~

~eron. David 'Q!U(l71

From: Diane Schulman [diane~schulman@theindagogroup.coml
Sent: Wednesday, April 07,20102:09 PM
To: Bergeron, David
Subject: Following up

Hi, David-

Nice to catch up with you today - have a safe flight.

As I mentioned, Steve Eisman, Matthew Leahy and I will in Washington for meetings on Friday, April 16th.
Steve and Matt would love to have a chance to share some oftheir exhaustive research on the for-profit
education industry and get your input.

We've got a few things scheduled but I know getting to meet you and Bob (as you suggested) would be a
priority so if you can let me know what time wouldwork for you; we'll work around it.

Thanks so much,
Diane

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

1
Kolotos, John

From: Pauline Abernathy [pabernathy@ticas.org]

Sent: Saturday, September 11, 20105:03 PM -? CA.\le.~
To: Pauline Abernathy
Subject: Sunday NYT editorial I ~'*-\?l~~
:~--~·Y\~
--- --
~~
FYI.

NYT editorial, online Sept 11 for print on September 12, 2010

Let the Students Profit

The Obama administration has proposed tough and much-needed regulations for lucrative for-profit
colleges. Industry is predictably pushing back hard, with legions of high-priced lobbyists and
organized letter-writing campaigns. The administration must hold its ground.

The final rules, due out in November, must be strong enough to rein in businesses that have made an
art of enrolling students who have no chance of graduating and stripping them of state and federal
grants and loans. Besides ending such abuses of stUdents, the regulations are needed to protect
taxpayers, who foot the bill for waste and abuse in the college aid program.

Honest, well-run for-profits play an important role in educating students who may not qualify for
traditional schools. Over the last decade, far too many institutions have been cited for saddling
students with ruinous debt. A recent report from the Government Accountability Office found
fraudulent or deceptive practices at all 15 of the for-profit colleges visited by investigators posing as
prospective students.

Some college officials encouraged applicants to falsify financial aid forms; students were also
pressured into signing enrollment contracts before they were allowed to speak to financial aid
representatives who would clarify costs. The programs offered at the for-profits schools were
substantially more expensive than comparable programs at nearby public colleges. In one example, a
student who inquired about the cost of studying for a massage therapy certificate was told that
$14,000 was a fair price, even though the local community college offered the same courses for
$520.

The new rules would grant the Department of Education stronger authority to stop schools from
making false or misleading statements about financial charges or the employability of their graduates.
Schools would be barred from paying recruiters based on how many students they brought in. Most
important, the new rules would cut off federal aid to programs that repeatedly saddled students with
debt that is defined as unaffordable under a new formula that takes earnings into account.

The for-profit sector is claiming that such abuses are rare and says that these rules would hurt the
poor and minority students who ate disproportionately enrolled in for-profit schools. In fact, the rules
would go a long way toward preventing those students from being preyed upon and saddled with debt
that follows them for the rest of their lives.

http://www.nvtimes.com/2010/09/12/opinion/12sun2.html
1
Pauline Abernathy
Vice President
The Institute for College Access & Success
www.ticas.org and www.projectonstudentdebt.org
TICAS: 510.318.7900 Direct: 510.318.7903

2
Kolotos, John

From: Debbie Frankie Cochrane [DCochrane@ticas.org]

Sent: Friday, Augl,lst 20,201011:05 AM
To: Kolotos, John
Subject: RE: Clarifying questions on repayment rate

Thank you, John. Two follow-up questions:

- safe to assume, then, that loans that were delinquent less than 270 days were still
included?
- did you run any alternative repayment rate calculations that used a window (like CDR)
rather than a snapshot?

Debbie

-----Original Message-----
From: Kolotos, John [mailto:John.Kolotos@ed.gov]
Sent: Friday, August 20, 2010 4:37 AM
To: Debbie FrankIe Cochrane
Subject: RE: Clarifying questions on repayment rate

for the repayment rates we published, a borrower's status was determined by taking a snap-
shot at the end of the fiscal year. so if the borrower was in default, or in a deferment or
forbearance status (other than in-school or military-related) , the loan was NOT included in
the numerator of the repayment rate ratio. john _
From: Debbie FrankIe Cochrane [DCochrane@ticas.org]
Sent: Thursday, August 19, 2010 3:50 PM
To: Kolotos, John
Cc: Pauline Abernathy
Subject: Clarifying "questions on repayment rate

John,

I'm glad I could reach you earlier. Here are the two questions that need to be clarified:

* Under the repayment rate calculation, is it possible for students

in default to be considered in repayment? As I read it, this could happen if a student made
one or two payments that reduced the principal and then subsequently stopped making payments
and defaulted. The end balance due would likely be higher, but the principal balance would
seem to be lower at the end of the year.
* At what point is deferment/forbearance status considered? At the
FFY-end snapshot, or is there a minimum-time threshold (like it has to be in
deferment/forbearance for six months)?

Thank you!
Debbie

Debbie FrankIe Cochrane

Program Director
The Institute for College Access & Success
405 14th Street, Suite 1100
Oakland, California 94612
office: (510) 318-790e // fax: (510) 318- 7918
dcochrane@ticas.org<mailto:dcochrane@ticas.org>
1
Kolotos. John

From: Stein, Suzanne [Suzanne.Stein@morganstanley.coml

Sent: Thursday, July 29,20104:09 PM
To: Kototos, John; Sellers, Fred
Cc: Colon Garcia, Cristina
Subject: Question on the NPRM on Gainful Employment

Dear John/Fred:

I am hoping you can help to answer a question that there seems to be significant confusion about (or direct me to
someone who can help). In the NPRM on Gainful Employment, there is discussion about what debt would be included for
the purposes of Debt to Income (DTI) calculations. It specifically says that debt from prior institutions will be included if
the debt is from institutions are under common ownership or control. Does this debt have to come from identical
programs? In other words, if a student were to get a bachelor degree from the University of Phoenix - let's say in an IT
program (one CIP code) - and then go on to get an MBA in Accounting (another CIP code), would the debt from the
bachelor program count against the calculation for the debt from the MBA program?

From the NPRM: The annual loan payment would be the median loan debt of students who completed a program during
the three year period under standard repayment terms (i.e., 10-year repayment schedule and the current annual interest
rate on Federal unsubsidized loans). Loan debt would include title IV, HEA program loans, except Parent PLUS loans,
and any private educational loans or debt obligations arising from institutional financing plans. However, it would not
include any student loan that a student incurred at prior institutions or at SUbsequent institutions unless the other and
current institutions are under common ownership or control, or are othervvise related entities.

Any help would be appreciated. Thanks for your time.

Regards,

Suzanne Stein
Morgan Stanley I Research
1585 Broadway, 34th Floor I New York, NY 10036
Phone: +1212761-0011
Mobile: +1917 270-7818 or +1914325-9391
Suzanne.Stein@morganstanley.com

NOTICE: If you have received this communication in error, please destroy all electronic and paper copies and notify the sender immediately. Mistransmlssion is
not intended to waive confidentiality or privilege. Morgan Stanley reserves the right, to the extent permitted under applicable law, to monitor electronic
communications. This message is subject to terms available at the following link: httpJlwww.morganstanley.com/disclaimers. If you cannot access these links,
please notify us by reply message and we will send the contents to you. By messaging with Morgan Stanley you consent to the foregoing.

1
Kolotos, John

From: Kototos, John

Sent: Tuesday, August 17, 20102:25 PM
To: Finley, Steve; Sellers, Fred; Ochoa, Eduardo
Subject: FW: Q&A on Gainful Employment
Attachments: QA on GE Aug 16 FINAL w logos.docx

From: Pauline Abernathy [pabernathy@ticas.org]

Sent: Tuesday, August 17, 2e1e 1:15 PM
To: Kvaal, James; Hamilton, Justin; Arsenault, Leigh; Gomez, Gabriella; Bergeron, David;
Madzelan, Dan; Kolotos, John; Smith, Zakiya
Cc: Lauren Asher; Connie Myers; Jennifer Webberj Angela Peoplesj Lindsay McCluskey; Getachew
Kassa; chris.lindstrom@pirg.org; Nicole Allen
Subject: Q&A on Gainful Employment

FYI. Attached are public Q&A on the Gainful Employment NPRM. It is being widely distributed
to Hill staff, stakeholders and the press to address some common questions. As always,
questions or comments are welcome to the extent they are permissable. Pauline

«QA on GE Aug 16 FINAL w logos.docx»

Pauline Abernathy
Vice President
The Institute for College Access & Success www.ticas.org<file://www.ticas.org> and
www.projectonstudentdebt.org<file:/Lwww.projectonstudentdebt.org>
TICAS: 51e.318.7gee Direct: 51e.318.7ge3

1
Kolotos, John

From: Kolotos, John

Sent: Friday, August 20,20107:37 AM
To: Debbie Frankl~ Cochrane
SUbject: RE: Clarifying questions on repayment rate

·for the repayment rates we published, a borrower's status was determined by taking a snap-
shot at the end of the fiscal year. so if the borrower was in default, or in a deferment or
forbearance status (other than in-school or military-related) , the loan was NOT included in
the numerator of the repayment rate ratio. john ___
From: Debbie FrankIe Cochrane [DCochrane@ticas.org]
Sent: Thursday) August 19, 2010 3:50 PM
To: Kolotos, John
Cc: Pauline Abernathy
Subject: Clarifying questions on repayment rate

John,

I'm glad I could reach you earlier. Here are the two questions that need to be clarified:

* Under the repayment rate calculation) is it possible for students in default to be

considered in repayment? As I read it, this could happen if a student made one or two
payments that reduced the principal and then subsequently stopped making payments and
defaulted. The end balance due would likely be higher, but the principal balance would seem
to be lower at the end of the year.
* At what point is deferment/forbearance status considered? At the FFY-end snapshot) or
is there a minimum-time threshold (like it has to be in deferment/forbearance for six
months)?

Thank you!
Debbie

Debbie FrankIe Cochrane

Program Director
The Institute for College Access & Success
405 14th Street, Suite 1100
Oakland, California 94612
office: (510) 318-7900 // fax: (510) 318- 7918
dcochrane@ticas.org<mailto:dcochrane@ticas.org>

www.ticas.org<http://www.ticas.org>
www.projectonstudentdebt.org<http://www.projectonstudentdebt.org>
www.college-insight.org<http://www.college-insight.org>

1
 Kolotos, John
From: Kolatas, John
Sent: Friday, August 20,20107:29 AM
To: Chesley, Susan
Subject: RE: Clarifying questions on repayment rate

thanks.

From: Chesley, Susan

Sent: Thursday, August 19, 2010 4:57 PM
To: Kolotos, John
Subject: RE: Clarifying questions on repayment rate

From: Kolotos, John

Sent: Thursday, August 19, 2010 4:03 PM
To: Chesley, Susan; Moran, Pamela
Subject: FW: Clarifying questions on repayment rate

Susan, I hate to keep bothering you, but do you know? thanks. john

From; Debbie FrankIe Cochrane [mailto:OCochrane@ticas.orgJ

Sent: Thursday, August 19, 2010 3:50 PM
To: Kolotos, John
Cc: Pauline Abernathy
Subject: Clarifying questions on repayment rate

John,

1 ' m glad I could reach you earlier. Here are the two questions that need to be clarified:

. * Under the repayment rate calculation, is it possible for students in default to be

considered in repayment? As I read it, this could happen if a student made one or two
payments that reduced the principal and then subsequently stopped making payments and
defaulted. The end balance due would likely be higher, but the principal balance would seem
to be lower at the end of the year.
* At what point is deferment/forbearance status considered? At the FFY-end snapshot, or
is there a minimum-time threshold (like it has to be in deferment/forbearance for six
months) ?

Thank you!
Debbie

Debbie FrankIe Cochrane

Program Director
The Institute for College Access & Success
405 14th Street, Suite 11ea
Oakland, California 94612

1
office: (51e) 318-7gee II fax: (51e) 318- 7918
dcochrane@ticas.org<mailto:dcochrane@ticas.org>

www.ticas.org<http://www.ticas.org>
www.projectonstudentdebt.org<http:L/www.projectonstudentdebt.org>
www.college~insight.org<http://www.college-i~sight.org>

2
 Kolotos, John
From: Klock, Dan
Sent: Wednesday, August 18, 2010 8:50 AM
To: Pauline Abernathy
Cc: Baker, Jeff; Kolotos, John; Bergeron, David; Sellers, Fred; Debbie Frankie Cochrane
SUbject: RE: NPRM deadline question

You are correct, for the NPRM that was published on July 26th , the 30-day comment period on the PRA portion of the
th
package would end on August 25 •

Dan
-------------
From: Pauline Abernathy [mailto:pabernathy@ticas.org]
Sent: Tuesday/ August 17/ 2010 5:14 PM
To: Klock, Dan
Cc: Baker, Jeff; Kolotos, John; Bergeron/ David; Sellers/ Fred; Debbie Frankie Cochrane
SUbject: RE: NPRM deadline question

Thanks Dan. When does the 30-day period end? Midnight Aug 25? Thanks again. Pauline

From: Klock, Dan [mailto:Dan.Klock@ed.9Qv]

Sent: Tuesday, August 17,20105:11 PM
To: Pauline Abernathy
. Cc: Klock, Dan; Baker, Jeff; Kolotos, John; Bergeron, David; Sellers, Fred
Subject: NPRM deadline question
Importance: High

Hi Pauline-

Getting a response took longer than 1 expected, however, the 30-day deadline that follows the paperwork reduction act materials on
page 43637 of the July 26,2010 NPRM is correct. This deadline is associated with comments the pUblic may wish to make related to
the burden assessment portion of the NPRM. As you know, the deadline for the public to provide substantive comments on the
proposed rule is September 9, 2010 as indicated on page 43616 of the NPRM. Hope that clears things up.

Dan Klock
Program Specialist - General Provisions
U.S. Department of Education
Federal Student Assistance
Policy Liaison and Implementation
830 First 81. NE., Mail Stop 113E2
Washington, DC 20202-5345
Phone: 202-377-4026
FAX: 202-275-5000
<maHto: Dan. Klock@ed.gov>

1
Kolotos. John
From: Pauline Abernathy [pabernathy@ticas.org]
Sent: Monday, August 16,20102:45 PM
To: Kolotos, John
SUbject: FW: Coalition letter calling for stronger GE rules
Attachments: Aug12_GE_NR.PDF; Coalition Itr on GE NPRM August 12.pdf

FYI This is the letter sent last week from 28 organizations to the Secy on the GE NPRM.

From: Edie Irons

Sent: Thursday, August 12, 2010 12:12 PM
To: 'arne.duncan@ed.gov'; 'jessica.finkel@ed.gov'
Cc: 'martha.kanter@ed.gov'; Kvaal, James; 'dan.madzelan@ed.gov'; 'david.bergeron@ed.gov'; 'gabriella.gomez@ed.gov';
Hamilton, Justin; Arsenault, Leigh; Smith, Zakiya; Pauline Abernathy
Subject: Coalition letter calljng for stronger GE rules

Dear Secretary Duncan et aI,

Attached please find a letter that was just submitted to regulations.gov as a public comment regarding program
integrity and gainful employment. Nearly 30 organizations advocating for students, consumers, civil rights, and
college access signed on. The groups praise the current proposal as a major step in the right direction, but call
for four improvements that would strengthen protections for students and taxpayers against career education
programs that over-charge and under-deliver.

Thank you for all your work on this important issue, please contact Pauline Abernathy with any questions at
pabemathy@ticas.org or 510-318-7903.

Edie Irons
Communications Director
The Institute for College Access & Success
405 14th St. 11th floor
Oakland, CA 94612
(510) 318-7902
eirons@ticas.org
Pfease note the new address and phone number, we moved in April.

www.ticas.org
http://proiectonstudentdebt.org

1
.!!!!lJeron r David
From: Bergeron, David .._
Sent: Wednesday, April 07, 2010 2:13 PM . .
To: Smith, Kathleen; 'RobertShireman@ptt.gov'
SUbject: FiN: Following up

I suggest we take this meeting. I have some backgroud to share.

David A. Bergeron

Sent using BlackBerry

From: Diane Schulman <diane.schulman@theindagogroup.com>

To: Bergeron, David
Sent: Wed Apr 07 13:09:05 2010
Subject: Following up

Hi, David-

Nice to catch up with you today - have a safe flight.

As I mentioned, Steve Eisman, Matthew Leahy and I will in Washington for meetings on Friday, April 16th.
Steve and Matt would love to have a chance to share some of their exhaustive research on the for-profit
education industry and get your input.

Wetve got a few things scheduled but 1 know getting to meet you and Bob (as you suggested) would be a
priority so if you can let me know what time
.
would workfor you, we'll work around it.
,

Thanks so much,
Diane

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

1
!!!:Sera". David
From: Bergeron, David
Sent: Wednesday, April 07, 20102:15 PM
To: 'diane.schulman@the.indagogroup:com'
SUbject: Re: Following up -

Thanks Diane. You'll be hearing from Kathleen Smith. She'll set this up and I should be able to attend. David
David A. Bergeron

Sent using BlackBerry

From: Diane SChulman <diane.schulman@theindagogroup.com>

To: Bergeron, David
sent: Wed Apr 0713:09:052010
Subject: Following up

Hi, David-

Nice to catch up with youtoday - have a safe flight.

As I mentioned, Steve Eisman, Matthew Leahy and I will in Washington for meetings on Friday, April 16th.
Steve and Matt would love to have a chance to share some of their exhaustive research on the for-profit
_education industry and get your input.

We've got a few things scheduled but I know getting to meet you and Bob (as you suggested) would be a
priority so if you can let me know what time would work for you, we'll work around it.

Thanks so much,
Diane

Diane Schulman
The Indago Group
41 East 11 th Street, 11th Floor
New York, NYI 0003
diane.schulman@theindagogroup.com
617.965,5113 Direct phone

f
~eron. David
From: Eisman, Steven [seisman@fppartners~coml
Sent: Tuesday, April 20, 2010 10:08 AM
To: Bergeron, David
Subject: FW: For-Profit Ed - ESI Lawsuit Docs Attached (Height Analytics)
Attachments: imageo01.jpg; 201 0-04-15_Halasa vs. ITT_Complaint. pdf; 2010-04-20_Height-Analytics_Pre-
Market.pdf

Importance: High

For your reading pleasure

Steven Eisman
FrontPoint Financial Services Fund
. seisman@fppartners.com
917-934-1770

From: Alex Cynamon [mailto:acynamon@heightarialytics.coml

Sent: Tuesday, April 20, 2010 10:04 AM
To: Undisclosed recipients .
Subject: For-Profit Ed - ESI Lawsuit Docs Attached (Height Analytics)
Importance: High

.<
... - <.".;{:'. :t:":. "\~'.; ," ",: .

·:H··,gh~····
•
...•• }\N l\:~,y;.'t;t~S-·

For-Profit Ed: ESI Lawsuit Documents

Tuesday, April 20, 2010

What's New?

As we reported this morning, a former administrator has file<;l suitClgainstESI alleging fraudulent record keeping and
inflated student grades. Halasa's complaint (attached) alleges that he observed a series of violations at the campus he
directed including:
• changing failing scores to passing scores so ESI could retain Title IV aid;
• altering attendance records so E51 could retain Title IV aid;
• inflating grades so students could meet minimum grade point averages and E51 could retain Title IV aid;
• compiling inaccurate job placement figures and distributing them to E51's accrediting agency;
• altering and destruction of files required to be maintained,bystate and federal law; AND
• compensating recruiters based on howmanystud~nts they convinced to enroll

The suit claims that during this period ESI was in violation of the False Claims Act (FCA) by making material false claims
to its accreditation agency (the Accrediting Council for Independent Colleges and Schools) and the Department of
Education.

The former employee alleges he reported these concerns to a Corporate District Manager, Corporate Human Resources
Director, and Corporate Director of Compliance and wasfii"edbecause of his attempts to stop these FCA violations.
.".. :.

1
For trying to stop violations of the FCA, the suit attemptsto recover double back pay, interest on the pack pay and
IIcompensation for any special damages sustained as a result ofthediscrimination, including litigation costs and
reasonable attorneys' fees."

From Height Analytics morning note (April 20, 2010):

For-Profit Ed: Lawsuit Against ESI Supports Increased ED Oversight of Completion Rates

The lawsuit filed Friday by a former ESI administrator alleging fraudulent record keeping and inflated student grades is
particularly concerning because the college is under increased pressure to boost its completion metrics in order to
reduce CDRs and meet the gainful employment completion/placement alternative (should it be reinstated in the final
rule).

In 2004, E51 was investigated by the SEC/FBI and federal investigators raided its offices seeking evidence of manipulated
student data (including placement, retention, grades, attendance, and other data). While it is too early to know the legal
merits of this case, should ESI be shown to have reported false information to the Department of Education it could
threaten Title IV eligibility and, as it did in 2004, lead to shareholder lawsuits that the company made material.
misrepresentations of information used as indicators Of its success.

For a PDF version of this report, including a schedule of events in Washington throughout the remainder of the week,
please refer to the attached document: "Height Analytics: Derivatives, For-Profit Ed, Internet Gambling, FCC, Bank Tax,
FYll Budget. /I

Alex Cynamon
Senior Vice President
Height Analytlcs
202-629-0016 office
443-995-1456 mobile
acvnamon@heightanalytics.com

975 F Street NW, Suite 520

Washington, DC 20004
www.heightanalvtics.com

The information contained in this e-mail.alongwithanyattachments.islntende-d solelyforthe private use cif fleight Analytics' clients and prospective clients. Height
Analytics does not guarantee the accuracy. completeness or timeliness of any information or a'nalysis contained in this email. Users assume the·entire cost and risk of
any investment decisions they choose to make. Height Analytics shall not be liable for any ross or damages resulting from the use of the information contained in this
e-mail. Should this e-mail contain a research report, this disclaimer is not Intended to conflict with or supersede the research report disclaimer. Cl'ients who wish to
receive a copy of Part II of Height Analytlcs' Form ADV may request one by email.inginfo@heightanalytics.com.

2
.2!!:seron I David
From: Leahy, Matthew [mleahy@fppartners.com}
Sent: Thursday, April 22, 201 01 :55 PM, . ..
To: Bergeron, David; Shireman"Bob
Cc: Eisman, Steven; Susanin, Chris
Subject: Updated slides
Attachments: ED Presentation_new pages.ppt

David and Bob,

I have updated a few pages from the presentation trbmlast week with new analyses that I thought you may find
interesting. . '.

Thanks,
Matt

Matthew Leahy
FrontPoint Management, Inc
1290 Avenue ofthe Americas, 34th Floor
. New York, NY 10104
(917) 934-1794
mleahy@fppartners.com

1
.!!!!:sera", David
From: McCullough, Carney
Sent: Thursday, May 27,20108:21 AM. .. .
To: Kolotos, John; Sellers, Fred; Gt:Jthrie,Marty; Bergeron, David; Madzelan, Dan
Subject: FW: EismanSohnConference[1];
Attachments: . EismanSohnConference[1].doc

From: Carol cataldo [mailto:cataldo2@ix,netcom.com]

sent: Thursday, May 27,20106:59 AM .
To: McCullough, carney
. SUbject:EJsmanSohnConference[l]

You may want to read this