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Mr. APPEL. I don't have the exact numbers with me today. I mean, it's not many-it's a few.

Mr. SHAYS. See, I'm trying to determine the value of having this committee look into it. As opposed to the committee that actually has to write the law, we look at the program, and we come with a fresh face and a fresh look. The kind of questions that I'm interested in asking just seem kind of basic stuff.

I mean, we have three organizations that are involved. Your report is fairly clear that they are all involved. But there's no one ultimately that seems to be held accountable. And it seems like the SPRE's almost became a way to give credibility to something that maybe doesn't deserve credibility.

I mean, I would think an accrediting board would be able to proudly say: We have this many institutions. We are very proud of what they do. We have located some of the bad apples in this group and we've gotten rid of them.

And if they haven't proactively looked for the bad in their group, then they're really defrauding the system. All they're doing is using the word "accreditation" without housing the substance to back it up. There are bad schools in the system. It's great they haven't accredited new ones. But maybe some new ones deserve to be.

It's not good if they haven't gotten the bad ones. However, I can't make that determination based on what you've been able to tell me. It seems to me like those are pretty logical kinds of questions to ask.

Ms. BLANCHETTE. I think, Mr. Chairman, that perhaps part of the difficulty here is in understanding, at least, the traditional role of the accrediting agencies. They don't see themselves as part of the Federal regulatory process. They now have responsibility because of the 1992 amendments.

Mr. SHAYS. We've given them more credibility, haven't we?

Ms. BLANCHETTE. I think maybe we have not necessarily given them more credibility. I don't want to say that. But, in terms of being a gatekeeper for title IV programs, perhaps we have believed that they had a different role than they actually had.

Mr. SHAYS. Well, I mean I would think logically

Ms. BLANCHETTE. And then one could argue what role should they have as a private entity.

Mr. SHAYS. We wanted to make sure that the schools that were able to encourage students to come to their school and have a program were schools of substance and that you would have an organization that would be able to put, in a sense, a stamp of approval. Admittedly, it was a brotherhood or sisterhood. But that they would take some pride in that this accreditation meant something and that they would work night and day to get out the bad ones. And you are not-at least I can't make a determination, and the committee can't, whether they have done that or not done it, based on the kind of response I'm getting.

I get the sense that they haven't, but I can't-I'm not provided, you know, helpful information right now.

Ms. BLANCHETTE. I think the results are mixed. And part of the difficulty may be that, as I said, we're in the process of doing the work, so we have not gotten to the point of issuing the final product.

Mr. SHAYS. Well, then I would encourage that question to be responded to. And I'd like to simply know-I'd like to know specifically every institution that is qualified under title IV to have loans. I'd like to know how many of them have lost their license. I'd love to know why they have lost their license or their accreditation.

I'd like to know from the different accreditation boards, and we'll follow this up with a letter-the different accreditation boards of how many they have-how many new schools they've accredited and how many they've revoked.

And I'd like to know their process for going after those that simply shouldn't be players.

I mean, as much as I fault the students for not paying, and I do fault them, if they've really been basically taken over, enticed to participate in a program that simply isn't worth the payment, I have some sympathy, though not an excuse, for why a student says, "Screw it. I'm not going to pay it."

mean, I understand that, even though that can't happen.

Ms. BLANCHETTE. I think we may run the risk of oversimplifying what is a very complex issue, even the question of what a bad school is or, on the other hand, what a good school is, what a quality school is. It's not as simple as it might sound.

Mr. SHAYS. No. But that's why you have accreditation of schools. I mean, my brother used to own a camp. They would tell you what was a good camp and what wasn't a good camp, what was a safe camp and what was a dangerous camp. Some of it was the number of teachers, the number of counselors to campers, it was the kind of safety program you practiced, and on and on and on. So I don't buy the fact that an accrediting agency can't tell you what adds up to be a good institution.

Ms. BLANCHETTE. I think an accrediting agency can tell you what it believes adds up to be a good institution within the realm of institutions it looks at.

Mr. SHAYS. Let me just conclude by saying you've told me about the Department of Education, and accreditation. Now, how does the State fit in?

Ms. BLANCHETTE. The States, and as I said earlier, the State rules vary among the States. The States basically license proprietary schools, just as it licenses other businesses, and that can sometimes be nothing more than payment of a fee, filling out an application, paying a fee, or there might be more extensive require

ments.

Mr. SHAYS. Does anyone on the committee have any questions or shall we get to our next panel?

Mrs. MORELLA. May I, Mr. Chairman?

Mr. SHAYS. Yes.

Mrs. MORELLA. Perhaps this had been answered; I was just simply curious about whether or not you've found any of the proprietary schools doing any recruiting that you felt verged on trying to entice at-risk, in terms of repayment, students?

Ms. BLANCHETTE. We did not look at the recruiting efforts of schools.

Mrs. MORELLA. OK. Mr. Chairman, isn't that kind of part of your question too, the idea, are they doing that and who is doing it?

Mr. SHAYS. Yes.

Mrs. MORELLA. Great. Thank you.

Mr. SHAYS. I realize, and with some deference to you all, that you are in the process of looking at this. We appreciate your effort to look into this.

It doesn't seem to me like it should be as confusing and diffuse as it appears to be. It seems to me that, ultimately, there has to be more accountability. I may change my view on how. But in my mind, it doesn't seem that the system has to work that way.

Do you all have any other comments?

Ms. BLANCHETTE. Just that I agree, accountability is extremely important, and I don't know that the system has to work that way. Mr. SHAYS. Thank you.

Ms. BLANCHETTE. You're welcome. Thank you, sir.

Mr. SHAYS. Thank you very much.

Mr. Towns. Thank you very much. Now, we move to the next panel, David A. Longanecker, Assistant Secretary for Postsecondary Education; Thomas R. Bloom, inspector general for the Department of Education.

There is a longstanding tradition that we swear everybody in on this.

[Witnesses sworn.]

Mr. TOWNS. Take a seat. Why don't we start with you, Mr. Longanecker.

Mr. LONGANECKER. Thank you.

Mr. Towns. I'm getting used to this, because I plan to Chair in the next Congress.

STATEMENTS OF DAVID A. LONGANECKER, ASSISTANT SECRETARY FOR POSTSECONDARY EDUCATION; AND THOMAS R. BLOOM, INSPECTOR GENERAL FOR THE DEPARTMENT OF EDUCATION, ACCOMPANIED BY PAT HOWARD, BRANCH CHIEF FOR POSTSECONDARY EDUCATION, AUDIT SERVICES Mr. LONGANECKER. Mr. Chair, members of the committee, for the record, I'm David Longanecker. I'm the Assistant Secretary for Postsecondary Education, and I'm accompanied this afternoon by Betsy Hicks, who is the Deputy Assistant Secretary for Student Financial Assistance, and is the person who is, to a great extent, responsible for much of what I am going to be talking about and for what I think is a pretty strong record of success for us in the oversight of and improvements in the oversight in postsecondary education.

It is a pleasure to appear before this committee today. This is my first opportunity to appear before this particular committee, though I've worked with a number of the committee members in other venues in the past.

It's also a pleasure to share with you, as you requested, the status of our current gatekeeping system, the roles and responsibilities of the tripartite gatekeepers, and the expectations each has of the other.

We hope that this is the first of many productive sessions with your committee, as we jointly look for ways to better serve students in the future, while also assuring that we do so through a set of programs that demonstrate the highest levels of fiscal and administrative integrity.

I might also mention to you I'm departing from my prepared remarks, which I presume will be included, and I'm going to try to abbreviate those quite a bit.

This afternoon, I'll explain the eligibility and certification requirements. I'll describe how tougher standards and more attentive oversight within the Department are reaping intended results. And, finally, I'll share with you the work we've done to adopt a fundamentally different, and we think better, approach to oversight for the future.

To the approximately 7,000 postsecondary institutions that currently participate in the Federal title aid programs, we provide them about $40 billion in Federal aid. So this is mighty important work in which we're engaged.

To participate in these programs, an institution has to meet three conditions. It has to be licensed to operate by the State in which it is located. It has to be accredited by a federally approved accrediting association. And it must be certified by the Department. You heard about the program integrity triad.

The States determine the standards used for licensing and approving institutions. And, indeed, those standards vary considerably from State to State.

Accrediting, on the other hand, is more closely monitored at the Federal level. Accrediting agencies are private, nongovernmental organizations that evaluate the educational quality of the institutions, to speak to the chairman's interest. They emphasize the curriculum, the faculty, the educational outcomes, support services, and the ability of the institution to carry out its educational mission.

The 1992 amendments to the Higher Education Act substantially strengthened the requirements of accrediting agencies, specifying 12 specific areas in which they must develop standards. This is serious business because if an institution loses its accreditation, it automatically loses title IV eligibility. And, in this world, for all practical purposes, that means they probably won't be able to survive.

The Department is responsible for evaluating compliance of the accrediting agencies. We do so by evaluating written materials, conducting site visits, observing their site visits, and conducting file reviews. In addition, we are assisted by the National Advisory Committee on Institutional Quality and Integrity, the role of which was substantially enhanced by the 1992 amendments, as well. This sterling group of professionals has proven extremely helpful to us in advising the Secretary of whether and how accrediting agencies should be recognized.

There were concerns in Congress and elsewhere about whether these accrediting agencies were adequately ensuring quality education. These concerns led to the much more directive role reflected in the 1992 amendments. The Department shared similar concerns, both under the last administration and the current one.

But I want to tell you that we are quite pleased with the response today. My perspective is somewhat different than the other ones you will hear today. Although we certainly continue to have some concerns regarding these agencies and their ability and willingness to enforce performance measure standards, we have wit

nessed substantial improvement. And we are convinced that these private organizations are better suited to assess educational capability than is the Federal Government.

If an institution is State approved and accredited, then it can apply for eligibility and certification by the Department. And this is where we come into the quality dimension. We look at whether that institution has the financial and administrative capability to operate its programs. So we're assessing its administrative quality, if you will.

That institution must demonstrate that it meets standards of financial responsibility and administrative capability. This is certainly not automatic, though it used to be. In 1990, only 16.6 percent of applications were rejected. In 1995, 40 percent were rejected.

Mr. SHAYS. Can you give me that statistic again? I'm sorry.

Mr. LONGANECKER. In 1990, 16 percent of applications were rejected; 1995, 40 percent were rejected. Furthermore, the sheer number of initial applications has declined by more than 50 percent since 1991. We think that demonstrates that people now know that this is more than just a frivolous activity.

When an institution seeks initial eligibility and meets the standards, it is granted provisional certification. Now, provisional certification is, incidentally, a very important result of the 1992 amendments. To remain eligible, you've got to pass these various tests, participate rapidly if the capacity is-let me just catch my breath. I saw that red light go off, and it just

Mr. SHAYS. No. I turned it off, which meant don't worry about it, within reason.

Mr. LONGANECKER. OK. Thank you. I appreciate that, Mr. Chair

man.

Mr. SHAYS. Your testimony is very important to us, and I want to make sure you have an opportunity to share it with us.

Mr. LONGANECKER. I mentioned how important we thought provisional certification was. It allows the Department to allow new and marginal institutions to remain eligible. But it also allows the Department to remove those institutions for participation rapidly if their capacity to serve the program's purposes deteriorate.

After the first full year on provisional certification, new institutions are reviewed and either granted full certification, continued provisional certification, or they are terminated.

Now, fully certified institutions must also follow certain procedures to continue to remain in the programs. Obviously, they must remain licensed and accredited, as they are requirements of the program. But they must also be recertified every 4 years. And when they come up, we determine, based on their performance, whether they are again fully certified, provisionally certified, or whether we withdraw certification.

Of the 1,500 institutions undergoing recertification last year, 70 percent were fully certified, 20 percent were provisionally certified, and 10 percent were rejected.

We also monitor these institutions' progress. And we have dedicated more staff, more training and more attention to this process. Last year, our 10 regional offices conducted more than 850 reviews of institutions, 50 percent more than the previous year. We've

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