems, and various applications. Furthermore, the Department has still not established the common identifiers in standardized data reporting formats for NSLDS and its title IV systems as it was required to do.

Because of these shortcomings, NSLDS must have workarounds in place to accept data from other systems. The Department of Education and its data providers currently use over 300 computer formatting and editing programs, many of them workarounds, to bridge the gaps in this complex computing environment. Such programs contribute to the rapidly escalating cost for the 5-year NSLDS contract from an original $39 million estimate to today's $83 million.

A systems architecture could significantly help the Department of Education in overcoming its continuing problems in integrating NSLDS with its other systems. An architecture is a framework or a blueprint to guide and constrain the development and evolution of a set of related systems. An architecture can cut expenses by reducing the need for stand-alone systems and their requirement for workarounds.

The Congress has recognized the importance of such architectures and their place in improving federal computing. The Clinger-Cohen Act of 1996 requires Department-level chief information officers to develop, maintain, and facilitate the implementation of integrated systems architectures. Despite the importance of such an architecture, Education officials have not yet devoted the time or effort to complete such a blueprint.

Education did begin the effort in 1995 known as Project EASI to develop an overall integrated framework. However, as we reported earlier this year, EASI has had a tentative start and been loosely defined. Without an architecture, the Department continues to acquire multiple stand-alone systems.

Today the Department manages nine major systems supported by 16 separate contracts to administer student financial aid programs. They range from legacy main frames to a new client server system. For the most part, these systems operate independently and cannot readily communicate or share data with one another. The systems are also expensive. As the chart over here indicates, and it is also included at the end of our statement, the cost for contracts related to these systems has almost tripled from fiscal year 1994 to 1998 from about 106 million to about 317 million.

In summary, we recognize the challenge that the Department faces in putting in such an architecture, but we believe that the longer it waits to develop such an architecture and integrate its systems, the more difficult that this job is eventually going to be.

That concludes the summary of my remarks Mr. Chairman. Thank you.


Chairman McKeon. Thank you very much.


See Appendix D for the Written Statement of Mr. Joel C. Willemssen


Chairman McKeon. Mr. Fitzgerald.




Mr. Fitzgerald. Good morning, Mr. Chairman. Members of the subcommittee. My name is Brian Fitzgerald, and I am, Staff Director of the Advisory Committee on Student Financial Assistance, created by Congress in 1986 to advise on student aid policy. I am also an observer on the Project EASI Steering Committee. On behalf of Dr. Robert Alexander, our Chairman who could not be with us today due to illness, I would like to thank you for the opportunity to testify at this reauthorization hearing.

Let me begin by saying that the Advisory Committee sent its delivery system reauthorization recommendations to Congress and the Secretary on May 1st. In those recommendations the Advisory Committee focused on two primary areas: first, the need to restructure the delivery of federal student aid under a performance-based organization, commonly called a PBO, and the need to reengineer title IV systems and contracts.

Our committee believes that these recommendations are inextricably linked. We believe that unless the Department's delivery efforts are restructured under a PBO led by a chief executive officer, also recommended by the Inspector General (IG), systems and program operations will continue to suffer, and very little reengineering or modernization will take place.

At the Department of Education, as in most agencies there is not only the requirement to keep existing processes and contracts running, but also the need to reengineer and modernize; that is, to consolidate, integrate and improve systems across the board. It is important to understand that Project EASI, the Department's only mechanism for reengineering, was originally a Secretarial initiative under a senior advisor. The advisor was supported by a dedicated core team who had no major day-to-day operational responsibilities. That is why in the early stages of Project EASI there was great hope and expectation that true reengineering would finally occur.

Unfortunately, the Project EASI that exists today is very different from Secretary Riley's original concept. Now all key decisions, strategies, and schedules in Project EASI have been assigned a line manager in the systems area, individuals with enormous day-to-day operational responsibilities. The day-to-day operational burdens have been exacerbated by several serious ongoing contract and system problems. Thus it is a matter of common sense that these line managers will be unable to consolidate, reengineer or modernize.

Because progress on Project EASI is subject to the demands of day-to-day operations and system problems, the student aid community has lost confidence that modernization will take place any time certain. That is why there are proposals before Congress to consider implementation of a mutual benefit corporation to deliver title IV aid.


Mr. Chairman, our committee is convinced the Department cannot reach the Project EASI vision. It cannot reengineer and modernize within its current structure. The only way to do so while holding programs and current operations harmless is to return the initial project EASI concept with a dedicated senior manager reporting to the Secretary, supported by a dedicated core team with no other operational responsibilities. The team must be given authority and technical resources to carefully develop and implement the future systems on a separate parallel track.

We believe the Department's current plan for line managers to implement Project EASI after revamping the existing 10 stovepipe systems and contracts is a formula for system and program instability. We believe that system performance will suffer and that breakdowns will increase while contracts soar. We fear that at the end of 5 years, we will be burdened with the same stovepipe system that exists today.

Let me return to the concept of management structure and close by citing four recent management decisions that I believe would not be made under a PBO structure to create a modern financial services enterprise within the Department of Education.

First, under a PBO, responsibility for new system development would not be assigned to line managers and staff, individuals already overwhelmed with operating and repairing existing systems, databases, and contracts.

Second, under a PBO, scarce resources would not be invested in modifications to outdated deteriorating stovepipe systems, modifications that do not improve deficiency, but threaten to destabilize current operations.

Third, under a PBO, implementation of Project EASI would not be delayed for years until current systems and contract problems can be solved.

Fourth, under a PBO, there would be absolutely no interest in undermining the FAFSA or federal delivery by eliminating the collection of what had been the two most important data elements in student aid delivery over the last 30 years, most recent income and asset data, data that would be required by any Modern Financial Services Corporation.


Mr. Chairman, the committee recommends that Congress require an implementation of PBO within the Department to deliver federal student aid. The committee also recommends that the Department be required to truly reengineer delivery. We don't need to know what systems, hardware, and software need to exist in the future in order to make key management changes at this point. Unless these steps are taken now, we feel quite strongly we will be facing more serious problems in the future. I would be happy to answer any questions you have about our recommendations. Thank you, Mr. Chairman.


Chairman McKeon. Thank you.


See Appendix E for the Written Testimony of Mr. Robert E. Alexander


Chairman McKeon. Mr. Biklen.





Mr. Biklen. Thank you, Mr. Chairman. I am very pleased to be here. I am Steve Biklen, President of Citibank's Student Loan Corporation, a company that specializes in originating, servicing and holding student loans, and I am also on the Project EASI Steering Committee.

As I know you have heard throughout the reauthorization hearings to date, substantial innovation in the delivery of student aid, especially loans, has been made. I believe, however, that further improvement to the delivery system should be a top priority of this committee during reauthorization, and I would like to recommend a number of principles that I think should be followed during this process.

One, the financial aid delivery process should ensure maximum student access.

Two, the delivery system should be customer-driven. The delivery system should be designed around the student-customer and not around the needs of any other party involved in the process. And I think Project EASI gets to both of those principles.

Three, technology should be used to the maximum extent possible to forge dramatic improvements in service for students.

Four, involvement of the private sector should be maximized in order to assure continuous innovation and community involvement.

Five, the cost of the delivery system should be minimized, consistent with the other principles as well as the important goals of program integrity, consumer protection and accountability.

Before I get to specific recommendations, I would like to just go over some concepts behind those recommendations, the first of which is that the delivery system should be open and common. Today there are an increasing number of proprietary systems that have been developed for the delivery of student aid. These include the direct loan system as well as numerous private-sector systems introduced by both lenders and guarantors. And there is no doubt that many of these systems have very attractive features, but what they lack, and I think the committee should assure is achieved, are the characteristics of being open and common.

The financial aid system should be fully open, common and integrated, meaning that all loan providers, including the Department and the direct loan program, should be able to deliver loans to students through the system. The system also should incorporate services supporting the other title IV programs.

The second concept, community responsibility for the delivery system should be incorporated into the delivery system through the use of one or more mutual benefit corporations. A mutual benefit corporation is a not-for-profit corporation with membership defined as stakeholders with interest in a specific matter and with the authority of the corporation carefully circumscribed in the corporate charter. Examples of these are condominium associations, the Securities Assurance Insurance Corporation, which supports the New York Stock Exchange, as well as ELM Resources, which we are very familiar with and participate in, which help in the delivery of FFEL loans.

The third concept is that common, not proprietary, data formats should be used in all delivery system data exchanges.

Fourth concept, electronic signatures should be permitted, and I would recommend that we have national legislation to ensure consistency between states in terms of how they approach that.

With respect to specific recommendations, I believe that we should introduce a personal identification number system, or a PIN system. This system would employ a PIN for each student, and they would use that PIN for every aspect of financial aid. Through the secure PIN, and this would be similar to that which is used, say, in ATM machines, the various transactions could be conducted electronically. These would include status inquiries and other key transactions such as applications and deferments.

Second, we should implement a master data record reflecting a student line of credit on student loans. This would be borrower-based as opposed to lender- or guarantor-based.

Third, we should permit easy electronic access to information on the origination status, and we should permit easy access, electronic access, to information on the servicing of loans.

We should modify the Department of Education procurement procedures to permit the Department to participate in a mutual benefit corporation, which I previously spoke about.

We should allow the use of the electronic forms. Another specific is we should allow students to apply for the FFEL loans on the FAFSA.

In summary, modern technology, best exemplified in the Internet, makes possible simplification of the delivery system and creates a great opportunity to improve the quality of service in our student assistance programs. And I would just say that while there have been differences in terms of the testimony that has been presented today, I think there is more commonality with respect to where we are going in the recommendations, and I am very hopeful that we can come out of this with some real solid recommendations and really get going. Thank you very much.


Chairman McKeon. Thank you.


See Appendix F for the Written Statement of Mr. Stephen C. Biklen




Chairman McKeon. Mr. Nassirian.




Mr. Nassirian. Good morning, Mr. Chairman. My name is Barmak Nassirian. I am here to represent the American Association of State Colleges and Universities, which has a membership of more than 370 public 4-year institutions and 30 State systems of higher education.

I think the topic of today's hearing is in some ways a somewhat peculiar one for a congressional hearing in that the delivery of aid tends to be a sufficiently mechanical task that under normal circumstances one could basically make the difficult decisions regarding policy and then simply assume that upon the provision of sufficient funding, with proper oversight, that the funds would be delivered to the intended beneficiaries. That is very much the way in which Congress has basically operated throughout the life of these programs, and it is the fundamental failure of that approach that brings us today to this particular topic.

There is a sense in which I do agree with every one of the panelists who came before me, including the Assistant Secretary. I think the Department has indeed made every effort and has indeed made some serious progress in the direction of modernizing delivery. But having said that, I have to regrettably also say that we are very far behind where we ought to be and that the systems are reaching the point where some fundamental change, structural change probably rather than radical change, is called for if we are to effectuate the purposes for which these programs were initially created.

The important thing to keep in mind when we talk about delivery, as sort of unimaginative and prosaic as the topic may be, is that to the ordinary citizen the delivery system is the program. To us inside the Beltway, we may have all kinds of views with regard to the financing system, with regard to the configuration of need analysis, but the fact of the matter is that to the applicant, to the family out there who applies for the student aid, and certainly to the aid director who has to interface with the Department systems, the delivery system is very much the essence of these programs, and its functionality or lack thereof therefore becomes paradigmatic of the entirety of the program.

The problems with the Department's delivery system have already been very, I think, thoroughly discussed here. What I would like to spend the balance of my time on is to bring to your attention one very important structural way in which we could change delivery, and that is through the creation of the mutual benefit approach.

In many ways, Project EASI, on whose Steering Committee I also serve, says all the right things. In other words, at the level of rhetoric it certainly lives up to every expectation, an integrated set of systems, delivery system of the 21st century, and all of that. And to a large extent, I believe that at the level of intention, the Department certainly intends to do all of that. The question at some point for policymakers becomes to what extent are the intentions in the realm of possibility, and most often what we tend to do in life is look at the track record, because in general words come easier than action.

It is that sort of lack of absolute conviction on the part of a significant segment of the community that has brought at least some of us to the point of contemplating the possibility of a collaborative cooperative effort by all stakeholders, all participants in the system, and I want to emphasize this includes the Department, to attempt to take collective responsibility for the delivery of funds. We are not talking about policy or oversight. We are talking about the technical, mundane, mechanical steps involved in getting signal from point A to point B, funds to the intended beneficiary.

The advantage of this approach is that you have the correct incentive structure. The advantage is that every participant has a vested interest in making the system work and that every participant gets an appropriate degree of input into the process. So I certainly hope that the subcommittee contemplates that approach as well as other possible ways of modernizing the delivery. And I appreciate the opportunity. Thank you very much.


Chairman McKeon. Thank you.


See Appendix G for the Written Statement of Mr. Barmak Nassirian


Chairman McKeon. This has been very enlightening, the testimony that each of you have given. I wish we had days and weeks and months to go into this. There is a lot happening.


Mr. Bloom, after looking at your statement and that of Dr. Longanecker, it is like you are talking about two different organizations when you describe the Office of Postsecondary Education. I want to commend you for the critical analysis you have made.

Would you support the idea of moving to a different management structure for the computer operations in the Office of Postsecondary Education, provided that it has a proper technical team?


Mr. Bloom. I really do believe that we ought to look at different structures. I will emphasize, though, that we really need to start with a head first. And Dr. Longanecker may be right when he says we need to make sure we are not putting the cart before the horse. But certainly we need to come up with the right head, whether that be the head of a mutual benefit corporation or a PBO. You know, that is open to debate. I happen to believe very strongly in the PBO concept and think that that would probably work pretty well in this organization.


Chairman McKeon. It seems to me that the little experience I had in education, I served for a number of years on a school board, and it was interesting to me how the superintendent of the district had vast responsibilities. He started out as a teacher, and then he moved into administration, and he became a vice principal, and he became a principal, and he became an assistant superintendent and ultimately a superintendent. His education was in teaching, and his ultimate job responsibility became in managing a large operation.

One of the things it looks like to me is the Department of Education has many, broad responsibilities. And it looks like if we are trying to run a student loan program that is larger than the largest bank, who we have people that their whole life in education has been in that area, and it is just part of what the Department of Education is doing, but it is such a huge operation, it seems to me you have some of the same type of problems.

Dr. Longanecker, we have heard at least 50 percent of all the information stored by the Department in these various databases is redundant. Do you know how much redundant information is inputted and stored in the multiple stovepipe systems operated by the Departments and what the cost of duplication would be?


Mr. Longanecker. I don't know what this precise numbers are in redundancy, but it is absolutely clear that there is tremendous redundancy, unnecessary redundancy developed through the process that has evolved over the years, the what is referred to as the stovepipe or legacy systems that we have, and that we need to move as rapidly as we can to an overall integrated data system that allows us to have redundancy where it is useful. But in most cases redundancy is not necessary or productive, and so we would want to get rid of that.

Betsy, do you have…


Ms. Hicks. That is a good explanation.


Chairman McKeon. It sounds to me like many of you are saying somewhat the same thing and coming at it from different directions. It sounds to me like, Mr. Secretary, what you are saying is we want to set up the system and bring in people to manage it.


Mr. Longanecker. Where I would differ is I think we actually have a management team that can operate this. That is where I am sure there is substantial difference from where we are at the table. The Secretary feels quite strongly that he has brought in a team that is capable of doing this, that we have demonstrated the capacity to do that, and that we have a plan that will get us from here to there.

We have brought in an exceptional person to run our systems area, and I don't think there is much doubt about that. In fact, around the table, we also think that the people who supervise that individual are capable as well. And that is Betsy and me and the Secretary and Mike Smith.


Chairman McKeon. I guess that is where the whole difference comes in, the whole different idea of how you approach it. But when you say that the team is doing well, then we talk about 1992 amendments required that the NSLDS databases be program-specific by January 1, 1994, and now we are at July of 1997, and we don't have that done yet. It makes it a little hard then to stand up and say we are doing a fantastic job.


Mr. Longanecker. Keep in mind…


Chairman McKeon. We will have more time.


Mr. Longanecker. Okay.


Chairman McKeon. My time is done.


Mr. Kildee.


Mr. Kildee. Thank you, Mr. Chairman.

We have three different approaches to management before us this morning. Project EASI, a PBO, performance-based organization within the Department; and a mutual benefit corporation outside the Department. I think that is the three basic modalities. Other than the one that you may be advocating, could you comment on the others?

And I also would like to have Mr. Willemssen and Mr. Bloom comment on the three modalities that have been talked about this morning.

Maybe we will start with you, Dr. Longanecker.


Mr. Longanecker. Yes, I think we need to explore all of those options as soon as we figure out where it is that we are headed, which we will know by September. I mean, we will have a basic architecture before us, and we can be talking more directly.

I think there are pros and cons of each. But I will tell you that even if we rejected the performance-based organization and the mutual benefit, we would need to fundamentally redesign, reengineer our delivery of services in the Department. We need to do business fundamentally differently. So what we will be looking at is something radically different than what we do today. Whether we do it in one of these paradigms, I am more inclined to think that it is not a good idea to give to the private sector public responsibility. So I am less inclined personally to find the mutual benefit corporation an attractive option.

I think that there are differences in public and private responsibilities. These are public dollars that are being spent. I am reluctant to turn over the responsibility of managing that to the private sector. We use the private sector, $320 million worth, every year in contracts to help us manage our systems, but it is with federal oversight. I think we would think that was important.

With respect to the performance-based organizations, I think there are some very interesting ideas. I ran two of those in previous lives, and I think there is a lot to be said for the freedom that you can have in that quasi-public on the other hand, when you have that freedom, it also means the Secretary has given up the responsibility or authority in an area where he has legal authority. So there is clearly trade-offs there as well.


Mr. Kildee. Dr. Fitzgerald.


Mr. Fitzgerald. Yes, Mr. Kildee, thank you.

I think there is another area of disagreement, and that is that I think our committee would suggest that we don't know need to know what our computer systems look like in order to determine what management structure is appropriate for a $50 billion set of programs. I don't think any corporation would have to figure out what computer system it needs before figuring out what management structure is necessary.

We feel very strongly that the performance-based organization is the right approach. This is a concept that was developed through Vice President Gore's National Performance Review. We agree that it is important to keep some of the most important oversight and management functions within the Department. The performance-based organization approach, however, provides the Agency with the ability to attract the kind of talent that it is unable to attract at this point, and that is senior executives with responsibilities running very large financial services, enterprises, some flexibility on the personnel side and some flexibility on the contract side. And we think those are the right ingredients to ensuring that the Agency can perform effectively in managing $50 billion in taxpayer funds.


Mr. Kildee. Mr. Biklen and Mr. Nassirian.


Mr. Biklen. Yes, Mr. Kildee, I think what we have heard is everybody, I think, pretty much agrees that Project EASI is where we want to get to. It is a question of how you do it, and mutual benefit corporation is one way, and the PBO is another way to manage it.

I agree wholeheartedly with Dr. Fitzgerald that in terms of the Department's managing this thing, I think it would be entirely appropriate to separate that out as a project, because if we include it in the day-to-day, we will never get it done.

As far as the mutual benefit corporation, I view that more as a partnership if the Department of Education is involved. And the Department would not be giving up the administration of public monies, but we would be working together to implement new systems. This could be structured so the Department would still have oversight and maintain responsibility for the public funds.


Mr. Kildee. Dr. Nassirian.


Mr. Nassirian. Thank you, Mr. Kildee.

I guess the question was to comment on the other two options than…


Mr. Kildee. The other two?


Mr. Nassirian. Well I would say this: The concern about PBO and we are certainly intrigued with the idea. We would like to investigate it and take a closer look at what this would look like. But the concern is that you can essentially achieve victory by decree; that you could, you know, declare yourself to be a PBO tomorrow without changing any particular set of practices.

The advantage of a mutual benefit concept is that you would fundamentally restructure the system, and, therefore, the transition would be at least now, it may be a bad idea, and the transition may be to a worse system, but at least you would have the assurance that it is going to be something other than business as usual.

So the concern we have about the PBO is that there is really no guarantee that any actual practices will be any different the day after you declare yourself to be a performance-based organization. I mean, in some ways all of us believe we are all performance-based, you know, folks and work in performance-based outfits.


Mr. Kildee. Could Mr. Bloom and Mr. Willemssen just briefly comment on it?


Chairman McKeon. Very briefly.


Mr. Kildee. Thank you, Mr. Chairman.


Mr. Bloom.


Mr. Bloom. I am certainly intrigued by the mutual benefit idea, although I have a couple concerns. The first one, it really looks like it is kind of management by a huge committee, and I do believe that somebody needs to be in charge. And I think that there are two benefits to a PBO. One is that clearly there is somebody in charge with a mandate. The other one is that it does separate policy from the, quote, "factory," and I think that is very important.


Mr. Kildee. Mr. Willemssen.


Mr. Willemssen. Yes. As opposed to what Dr. Fitzgerald mentioned earlier, our review was focused more on the computer systems and the lack of integration thereof. And given that, what we would like to see is a clear plan with concrete details on how the Department is actually going to accomplish the architecture that we have recommended. To date, we haven't seen that. If it is Project EASI, we would like to see the details associated with that. If it is something that the chief information officer is putting together, we would also like to see more concrete details.

We have taken a preliminary look. We have some concerns. So from our bottom-line perspective, regardless of the organization alignment, we would like to see more specificity on exactly how the Department is going to accomplish implementing the system-wide architecture.


Mr. Kildee. Thank you very much.

Thank you, Mr. Chairman, for your indulgence.


Chairman McKeon. Thank you.


Mr. Deal.


Mr. Deal. Thank you, Mr. Chairman.

I appreciate the comments of the panelists. They are very interesting. I obviously have some concern in light of the criticisms and critiques that have been offered by GAO, the IG and others on this panel. And one of the comments that is in Mr. Nassirian's prepared testimony is one that I would like to address to Dr. Longanecker, please.

He talks about Project EASI, and he says that one of his concerns is that it was essentially transformed into a Department of Education system development effort, and then this statement: This change renders Project EASI susceptible to all the shortcomings of the Department's structural and bureaucratic disadvantages with regard to technology.

I think that probably summarizes what I have heard many of the other panelists saying is that we are all concerned that the structural and bureaucratic disadvantages of the Department of Education are what we are hearing criticized here. Would you respond to that, please?


Mr. Longanecker. Yes. Let me explain why we reincorporated EASI into the Office of Postsecondary Education rather than reporting directly to what was the Deputy Secretary.

The reason was that EASI was going nowhere. It was a vision that for 2 years was floundering, and it wasn't making any progress. And partly that was because we came to realize that having it totally separate wasn't providing any buy-in from the people within the Department. Clearly the Department people had to be part of this. So we brought it in-house, put it under Betsy Hicks’s leadership.

I think Mr. Fitzgerald misunderstands how we are operating that. The people who are responsible for EASI are, that is their primary responsibility. They don't have other things that they are involved in. So this is their level of responsibility. And so that is how we are managing it. As a result, in the last year we have been able to start to get things on track and to get some very solid, deliverable and others coming on in the next 2 months, which will provide us with the portion of the EASI design that talks about where the Education Department should go.

Now, there are two parts to EASI. One is what we call EASI Ed, which are the things that we will need to do; and the other is, the colloquial term is The Big EASI, which is sort of how we refer to the overall project and how EASI Ed fits into that. And this is all, I think, coming together very nicely now in a way that the Department is fully comfortable, is making progress and moving forward.


Mr. Deal. I don't hear in that answer specific concerns that have been addressed by the panelists here who are your friends and your allies, but yet are critical of what is in place and what they perceive is the direction that you are headed in. Will the concerns specifically that have been addressed here be incorporated in the September report? I suppose that it is. And if so, what do you anticipate that that will do?


Mr. Longanecker. I believe so. But let me ask Betsy Hicks to respond to that. I didn't do a very good job to responding to your question, and she is…

Ms. Hicks. First of all, I think there is a lot of misinformation about what it is we are doing, and I am afraid I wouldn't have time to go through all of it. But I would really encourage anyone in a decision-making role to make sure that they do get the correct information before we move ahead.

I think that one thing that I have found really absent from this discussion that I think is essential to keep in mind, it goes back to the opening remarks that Chairman McKeon shared with us, if our goal truly is to make higher education affordable, we have to ask ourselves where the students and where the schools are in this process. And I think there has been no recognition of the fact that schools are in a far worse situation than the Department might be relative to their systems or lack thereof.

Large public schools do have mainframes. They tend to be outdated legacy systems. They tend to be stovepiped, where they have a separate system for admissions, for financial aid, for registrar. There are many institutions that have not even developed large mainframe systems the way that they should have. And amazingly among the 6- to 7,000 institutions, schools that participate in our programs, many of them still use paper processes.

So however we move forward, I think it is important that we ask ourselves if we are going to restructure, will that structure meet the needs of primary customer-students and secondary customers as I see it, schools, which are really the entities that deliver the funds.

I think the other caution I would provide is that I believe as we look at the merits of a mutual benefit corporation, I think this goes back to your question, we need to ask ourselves why EASI is not making the progress that it should be making. And I believe the reason is, having dealt with this for a year, is the same comment that Tom Bloom made about the possible downside of a mutual benefit corporation, and that is EASI is an attempt to bring all the players to the table. And as Steve Biklen has said, I believe there is more commonality than might be apparent here, but the disadvantage is you have one humongous committee that is trying to make decisions, and that slows down the process.

Again, I agree with Mr. Bloom when he says it takes time, it takes energy, it takes money, it takes intellect, and it takes skill. But if you are going to try to deal in an open environment, which we have been, and raise all those issues, that is going to slow down the process.

When I went back to my original comment about misinformation, I believe we are working towards a plan. I believe the GAO will see that plan when we come forward with our functional requirements, our cost benefit analysis, our target architecture. But the more difficult part of the process will be for all the partners to make a decision that what we have before us is the way to go and to get an agreement on that.


Mr. Deal. Thank you.


Chairman McKeon. Your time is up, but if it weren't, you probably would ask Dr. Fitzgerald if he wanted to defend himself on the misinformation.


Mr. Deal. With the Chairman's indulgence, I would be pleased to hear that.


Mr. Fitzgerald. Thank you, Mr. Chairman, Mr. Deal. I think our concern, quite candidly, has less to do with Project EASI. We, this committee has been a very strong supporter of Project EASI for quite some time and has, since 1988, been making recommendations to integrate and streamline delivery. We are coming down to the point, however, where we really need to bite the bullet on implementing Project EASI.

I agree with Betsy. Let me be very candid. We have from time to time been critical of the progress being made by Project EASI, and we didn't think it was focusing on the Department of Education systems enough. It was focusing on everything else, a system where students could, you know, register for classes. The problem with the federal delivery system is its systems, its computer systems.

The real question, however, and I agree with Mr. Willemssen on this, once we get the target architecture, once we get the system requirements, how will this be implemented? And our concern is that the Department has announced a plan and this is the core of our concern and the reason we think that we need a different approach, in which it will basically have to migrate its current computer systems onto a new hardware platform before it begins to implement Project EASI. We have had consultants look into this, and everyone we have talked to has said leave those systems in place, don't do anything to them, don't invest any more money in them, and begin immediately building the new systems. And I think at bottom that is what we are most concerned about. We want to see Project EASI implemented.

I hope no one interprets our comments about a PBO as being critical of the current management. We are worried about what happens after this current group of managers leaves. These changes must be institutionalized. The Department really must create a modern financial services enterprise in order to support these programs, and that's the basis of our concern.

Thank you, Mr. Chairman.


Chairman McKeon. Thank you.


Ms. McCarthy.


Ms. McCarthy. Thank you, Mr. Chairman.

Dr. Fitzgerald and Ms. Hicks answered my questions. We in Congress and the Department of Education, have to become more business-minded. We have to run the financial aid programs the same as American Express. The technology is out there, as you mentioned, to set up the programs. And I would certainly like to see down the road a World Wide Web site for the students and the parents to use, as we had discussed last week, to determine, when their child is in first and second grade, how much money they have to put away every week.

The technology is there, but we as the government certainly have to start working like a good business, and using good business practices, so tax money is being used wisely. I believe the government has to stay involved in the loans system, but should also work with partnerships outside. Thank you.


Chairman McKeon. Mr. Schaffer.


Mr. Schaffer. I have no questions, Mr. Chairman.


Chairman McKeon. Mr. Barrett.


Mr. Barrett. Thank you, Mr. Chairman.

I am sorry I wasn't able to hear the beginning of the testimony out here because of a conflict in schedule, which is not unusual around here. So if I cover ground previously covered, forgive me. But I did have a couple of concerns in my own mind about the subject at hand.

It seems to me that Project EASI is the direction that the Department seems to be going in without any question in terms of the modernization of the student aid delivery.

It occurs to me that a lot of the functions of Project EASI already exists in the Department's own software or through third-party vendors. And there is no question in my mind that there is duplication. It does exist at the present time, and that is of great concern to me. And I would appreciate Dr. Longanecker, perhaps Mr. Bloom, addressing that. And if that is the case, how can we justify the costs?


Mr. Longanecker. Well, I don't think we can long justify the costs, and we couldn't agree more. We want to work as rapidly as we can to get out of the stovepipe legacy systems. I can explain to you how we got to those, and one can build the house of cards and understand how we got there, but it is hard to continue to defend it into the future.

That is why we set up Project EASI to work with the community. We could have and, in fact, when we arrived, there was a plan that our system staff had developed to develop an entirely new approach. The trouble was it was bounded by the way in which we think within the federal government. It did not have any substantial involvement from the external community, and we felt that if we wanted to move and be really on the front end of this and working with our partners well, we needed to have a collaborative process that defined the future for us better. And that is what we have been trying to achieve through EASI.

EASI went more slowly than we had anticipated or desired. We are right at that point right now, though, where we are already starting to see some of the benefits of it, and we will start to see more. And what I hope to convince my friend Brian Fitzgerald is that fairly soon we can start to see some very positive outcomes from this.


Mr. Barrett. Thank you.

Mr. Bloom, would you care to comment?


Mr. Bloom. Yes. I do believe this is something that we all agree on. We have these, whether it is 10 or 14 or whatever the number is, legacy systems. And we need to come up with something new, and we have to probably go parallel, as Dr. Fitzgerald says, go parallel with the legacy systems and then at some point be able to move into the new system. It is like building a new house while still living in the old house on the same property. You have to have a place to live, and we have got to live in those legacy systems. But hopefully, we are building a new, better, more integrated house with the Project EASI, which, by the way, is probably misnamed. It probably should be Project Hard, because it is very, very difficult to do what we are doing.


Mr. Barrett. I have also had some concerns expressed to me from my district regarding some of the various functions in ED Express software and direct loan processing. It hadn't been working properly for schools out there, and specifically, some of the schools couldn't load ED Express on their computers and make it work. Those that got it to work had numerous problems in getting the software to print the electronic student financial aid record. On and on. I could go on with other concerns that have been expressed to me. I would appreciate your elaboration.


Ms. Hicks. Yes. You seem to know a lot. We do have a product called ED Express which is used by many of our schools. It tends not to be used by larger schools. They tend to do their business with us through mainframes, but for a moderate-size school they use this product. And this product will assist them with everything from application processing through the functions they need to perform to participate in direct loans.

We produce that piece of software through a contract with one of our contractors. It requires a very rigorous schedule. We don't have the luxury of a company such as Microsoft that we can delay the publication, the, you know, coming forward with a new product. It is definitely tied to the rigorous award cycle that that software has to be out there in time for schools to use as they bring up a new awards cycle.

We have had some bugs in it, despite our best efforts to test, and believe me, we do very rigorous testing both through the contractor and through their independent quality control as well as use our own internal staff. We do end up with bugs. And again, this happens in the development of software. These bugs will make things difficult for schools. We try to identify when an issue is raised to us whether that particular problem the school is experiencing is a result of how they have configured their systems or their technical expertise or whether it really is a systems-wide issue that we need to address and get messages out there and support services to allow schools to go forward.

As we move forward with our strategic planning under Project EASI, we are looking at new and better ways to develop software. If there is anything I would say we didn't do well is we really didn't understand when we went down this path of developing software that we really were becoming a Microsoft of the higher education community. And we need to understand the decision we have made and all the ramifications and support services, so as we look at some of these new approaches, Dr. Fitzgerald mentioned one of them of moving our systems to a new platform, we are looking at a way to provide software development across these 16 different contracts, these 9 different systems, so we can have quality software development both to run our systems as well as quality software development for the products we make available to schools.


Mr. Barrett. Thank you. My time has expired, but you agree there have been bugs and problems. Are you also suggesting that the bugs and problems still exist?


Ms. Hicks. I agree, yes, there are bugs and problems. I would probably disagree if you say there are major bugs and problems, because we have been able to continue to keep the trains running. At any point where I speak there is probably some issue that a school has identified. They do this, they get out there on their list servers and share it, and the one thing I caution you is not all of them are due to the product we have. Some are due to the understanding of the school. That goes back to the issue I raise. But yes, they are always there, and we need to continue to improve, but I don't think we are as badly off as some people state we are.


Mr. Barrett. Thank you.

Thank you for the indulgence, Mr. Chairman.


Chairman McKeon. Thank you.

So we are the Microsoft of software, and we are the Citicorp of banking, and all within the Department.


Ms. Hicks. Oh, yes, we are everything.


Chairman McKeon. Mr. Andrews.


Mr. Andrews. Thank you, Mr. Chairman.

I wanted to provide some context to this discussion about efficient delivery of financial services. About 3 weeks ago, my wife and I went to one of these discount shopping centers to buy some holiday gifts in advance, and I will say for the record I feel personally responsible for the upsurge in the economy as a result of that. And we used a major credit card from one of the financial services companies that are being whose virtues are being extolled by some here today. And after about the third purchase, every time we went into a store, the card wouldn't go through, and the card wouldn't go through because it was issued in a Washington, D.C. area code there is a high rate of theft here and we had to call each time and get the card straightened out. We had to make six or seven different phone calls in six or seven different stores.

That doesn't happen all that frequently, but it happens in the private sector, too. And I point this example out to say that before we rush headlong into the proposition of making wholesale changes that puts the student aid delivery system in the private sector, we ought to understand that customer service problems are not the exclusive property of the public sector. They exist in the private sector as well.

With that in mind I wanted to ask Dr. Longanecker a couple questions that I think provide some context. It is true, isn't it, that the Department is delivering in excess of $40 billion a year worth of financial aid; is that right?


Mr. Longanecker. This coming year that is correct, that is what we will do.


Mr. Andrews. And my district office is probably a pretty good example of this. I represent about 600,000 people. We probably get 250 complaints a year about some kind of problem with a Pell Grant or student loan, and I assume that not everyone who has a problem calls us. But my guess is there are well over 100,000 people in my District getting some kind of federal financial aid, and we are hearing from less than 1 percent of those customers, and I think that bears some mentioning.

Second, I note that the GAO testimony talks about $2.5 billion worth of student loan defaults in fiscal year 1995. What was the amount of student loan defaults in fiscal year 1996?


Mr. Longanecker. Well, the net cost has gone down. The actual amount of defaults have been going down for the last 4 years, from about 4 billion to, I think, 2.5 billion. But the net cost of defaults have dropped from $2.5 billion to $1 billion.


Mr. Andrews. Can you describe to me how that happened and who was responsible for making it happen?


Mr. Longanecker. Well, that has happened for three reasons. One is the net default rate has gone down as we have eliminated a number of schools that were high-risk schools that had high default rates. That was with both Congress' help and the Department's administration of that. Some of that occurred as a result of improved collection processes by the guaranteed agencies and others in the FFEL loan program. But the most significant increase came through the efforts of our debt collection service, which is a Department-run corporation.


Mr. Andrews. Now, how does that work? When there is a debt let's say the student defaults on his or her loan. The bank turns the loan over to the Department. The Department or the guarantee agency, I should say, pays the bank. How does the Department pursue the debt collection? Generally how does that work?


Mr. Longanecker. Well, initially what happens on a defaulted loan is the guaranteed agency attempts to collect that. So we only really have the paper that they have been unable to collect. We use a variety of techniques. We do skip tracing. We garnishee wages. We offset federal income tax returns. We do a number of those things. We also have a number of performance-based contracts with collection agencies that help us and assist us in that effort.

Mr. Andrews. Could you tell us and if you don't know, I would ask you to supplement the record, what the gross receipts of that debt collection has been over the last 2 or 3 years? I assume it has risen.


Mr. Longanecker. It has risen phenomenally, and unfortunately, I don't have those numbers before me, but I will provide those. It has more than doubled.


Mr. Andrews. I point this out for the following reason: I understand that the Department is not being held to a standard of perfection. Fortunately, none of us is held to that standard. But I do think it is important to note the progress that has been made under the existing management team and the existing management systems when we evaluate the ability of those systems and that team to make further changes in other areas. And I want to commend Secretary Riley and the team he has assembled for the progress that you have made.

I yield back.


Chairman McKeon. Thank you.


Mr. Hoekstra.


Mr. Hoekstra. Thank you. I would like to thank the Chairman for allowing me to sit in this discussion today. We have done a lot of work in our Oversight Subcommittee taking a look at different agencies, and it gets to be a disturbing pattern.

I think Mr. Andrews was just asking you, Mr. Longanecker, how much money you give out every year. What is the outstanding balance for loans right now? Do you know?


Mr. Longanecker. We have over $100 billion, I believe, outstanding at this point.


Mr. Hoekstra. I think you are right. I think that does make you the Citicorp of America. I think Citicorp, their consumer loan balance, and they are the number one private company in the country, and they are about $80 billion. So you are bigger than what they are.

The difference here is if you don't like your service from MasterCard, you can quit. You can get another card, an American Express or some other card. The interesting thing about MasterCard, is we are talking about 16 or 18 different loan programs, I believe MasterCard has developed now 4,200 different ways to get a MasterCard into our greedy little hands to use.

And I read and listen to this testimony and hear how we are handling $100 billion, and it scares me. Reading the GAO report about the multiple systems, and I think you go back in your conclusions, you are talking about the actual cost to maintain all these stand-alone systems is going from $106 million and is expected to climb to $317 million per year in 1998. In your conclusions, the number of known errors in the system remains significantly high. Mr. Bloom, could you describe what "significantly high" means?


Mr. Bloom. Well, I mean, it really depends on which system we are talking about, because there are 10 different stovepipe systems.


Mr. Hoekstra. I mean, if I am a student, does it mean that the chances of getting accurate information of exactly how much money I owe is kind of difficult; I may not really be able to find out too quickly?


Mr. Bloom. I am not sure. I guess I would check with some of my colleagues here, but I don't think that that is one of the problems.


Mr. Hoekstra. What does it mean then, the number of errors remains significantly high? What are the implications of those errors?


Mr. Longanecker. Well, let me help my buddy here, because I think one of those errors we would agree with very much. In the NSLDS program the error rate is 5 percent, and that is unacceptably high.


Mr. Hoekstra. What does an error mean?


Mr. Longanecker. This means of the data that is provided by the guaranteed agencies to us has an error rate on average of 5 percent of the loans that are reported to us, either the balance or the dates or something is incorrect, and that is unacceptably high. Now, that rate was 15 percent up until recently, so we have substantially improved that, but 5 percent is still unacceptably high. What that means is that for that student, if they (that 5 percent of students) were to query from their school what they owed or the school was to ask, they wouldn't get entirely accurate information. Now, they would get pretty close, but not perfect.


Mr. Hoekstra. Well, pretty close.


Mr. Longanecker. Yes.


Mr. Hoekstra. That works for horseshoes.

Let me ask, I am running out of time quick here. The implications at the college level, the college is still running through paperwork, running papers rather than being on-line.


Mr. Longanecker. Yes. Not so many of the colleges, but many of the proprietary schools are not running sophisticated operations. Now we have announced that this coming year, 1998, we expect all institutions to be on-line electronically with us for the exchange of data and for communications, so we have…


Mr. Hoekstra. You have announced that. I mean, it is one of the things that we have found the Corporation for National Services announce for 3 years that their books were going to be auditable next year. And they have come back now and said, yes, we are consistent, they are going to be auditable next year. So announcements don't necessarily, actually I would prefer that panelists don't make announcements because those sometimes come back and bite them in the future.

I guess my concern is when we are dealing with $100 billion of outstanding loans, I get very, very concerned hearing that people who are not experts in this are expected to perform at the rate of a Citicorp or the Microsoft of the government or the equivalent. It scares the daylights out of me with that kind of money and that kind of sophistication required for people who really aren't experts in this.


Mr. Longanecker. Let me respond in two ways. First, I think we would argue that we have more expertise than we are generally given credit for. I myself was in charge of the 10th largest lender at one point in the guaranteed student loan programs and one of the guaranteed student agencies at another point in my career. So we don't come to this without any experience. But let's say that you are to some extent correct in that. That is why we hire the best in the business to help us.

If you look at this, the $106 million is compared to the $317 a little bit misleading because during that period of time we brought on a brand new student loan program, which, incidentally, all of the subsidy's costs, all of the costs to the federal government are on budget as opposed to the Family Educational Loan Program, which has huge costs, but they are all off budget, they are hidden. So that is why the costs have gone up. And the costs have gone up so that we can afford to hire the best in business to help us to manage this program to assure that the student loans are repaid in time and in full, and that we have the kind of accountability that Tom Bloom is going to insist that we have.


Mr. Hoekstra. That you are going to have it, but you don't have it today.


Mr. Longanecker. We believe we have quite strong accountability in that program, stronger than we have in the FFEL program by far, and it is going to continue to get better. As we brought up a new program, we found there were areas that we needed to do better. Tom and his staff have helped us out a great deal in understanding that. And we will do everything that is necessary to assure that federal dollars are well spent in that program.


Chairman McKeon. Mr. Fattah.


Mr. Fattah. Thank you, Mr. Chairman.

I am reminded as we discuss this that the Congress itself has been trying to improve our management information systems for the years that I have been here, and we have failed to do it. And so it is of interest to chat with you today about the efforts of the Department, but I think that all of us should be aware of our own inability to get our own house in order on many of these same issues.

But I am pleased that Congressman Andrews brought out the success rate that the Department has had in addressing this. But I want to get into some of the details about the EASI system. You have all of the stakeholders at the table as part of this development. Could you just by category identify and in specific, give the Chairman and Ranking Member, a list of the committee members.


Mr. Longanecker. Betsy Hicks is the Chairman of EASI, so I will let her respond.


Mr. Fattah. If we can be brief, I want to get a sense of who is at the table in this process.


Ms. Hicks. Just to indicate who in front of you is a member of the EASI Steering Committee, it would be Mr. Nassirian, Mr. Biklen, Mr. Fitzgerald. We have brought representation from all of our stakeholders.


Mr. Fattah. That…

Ms. Hicks. Guarantee agencies, banks, secondary markets. Sallie Mae is a member; schools, also student groups.


Mr. Fattah. Now, you have been working for a while. In a few weeks from now, in September, you are going to lay out the architecture…


Ms. Hicks. Correct.


Mr. Fattah. …of how this new servicing system and information system is going to be.


Ms. Hicks. We will lay out a recommended target architecture and then try to reach consensus.


Mr. Fattah. So if we were sitting here after the August break, we would be talking specifics about how this new system, at least based on this work that all have been involved in, would benefit the Department and the_


Ms. Hicks. That is correct.


Mr. Fattah. …and the students and schools involved.


Ms. Hicks. Right.


Mr. Fattah. Now, I used to be the chair of the executive board of PHEAA, which is one of our larger guarantor agencies back home. We have a bifurcated system there, Mr. Chairman, in which a part of the agency runs the state grant program and the like. And then we have performance-based on the other side of the agency, all at the same leadership, in which, on the servicing side, for loans, we operate much more like a for-profit business. So that there are a number of ways that one could go about this. But the important work first is the recommendations of the EASI, of the stakeholders' group, because you have got to have everyone at the table and everyone who is going to be involved in this to be able to participate.

This issue of the reduction of the default rate, you said it was $3 or $4 billion down to $1 billion over the last 4 years?


Mr. Longanecker. Yes, in terms of rate, we reduced the default rate to the…


Mr. Fattah. I am not talking about the rate.


Mr. Longanecker. Yes, I believe the dollar amounts were $4 billion in costs in 1992, and they are down to around $2.5 billion. During that period of time, the actual volume has increased by 40 percent.


Mr. Fattah. I understand that. I want to help my colleague. I think he has left by now. But when we talk about having $100 billion in a loan portfolio, and you talk about such a low default rate, you could not find in the Citibank credit card department, that is a low rate, I mean, of default in bad loans. So this is actually progress that is being made.

And I think we should be clear about it in that the problem that you mentioned about the proprietary schools operating with paper rather than computers, this is the for-profit sector of higher education. These are the ones who were involved on the for-profit side who had not yet caught up with the fact that we need to have a management information system. And they also are the ones who have the highest level of default rates. So we need to tie this all together in a way in which we are outcome-driven in terms of the results that we want.

So I do think that it is helpful that the Department will require them to come on-line, and it will help us, I think, once this whole system is put together, to be able to choose between some of the management choices that have been talked about today. But I think you can't make those choices, I disagree with someone on the panel that said, well, we don't need the architecture in place to decide what the best way is to proceed. I think a couple weeks will benefit and inform the judgments and outline the choice points more clearly for everyone involved about how we ought to proceed. I want to thank the panelists for their testimony.


Chairman McKeon. Thank you very much.


Mr. Schaffer.


Mr. Schaffer. Thank you, Mr. Chairman. I just want to try to get to some of these numbers and some terms that may be a little more basic. And, for example, the escalation in costs over here that are listed on the chart and in the materials that we have all been described as actually increasing the opportunity for higher education for many students, and I would like to see if anybody can quantify that. Where are we headed in terms of our targets and goals, increasing academic opportunity for students? What does this represent in those terms? I know what the dollar amount is. What measurable result will we see as a result of that kind of spending?


Mr. Longanecker. Okay. If you were to take a look at that, you will notice that the increase, almost all of the increase, is associated with what is the darkest, the black line, and those are the costs of administering the direct student loan program. All of the costs of administering that program are on budget in the appropriations side of the budget. The net effect of that is a substantial reduction in the net costs of student loans to the federal government.

Direct lending costs less per dollar loaned than the FFEL program. Now, you won't see that because the costs of the subsidy for the FFEL program are embedded in the mandatory side of the budget under the subsidy cost for that program. They were developed as different ways in being funded. The costs of direct lending are on budget in the appropriated account. Many of the costs of administering the FFEL, because it is provided as a payment to the banks, is embedded in the mandatory costs of that program. So the benefit, the net benefit is equivalent benefits to students, even better repayment terms at lower cost to the federal government.


Ms. Hicks. Could I…


Mr. Schaffer. Yes, I would like to find out if others have a comment.


Ms. Hicks. Could I add a comment?

If you look at the far right, the box above the black box, those are the costs associated with running the central processing system. That is the system that processes the FAFSA, the federal application, the free federal application. So as you ask you realize whether we are making higher education more affordable, one of the ways we do that is by providing an application to the American public that it is free to process. But, of course, you know we bear the cost.


Mr. Schaffer. Mr. Biklen, can you comment on that as well?


Mr. Biklen. Well, I think the only thing I would say is I am not that familiar with these costs, but if this is the total cost of running these systems, and it has gone up like it has, I think if we can do what we are talking about and get to Project EASI, I think we can get a heck of a lot of cost out of this. I think we can do it a lot faster if we get the involvement of the people that are delivering the aid, and that is why I think it is so important to pursue this MBC thing, because I think if we get the private sector involved, not to say you are giving up any oversight, you can make some tremendous process and with technology and the Internet and so forth, eliminate all these stove pipes and, you know, take a lot of costs outside.


Mr. Schaffer. Let me just continue on with the quantification of the money that we are spending as it relates to education opportunity. For the efficiencies that have been suggested in the GAO report and by others on the panel, just recovering the funds that are currently expended on various inefficiencies in the loan program, if those funds were put toward actual, you know, providing loans and assistance directly to students, how many more students would you be able to estimate we would be able to serve in America, or does anybody know that?


Mr. Longanecker. Well, I appreciate the question. We actually had a budget request to take some of the inefficiencies out of the student loan program and use the billion dollars that was available there to lower the loan origination fee for students that was not entertained in this last budget, though we will be talking to you during reauthorization about some ideas there.

There is also excess guaranteed agency reserves out there in the billions of dollars that could be used for purposes of reducing the costs to students as well. You know, today we charge the student right up front 3 or 4 percent on their student loan before they get a dollar of it, and that is something we would like to get rid of if we could.


Chairman McKeon. Mr. Hinojosa.


Mr. Hinojosa. Thank you, Mr. Chairman.

I think that I also want to echo the comments by some of my colleagues and to thank for you bringing us such interesting information about the student aid programs.

My district is an area with many disadvantaged students, and this is something that is very, very important. And in looking at this chart that you have given us, it brings up the question if the growth of the program at some point reached a point of diminishing returns, the cost seems to have escalated in the miscellaneous systems portion of the expenses and on the last one, federal direct loan programs, direct loan origination, and the servicing portion systems that you pointed out to us.

Has the Department of Education considered looking at how that can be changed so that we can be much more efficient? I got here a little bit late.

And possibly in just skimming through this material, I saw the four recommendations given by Mr. Nassirian, and in this material it talks about four concerns that are addressed here. And it talks about the problems with the processing of these federal student aid programs. It goes on to mention four complexities of student aid processing, and it seems to me that these folks who gave us these four recommendations seem to be hitting the problem right on the head. And I would like to ask you how can our committee help you expedite implementation of these recommendations?


Mr. Nassirian. Mr. Hinojosa, let me sort of set this in some context. It would be tremendously regrettable if the reaction of the committee to the entirety of this panel ends up being one of sort of pigeonholing the opinions that you heard here. I truly and sincerely believe that the senior managers at the Department are among the brightest people we have had in office, and that they have the best of intentions. I really mean that. I wouldn't say it if I didn't. So please don't misunderstand any of our criticism as criticism directed at the Department for any other reason than your concern, sir, the complexity that people have to deal with.

And by the way, the less sophisticated you are, the more at-risk you become when you confront a complex system of application. You know, it is the ones who have lawyers and accountants and doctors as fathers do well no matter how complicated a system we set up in front of them. It is the ones for whom we really ought to be reaching out, the ones for whom we really want to reduce because the application is daunting. I mean, you know, I myself would have a hard time.

Now, Mr. Andrews, when you talk about your trip to use your credit card, I want to be very clear here, I am not here to bash the Department. I am a supporter of the Department of Education. I support direct lending. I bear all the scars of direct lending, and I am not going to go back on that. So please do not misunderstand what we are saying here.

What we are saying here is that there are specific aspects of this program that are like pulling teeth. If you think your trip to the department store was bad just because with six phone calls you managed to help boost the economy, let me assure you, on a daily basis there are kids who apply whose application goes in to Never-Never Land. There are institutions that essentially run the entirety of their offices with what I would describe charitably as shareware status software for which the taxpayers pay dearly. I mean, this is not falling out of, you know, the sky for free. We are paying good money for bug-ridden, highly unstable kind of software.

And I appreciate the Deputy Assistant Secretary's comments about it is hard. Sure it is hard. It is all hard. But a company that put out software like this would have been out of business. So the way we can do this, sir, I really want to be sort of brief, the simplest way would be to restructure the system. This system as it stands is just not tenable in terms of its structure.


Mr. Hinojosa. Thank you.

Thank you, Mr. Chairman. I would like to give, oh, I am out of time. Excuse me.


Chairman McKeon. We would all like to use more time.

Mr. Kind is gone.


Mr. Fattah. Mr. Chairman.


Chairman McKeon. Mr. Ford is gone.


Mr. Fattah. Can I get 2 minutes?


Chairman McKeon. Mr. Romero-Barcelo is gone. We are all gone. I think everyone has had a chance, and we do have another panel, so…


Mr. Andrews. Mr. Chairman, can we get one more question on the record for Mr. Longanecker? It is very brief, but I would like to get it on the record, with your indulgence.


Chairman McKeon. If you do it very briefly.


Mr. Andrews. I promise you.


Mr. Fattah. It is unfair, Mr. Chairman. I asked…


Mr. Andrews. I am senior to you.


Mr. Fattah. Oh, okay. I understand how that works.


Chairman McKeon. In the interest of bipartisan and not having anyone have any more fights, no. If you want to get it on the record, you can ask.


Mr. Andrews. Very good.


Chairman McKeon. We have told panels in the past that if you do have something that you thought of, if you will get it to us later, and we will keep the record open to get other things in. I appreciate that. And thank you very much for being here today.

We will take just a 2-minute break to get the other panel ready, and then we will start right away.

[Brief recess.]


Chairman McKeon. We will begin our second panel. I just got word that we have a Republican conference at 1:30 p.m. I don't know if the Democrats have one or not, but that would indicate that we have some problems with our budget deal that we were so happy about last night. I hope that is not the case. I hope it is just clarification.

But we will hear first from Mr. Robert Glidden, President of Ohio University, Athens, Ohio; and Mr. David Wolf, Executive Director of the Western Association of Schools and Colleges Accreditation Commission for Senior and Junior Colleges, from Santa Rosa, California; and then Mr. Jeffrey Wallin, President of American Academy for Liberal Education here in Washington; and finally, Mr. Arthur Keiser, Keiser College of Technology, from Fort Lauderdale, Florida.


Chairman McKeon. Mr. Glidden.




Mr. Glidden. Good morning, Mr. Chairman, Members. Knowing that our time is short, I will try to be very brief. We have entered testimony. I am, was, introduced as President of Ohio University, but I also represent here the Council for Higher Education Accreditation this morning, and I would begin by saying about accreditation and its relationship to the federal government, that accreditation is a uniquely American invention, and it is based on some American principles, volunteerism, peer review, self-assessment, and so forth. Many Americans, even those in higher education, do not recognize that or appreciate that we are one of the few systems in the entire world, perhaps the only, that does not have a federal Ministry of Education that governs who can take advantage of higher education and so forth. So we think accreditation is a fundamental part of that system.

We have a very diverse system of higher education in the United States with a wide range of types of colleges and universities and vocational and technical institutions and so forth, and therefore, accreditation must be very flexible. And therein lies one of the challenges to us. We do not have a national curriculum of any kind, we do not have standardization of that sort, and we think it is important to, in the accrediting process, to maintain that diversity.

I will move very quickly to just say a couple of our challenges for the future are issues such as international education, certainly the use of technology as it impacts higher education, distance learning, and the whole teaching and learning process, and then the reevaluation of education to focus on student learning and achievement, which is fundamental to accreditation and the assessment of quality.

There are two or three points I would like to make about the higher education amendments and our priorities with regard to accreditation. First of all, we would hope that any changes that are made in this reauthorization process maintain program integrity, quality assurance, that is what accreditation is all about, through appropriate sharing of responsibilities between the creditors, the states, and the federal government. The respective roles of those three entities we think should be clarified from what they are presently. The federal government protects the federal fiscal interest. Accreditation is responsible for quality review and assuring minimum standards. And the states should license postsecondary institutions to operate in their states.

Much of what is done by accreditation is not regulated by the federal government and should not be, and we think that some of those limitations should be articulated in the law. The state authority to set standards should not be superseded by the federal government. We believe that the state postsecondary review entities should be deleted from statute and replaced by state licensure responsibility.

And there are several additional amendments I would suggest, but they are in my testimony, and in the interest of time I will relinquish the microphone.

Thank you, Mr. Chairman.


Chairman McKeon. Thank you very much.


See Appendix H for the Written Statement of Mr. Robert Glidden


Chairman McKeon. Mr. Wolf.




Mr. Wolf. Thank you, Chairman McKeon, and Members of the subcommittee. I am here before you as Executive Director of the Accrediting Commission for Community and Junior Colleges of the Western Association of Schools and Colleges, and I thought I would spend just a minute, Mr. Chairman, describing how accreditation works, what it is that it is that we represent here at the table.

There are six regions nationally which contain eight accrediting commissions that pertain to higher education. In addition, there are other institutional accreditors that specialize by type of institution. On top of that, there are program accreditors that accredit specific programs, law, medicine, business, engineering, these kinds of things, which are in this mix as well. Together this complex of organizations has maintained the integrity and the quality assurance of American higher education for over 100 years now.

The actual conduct of accreditation involves the establishment of standards, which, for example, in the case of my commission, is an ongoing project that culminates once every 6 years in the issuing of a revised set of these standards. These standards become the basis upon which individual institutions conduct self-studies that become the basis for a team visit, which in turn generates a team visit report, which together with other information about the institution feeds to the commission that then makes the judgment regarding accreditation status.

There is a whole range of statuses that all of our commissions have at their disposal to issue. Some of these are negative. These are the ones that tend to lead to colleges either improving rapidly or going by the wayside.

The commissions themselves, and ours, I think, is fairly typical, number about 15 to 30. There are few exceptions. They are made up of faculty members, administrators, members who represent the public interest directly.

This issue of the public interest is a matter that has been very important to regional accreditation, perhaps all accreditation, but I will speak just to regional. This is one of several issues which are being examined by all the regionals now in various coordinated efforts. Besides the issue of public disclosure and public representation, as Bob Glidden mentioned, the issue of international education, making sure that, since this is a relatively new matter in certain dimensions that have brought into question quality of some overseas programs, we have spent a lot of time on that lately.

With regard to technology, the advent of the new type of university, such as Western Governors University, for example, is a particular challenge to regional accreditation. Last week I was in Salt Lake City with representatives of four of the eight regional accrediting commissions working with the Western Governors University staff trying to fashion a new set of eligibility requirements and standards particular to that kind of organization and then develop a process by which that type of organization might achieve accredited status.

All of this is by way of trying to demonstrate the systems that yield the broad range of institutions that receive accreditation in fact. In my written testimony, I have provided a number of examples of the kinds of institutions in my region, which is a relatively small one in this country. In our 137 member colleges, you find all the way from very small private, specialized institutions to very large, urban, public community colleges that might enroll as much as 30- or 35,000 students over the course of one semester. That whole range has been managed and is being managed reasonably by our existing system, not that it is perfect by any manner or means.

With regard to the Higher Education Act, Mr. Chairman, as Dr. Glidden has mentioned, the primary concern that the region in addition to accreditation bodies have is that the triad that has formed to protect the interests of the public and the education community be preserved in its proper balance; that is, the states worrying about licensure, the federal government protecting its own financial interest with regard to student financial aid and grants, and then quality assurance with regard to program falling to the accrediting community.

Certainly we are happy to answer any questions, and I want to thank you for your kind attention.


Chairman McKeon. Thank you very much.


See Appendix I for the Written Statement of Mr. David B. Wolf


Chairman McKeon. Mr. Wallin.




Mr. Wallin. Thank you, Mr. Chairman, Members of the committee, for giving me the opportunity to share my thoughts about accreditation and to tell you a little about my organization, the American Academy for Liberal Education.

Accreditation in American higher education has been a controversial topic for several years now. The reasons, not surprisingly, parallel many of the controversies concerning higher education itself. On the one hand, higher education in this country has been widely perceived to be an almost indispensable prerequisite for obtaining well-paying jobs and solid career positions. That this perception is true is borne out by recent studies indicating that the income differential between high school and college graduates continues to widen. It now exceeds 40 percent. I suppose if we were to add that college dropout Bill Gates into this figure, it probably would exceed about 60 percent.

On the other hand, the general decline of public confidence in our public and private institutions over the past few decades has not exempted higher education. The Harris opinion polling group, which has conducted research on this topic since the 1960s, has indicated that public confidence in American higher education has declined by more than half in the past 30 years. Meanwhile the cost of education has skyrocketed.

While between 1970 and 1994 the Consumer Price Index increased just under four times, the average cost of tuition, room and board at 4-year public colleges went up nearly five times, and at private colleges, it went up seven times. Yet it is not simply rising costs that have led to this loss of confidence, for in some respects, perhaps in many respects, the value of college education in relation to productivity has increased during these years.

Much of the problem has to do with the perceived lack of accountability on the part of colleges and universities. Although an accountability revolution has swept through American business and even some parts of government in the last 20 years, it has not yet made much headway in higher education. This is where the problem of accreditation comes in. How can accreditation, a large, cumbersome, and very expensive system, be said to ensure accountability while continuing to certify institutions that by almost any measure fail to provide a quality education equivalent to the cost, both private and public, of that education?

One source of this problem is the fact that large associations that accredit all types of learning institutions naturally find it difficult to specify academic standards that can be applied to all of their institutions. My colleague on the right here, for example, represents a very fine institution on the west coast, a rather small one as these things go, but even there, it is difficult for, what is it, 138 members to find an academic standard that can apply, say, to Compton Community College, Stanford University, and Berkley, say, a foreign language requirement or something of that sort, not for want of trying, not for want of good will, it is just a very difficult thing to do and one of the problems that we face in accreditation.

A possible solution to that problem is to supplement accreditation of regionally-based associations with national mission-related associations. This would allow major research universities, for instance, to respond to academic and learning criteria that explicitly address their own missions. Similarly, community colleges, technical institutes, and liberal arts colleges could be held accountable to standards specific to their goals and level of academic performance. My own organization, the American Academy for Liberal Education (AALE) was founded in part to see how such a system might work on a trial basis.

AALE was founded in late 1992, became operational in 1993, and was recognized by the Secretary of Education in 1995. It is distinguished by several features. Its board of trustees and council of scholars, which acts as an accrediting commission, have included major academic figures, such as Jacques Barzun, provost-emeritus of Columbia; Elizabeth Fox-Genovese, founder of the women's study program at Emory University; a Pulitzer Prize-winning biologist and Nobel Prize-winning physicist from Princeton and so on.

We have academic standards required of all our institutions. They include that students are educated in mathematics and laboratory science, literature, philosophy, history, and foreign language, the other elements of an exemplary liberal education. And we apply these not only to liberal arts colleges, but to member institutions that may be universities, but have strong general education requirements. We also require senior faculty to teach introductory courses even in the research universities and guarantee to students a freedom of inquiry and speech necessary to liberal inquiry and learning.

A new accrediting association like AALE could never have been founded under the old interpretation of the Departmental rules for recognizing accreditors. That interpretation protected a status quo system, and it was changed by Secretary Bennett, then by Secretary Riley as well, and by Lamar Alexander in between.

I wish to state, by the way, that the Academy is the first new accreditor under this system. It has been treated very fairly and well by the Department. And my recommendation here, in addition to those I submitted in writing, to keep this short, is simply this: to recognize that that was a decision of the Secretary that is not written into law. I would suggest that the committee consider writing into the Higher Education Act that new associations that meet all of the requirements of the Secretary continue to be recognized as a matter of law rather than as a matter of the choice of the Secretary, even though we, as I say, have certainly had no difficulty in this matter. But I would like to see that written into law so that we don't go back to the old system where there is a veto exercised by the existing accrediting agencies.

Thank you.


Chairman McKeon. Thank you.


See Appendix J for the Written Statement of Dr. Jeffrey D. Wallin


Chairman McKeon. Mr. Keiser.




Mr. Keiser. Chairman McKeon, Ranking Member Kildee, and Members of this subcommittee, thank you for providing me the opportunity to present testimony on the accrediting process and how institutions view the role of accreditation.

My name is Arthur Keiser, and I am here to testify as President and CEO of Keiser College and a member of the Career College Association's board of directors.

Keiser College is a regionally accredited, 2-year degree-granting institution, accredited institutionally by the Commission on Colleges of the Southern Association of Colleges and Schools.

I speak today on behalf of all accreditation, not just regional or national, but regional, national, and programmatic. I am a strong supporter of accreditation, and over the past 20 years, Keiser College has received accreditation by national, regional and programmatic accrediting agencies. Each one has helped our institution to become a better institution.

I want to talk on four topics, one on the role of accreditation; two, the barriers to student success; three, the burden of over regulation; and four, the future in terms of our country's educational processes and as it relates to accreditation.

The first, I agree and I echo President Glidden's comments that it is very important that the Congress clarify the role of accreditation in the Program Integrity Triad. Over the past few years, with the development of the SPRE and now the decline of the SPRE, the role of the accreditation has become one of regulator rather than one of pure evaluator. Accreditation should be and stands for one of the goals that this committee has, and that is the quality of education. It best serves the population of this country by recognizing and providing that role of an evaluator of quality.

Therefore, we believe strongly that in the coming reauthorization of the Higher Education Act, Members of this committee strongly accept or define the roles of the state, and that as serving and protecting the consumer; the federal Department of Education in protecting the integrity of the financial aid programs; and that of accreditation in terms of defining academic quality.

The second area that our members of our association are most concerned about is the barriers to student success. To quote James Duderstadt, the future of higher education will be a seamless web in which all that blends together for students to receive lifelong learning.

We believe that this committee should take initiatives to ensure that students entering from one institution, whether it be from my colleague next to me’s accrediting body, or from the accrediting Commission on Colleges and Schools of Technology which once accredited Keiser College, to that of a regional or national accrediting agency be a seamless process. The cost to the public of duplication of programs strictly because of artificial barriers is not effective and is inefficient and counterproductive to the population of our country.

The third part is the burden of regulation. My institution has had four program reviews, three unannounced accrediting visits, four announced accrediting visits, three fiscal audits of our financial aid programs, four fiscal audits of our financial programs, three guarantee agency reviews, and a recertification of our institution by the Department of Education, three guarantee agency reviews, all in a matter of 3 years. This is an overburden on our institution and all of the institutions that are represented by the associations in this room. It is important that we look at this overburden of institutions that drive up the cost of education.

A number of conclusions I would like to ask for this committee to consider. One, I strongly recommend that the committee looks at and continues to support the important role accreditation will continue to play in America's future. Two, I encourage you to review and incorporate many of the positions forwarded by the Council of Recognized Accrediting Agencies, which I have submitted in my testimony, into new law. Three, I recommend that Congress provide incentives for accrediting agencies and the Department of Education to encourage innovation and institutional change.

I strongly suggest that appropriate and open standards dealing with distance education, electronic delivery systems and cyberspace-based education, whatever forms it takes into the next millennium, be encouraged. I strongly suggest that Congress continue to recognize diverse forms of organizations, structures, controls, and encourage new and experimental institutions in the future.

And I strongly suggest that our students must be able to compete in an increasingly global work force, and that ensuring education quality through a flexible, innovative, voluntary accreditation process is crucial.

Thank you. And any questions you may have.


Chairman McKeon. Thank you very much.


See Appendix K for the Written Statement of Mr. Arthur Keiser

See Appendix L for the Written Testimony of the Council of Recognized National

Accrediting Agencies


Chairman McKeon. Before I came into Congress, I had the opportunity of serving on a school board. I also served on a hospital board. I am a little bit familiar with accreditation. We had accreditation of our high schools. We had accreditation of our hospital by peer groups. And I understand how important they are. I understand the pressure that the schools, the hospital felt when they knew somebody was coming to look at them. I can't imagine going through all of those different processes in a 3-year period. That seems a little excessive.

Since coming to this position, I have heard some of the problems with accrediting bodies, and one of the things that has been brought to my attention, and I would like you to address this and see if I am off base or I misunderstand, but it seems to me that all of us should have some kind of accountability, which is why it is important to have accreditation. We have accountability at least every 2 years, and more often than that it seems like on a daily or hourly basis, by constituents. And in most places in life, people have accountability. But what I have found in looking into this a little bit is that the accrediting bodies seem to be above accountability, well, I am sure they have some accountability, I just can't say where it has much effect.

Sometimes when you have no or limited accountability, there seems to be an arrogance that comes from that. And I have seen the way some of the schools have been dealt with and some of the problems that they have had with accreditation, and some of the decisions that have been made seem to arise from this lack of accountability or from an arrogance that comes from that.

Can you each maybe respond to that and see what your experiences tell you in this area?


Mr. Glidden. I will begin, Mr. Chairman, if you will permit me.

First of all, there are many different types of accrediting agencies as has been explained, and as I know you know. One of the functions of the Council for Higher Education Accreditation, which is a new organization just as of a year ago, it is formed and is paid for by institutions, is to make accrediting agencies in a sense accountable to this organization, a collection of all the institutions. It is our hope that we can have regular reporting from institutions after accrediting visits and after the results are announced and so forth, and if we see a pattern of abuses or problems, that we can mediate those disputes.

In fact, the regional accrediting agencies are presently accountable to their memberships in a sense. It is they who set the standards and actually set the procedures and make the decisions. In some instances, programmatic accrediting bodies are fortified by state licensure requirements where an individual cannot sit for a bar exam, for example, I think some 36 or 38 states, unless they have graduated from an accredited law school. So that takes the voluntary nature out of accreditation. And that is the kind of thing we would hope to mediate disputes over and resolve some of those differences. So that is the primary function of the organization that I represent here today.


Mr. Wolf. Mr. Chairman, you know so much of what you see is where you sit. Sometimes at our end, it looks like we feel almost as burdened as Mr. Keiser has discussed. There are four ways that immediately come to mind I know that we are held accountable on a very regular basis. The first is certainly to our membership. We hear grousing and complaining certainly from our own member institutions from time to time if there is some issue that is coming up where they believe we are out of line. Secondly, and this has to do more with the public, specifically students, there is a provision that if there is the belief on the part of a member of the public that the accrediting commission has not discharged its duty appropriately, to bring that to the attention of the Department of Education. The Department of Education makes inquiry to us, and we have to answer then to them in that specific context.

In a more general, ongoing fashion, there are two cycles that we have to abide by. We are reviewed every 5 years by the Department of Education. In fact, this afternoon I will be spending some time over at 7th and D streets providing more information for our application, which is under review right now. Then every 5 years, historically, we had been reviewed by our own accreditation national organization, CHEA now, CORPA previously. We went through that last year. It was a matter that took us some 6 or 7 months to prepare for, as with the DEA review this year.

These are major reviews, the consequences of which can be something less than a renewal of your 5-year recognition.


Mr. Wallin. Yes, it seems to me that this is one of these odd situations where on the one hand there is a great deal of accountability; on the other hand, there is one essential element missing, the one that no one ever intended, I expect. And it does have to do with the issue of just how voluntary such an association is. In one respect they are voluntary, but as soon as you have that link between an association with an accrediting agency and gatekeeping, they become far less voluntary, and that is part of the problem.

We think that there ought to be some choice here where institutions can go to different accreditors. There is a downside of that, too, of course. If there were to be a multiplicity of accreditors, the Department of Education would certainly be required to continue to see that they abided by very high standards. But once that issue is met, then you introduce new accountability if the members actually have somewhere else to go. If all they can do is complain, then a great deal depends upon the force of their complaint and how that is received by the various agencies.

We do think that that voluntary element needs to be more respected in fact rather than in name.


Mr. Keiser. Mr. Chairman, this is an interesting question. I have served on over 70 accrediting teams for five different accrediting commissions, and in all my experiences I found the accrediting process to be an extremely fair one, a process which peers really do get involved and attempt to help institutions become better. That is its purpose. Unfortunately, because it has that role of gatekeeping, which I believe is an important role, because accreditation is the best way to examine educational quality, it has this process which it ends up having two roles, one the chicken guarding the hen house and at the same time being unfair and trying to keep people out. It is an unfortunate circumstance that accreditation finds itself wearing those two hats which are clearly different.

But for the most part, I agree with President Glidden that the membership is very involved in determining the standards and the accountability of the accrediting commission. And in some cases, that is part of the reason that arrogance comes across. I think, depending on the membership of its organization, it reflects those members. And sometimes that creates arrogance, that the perception of the public is sometimes correct.


Chairman McKeon. I guess one of the problems that I found was with a specific school that was given by their accrediting agency certain requirements, and they met all of the requirements but one, and the school was going to be shut down in the middle of the year. And it seems to me when our ultimate goal should be to help students, and you are talking about cutting off their school in the middle of the year, and then when members of the school went to go visit with accrediting bodies, traveled to other states to do so, they couldn't even get in to see them and talk to them.

These are the kind of things that I think sometimes excess power to people is used excessively. Maybe these are very few and far between examples that I have seen when you figure we have 7,000 schools out there and a lot of accrediting going on, and I have heard of two problems in the last year or two. That is probably pretty good, unless you are one of those two schools that is having one of those problems. But thank you for your answer to that.


Mr. Kildee.


Mr. Kildee. Thank you, Mr. Chairman.

We used to have what is called the Council for Postsecondary Accreditation. That went out of being. And the Council for Higher Education Accreditation is serving a similar role to that.


Mr. Glidden. That is correct, Mr. Kildee.


Mr. Kildee. So your role is to seek a certain level of accountability of the various accrediting agencies.


Mr. Glidden. Yes. There are two or three differences between the Council on Postsecondary Accreditation on whose board I served back in the 1980s, so I am well familiar with that, and the Council for Higher Education Accreditation. This present organization represents just degree-granting schools and colleges, and we made that change partly because of the diversity issue I mentioned before. We have enough problem protecting diversity just among that whole community.

Our organization, the separation between what we do and what USDE does in recognizing accrediting agencies should be made clear. That is, we recognize accrediting agencies for good practices, for fair practices, for trying to resolve some of the kinds of circumstances that Chairman McKeon spoke about. But we do not recognize them for the gatekeeping function having to do with Title IV eligibility. The USDE committee does that, and we think that that separation is appropriate.

Now, over the past several years in developing this organization, we have worked closely with the Department, and we think we understand the separation of functions there, and they have been very cooperative with us, and we have tried to be very cooperative with them in understanding all of that.


Mr. Kildee. The Council for Higher Education, the various associations involved with that, do they accredit public, private, and proprietary schools?


Mr. Glidden. Yes, but they must be degree-granting. And actually, we recognize the accreditors. We do not accredit directly.


Mr. Kildee. Right.


Mr. Glidden. Because this is a council.


Mr. Kildee. You kind of watch for the accreditability of the accreditors.


Mr. Glidden. Exactly.


Mr. Kildee. But they in turn could accredit and do accredit degree-granting institutions, public, private and proprietary.


Mr. Glidden. Yes. We are still struggling with the eligibility for participation issue a little bit. We presently have that a majority of the programs or institutions accredited by an accrediting body must be degree-granting in order for them to be eligible for participation in our organization.


Mr. Kildee. So apparently we have, right now, two levels of accountability, because in the 1992 reauthorization, we asked the Department of Education within 5 years to review and approve the various accreditation organizations. So we have two levels of accountability, public and private, right?


Mr. Glidden. That is correct.


Mr. Kildee. Do you know or does anyone from the Department here, not at the table, if at this point in time have all the agencies currently approved by the Secretary been reviewed and approved in the past 5 years? Because I think in 1992, we asked for within 5 years that they review and approve the various accrediting organizations.


Mr. Glidden. I would think so, but I could not be authoritative. I don't know if there is anyone in the room from the Department. But they have a 5-year review cycle.


Mr. Kildee. Right.


Mr. Glidden. So unless someone slipped out of the cycle for some reason, I believe they would all have been reviewed.


Mr. Kildee. They should have accomplished that.


Mr. Glidden. Right.


Mr. Kildee. If someone for the Department could supply that for the record, I would appreciate it.


Mr. Glidden. I believe so, but I am not an authority on that. I don't know if there is anyone from the Department here.


Mr. Kildee. Jon; do you know?


Mr. Oberg. I believe it has been completed, the entire cycle, but I will have to check to be sure.


Mr. Kildee. If you can supply that for the record, Jon.


Mr. Oberg. Or any that are not completed.


Mr. Kildee. Thank you very much.


See Appendix M for the Summary of the Reviews of Accrediting Agencies performed by the Department of Education since the enactment of the Higher Education Amendments of 1992


Mr. Kildee. Mr. Keiser, you helped as a review team accredit other institutions. Your school is a proprietary school. Do you find that accrediting associations treat proprietary schools at this time as well as the public and private institutions?


Mr. Keiser. Well, there are different accrediting commissions. Certain accrediting commissions, such as the National Accrediting Commission, tend to not have the focus on governance of their organizations as a major focus, whereas in the case of the southern region, governance is a condition of eligibility. This sometimes creates, because of its governance and its control issues, extreme difficulties for institutions like mine, which have gone through the process to become accredited by a regional accrediting commission. Those type of issues of creating independent boards that are primarily from lay people, it is really difficult for a corporate entity to do some of those things where the stockholders of an organization would lose control over the operations of an institution. Our institution decided to do that. Other closely held organizations would have a hard time doing that.

In addition, many of the private career colleges and schools in this country are very vocationally focused, technically focused. The national accrediting agencies have emphasized in terms of, let's say, faculty credentials and appropriately have recognized that sometimes in a career area, very strong guidelines in hiring faculty who have industry experience or have work experience and knowledge of the field is sometimes more important. Regional accreditation based on the predominance of the membership of being academic institutions places a much higher degree of emphasis on the credentialing and on the areas of academic experience.

This is a conflict for some institutions whose missions are very focused to career orientations and cause them not to become members of or are forbidden from becoming members of regional accrediting agencies. They are not prohibited, but unfortunately in the southern region, I think there are only 10 proprietary institutions of the 800 members. So we are one of the unique institutions that has taken that jump.


Mr. Kildee. I visited a school recently in which the vast majority of the faculty were not full-time. They had CEOs from the major corporations in Oakland County. Do accreditation associations, aside from going beyond evaluation, try to regulate how many or what percentage of one's faculty should be full-time? In other words, does accreditation sometimes go beyond evaluation to regulation?


Mr. Keiser. I might turn to the accreditors. I do know that on a level one, which is a 2-year degree program, we do not have those criteria under the southern association. But when you go to the baccalaureate, they do have specific percentages of full-time faculty required. I am not sure I would take the jump in terms of the conclusion, but the fact is certain accrediting again, it is back to a membership. The membership of that accrediting association believe that full-time faculty are a critical component to effective education. Our institution has a majority; over 65 percent of our faculty are full-time, so we believe in that concept.


Mr. Wolf. We certainly hear that complaint from time to time, Mr. Kildee. There are two ways to approach the issue. First of all is what do the standards say? Speaking for my commission, there is no place in the standards that specifies some ratio or minimum requirement with regard to full-time faculty per se.

Every attempt has been made in building our standards to have them sufficiently flexible that they can address a range of institutions, including the proprietary institution that is primarily and sometimes exclusively part-time faculty members. The recent experience we have had with Western Governors University, which has no faculty, for example, in their direct employ, no conventional teaching faculty, is the subject of some additional examination as an example of how flexible the community is trying to be in being responsive to some of these new types of postsecondary education we are seeing.

Then there is a second way of looking at it, and that is what happens when a team actually goes out there and is examining? A lot depends on the team makeup, the team chair and such, and how they work with the individual institution.

I make it a practice, and I think I am typical of executive directors of region commissions, to be in very close contact of team chairs such that if an issue comes up, they find something on site they were not expecting to find, let's say it has to do with a number of full-time faculty, but they would contact us for a consultation before they begin to render any kind of judgment in that case.


Mr. Glidden. Can I make one additional comment about that, Mr. Chairman? I think we are undergoing a change of culture in higher education, but in accrediting agencies and practices as well. That is from looking at what we call input measures to outcomes, we are trying to encourage accreditors and institutions to carefully consider do students learn what we expect them to learn. And, of course, that is a little more difficult to assess and get at than just counting faculty and counting library books. But I think there is a tremendous move in the accrediting community towards outcome of success in terms of a mean of where we have quality and where we do not.


Mr. Kildee. Thank you.


Chairman McKeon. Thank you.


Mr. Deal.


Mr. Deal. I would, first of all, like to ask under what circumstances would an accrediting commission reject the recommendations of a review panel, and does that happen often? And if it does, does the Department of Education become involved in resolving the conflict?


Mr. Wolf. Mr. Deal, I think I can respond to that. We keep pretty close tabs on that kind of matter. I don't know if my commission is typical, but I can give you some statistics based on the last couple of years.

Over the last four commission meetings, and that would involve about 50 comprehensive reviews of our institutions, about 15 percent of the recommendations from the team were not taken by the commission. In almost every case, the commission issued a more severe conclusion than was recommended by the team. In part, I think it reflects two things: First, the commission exercising its responsibility to make sure that its renderings are consistent. Now, individual team chairs see their individual campus. The commission is seeing a whole range of actions at any one seating.

The second, though, I think is a general trend, because if you look across recent years, you will find and I think this is national, in general more negative sanctions coming down now out of at least regional conventions than we were used to seeing 5 or 10 years ago.


Mr. Deal. Does the Department of Education ever intervene in that process?


Mr. Wolf. It has not, to my knowledge.


Mr. Deal. I would like to move on to another general statement, but also has a question, and one specific. I have heard all of you talk about what the role of accrediting organizations are. Mr. Wolf talked about quality assurance. Mr. Keiser talked about evaluation of quality. President Glidden just talked about how assessment is being a move that is going forward. Let me touch on several areas that we have heard in previous hearings and this committee as well as what I hear back home.

There are several areas of concern to me. One is complaints from larger university environments in which students say, we never see those professors. Those professors whose names are the quality for accreditation, because of the research level, they are all busy writing books or research, and we just see teaching assistants. We don't get taught by the ones your organizations are looking at for the purposes of accreditation.

Secondly, I am concerned, and Mr. Kildee has touched upon it, the nontraditional student as well as the nontraditional faculty. I am especially concerned because I am seeing it at the graduate level, not just at the entry level. I am seeing it more at the graduate level with graduate degrees being issued in these nontraditional settings. I am concerned about the quality of what is being taught and whether or not the degree represents quality education.

But the third one is, and this is the one that there is a de-linkage here somewhere in the process, and that is as it relates to teacher training and the colleges of education within our universities and colleges. We have consistently heard in this committee and elsewhere that one of the problems with teaching in the elementary and secondary level teachers is that the colleges of education are not teaching teachers how to teach. And we are consistently hearing systems of education, systems at the local level saying, we need more money to teach teachers how to teach because the colleges of education are not doing so. They don't listen to us. They are totally irrelevant in terms of having a linkage with the people who are employing their graduates.

Now, if the role of accreditation is that of quality assurance, what, if anything, is being done from the accreditation standpoint to make sure that in the colleges of education, that their students are capable of doing what they say they are doing? What are you doing in that regard?


Mr. Glidden. Well, first of all, you make interesting points, and we have heard all of those things as well. On the first two, graduate-assisted instruction versus professors, and also nontraditional students, again, we think the answer is for institutions and accrediting agencies to look at student outcomes. In fact, I have been at large research universities, and I have answered this question often, but, in fact, many times graduate assistants who are doing teaching are very well-qualified instructors. Sometimes there are complaints because the students can't understand them if they are from another country, things of that sort. But, again, the students are learning at the pace and the way we want them to. That is the best way to measure that. For nontraditional that is absolutely critical.


Mr. Deal. Could I interrupt you there?


Mr. Glidden. Sure.


Mr. Deal. Is there any negative in the accreditation for the fact that teaching assistants are used rather than those professors who have degrees?

Mr. Glidden. I think it would depend on whether it is specialized or regional or which accrediting group is looking at it. Mr. Wallin spoke to that point with his organization as a requirement. I think most of us, there might be some negative marks, and there might be some comments about it, but we generally are not that prescriptive when we look at an institution.

If I may say a word, because I am sure others would like to speak on this point about teacher training. There are two issues there. One is regional accreditation, and the other one is the National Council for Accreditation of Teacher Education (NCATE). I assure you that NCATE does work very hard to try to get linkage between schools and colleges and universities who prepare teachers.

And if I just make a side comment about the preparation of teachers, we really expect a lot more from teachers these day than we once did. Schools are social agencies as well as education institutions in many instances, and the preparation of teachers is a difficult issue, but I assure you that NCATE, for one, is trying to make linkages between schools and universities always.

You may wish to speak to the issue of…


Mr. Wallin. Yes, just on a couple of these things.

Well, as someone who has taught at major universities as well, I think we all have to recognize there are some wonderful researchers we really ought to do our best to keep out of the classroom. They may not be the very best teacher for someone who is a freshman or sophomore. On the other hand, we do think there is a problem here. When we are talking about an institution that has its reputation built primarily on these big name professors, people don't really get to see them. So we do have a standard. It is flexible, but it is a standard that does require major professors to teach introductory courses. That is one reason we have people like E.O. Wilson on our board. Here you have a two-time Pulitzer Prize winner in biology who until last year taught an introductory course in biology at Harvard. It can be done. We don't believe research and teaching are mutually incompatible, although sometimes it can.

As far as the overall issue of the quality of teaching, I do think that there is much more attention being paid certainly at the college level, and that is because, as Dr. Glidden mentioned, there is strong movement to assist institutions based on the quality of their work, which means in almost every case the quality of the teaching and the quality of the student learning. As that movement continues, I think you will see a strengthening of the system of teaching in colleges and in universities. Then the issue of the student assistants can be addressed in a better way than simply laying out a ratio of what is acceptable and something of that sort.

I think what you are starting to see is a very difficult issue to address. Let me say how difficult it is in this respect. Remember this difference when you are assessing something. Let us say that you are a department chair, and you are assessing faculty on their ability to teach. You need them to be open to discussion and open to improvement. And if at the same time you are going to hit them with tenure decisions based upon that review, and increases of salary and things of that sort, you create a system that is at war with itself. And we have to find a way of entering into that and helping our institutions assess teaching on campus in a less threatening way and a more productive way.


Mr. Keiser. Congressman, I cannot speak on the teacher education, but I can speak that many of the nationals, which I also have an institution that is nationally accredited, are extremely outcome-oriented, extremely oriented and focused to the quality of the graduate, which is a measurement that, for our case, is very, very important, especially in career education.

We are looking at not only the knowledge that they have received, but the success in the field, the success from the companies that are hiring the students, in working with the students, the success of that student to be able to articulate the issues that the employers want.

We also evaluate very carefully the success we have in meeting students' goals and objectives through the evaluation of retention. We also evaluate, and I know in many of the accrediting commissions where they come in and they survey the students in terms of the institution, how well the faculty is doing. And we assess the student satisfaction in terms of their learning objectives and goals. So the national accreditations have made a major effort and taken a major step at working on accountability of student success, graduation, and reaching their goals and objectives.


Chairman McKeon. Thank you.


Mr. Wolf. I am sorry, could I add just one quick point on this item?


Chairman McKeon. Please.


Mr. Wolf. Much has been said about outcomes measurement, and we talked earlier about resources, how the focus used to be on counting books and full-time faculty and chairs in the classroom. I attended a really interesting, and maybe in the long run will prove important, meeting earlier this month where the Malcolm Baldrige staff met with four of the accrediting regions, and the issue they introduced with a new emphasis, that I think we haven't paid enough attention to just yet, are systems. It is one thing to talk about what you have got in terms of raw materials, it is another thing to talk about the outcomes. But it is the systems that tend to link those two.

I think, Mr. Deal, especially in the area of teacher education, that is a promising area, and I think it is one where new focus is beginning, and maybe a lot of attention is needed.

This is the kind of thing that the accrediting community, I think, needs to focus more on now. I think we are getting some leadership out of the Baldrige community, not that you can take whole cloth their systems, but they have, I think, a number of interesting aspects to their approach that we need to examine carefully and borrow from liberally.


Chairman McKeon. Thank you.


Mr. Andrews.


Mr. Andrews. There are, I guess, three approaches to measuring quality in higher education. The first would be to have some public or governmental entity just say who qualifies and who doesn't. I don't think any of us subscribe to that as an exclusive method. The second would be to have an accreditation system, which we have, to provide guidance to students and families as they choose, and I think we have a good accreditation system. We want to make it better, but we want to keep it. And the third way is to let people have information themselves and take into account what the agencies say, but then make their own judgment. And it really goes to what President Glidden said a minute ago about output and outcomes.

In the context of a baccalaureate program, a 4-year baccalaureate program, what indications of output has our research shown us to be valid? In other words, if I am a parent who is looking to help my son or daughter choose a 4-year baccalaureate institution in liberal arts, we will narrow it to that, what kind of indication exists that one might point to and say, this is a school that is succeeding, or this is a school that isn't? What would we publish in the Consumer Digest of good versus bad?


Mr. Glidden. That is an excellent question, Mr. Andrews. I think the tricky answer is that it is almost discipline by discipline. For example, a baccalaureate history major, I would determine where he or she goes to graduate school, where he or she is accepted and how they succeed, because as a history major, unless you want to go on and do something else, you are not going to find employment as a historian probably.

For certain vocational areas or baccalaureate professional areas, and there are a few of those, you can measure whether or not the people are placed in jobs. But the difficulty then comes in how you generalize all that information across an institution. So if a parent or student is looking at a particular discipline, and they want to know if history at college X is a good program, they can probably look to see where they go to graduate school and how they are accepted.


Mr. Andrews. Is there a place where that information is collected?


Mr. Glidden. Not central, no.


Mr. Andrews. Is there a way we could create one? I am sure we could. If we did, would it be best for the government to create such a resource or for the accreditation agencies or the institutions to come to…

Mr. Glidden. Some states.


Mr. Andrews. If I wanted to look up what happens to history majors at Oberlin College, how many of them go to graduate school and where do they go when they do, where do I find that information?


Mr. Glidden. From Oberlin College?


Mr. Andrews. Yes.


Mr. Glidden. Because there would be so many differences between Oberlin College and some other institution you might name in terms of what the aspirations would be in part. Part of the difficulty comes in how fair you can be about that sort of thing. Now, if you were comparing Oberlin College with Williams and perhaps others, you would get the information from each of those places, I presume. To do that nationally, centrally would be difficult, but some states are doing more and more of this, of insisting upon various kinds of outcomes reporting from their colleges and universities; that is, the state colleges and universities. And in diffuse states that would include private.


Mr. Andrews. Mr. Keiser, let me ask you a question. I know that in the career school sector, JTPA programs and others require very extensive reporting and placement rates by your schools. Is there similar reporting requirements? Do they exist for public institutions like vocational schools and community colleges?


Mr. Keiser. In the State of Florida there are. However, they use different definitions. And from our standpoint, at least in Florida, which I can speak of, one of the things we have spoken out against and spoken, or I should say for, is a common set of definitions, because it is very important that if the public is going to be a consumer of educational services, which I believe they ultimately are, that they are able to compare apples and apples and oranges and oranges.


Mr. Andrews. If my daughter were considering going into a technical program in laser optic technology, at least on a national level, is there any place I can go to find out the placement rate at laser optic programs in community colleges and vocational technical schools?


Mr. Keiser. I am not aware of that.


Mr. Andrews. But there are places I can go to find out from the career school sector; is that right? Probably the local workplace investment board or whatever the success_


Mr. Keiser. On the state level you would have, the state licensing board collecting that data. Many of the national accrediting commissions collect that data and publish it. And, Mr. Chairman, one of the things I would like to come out of this reauthorization is a uniform set of information in that situation so a student or parent can find that out. Thank you.


Mr. Wallin. May I say something about that, Mr. Chairman?


Chairman McKeon. Let me get to Mr. Schaffer.


Mr. Schaffer.


Mr. Schaffer. Thank you, Mr. Chairman.

I would like to ask if there is any value judgment associated with accreditation by any of your groups? What I mean by that is similar to consumer indicators that are frequently published in various journals or even in national publications of various sorts about the best dollar value for a higher education can be found at this institution or that institution. Do you consider the cost versus the advantage of attending a particular institution in your accreditation process?


Mr. Glidden. Lots of others are doing that for us in the publishing world. We have not done it through accreditation. There have been occasional discussions and attempts at a kind of grading system in accreditation, none that the community at large has accepted or is interested in because of the problems it might cause. So that within accreditation, itself, maybe these gentlemen know of some instances, but I don't know of any best buy lists or A versus B versus C lists and so forth.


Mr. Wallin. Well in some respect, in a limited respect, in the long run we are trying to supply something like that. But one of the difficulties here is when you look at a college and say, well, let's see if it is a good college, how many students go to graduate school or how many get good jobs, very relevant on one hand; on the other hand, that has an awful lot to do with the students that get there in the first place. I mean, Princeton may be a great place, but even if it is not, it is still a good place to send your child, because they are going to do pretty well afterwards. And there are a lot of schools like that, Williams and so on.

If you get beneath that, if you are trying to find out what the value added is, what are the students learning or not learning, I don't think there is an easy way. That is why there is so much trouble with U.S. World reporting and that sort of thing. We think you have to go in there and to use the methods of assessment and peer review, which we have a long history of in this country in accreditation, and turn it, focus it on student learning and really see what is going on in that school so you can make a judgment. We think that is a very difficult long-term process. There is not going to be an easy answer to that, but we do think it can be done.

But you have to have standards that you can measure. If you are going to talk about students' writing, well, we have got to decide what that really means. If you want to talk about them being statistically literate, we have to decide what that means and do it within the context of maintaining the universities' institutions and their perspectives.


Mr. Schaffer. Can any of you comment on the costs colleges and universities incur by becoming accredited? I think it was Mr. Wallin…


Mr. Wallin. I did.


Mr. Schaffer. …I think, that talked about he recently went through as a new accrediting agency, and I would like to hear your experience.


Mr. Wallin. What I meant by that was not so much the cost of paying the accrediting agency. That is not all that much. It is the internal cost of producing the self-study and the self-evaluation. I have seen figures for as high as $100,000 for that being done in a major institution, just the time of the faculty and administrator, so it is quite expensive.


Mr. Keiser. It is an expensive process. But again, remember the purpose of accreditation is to bring us, an institution, up to a set of standards. They voluntarily agree to do that. Some accrediting agencies are more expensive than others depending on the basis of that criteria or standards. Institutions have a choice.

I would also like to go back just to your last question and talk about what makes this system so effective in this country is the diversity of the institutions. It is important to establish measurements, but at the same time it is the same thing of evaluating accrediting commissions. The critical thing is does it meet the needs of the students, and that is the institution's governance must make that determination.


Mr. Schaffer. With 88 different agencies presently, let me just ask is that enough; is it not enough? Does it offer the kind of variety that would best meet the needs of a student in a free-market-type setting as higher education is situated? Secondly, I want to ask, and I know I am running out of time, compared to international benchmarks, does our accrediting process, in your opinion, measure up to the government centrally-controlled similar processes that other countries utilize?


Mr. Glidden. Go ahead.


Mr. Keiser. Just quickly, and I won't take your time. I think we have a very exciting accrediting process. Some is great. Some is not so great. But it is at the high range and the low range that really makes it so special versus the mediocrity of a singular governmental standard.


Mr. Glidden. I think it is really important to preserve the diversity in American higher education. There are so many choices. You can't find that kind of choice anywhere else in the world. And I really believe, and I don't mean to just wave the flag in front of you, but I really believe that our system is very American in concept, the kind of opportunity it affords, the kind of choice it affords, and we think it is critically important to preserve that choice.

If I may make a brief comment about the cost issue. I think sometimes, I mean the 100K figure may be true, but that is kind of railroad accounting, you know. The fact it is good enough is not good enough. And what accreditation is about to a great extent is improvement. And so what those institutions are spending in terms of people's time is the kind of self-assessment that they ought to be doing anyway. It is just that they can blame it on an accrediting agency in this particular case, and that is probably good. But what accrediting about is not just assurance of quality. But improving quality is at least half of what it is about.


Chairman McKeon. Thank you, Mr. Kildee.


Mr. Kildee. Just briefly. First of all I want to commend the panel. It represents a great spectrum of higher education. It has been very, very helpful to us.

Just one question. Mr. Glidden, you mentioned history majors and outcome. I love to hire history majors in my office. In fact, I seek them out. Is that considered a positive outcome?


Mr. Glidden. I should think so, Congressman.


Mr. Kildee. Thank you.


Chairman McKeon. Thank you very much for being here for your testimony.


Mr. Glidden. Thank you very much for the opportunity.


Chairman McKeon. It is very enlightening. We will now adjourn this hearing.

[Whereupon, at 12:21 p.m., the subcommittee was adjourned.]