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(b)(5)

From: Diane Schulman [mai lto :diane.schulman @theindagooroup.coml

Sent: Tuesda y, May 04, 2010 2:48 PM
To: Fine, Stephanie
Subject: Re: Request for meeting

Hi, Stephanie -

Thank you very much for getting back to me. Are you saying the the Deputy Secretary has not
met at all with industry representatives or their lobbyists on gainful employment? I am surprised
because 1 assumed that he would be getting input on the prospect of re-regulating the for-profit
industry from a variety of points of view.

Since Steve Eisman's analysis of the for-profit industry goes far beyond gainful employment,
should we try to find another time to meet on his overall findings? I gua rantee you, it is worth a
half-hour of the Deputy Secretary Miller's time.

The morning of Friday, May 14th would work for Steve if the Deputy Secretary has an opening?
Best regards,
Diane

On Tue, May 4,2010 at 2:28 PM, Fine, Stephanie <Stephanie.Fine@ed.gov> wrote:

Diane,

Thank you for reaching out. Unfortunately, the Deputy Secretary is booked solid this Thursday.

Additionally, as I hope you can appreciate, given where we are in the regulatory process, at this time we
are not having specific discussions with respect to gainful employment or any other potential regulations
related to our upcoming NPRM.

While we can't have discussions on these topics, the Deputy Secretary does welcome open
communication and is glad to meet on other topics.

Thank you very much for your understanding,

Stephanie

From: Diane Schulman [mailto:diane.schulman@theindagogroup.com]

Sent: Friday, April 30, 2010 3:04 PM
To: Fine, Stephanie
Subject: Request for meeting

Hello, Stephanie -

I am a former journalist who currently does research for law firms and investors. Over the past
few years, I've had an opportunity to get to know the for-profit education industry by
interviewing hundreds of students and former employees of various big, publicly traded
companies. My extensive research has convinced me that the harm being done to students and
taxpayers - under the guise of education - is almost unimaginable.

I am writing to request a meeting with Deputy Secretary Miller for Steve Eisman, Matthew
Leahy and Chris Susanin of Frontpoint Managment and myself. Frontpoint has done an
exhaustive analysis of the for-profit education industry and has come to some stunning
conclusions which, we believe, would be of interest to Deputy Secretary Miller and others in the
Department at this critical time.

Ifpossible, we would love to include Under Secretary Kanter and Deputy Under Secretary
Shireman in the meeting as well as anyone else you would care to invite.

At the moment, we are scheduled to be in DC on the morning of Thursday, May 6,2010. Please
let me know if that works on your end. If now, we should speak on the phone and and try to find
a better time slot.

I should mention that Mr. Eisman was recently profiled in Michael Lewis' new book, The Big
Short. Mr. Eisman is an expert in the financial services sector and, early on, recognized - and
warned about - the impending subprime mortgage collapse. It is worth noting that the parallels
between the subprime collapse and the for-profit education sector are striking as you will see in
Mr. Eisman's analysis.

Thank you for your help.

Best regards,
Diane Schulman

Diane Schulman
The Indago Group
41 East 11th Street, 11th Floor
New York, NY 10003
diane. schulman@theindagogroup.com
617.965.5113 Direct phone

Diane Schulman
The Indago Group
41 East 11th Street, 11th Floor
New York, NY 10003
diane. schulman@theindagogroup.com
617.965.5113 Direct phone
From: Ritsch, Massie
Sent: Tuesday, May 18, 2010 2:08 PM
To: Shireman, Bob
Subject: Don't take it personally ...

Colleges Surge as Government Official Is Said to Quit (Updatel)

By Lu Wang and Daniel Golden

May 17 (Bloomberg) Education stocks including Apollo Group Inc.

rallied on speculation that a proposal to
toughen regulation of for-profit education companies may not materialize
because one of its main backers is
leaving his position.

u.S. Education Deputy Undersecretary Robert Shireman will leave and

return to California, according to a
person familiar with the situation. Shireman is pushing to produce
tougher regulations that may reduce the
amount of federal financial aid that for-profit colleges receive. He made
an April 28 speech that was viewed
as critical of the increasing taxpayer money provided to for-profit
colleges.

"The investment community has viewed Shireman as the key driver of

increased scrutiny on the for-profit
sector," Jeffrey M. Silber, an analyst with BMO Capital Markets In New
York, wrote in a note. The regulation
"could limit the sector's profitability and growth if enacted as
currently proposed."

Federal aid to the industry has jumped to $26.5 billion in 2009 from $4.6
billion in 2000, according to the
Education Department, prompting concern that students of those schools
are taking on too much debt.

The tougher proposed rules, which are expected to be released for public
comment in coming weeks, would
require Apollo's University of Phoenix and Career Education Corp. to show
that their graduates earn enough
money to payoff their student loans. If for-profit colleges can't meet
the standard, they could lose federal
financial aid, which typically makes up three-quarters of their revenue.

The Standard & Poor's 1500 Education Services Sub-Industry Index, which
tracks nine companies, today
jumped 7.4 percent, the most since Sept. 21. Apollo, the biggest U.S.
for-profit education provider,
advanced 9.6 percent to $57.85. Career Education climbed 9.8 percent to
$31.66. Corinthian Colleges Inc.
rallied 13 percent to $15.99 and DeVry Inc. gained 4.9 percent to $62.03.

On April 21, 2009, when Shireman was appointed, the stock index slumped
6.9 percent.
Shireman told u.S. Secretary of Education Arne Duncan when he was
recruited that he could only hold the
position until now because his family was moving to Washington from
California just for the 2009-2010
academic year, according to a person familiar with his plans. He will
leave his post at the end of June, the
person said.

News of Shireman's departure was earlier reported by the Chronicle of

Higher Education.

To contact the reporters on this story: Lu Wang In New York at

Iwang8@bloomberg.net ; Daniel Golden in
Boston at dlgolden@bloomberg.net .
From: Ritsch, Massie
Sent: Tuesday, June 09, 2009 3:10 PM
To: 'NassirianB@aacrao.org'
Subject: Paul Ginocchio

Barmak,

Thanks for talking to Paul Ginocchio. I hope he has an accurate sense of

the conf call you were
on. Can you recall others on that call whom he should speak to, who would
agree that no
particular sector was targeted? I'm on vacation for a couple days and
don't have my list.

Thanks,
Massie
Massie Ritsch
u.S. Department of Education

From: Nassirian, Barmak <NassirianB@aacrao.org>

To: Ritsch, Massie
Sent: Fri Jun 05 16:00:20 2009
Subject: FW: Kantrowitz on the Deusche Bank Alert

-----Original Message-----
From: Kantrowitz, Mark [mailto:Mark.Kantrowitz@Monster.com]
Sent: Thursday, June 04, 2009 3:23 PM
To: Kantrowitz, Mark
Subject: Deutsche Bank Note on Last Week's NegReg Conference Calls

Several people have asked me about a recent Deutsche Bank note about
last week's US Department of Education conference calls concerning
upcoming negotiated rulemaking. The note says that Thursday's call had a
more negative tone toward for-profit higher education than Friday's
call. The note cites two different unnamed sources. I don't think I'm
either source.

I participated in Thursday's call. I did not participate in Friday's

call. So I cannot compare the two calls. But any difference in the two
calls is likely due to differences in the participants, not any
difference in the degree of openness from the Department. The Thursday
call was to public policy advocates; the Friday call was to analysts.

The public policy advocates were encouraged to participate in the

hearings and forums and to bring attention to any issues or problems
faced by students and schools (in general, not specific to for-profit
higher ed). When one of the public policy advocates asked whether
students could testify, the response was that anybody could testify and
that students certainly could and were encouraged to do so. It was noted
that testimony would be limited to five minutes per person. I did not
notice any particular animus directed specifically at for-profit
colleges. As I noted in my previous report, this negreg struck me as
being much more exploratory than typical and that the Department does
not appear to have a predetermined agenda for the hearings. For example,
they do not have any draft regulatory changes. So while they certainly
are soliciting testimony on any problems schools and students have
experienced, they do not seem to be soliciting testimony to specifically
support a particular position.

Certainly some of the issues listed in the Federal Register notice may
result in regulatory changes that affect for-profit education. I have no
doubt that there will be testimony about incentive compensation, with
some focus on whether the safe harbors concerning the word "solely"
permit abuse. The phrase "perhaps too big of a harbor" was used. So
there may ultimately be some narrowing of the degree to which
institutions can compensate recruiters largely based on starts. Likewise
there may be some refinement of ability-to-benefit. It's been seven
years since the safe harbors were put into place, which is a fairly long
time without any review.

Overall, the Department seems to be taking a thoughtful approach to

developing policies that encourage improvements in institutional quality
and performance and which will reward institutions that help achieve
goals relating to access, persistence and completion. It appears that
the Department is pursuing a more organic approach that will naturally
separate the wheat from the chaff (or to reward wheat so the chaff will
transmogrify itself into wheat) and target specific abuses, rather than
policies that are motivated by concerns about a particular sector of
higher education.

Quoting from page 378 of the education appendix to the President's

FY2010 budget proposal, in the discussion of the Perkins loan program,
the last two sentences give a sense of the evolving priorities of the
Department.

The 2010 Budget proposes to modernize and expand the Perkins

Loan program so more colleges can participate and more students
receive access to greater aid. Under this proposal, annual loans
to students would increase to $6 billion from the current $1 billion.
Rather than operating through institutional revolving funds,
under the proposal Perkins Loans would be delivered using the
same method as Pell Grants and Direct Loans, and would be
serviced by the same private-sector companies servicing Direct
Loans and FFEL loans acquired by the Department. Loan volume
would be allocated among degree-granting institutions using a
method to be determined in consultation with Congress. The
Administration intends for this new formula to encourage colleges
to control costs and offer need-based aid to prevent excessive
indebtedness.
It may also reward schools that enroll and graduate
students from low- and middle-income families.

Further, if we look at the discussion of the College access and

completion fund on page 379, it demonstrates an increasing focus on
retention and completion and not just access.

College access and completion fund.-The Budget includes $500

 million in 2010 and $2.5 billion over five years to fund national
and State efforts to improve degree attainment rates in higher
education and identify and promote what works in helping needy
students get a degree. States would have considerable flexibility
in the types of programs that can be funded. The proposed Fund
would emphasize programs with strong evaluation components.
States could also set aside a portion of their funding to continue
college outreach and information activities now undertaken by
guaranty agencies in the Federal Family Education Loan program.
The method of allocating funds to States and national
activities will be developed in consultation with Congress.

In both cases the allocation methods will be "developed in consultation

with Congress", perhaps an indication that the Department is still
trying to solidify its ideas. That would be consistent with their using
the negreg process as a kind of formal suggestion box.

To the extent that for-profit higher education is nimble and focused on

providing a quality education, continually optimizes graduation and job
placement rates, and uses proactive aggressive counseling to intervene
in the at-risk populations that they serve disproportionately, it should
benefit. Students who graduate are more profitable than students who
don't, so efforts that improve institutional quality and persistence
will help for-profit colleges fulfill growth goals. The Department is
trying to improve effectiveness at every level and control of
institution, not rein in a particular sector.

Mark

Mark Kantrowitz
Publisher of FinAid.org and FastWeb.com
Author, FastWeb College Gold

Barmak Nassirian
MCMO
1 Dupont Circle, Suite 520
Washington, DC 20036
202/ 263-0290 Direct
202/ 872-8857 Fax
From: Ritsch, Massie
Sent: Friday, June 05, 2009 4:49 PM
To: Nassirian, Barmak
Subject: RE: Follow-up to Dept of Ed. calls on negreg

Call you shortly

From: Nassirian, Barmak [mailto:NassirianB@aacrao.org]

Sent: Friday, June 05, 2009 4:46 PM
To: Ritsch, Massie
Subject: RE: Follow-up to Dept of Ed. calls on negreg

I'm in my office now, and can be reached on my cell 262-4684

Barmak Nassirian
AACRAO
1 Dupont Circle, Suite 520
Washington, DC 20036
202/ 263-0290 Direct
202/ 872-8857 Fax

-----Original Message-----
From: Ritsch, Massie [mailto:Massie.Ritsch@ed.gov]
Sent: Friday, June 05, 2009 4:41 PM
To: Nassirian, Barmak
Subject: Follow-up to Dept of Ed. calls on negreg

Barmak,

I believe you joined us last week on a call with higher ed associations

on the upcoming neg reg
hearings. Could I connect with you by phone for a minute today?

Thanks,
Massie

Massie Ritsch
Deputy Assistant Secretary for External Affairs & Outreach
u.S. Department of Education
(202) 260-2671
Cell: 202-365-8225
massie.ritsch@ed.gov
(b)(5)
(b)(5)1-------------------------------~
(b }(5)

Fr om: Di a n e Schu l ma n (mai l to: d i a n e . s c h u lm a n @th e i nd ag og roup . c om]

Sent : Tuesday , May 04 , 20 10 2 :48 PM
To : Fi n e , Ste phanie
Subjec t : Re : Requ e s t f or me e t i ng

Hi, S tephanie -

Thank you very muc h fo r g e t t i ng b a ck t o me . Are yo u saying t h e t he Deputy

Secre tary h a s n ot
me t a t a ll wi th i ndust r y r epr e s e n t a t i v e s o r the i r lobbyists o n ga i nful
employment? I am su r pr ised
because I assumed t ha t he wou l d b e ge tting i np u t on t h e p ros pect of re -
r e gul ati n g t he f o r - p r of it
i ndus try f r om a va rie ty of p o int s of view.

Since Ste ve Eisman 's ana lysis of t he fo r -prof i t indust ry goes fa r beyond
gainful e mployment ,
s h ould we t ry t o find a nothe r time to me e t o n his overall f ind i n gs? I
gua r ant e e y ou , i t is wo rth a
h a l f- h o u r of t h e Deputy Sec re tary Mi l l e r ' s time .

The mor ni n g o f Friday , May 14th would wo rk fo r Ste ve if t he Dep uty

Sec re tary h a s a n op e ning ?

Best r ega r d s ,
Diane
On Tu e , May 4 , 20 10 at 2 :28 PM , Fine , Stephanie <Ste phanie .Fine @ed. gov>
wro te :
Diane ,

Than k you for r e a ch i ng out . Unfo rtunately , t h e Deputy Sec re tary is

b o oke d solid th is Th u r s d a y .

Ad d i ti o n a l l y , as I h ope you can app reciate , gi v e n whe re we are in the

r e gul a t or y proce ss , a t t h i s
ti me we are no t havin g s pecif ic discussions wi t h res pect to g ai n fu l
employment o r any o th e r
p o t e n t i al r eg u l at i ons re lated t o our u p c omi n g NPRM .
While we can't have discussions on these topics, the Deputy Secretary
does welcome open
communication and is glad to meet on other topics.

Thank you very much for your understanding,

Stephanie

From: Diane Schulman [mailto:diane.schulman@theindagogroup.com]

Sent: Friday, April 30, 2010 3:04 PM
To: Fine, Stephanie
Subject: Request for meeting

Hello, Stephanie -

I am a former journalist who currently does research for law firms and
investors. Over the past
few years, I've had an opportunity to get to know the for-profit
education industry by
interviewing hundreds of students and former employees of various big,
publicly traded
companies. My extensive research has convinced me that the harm being
done to students and
taxpayers - under the guise of education - is almost unimaginable.

I am writing to request a meeting with Deputy Secretary Miller for Steve

Eisman, Matthew
Leahy and Chris Susanin of Frontpoint Managment and myself. Frontpoint
has done an
exhaustive analysis of the for-profit education industry and has come to
some stunning
conclusions which, we believe, would be of interest to Deputy Secretary
Miller and others in the
Department at this critical time.

If possible, we would love to include Under Secretary Kanter and Deputy

Under Secretary
Shireman in the meeting as well as anyone else you would care to invite.

At the moment, we are scheduled to be in DC on the morning of Thursday,

May 6, 2010. Please
let me know if that works on your end. If now, we should speak on the
phone and and try to
find a better time slot.

I should mention that Mr. Eisman was recently profiled in Michael Lewis'
new book, The Big
Short. Mr. Eisman is an expert in the financial services sector and,
early on, recognized - and
warned about - the impending subprime mortgage collapse. It is worth
noting that the parallels
between the subprime collapse and the for-profit education sector are
striking as you will see in
Mr. Eisman's analysis.

Thank you for your help.

Best regards,
Diane Schulman

Diane Schulman
The Indago Group
41 East 11th Street, 11th Floor
New York, NY 10003
diane.schulman@theindagogroup.com
617.965.5113 Direct phone

Diane Schulman
The Indago Group
41 East 11th Street, 11th Floor
New York, NY 10003
diane.schulman@theindagogroup.com
617.965.5113 Direct phone
From:
To:
Su bj ect :
Date:

Education DepanmentTakes Key Step to

Protect
.
Students·
'.
al1d.Taxpayers from
. " . ..
.Career ·Education Rip-Offs
-. "" .. '.',

"Today, theObama Adminlstratlonproposed a.rnuch-need.deflnltion of 'gainful employment' to protect

studentsand ta xpayers .• from getting .ripped 6ff .by career.education programs) hat over-promise and
under-deliver , lt Is encourag ing·that .theAdrnlnfstratlon has.proposed a requlatlcn with s ome·teeth, and
in time to beflnallzed by November and go into effect next y ear.

"Still, the rule needs to be strengthened to adequately protec t students and taxpayers . We are
particularly concerned t hat.programs could c ()ntinueto profit from federal student aid when m ore.than
halfoftheirstudents with lo ans canl affordlo pay dowp lheir p rincIpal. .In the next year alone,
taxpayers willunderwrile more than $30 billion in federal loans to students attending programs required
to prepare them f or gainful employment.

"To participate in federal stllderit aidpr6grams, federal law requires most programs offered by fer-profit
institutions, .and·any.caree rored lIcationalprogram of less.than .two years, to .'prepare.students .for
gainfurernploymentin a recognized occupation.' Yet existing •regulations do net define what this
means, leaving the law unenforced and students and 'taxpeyersunprotected, Asa .result, unscrupulous
schools·are. recruiting :stud ents.for expensIve •programs thaldo nol .prepare themf or j obs that would
enable lhem topay bff their·student loans, orJorany job s aLaU.•.Such p rograms leave.students.deep in
debtthey cannot repay and cost taxpayers m illions of dollars in Pell Grants and defaulted federal
student loans.

"The Obama Administration deserves praise for issuing this important draft regUlation. We
review it to ensure that it sufficiently protects students and taxpayers from career education programs
that leave students worse off than if they had never enrolled:
201011:53

Mal:lzelan, Dan

mutual