Career College Association

Trends, Policies and Issues

Reauthorization 2003
Nicholas J. Glakas
National Council of Higher Education Loan Programs
Sarasota, Florida
January 9, 2003

The Global Education Markplace

A few facts . . .

Education A Few Facts

Education spending in the United States is $750 billion and worldwide is
over $2 trillion.
Higher education is a $250 billion market in the United States.
More money is spent in the United States on education than in any other
industry with the exception of health care. Annual expenditures are more
than Social Security and defense combined.
Globally, 84 million students attend 20,000 colleges and universities.
66 million adults and more than 50% of all employed persons participate
in some form of continuing education.
Less than 25% of U.S. adults have a B.A. or higher.

Education A Few More Facts

Over half a million foreign students study in the United States and spend $13 billion.
India, China and South Korea are the top places of origin for foreign students
studying in the United States in 2001-02. Combined they sent almost 180,000
students to the United States.
Global demand for higher education is forecast to reach 160 million students in 2025.
In 1950, approximately 30% of all jobs in the United States required skilled labor;
today, 85% of jobs require skilled labor.
There are 9,485 postsecondary institutions in the U.S. Forty-seven percent (4,463)
are career schools, institutes, colleges and universities.
There are 6,431 Title IV participating institutions in the U.S.
Thirty-seven percent are career schools, institutes, colleges and universities.

Size of Global Education and Training Market

Global education and training market:

U.S. market:

$750 billion

U.S. higher education market:

$2 trillion

$250 billion

Students: 42 million (1990); 97 million (2010)

U.S. online higher education market (2001): $4.5 billion

U.S. online higher education market (2005): $11 billion

U.S. corp. & government training market:

$100 billion

Global corp. & government learning market: $300 billion

Source: ThinkEquity Partners, Eduventures.

Major Sectors in the U.S. Economy

$ Billions

% of GDP

Health

$949

14.1%

Education

$740

9.5%

Social Security

$336

5.0%

Defense

$272

4.0%

Total GDP

$7,790

100%

Education = $2 trillion global market!

Source: Credit Suisse First Boston

The Evolving Higher Education Marketplace

The higher education market is huge

Globally, 84 million students and 20,000 colleges and universities;

in the U.S., 16 million students and 9,500 colleges and universities
Higher education is a $250 billion market in the U.S.

And growing

Domestic undergraduate enrollments will increase by 13% in the

next decade to 21.2 million by 2010
College less of a choice and more of a must-have

With significant demand imbalance

U.S. is only 1 of 10 countries providing a college education to 1/3 or

more of their college-age populations

Source: ThinkEquity Partners, National Science Foundation

Education Counts
Educational Attainment Outcomes
Salary Gap between Male High School and College Graduates
112%
120%
100%
80%
60%

47%

40%
20%
0%

1971
Source: National Center for Education Statistics

2000

The Need for Skilled Workers

% of Jobs Requiring Skilled Workers

85%

90%
80%

65%

70%
60%

45%

50%
40%

28%

30%
20%
10%
0%

1950
Source: ThinkEquity Partners

1991

2000

2005E

The Need for Skilled Workers

Less than 25% of U.S. Adults 25 and Older have a Bachelors Degree
or Higher

75%
25%
Adults without
Bachelor's or Higher
Degree

Source: ThinkEquity Partners

Adults with Bachelor's

or Higher Degree

Higher Education Landscape

66 million adults and more than 50% of all employed

persons participate in some form of continuing education
56% of the workforce, or 66 million people, is without an
advanced degree
Number of corporate universities skyrocketed from 400 in
1988 to over 2,000 today, including 40% of Fortune 500
companies
More than 60% of corporate universities have alliances with
institutions of higher education, increasing to 85% by 2003
Source: ThinkEquity Partners

Global Higher Education Landscape

Over 500,000 foreign students, or 3.5% of total

postsecondary enrollees, study in the U.S. and spend $13
billion
America educates one-third of all foreign students
For every foreign student studying in the U.S., there are
three to five students who would consume U.S. education
online, if they had the access or the resources

Potential of 1.6 million international distance learning candidates

Global demand for higher education forecast to reach 160

million students in 2025

Conservatively, 45 million users of online higher education

Source: ThinkEquity Partners

Number of International Students at U.S. Colleges

& Universities 1975-2002
700000
600000

583000
515000

500000

453000

400000

387000
342000

300000
200000

286000

155000

100000
0
1974/75

1979/80

Source: Institute for International Education, Open Doors 2002.

1984/85

1989/90

1994/95

1999/2000

2001/02

Number of International Students at U.S. Colleges &

Universities From Top Ten Places of Origin, 2001-02

70000

66836

63211

60000
49046

50000

46810

40000
28930

30000

26514

20000

12518

12091

Mexico

Turkey

11614

11606

10000
0

India

China

S. Korea

Japan

Source: Institute for International Education, Open Doors 2002.

Taiwan

Canada

Indonesia Thailand

Future Demographic Trends

OVER THE NEXT 50 YEARS:
U.S. population will grow by 50%

275 million in 2002

395 million in 2050

Immigration will increase by 80 million

Under 17 population = 100 million or 1 in 4
Elderly population will double = 20% of total population
Racial Mix

White
Hispanic
Black
Asian

50% of the U.S. population

25%
15%
10%

The For-Profit Sector

The Career College Association is a voluntary membership organization of
private, postsecondary schools, institutes, colleges and universities that provide
career-specific educational programs. CCAs 1,000 members educate and
support more than a million students each year for employment in over 200
occupational fields.
CCA member institutions cover the full gamut of postsecondary education: from
short-term certificate and diploma programs, to two- and four-year associate and
baccalaureate degrees, to masters and doctoral programs.
Most CCA member institutions participate in federal student financial assistance
programs under Title IV of the Higher Education Act.
In addition, over the past four years CCAs Foundation has provided more than
17,000 scholarships to high school graduates attending CCA member schools,
institutes, colleges and universities.

Size of the the U.S. Postsecondary For-Profit Sector

There are 9,485 postsecondary institutions in the

U.S. Forty-seven percent (4,463) are career
schools, institutes, colleges and universities.
There are 6,431 Title IV participating institutions in
the U.S. Thirty-seven percent (2,355) are career
schools, institutes, colleges and universities.
Source: National Center For Education Statistics, Postsecondary Institutions in the United States: 1993-94 and 1998-99.

Non-Profit and For-Profit Distinctions in

Higher Education
Non-Profit

For-Profit

Tax-exempt
Donors
Endowment
Stakeholders
Shared governance
Prestige Motive
Cultivation of knowledge
Discipline-driven
Quality of inputs
Faculty power

Tax-paying
Investors
Private investment capital
Stockholders
Traditional management
Profit motive
Application of learning
Market-driven
Quality of outcomes
Customer power

Source: Richard Ruch, Higher Education, Inc., The Rise of the For-Profit University. Baltimore: The John Hopkins University Press, 2001.

Postsecondary Education Companies

Company

# of
Campuses

Enrollment Total

Programs

Apollo Group/U. of Phoenix

65

133,700

Bachelors Doctorate

Career Education Corp.

43

50,400

Diploma Masters

Corinthian Colleges, Inc.

63

35,000

Diploma Masters

DeVry, Inc.

26

56,000

Associates Masters

Education Management Corp.

40

39,000+

Non-degree Doctorate

ITT Educational Services, Inc.

74

33,000

Associates - Bachelors

Kaplan Higher Education

44

20,000

Diploma Bachelors

Strayer Education, Inc.

20

16,500

Associates Masters

Whitman Education Group,

Inc.

22

9,000

Diploma Doctorate

The Reauthorization of the Higher

Education Act
CCA Reauthorization Preparations

CCAs Reauthorization Preparations

Identified our key issues for reauthorization

Prepared a CCA Board-approved strategic lobbying plan

Will cover costs of various studies

Will include regional dinners and reauthorization workshops
Additional amount retained in reserve

Formalized input from membership

Being updated quarterly

Discussed at all CCA speaking engagements
Implemented by CCA members and staff

Established a reauthorization budget

Finalizing legislative handbook for CCA membership & Capitol Hill

Three key studies completed or ongoing
Submitted key issues at the request of House Education Subcommittee

Presidents Advisory Council

Small College Advisory Council
Entire CCA membership review of issues

Assembled a coordinating council of Washington representatives

Monthly meetings of this Legislative Advisory Council.

Lobbying teams created based on issues of interest

CCAs Reauthorization Preparations

(continued)

Implemented a grassroots lobbying effort.

Effective PAC Operations

Legislative Action Network in operation

Goal of 200 CCA members for Hill Day
Total CCA member involvement during reauthorization

100 CCA members

CCAPAC contributed to 81 Congressional candidates in 2001-2002.

Excellent relations with key participants in Reauthorization

White House
Senate and House Leadership
Congressional Education Committees and staff
Department of Education
State Associations
Key Business Associations
Selective Higher Education Associations.

The Reauthorization of the Higher

Education Act
CCA Reauthorization Issues

CCA Reauthorization - Issues

Transfer of Credit (study)

Return of Federal Funds (study)
90-10 (study)
Financial Responsibility
Single Definition of Higher Ed Institution
Federal Investment (Loan Limits)
Provisional Certification
Judicial Review

Reauthorization Issues (continued)

50% Telecommunications Rule
Accountability
Probably off the table:
12-Hour Rule
Incentive Compensation

Transfer of Credit

Issue: CCAs Foundation commissioned the Institute for Higher Education Policy to study the relationship between
credit transfer of students who attend nationally accredited institutions to regionally accredited institutions. The study
found a strong pattern of full acceptance of credit for virtually all institutions that are regionally accredited, but
acceptance for only a small percentage of institutions accredited by national accrediting bodies.

CCA Proposal: Revise section 1094(a) to add a new required condition in the program participation agreement signed
by institutions participating in the Title IV student aid programs as follows: (25) The institution will not exclude
transfers of credit earned by students completing courses of programs from other eligible institutions of higher
education on the basis of the agency or association that accredits such institutions, provided that the agency or
association is recognized by the Secretary pursuant to Subpart 2 of Part H of this Act, and will base decisions on
whether to accept such credits solely on whether the courses or programs are equivalent in content to those offered by
the institution and the student has completed the course or program at the required level of proficiency.
Revise section 1099b(a) to add a new required recognition criterion for accrediting agencies:
(9) such agency or association shall not adopt or apply standards, policies or practices that restrict transfers of credits
between eligible institutions of higher education as defined by this Act that are accredited by an agency or association
recognized by the Secretary under this Subpart.

Return of Title IV Funds

Issue: Return of Federal Funds has been one of the most

controversial provisions of the 1998 reauthorization. CCA
has commissioned a major study to determine the extent of
harm to students and institutions.
CCA Proposal:Use the results of the study and its
simulation model to develop specific proposals.
Anticipated completion the end of January.

90-10 Rule
Issue: As part of the 1998 HEA Amendments, Congress modified the
85-15 rule to allow no more than 90% of a proprietary institutions
revenue to be derived from Title IV. Subsequently, the Department of
Education changed the definitions of eligible revenue to make
compliance more difficult.
CCA Proposal: CCA has contracted with the American Economics
Group for a comprehensive study of the effect of the 90-10 rule on
students and institutions. Upon completion of the 90-10 study, CCA will
determine the alternative proposals that have the greatest aggregate
benefits for the largest number of institutions and students.

Financial Responsibility

Issue: The higher education community and the Department of Education have
gained five years of experience in applying the financial responsibility
regulations adopted in November 1997. While the regulations have been an
improvement over the requirements previously used to measure financial
responsibility, there are still serious problems with the manner in which the
Department judges the financial stability of institutions.

CCA Proposal: Only historic goodwill should be used in determining the ratios and calculating the
composite score; additional goodwill booked as a consequence of an acquisition would not be
deducted. After an acquisition, this additional goodwill would be recognized on a gradual basis over
a five-year period. This treatment of goodwill would be conditioned on the acquirer being
creditworthy at the time of the acquisition as measured by the strength factors for its primary reserve
and equity ratios.

The language of the statute should clearly state that the Secretary will permit accounting treatments
that are in accordance with GAAP.

Single Definition of a
Higher Education Institution
Issue: 1998 HEA Amendments moved toward
enacting a single definition for the purpose of
providing equal access to all Title IV programs.
Separate definitions still remain in Section 101 of
the Act.
CCA Proposal: Revise the Act to include
proprietary institutions in Section 101 and delete
Section 102.

Federal Investment in
Postsecondary Education
Issue: The federal grant and loan programs have not kept pace with
inflation. Grants now account for less than one fourth of federal
financial aid.
CCA Proposal: Increase funding to the Pell Grant program thereby
increasing the maximum award levels, and explore other innovative
proposals such as the concept of front-loading federal grant aid to
provide increased assistance to students during their first two years of
postsecondary education.
Increase the loan limits of the subsidized and unsubsidized federal
student loans as much as feasible within the constraints of budget
considerations, with special consideration given to students who are in
year one and two where assistance is often needed the most.

Provisional Certification

Issue: Provisional certification is a status that carries both limitations and risks that fully
certified institutions do not face. The Department of Education takes the position that the
Secretary may terminate the provisional certification of institutions as a response to
allegations of regulatory violations. In such cases, the institutions do not have the due
process protections that would be provided in a Limitation, Suspension & Termination
action or an emergency action.

CCA Proposal:The law should be changed to create an exemption from the requirement
that an institution be placed on provisional certification upon a change of ownership that
results in a change in control when a change transfers ownership to a person or entity that
has an established track record of regulatory compliance, which could be judged by
whether the acquiring institution is itself fully certified and is permitted to use the advance
payment method.

Additionally, the Departments ability to make ad hoc policy should be replaced with a
clear set of rules.

Judicial Review

Issue: The Department of Education has used an

obscure provision in the HEA to persuade some
federal courts to deny educational institutions their
day in court.
CCA Proposal: Amend Section 432(a)(2) of the
HEA to allow court review.

50% Telecommunications Rule

Issue: During the 1992 HEA Amendments, Congress enacted the 50%
telecommunications rule. The rule stipulates that institutions are not
eligible to participate in Title IV programs if they offer more than 50% of
their courses via telecommunications or correspondence or if 50% or
more of their regularly enrolled students are enrolled in
telecommunications or correspondence courses.
CCA Proposal: CCA supports modification of the 50% rule to allow
increased flexibility for students in meeting their educational goals.

Accountability

Issue: The Administration has indicated that, just as performance measures were
the centerpiece of the recent K-12 reauthorization, it will seek to import into the
postsecondary education arena some measure of institutional effectiveness. CCA
formed a Task Force to formulate recommendations for reasonable, workable
accountability measures in higher education.
CCA Proposal: Create an Institutional Report Card based on a general
framework with three constituent parts:
Input measures to assess the resources and capacity to deliver educational
services;
Output measures to provide information on graduations/completions; and
Outcomes measures to demonstrate value added to students.

Career College Association

Nicholas J. Glakas
NickG@career.org
Phone: 202/336-6754
www.career.org