Federal Aviation Administration Extension Act of 2010--Continued

Floor Speech

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Mr. DURBIN. Will the Senator yield for a question?

Mr. HARKIN. I am[Page: S45] delighted to yield.

Mr. DURBIN. I wish to ask the Senator, most people say businesses ought to have their opportunity to make a profit. That is what America is all about. What percentage of the revenues at, say, the University of Phoenix come from Federal taxpayers?

Mr. HARKIN. I am glad the Senator asked that question. I will go over that again. There is a Federal law that says they can only get 90 percent of their revenue from Federal financial aid sources, loans or grants, Pell grants, loans, that type of thing, 90 percent. The University of Phoenix reported last year they got 89 percent of their money from the Federal Government. But here is the kicker. If you are a GI and they recruit you and you are giving them your GI bill benefits and other educational benefits you get through the military, that is not counted in the 90 percent. For some reason that is not taxpayer money. Actually, the University of Phoenix got more than 90 percent of their money from the taxpayers.

Mr. DURBIN. If I might follow up, didn't we ask the GAO to do a study, or the Department of Defense to do a study about GI bill benefits and how much we were actually spending through the GI bill for education through the for-profit schools compared to the public schools, community colleges, colleges and universities? We asked for that number, and we ended up learning these for-profit schools were charging GIs and veterans three times the amount being charged for those who went through other traditional schools, public schools, and universities.

It strikes me we have a legitimate concern. I know the Senator from Iowa and myself have been dutifully and loyally voting for Federal aid to education. I don't know his story. My story is, I am standing here today because of a National Defense Education Act government loan that let me finish college and law school; the Senator from Iowa the same thing. I have thought, goodness' sakes, if that is how I reached this point in my life, other people deserve the same chance. I have been almost an automatic vote when it comes to that kind of assistance.

I thank the Senator from Iowa. Now that he has had these hearings and I have joined him in investigating it, I find that a growing percentage of Federal aid to education is going to for-profit schools that operate with 90 percent Federal tax dollars and don't end up providing the kind of education these young men and women need to succeed, and many of them end up defaulting on their student loans. So there they are with the debt and nothing to show for it, which I believe is the point the Senator is making.

I ask my colleague, a veteran himself, how can it be fair to the government or the veterans for this kind of exploitation to continue?

Mr. HARKIN. I say to the Senator, who has been a leader in this effort of looking at the for-profit industry, trying to get the facts so we can make reasonable decisions as legislators about protecting both the taxpayers' dollars and protecting students, on December 8 our committee published this report called ``Benefiting Whom, For-Profit Education Companies and the Growth of Military Education Benefits.'' I suggest that he might want to look at that. The Senator is absolutely right. More and more of this money is going to the for-profit schools.

Let me put it this way: Between $640 to $700 million in GI bill benefits went basically to public institutions, public schools--the University of Illinois, Iowa State, University of Colorado, University of Georgia--all that. About $640 to $700 million went to public schools. That supported 209,000 students. About the same amount of money from GI bill benefits went to the for-profit schools and supported 75,000 students.

Mr. DURBIN. So it is roughly three to one.

Mr. HARKIN. Yes. That is about right.

Mr. DURBIN. So for every dollar we spent through the Department of Defense to help veterans in the GI bill, if they went to a for-profit school, they were being charged three times what public schools were charging.

Mr. HARKIN. The Senator is correct.

Mr. DURBIN. And the numbers we found show that, for example, four of the five biggest schools receiving the most post-9/11 GI bill funding have at least one campus with a student loan default rate above 24 percent over 3 years. In comparison--and I don't have the numbers in front of me--I believe when we look at public schools, the default rates are in the 7- to 10-percent range.

Mr. HARKIN. That is correct.

Mr. DURBIN. So more and more students are being charged higher tuition, going deeper in debt, and defaulting at a rate of 3 to 1, being charged three times as much, defaulting three times as much as those who are attending public schools?

Mr. HARKIN. That is right.

Mr. DURBIN. It seems to me, at a time of great national deficits, when we do care about our veterans, this is an unexplainable, indefensible situation. I thank the Senator from Iowa for his hearings on this matter. I ask him: At this point, where do we go from here in terms of these schools and in terms of what we should be asking of them to make sure the students, the veterans, and the taxpayers get a fair shake?

Mr. HARKIN. I thank my friend from Illinois for his focus on this issue for a long time and bringing it to our attention. Again, where are we going? We have some more hearings we are going to be having after the first of the year.

Then we are going to be looking at legislation we need to do. We need to take care of this.

As I said earlier, our friend and former colleague, Senator Sam Nunn of Georgia, in 1992, had hearings on this very same subject, and we put in place what we thought were fixes to straighten out this industry and to make sure taxpayers' dollars were better protected. Almost all those have been done away with--the fixes that were made by Senator Nunn and this body, this Congress at that time. We have to reexamine those fixes and others again.

For example, as the Senator knows, in 1992, we put a ban on compensating employees solely for recruiting students; in other words, you could not pay recruiters for how many students they recruited.

Mr. DURBIN. Bounties.

Mr. HARKIN. A bounty. That was rolled back in 2001. We also had a provision that was put in the law then, that at least 50 percent of your students had to be campus based. That was done away with in 2005. So all your students can be online. Since 2005, we have seen this huge explosion in online students going to these private schools online. So those are just two of the things that have been rolled back. I think we have to reexamine that and reexamine how we better protect both taxpayers and students.

Mr. DURBIN. If I could ask one last question of the Senator from Iowa.

So the U.S. Department of Education is looking at this?

Mr. HARKIN. Yes.

Mr. DURBIN. Secretary of Education Arne Duncan is looking into this.

Mr. HARKIN. Yes.

Mr. DURBIN. You cannot escape the reaction of the for-profit school industry. They are buying full-page ads in every newspaper they can get their hands on, claiming we are, by this investigation, trying to deny an opportunity for education for particularly disadvantaged students.

Mr. HARKIN. Yes.

Mr. DURBIN. Isn't the bottom line that we want to make sure that, first, schools are accredited, so when they hold themselves out to offer a training program, certificate, degree, they, in fact, are doing that; second, to make sure they are charging a reasonable amount for the education they are offering; third, if you have so many defaults, it basically says your students are just accumulating debt, not accumulating diplomas, and we have to bring that to an end; and they are asking about whether students end up in a job when it is all over, gainful employment. Are any of these unreasonable if the Federal Government is providing 90 percent of the revenues for these schools?

Mr. HARKIN. I think the Senator is being very reasonable. I think these are the minimum kinds of things we ought to do, as I said, to be stewards of the taxpayers' money, protect our veterans, and protect other students.

One of the tricks in the trade, as they say--I bet if I asked most Senators to describe a semester, what is a semester, you would think a semester goes usually from September to January, one semester; and maybe January to May is another semester; and then there is summer school. That is not it. A semester is what you make it. Some of these schools have a semester that is 5 weeks long. So if you can keep your students in for 60 percent of the semester, you keep all their money. Then they drop out, and you have the money.

This is something else we have to look at, a better definition of what the timeframes are. What do we mean by a semester? How much time is that? How much time does a student have to stay there before the school can keep the grants and keep the loans from the student? But, again, these are things I think our committee and others are going to have to wrestle with, as we go ahead on this issue.

I know others are backed up here to speak. I started a little bit late. I was supposed to start at 3:15. I think I started at 3:30, if I am not mistaken. So I will just take a few more minutes and try to close. I do not wish to keep other Senators waiting.

I, again, wish to close on this, on the cost and debt. At these for-profit schools, many students do not leave with a degree, but most leave with debt. The average student attends for about 128 days before dropping out. That is a little over 4 months. That is the average. For most schools, that is two terms. That is enough time for students to rack up thousands of dollars in debt--anywhere from $6,000 to $11,000, depending on the program and school.

That is because for-profit schools are far more expensive than comparable programs at community colleges or public universities. The average tuition for a for-profit school is about six times higher than a community college and twice as high as a 4-year public school. Average annual tuition for a for-profit school was about $14,000 in 2009, while tuition at community colleges averaged about $2,500, and instate 4-year tuition was about $7,000.

Of the 15 schools investigated by GAO, 14 had higher tuition than the nearest public college offering a similar program. One that we looked at offered a ``computer-aided drafting certificate'' for $13,945, when the same program at a nearby community college cost $520. The cost of an associate's degree offered by the second largest for-profit is over $38,000, and a bachelor's degree can cost up to $96,500.

Again, I just referenced to the Senator from Illinois the recent study we had done regarding the GIs and what the GIs are coming out with. They are paying three, four, sometimes five times as much going to an online school as they could at a community college or a local public or even a nonprofit university.

On the placement--I know others are here, and I do not wish to again hold them up. I talked about what Senator Nunn had done back in 1992. Let me just respond on one thing on the accreditors. The Senator from Illinois mentioned accreditation. I wish to just respond to that because a lot of people think, if they are accredited, they must be all right. But here is what we found.

All institutions of higher learning are governed by a combination of the Federal Department of Education, State agencies, and private accrediting agencies, which ought to act as a safeguard against the proliferation of high-cost, low-quality educational institutions. A few States have passed strong State authorization requirements, which have made it difficult for some questionable for-profit colleges to set up shop in those States. Unfortunately, those States are the exception rather than the rule. Accrediting agencies are charged with the mission of ensuring educational quality. However, this does not happen at a lot of for-profit schools.

There are two types of accrediting agencies: the so-called national accreditors that focus on accrediting for-profit schools, and there are regional accreditors that accredit most public and nonprofit universities. Increasingly, for-profit schools are seeking regional accreditation. One particular regional accreditor, the Higher Learning Commission of the North Central Association of Colleges and Schools, accredits 18 of the 24 for-profit schools that have regional accreditation and, until recently, was known as the go-to accreditor for for-profit schools.

They have a cozy relationship. We had testimony from a witness employed by one of the national higher education accrediting organizations. He testified:

Accreditors must hold institutions accountable to ensure that only the highest level of integrity is injected into the student recruitment and admissions process.

The same witness assured the committee that in 629 onsite evaluations of member schools over the previous 2 years, the agency did not find even a single example of ``substantial non-compliance.'' Yet this witness's organization accredits three of the schools documented by the GAO as having engaged in misleading or deceptive recruiting.

So, again, that is where we find ourselves: One-quarter of our financial aid budget is going to a sector dominated by education companies owned by investors and shareholders seeking to maximize short-term profit. Their mission is to grow and to get profits at the expense of positive student outcomes. There are virtually no legislative checks in place, though new Department of Education regulation on incentive compensation is a step forward. The current accreditation bodies in higher education are ill-equipped to deal with the size and relentlessness of the investor-owned companies. As a consequence, as I just said, we have ``for-profit'' companies financed with over 85 percent of taxpayer dollars, reaping $3.5 billion in profits, and millions of students leaving these schools with debt but no diploma.

These schools will receive more than $30 billion in Federal aid this upcoming year--$30 billion. It seems to me it is the obligation of us here and Federal regulators to provide effective government oversight and regulation of Federal financial aid dollars. The public is watching to see whether taxpayers' dollars are being used wisely and effectively. With high-cost schools, and sky-high dropout rates, with limited job placement and services, I have grave doubts that many of these for-profit schools are a good taxpayer investment.

At stake in the debate is the future of millions of Americans who are being aggressively recruited into high-cost programs of often dubious educational quality. For all these reasons--for every Yasmine Issa who has been misled or defrauded by a for-profit college--we have an obligation to make sure these schools are doing a decent job for their students. We need for-profit schools that put the interests of their students first. We need for-profit education companies that strive to serve the needs of the students they recruit and enroll. That is not always the case today. Congress and the executive branch have an obligation, I would say a moral obligation, to provide effective oversight of the for-profit sector in higher education. We owe this to the students, and we owe it to every taxpayer.

I yield the floor.

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Mr. DURBIN. Mr. President, I ask unanimous consent that after I have completed my remarks, the Senator from Rhode Island, Mr. JACK REED, be recognized.

The PRESIDING OFFICER. Is there objection?

Without objection, it is so ordered.

Mr. DURBIN. Mr. President, I have listened carefully to the remarks of the Senator from Nevada, and I respect him, although I must disagree with him on several particulars.

When I look back at history, I see it differently. What I see is a Great Depression facing America that led to record unemployment, business failures, farm failures--one of the worst economic conditions faced by America in modern times.

The election of Franklin Delano Roosevelt in 1932 and his ascension to office in 1933 ushered in a new approach, an approach that was called the New Deal. That basically said: We are going to take control of the situation. We are going to stand behind your deposits in the bank to make sure you don't lose them. If the bank fails, you won't be broke--the Federal Deposit Insurance Corporation. We are going to put the watchdogs on Wall Street to make sure people don't do things there that are basically, if not illegal, unwise, and so we are going to make certain we have good business practices there. We are going to stand behind the farmers. Before we let them lose their farms, we are going to try to get them through a difficult year so they can be there to fight again. We are actually going to create jobs across America. First, for those who are working, we are going to create the minimum wage so that people know they can get a basic salary to live on. And for those who couldn't find work in the private sector, Franklin Roosevelt said: We will create WPA jobs and other jobs across America building things that will serve us for generations to come.

The New Deal was launched, and not long after it was launched, voices similar to ones we have heard this evening came forward and said: Wait a minute, we are spending money we don't have. We are going into debt as a nation.

Those voices started to prevail. So Franklin Roosevelt and the New Deal started to back off. They backed off the stimulus to the American economy, and the unemployment rate, which had gone down from over 20 percent to 13 or 14 percent, went back up again to 19 percent and languished because, with the lack of stimulus into the economy, America was not getting well and strong.

Then something came along which the Senator from Nevada failed to mention. He spoke about how government spending really doesn't invigorate an economy. I would suggest to him that he left out one phrase in a speech I would like him to look up--World War II. When we went into that great war to stop Hitler, to stop the forces of nazism and fascism across America, we mobilized this country and put it to work building the war machine. Great sacrifices for families across America--Rosie the Riveter. Mom went to work because Dad was off fighting the war. Everybody pitched in. We went in debt as a nation, but we won that war and came out of it with a strong, thriving economy, one of the strongest in the world. So to argue that government spending--which there was a lot of during World War II--didn't have anything to do with economic stimulus is to ignore the obvious. It did.

Let's fast-forward to where we are today and where we are tonight.

I see my colleague, the Senator from Rhode Island, is here. He has been chairman of the Joint Economic Committee, and he understands the economic conditions better than most of us who serve in the Senate. But I got a little insight into our economy by serving on the President's deficit commission for the last 10 months. We met week after week, month after month, and we talked about the state of the American economy and the debt of our Nation.

I came to the conclusion--which 11 out of the 18 members of the deficit commission agreed with--that the current situation is unsustainable. We are, in fact, borrowing 40 cents out of every dollar we spend. Whether that dollar is spent for a new missile system for the Pentagon or whether it is spent for food stamps for the poorest of the poor in America, we borrow 40 cents out of every dollar spent, and we borrow it from countries that are becoming our creditors, our mortgagors, countries such as China, the OPEC nations, Korea, Japan, and Saudi Arabia. They are the ones loaning us the money. Of course, it calls into question whether they think we are creditworthy. That is why we need to do something about our debt as we get more deeply into debt.

The Senator from Nevada talked about the state of the economy and the debt we are facing, but he failed to tell the whole story. I always say the story should begin with what the state of the economy was the day President William Jefferson Clinton left office. At that moment in time, the accumulated debt of America, from George Washington through President Clinton's 8 years, was $5 trillion. At that time, we were in surplus on our annual budgets, and President Clinton turned to incoming President George W. Bush and said: Next year, we project a $120 billion surplus for your budget, so we are leaving you in good shape, not with red ink but with black ink--a $5 trillion debt, $120 billion surplus in the[Page: S8992] coming year.

Eight years later, at the end of George W. Bush's administration, the national debt had grown from $5 trillion to $12 trillion--more than doubled in 8 years--and President George W. Bush said to incoming President Obama: I am not leaving you a surplus; I am leaving you a $1.2 trillion debt for the next year.

George W. Bush inherited a $120 billion surplus when he came to office, but he left behind a $1.2 trillion debt. How did we reach such a sorry state in a mere 8 years? President Bush was the first President in history to cut taxes in the midst of a war. It is counterintuitive, and he did it. He believed the economy would grow, and it didn't work. As a result, we got more deeply into debt. He gave tax cuts to the wealthiest in America, and they are the least likely, from an economic point of view, to invigorate our economy. And then he turned around and had several programs he signed into law that were totally unpaid for, just adding to our debt.

That is where we find ourselves today. That is where the deficit commission finds itself. So just a few weeks ago, we reported--11 out of 18 members voting--in favor of the deficit commission. Two weeks later, here I stand on the floor of the Senate, and we are considering a bill which

will add $858 billion to the national debt. That isn't something we anticipated when the deficit commission labored for 10 months trying to figure out ways to cut $4 trillion out of the debt over 10 years. Here we are, 2 weeks later, adding this money to our debt.

I will tell you that I vote for it, and I do with a specific reason in mind. I believe that unless we do something definitive and decisive, we are not going to come out of this recession as quickly as we should, more people will lose their jobs, and our debt will get worse. We need to stimulate and invigorate this economy.

I think President Obama was right 2 years ago when he had a stimulus package. I might remind my friends on the other side of the aisle that a third of it was tax cuts--which is their mantra in good times and bad--a third of it was tax cuts, a third was a safety net, and a third was basically designed to build the infrastructure of this country. I thought it was a good stimulus package, and I do believe it created millions of jobs or at least saved millions of jobs that would have been lost. The same holds true today. We need to invigorate this economy and move it forward. That is why I support this package.

Let me tell you something else. There are things in this tax package which will be voted on tonight or early tomorrow morning which I find awful and indefensible--two in particular. First, that we would extend tax cuts to the wealthiest people in America at this moment in our history I think is indefensible. Second, that we would segregate a small group of the wealthiest people in America and say we are going to give them blessed treatment when it comes to the estate tax they pay I think is mindless. It is not going to invigorate the economy. In the name of justice and fairness, these people, who have done well, should pay back some of it to the country that has allowed them their prosperity. Instead, the Republicans have insisted that the wealthiest of the wealthy in America should receive more.

This chart really tells you what is happening in this country, and it is a scary story--not just sad but scary. The accumulation of wealth for the richest 1 percent of the population in America--in 1976, the richest 1 percent of Americans had 8.9 percent of the wealth in America. In 1976, the top 1 percent had 8.9 percent. Now go to 2007. The top 1 percent population in America has 23 1/2 percent of the wealth.

I don't begrudge anyone prosperity, wealth, and comfort, but they are getting wealthy at the expense of a society which is not providing for those in lower income categories. The people in lower and middle-income categories are falling further and further behind. That is why we cannot allow this tax cut that otherwise would have been reimposed as a tax increase on January 1 on them to occur. That is why I have swallowed hard and said I will vote for this package even though I think the breaks for the wealthy really can't be justified from an economic or justice viewpoint. I just d[Page: S8992]on't think they can. But that is the reality we face.

I do want to say one thing before I yield to my friend from Rhode Island. Mark my words, write them down, put them away in a desk drawer, and pull them out April 1, and they are these: When the Obama administration comes to Congress and says, now that you have voted for additional tax cuts and spending, Members of Congress, you must now increase the debt ceiling of America because we need to borrow the money to cover what you voted for, including the vote that took place this December, which creates $858 billion more in debt, you will hear the other side of the aisle screaming, wailing, whining, and crying that there is no way they can vote to increase the debt ceiling of America. The same people who will have voted for this tax package increasing the debt of America by $858 billion will refuse to pay the check when it comes to the table after the dinner. They had the big banquet, they announced the tax cuts for the wealthy, but when the check comes to the table that says, incidentally, now we have to borrow that money, they are going to say: No way. We are fiscally conservative. We don't borrow money. No, but you spent it. And they have spent it either directly on spending or indirectly on tax cuts. That will come between April 1 and July 1.

I am sorry that as part of this tax package we do not have an increase in the debt ceiling. Those who are going to want to wave the banner of tax cuts and claim all the credit for tax cuts should also stand up and take their medicine because we are going to have to borrow the money to pay for it, and we will need their votes when it comes time to address the debt ceiling.

Mr. President, I yield the floor.

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