and I just wanted to find out if it's accurate. The national loan default rate has been cut in half, according to this information I have, from 22.4 percent 3 years ago to 11.6 percent in the most recent year, reducing the taxpayers' burden by millions and millions of dollars. Would you comment on this?

Mr. LONGANECKER. Those are correct. That's one of the statistics we're proud of. I think another one that's very important is the net cost of defaults have gone down from over $2 billion to $1⁄2 a billion this year. I mean that's all good news.

We're working very hard to assure that this set of programs has integrity. We think the default rate has been a good and reasonable proxy for educational quality and for administrative capability. And so we're not uncomfortable using that as we have. If there are better measures, we've indicated to the community, we'd be glad to look at those during reauthorization of the Higher Education Act. But we think that the default initiative has been very helpful in improving the overall performance of institutions and students in this array of Federal student financial aid programs.

Mr. TOWNS. So you attribute it to that? Is there anything else that you attribute it to?

Mr. LONGANECKER. I think it's good management on the part of the Department, obviously. They're a clear part of it, without doubt, I'm sure. We'd like to claim all the credit, but I think the default initiative as I indicated, was a great part of it.

If you look, you will find, particularly within the proprietary sector, the institutions that are remaining are bringing their rates down; so, it is not only eliminating bad schools, it is changing the behavior of those schools that remain in the program.

Mr. Towns. All right. Let me move along. What are your views on making accrediting agencies more liable? What effects has title IV had on the role of accrediting agencies and the gatekeeping system?

Do you feel there is still room for further changes in the role of accrediting agencies to ensure program integrity?

If so, I would like to know what changes, because I think this is very, very important.

Mr. LONGANECKER. It's an awfully important area, and it's one I think we're going to have to continue to have a lot of discussions. Tom and I disagree a little bit on how aggressive the Federal role should be here. I very strongly believe that a private sector involvement in quality assurance is better than trying to Federalize that activity.

However, having said that, I would also tell you that I don't think the current accreditation process is a very modern quality assurance process; it needs reform.

Having said that, I would also tell you there's a great deal of reform going on in that community, both pressured by the changes in the Federal law and self-initiated activities.

So, I'm fairly optimistic that the kind of modernization that's needed to bring it into compliance is beginning to occur.

We have noted a number of the accrediting bodies that accredit proprietary schools have begun eliminating schools. We've had over 80 schools eliminated between 1993 and 1996, most either by State licensure or by accreditation. And almost all of those were elimi

nated by accreditation, not by State licensure. And that's substantially more than was the case before. There was virtually nothing going on before.

With respect to the national accrediting bodies, the ones that accredit public and private colleges and schools, they haven't eliminated as many institutions, though they too have become much more aggressive. And we, in our oversight, have become much more aggressive. In our review of these programs, relatively few, as they came up before us for their first review after the 1992 amendments, received the full certification for 5 years.

In many cases, we have let them continue in operation, but we have told them where we think there are areas they need to strengthen. We've given them 1, 2, or 3 years to do that. And we've been quite pleased, by and large, with the response that we're receiving.

This is a very significant change from the way in which accrediting bodies have been held accountable in the past. It's very uncomfortable and very new for them, and it took a while for them to believe that it was that different, even though the law said it was. That realization, we think, has occurred, and we believe we are seeing substantial turnaround in the attitudes of accrediting bodies.

Mr. Towns. All right. I'd like to get your comments on that, Mr. Bloom.

Mr. BLOOM. I guess by nature, I am a fairly impatient person, and while we do see some movement by the accrediting agencies, it has been 4 years, and we're not where, at least, where I believe-going back to my chart-we ought to be.

So while there is some movement, it's not enough, in my book. And, again, by nature, I would much rather this be my professional education tells me I would much rather this not have to be a Federal process. But if they're not going to get there, we're going to have to kick them one way or another. That's kind of my point. Mr. Towns. All right. OK. Mr. Chairman, at this point, I yield back, unless, Mr. Howard, you want to make a comment? Mr. HOWARD. No.

Mr. Towns. OK. Fine.

Mr. SHAYS. First off, Mr. Longanecker, you've been in the Department for how long?

Mr. LONGANECKER. I've been there since June 1993; 3 years.

Mr. SHAYS. You know this committee tries not to throw bricks at Government agencies. You have been there for 3 years, and there was a process before you.

What I hear you saying is that you did not have the kind of information systems that would enable you to get information quickly and easily when you took over; is that accurate?

Mr. LONGANECKER. That's accurate. I would say that we aren't there yet. We have better information systems today. We still are doing a great deal.

If I had added a second area to Mrs. Morella's request about how I'd apply for the Baldrige Award, it would be to improve our overall information management systems. And we're working very hard toward that.

Mr. SHAYS. We have a subcommittee of the Government Reform and Oversight Committee that focuses on management information systems, because there's a general sense that the Government, for whatever reason, is never at the cutting edge.

And when it starts to get there, it's way behind, I mean when it starts to implement, and then it doesn't implement the programs well, then we're constantly redoing them. I mean it seems like one horror story after another.

But getting to the statistics that I'm interested in, it seems like a no-brainer to me that you would be able to tell me the number of proprietary schools that are involved in title IV programs.

Mr. LONGANECKER. Well, here's the table that I think you're looking for, for fiscal year 1988 through fiscal year 1993, which is the most recent cohort default rate that we have, by public 4-year, public 2-year, private 4-year, private 2-year, proprietary, foreign, unclassified on one column, number of schools, number of hours defaulted, number of borrowers, payment

Mr. SHAYS. Let's take proprietary schools.

Mr. LONGANECKER. OK, proprietary schools.

Mr. SHAYS. Just give an illustration of what you've got there. Mr. LONGANECKER. In 1988, the number of proprietary schools was 4,435. Their default rate, at that time, was 30.5 percent. And they represented three-quarters of the students in default.

Mr. SHAYS. And do you have a dollar amount?

Mr. LONGANECKER. I don't have the dollar amount on this table. We do calculate the dollar amount.

Mr. SHAYS. Well, we'll just have you followup on that, sir.

Mr. LONGANECKER. By 1993, and this is

Mr. SHAYS. I understand you don't have it here, but I would like you to follow up on that request.

Mr. LONGANECKER. We'll be glad to provide that to you. To give you a sense of how things had changed, by 1993, that number of schools had dropped to 3,575 schools.

Mr. SHAYS. Wait. I'm sorry. How many total schools did you have in 1993?

Mr. LONGANECKER. It's 4,435 proprietary.

Mr. SHAYS. It's 4,435. It still is the same number?

Mr. LONGANECKER. No. It's gone down to 3,575. So it's dropped by

Mr. SHAYS. It's 3,575. I'm sorry.

Mr. LONGANECKER. It dropped by 900 schools. The number of defaulters had dropped from 319,000 to 99,000.

Mr. SHAYS. It's 99,000, OK.

Mr. LONGANECKER. Defaulters now represented less than onehalf of the defaulters, whereas they represented over three-quarters of the defaulters in 1988.

Mr. SHAYS. You say one-half of what?

Mr. LONGANECKER. Of all defaulters are in the proprietary sector.

Mr. SHAYS. So you're saying the proprietary schools went down in number.

Mr. LONGANECKER. And, as share of the total, both in absolute numbers and as a share of the overall total.

Mr. SHAYS. And the nonproprietary schools may have remained constant?

Mr. LONGANECKER. Yes. Actually, there's been relatively little change. The overall default rate for other sectors has remained fairly stable and is not that high; it's around-I think the overall default rate for 4-year-well

Mr. SHAYS. And when you talked about the $2 billion versus the $2 billion; explain that to me?

Mr. LONGANECKER. That's what I call the net default rate. That's the difference between what we paid out in that year in default costs and what we collected in student loan defaults. And most of that is from a substantial increase in collections. Again, that is an area where, I think, we can proudly claim that we have a very high performing unit. Our debt collection service is extremely good. But also the law gave us some pretty powerful ammunition.

Mr. SHAYS. Right.

Mr. LONGANECKER. There was a question earlier about defaults. Mr. SHAYS. You can garnish wages, correct?

Mr. LONGANECKER. We garnish your wages. We capture income tax refunds.

Mr. SHAYS. Right.

Mr. LONGANECKER. We do amazing work with skip tracing to locate people. And we just don't give up on a student. And they cannot, as an answer to that, they cannot declare bankruptcy.

Mr. SHAYS. Right.

Mr. LONGANECKER. So we go after them. I mean, we ruin a person's life if they default on a student loan.

Mr. SHAYS. You know, they ruin their own lives.

Mrs. MORELLA. If the chairman would just yield, you started to mention what the default rate is.

Mr. LONGANECKER. Default rate, very substantially, by type. Public 4-year institution, the average default rate is 6.9 percent. Mr. SHAYS. Slow down just a little bit. You're going a little too quickly.

Mr. LONGANECKER. It's 6.9 percent for public 4-year colleges; that would be like the University of Maryland. Public 2-year, like Montgomery College, would be 14.5 percent. Private 4-year, like GW or Georgetown or Catholic or American, would be 6.2 percent. Private 2-year colleges, that would be a school like I'm trying to think, Mount Vernon, is that right, I think they're a private 2-year, 13.5 percent. Proprietary now at 23.9 percent. Foreign institutions, 5.1 percent. And, unclassified, 4.1 percent.

So the overall rate comes to 11.6 percent.

Mr. SHAYS. Yes. But I just want to understand. The default rate is a half a billion as of what year?

Mr. LONGANECKER. That's as of fiscal year-well, I got that one here, too; I'll give you that. That's as of 1995, the fiscal year that was completed last September 30. That was the net default rate. It was the difference between $2.4 million in default costs and $1.9 million in default collections.

Mr. SHAYS. OK.

Mrs. MORELLA. Mount Vernon gives bachelor's degrees and master's degrees now.

Mr. LONGANECKER. Then I have a bad example.

Mrs. MORELLA. You're in the olden days.

Mr. LONGANECKER. Yes.

Mr. SHAYS. And the $2 billion was in what year?

Mr. LONGANECKER. The highest year we had was in 1991, and the net cost in that year was $2.8 billion.

Mr. SHAYS. And is that figured the same way?

Mr. LONGANECKER. Yes. It was $3.6 billion in default costs and $.7 billion in collections.

Mr. SHAYS. Well, it seems to me that's a pretty impressive number.

Mr. LONGANECKER. Yes. We're reasonably proud of it.

Mr. SHAYS. Mr. Bloom, put it in perspective. I'm impressed.

Mr. LONGANECKER. Well, you should be. I mean this is—I mean we do some things

Mr. SHAYS. I didn't ask you. I asked Mr. Bloom.

Mr. BLOOM. It's certainly moving in the right direction. And I would add that a lot of people can take credit for that, including the Congress particularly, for instituting the default rate provi

sions.

Mr. SHAYS. So we've given the Department some significant tools in which to go after them.

Mr. BLOOM. And they've used them well.

Mr. SHAYS. Yes. And so, for my way of looking at it, I can go back to the constituents I represent and say, if a student defaults, they can't hide. It's not written off. It follows them the rest of their life, until they honor their commitment. Now, when is it written off?

Mr. LONGANECKER. Well, actually, it's never written off. It's one of the dilemmas we have with the GAO and others, in terms of trying to find and get a clean audit. These debts are really never written off, until a person dies. We don't go after people after they die. There's been some discussion about it.

Mr. SHAYS. Let me get to the next-you're kind of a fun guy here. See, you know, we all make mistakes. I made a mistake giving my ranking member the gavel. And, you know, but we learn.

Accreditation, I don't think I am impressed with that part of it. The accreditation agencies are national; they're not State by State. And you basically accredit the accrediting organization?

Mr. LONGANECKER. That's correct.

Mr. SHAYS. I'd love to have a sense of how you evaluate the accrediting organization?

Mr. LONGANECKER. We deal with them very similar to the way in which we deal with a school. We review them periodically. They bring to us

Mr. SHAYS. And how many organizations do you

Mr. LONGANECKER. I'm trying to remember the total number; about 20-I'm thinking it's about 20 to 25 that are

Mr. SHAYS. I'm kind of pleased that you didn't have an answer. Mr. LONGANECKER [continuing]. Are approved between-there are the national organizations, like the ones that you will have speaking to you later. There are also, then, the regional accrediting-there are seven regional accrediting bodies, six or seven regional accrediting bodies. They are the ones that most traditional colleges and universities are accredited by.