Madam Chairman and Members of the Committee:

I am pleased to appear before you today to describe what the Department of Education is doing to help ensure the quality of education in our nation's institutions of higher education and to discuss the growing problem of diploma mills.

Our decentralized system of higher education is widely admired around the world for its quality and diversity. This quality is largely a tribute to the efforts made by the many different types of postsecondary institutions that ensure a valuable education is provided to their students. Others also contribute to the success, including state governments that play a direct role through the licensure of postsecondary institutions; the Federal government through its oversight of the accreditation process as set forth in the Higher Education Act; and accrediting agencies that establish and apply standards to institutions of higher education. The combined efforts of all of these parties make an important contribution to maintaining and improving the quality of those institutions.

On the other hand, diploma mills operate outside of stringent and appropriate supervision. They grant diplomas or degrees that are fake and usually worthless because of a lack of proper standards.

The problem posed by diploma mills must be seen in the context of how important postsecondary education is to our information economy. The value of a quality postsecondary education has never been greater. The new century demands a different type of worker: one who is more highly educated, is better trained, and has a broader set of skills in a variety of areas. There are significant differences in employment and earnings between those who have earned a degree in higher education and those who have not. Research consistently shows that the unemployment rate for adults aged 25 years old and over who have received at least a bachelor's degree (recently at 3.1 percent) is significantly lower than adults who have not completed high school (8.8 percent) or only completed high school (5.5 percent). At the same time, the Bureau of Labor Statistics projects that between 2002 and 2012, 70 percent of the fastest-growing occupations will be in occupations that generally require some sort of education beyond a high school diploma.

The annual and lifetime earnings of bachelor's degree recipients are also significantly greater than the earnings of those with only a high school diploma. For 2002, the U.S. Census Bureau reports that the average household income of a college graduate is more than 80 percent greater than that of someone who has only a high-school diploma. Now, more than ever, our country and economy place a premium on higher education. As a result, most individuals are motivated to earn legitimate degrees from postsecondary institutions. However, there are others who do not want to invest the time and effort required to obtain a legitimate degree. For this group of people, diploma mills provide a means for obtaining a "degree" that purports to represent the completion of a postsecondary education.

Although we tend to focus on the consumers who are unsuspecting victims of diploma mills, we need to recognize that some consumers are well aware that they are obtaining fake credentials. Just last week, my assistant received an email at the Department of Education and the subject line said "get your highly credited diploma now." The message went on to say, "get your diploma within 30 days! No classes to attend. No books to read. Simply pay and receive your diploma. Only a name and 2 telephone numbers are required." People who respond to such ads would have a difficult time convincing most of us that they are victims of diploma mills.

In response to the problem of diploma mills, it is important to recognize that this is not the first time this issue has surfaced in the United States. The federal government's concern about diploma mill activity arose in 1952 during the Korean conflict. The concern then was that diploma mills were rapidly opening to take advantage of federal funding in the form of "GI Bill benefits" for veterans of the Armed Forces. State approving agencies were required by statute to visit all non-accredited educational institutions that wished to have courses approved for GI Bill education assistance benefits. They were required to apply a stringent list of approval criteria to those courses. That basic approach is still being used effectively by Veterans Affairs to ensure that the substantial Federal investment in student aid is made to students who are attending institutions of higher education that provide a sound education.

For the most part, diploma mills do not endanger the integrity of the Federal student aid programs because of the accreditation process and the oversight conducted by the Department's Federal Student Aid office. However, they do threaten to devalue the legitimate education credentials of millions of Americans. Senator Collins, you raised your concerns to Secretary Paige which prompted a series of events. First, Secretary Paige asked me to convene a meeting to explore the problem of diploma mills. That meeting was held on January 15 of this year, and a wide range of representatives from state and federal agencies attended. Those at the meeting included officials from Oregon, North Dakota, New Jersey, Illinois, the Office of Personnel Management (OPM), the Federal Bureau of Investigation (FBI), the Federal Trade Commission (FTC), the General Accounting Office (GAO), the Department of Education and staff from the Senate Governmental Affairs and the House Government Reform Committees.

The purpose of the meeting was to share information and create awareness about on-going State and Federal efforts to address the problem of diploma mills and to lay the groundwork for greater coordination in the future. Representatives from Oregon, North Dakota, Illinois and New Jersey described the laws that have been enacted in their respective states to restrict the operation of diploma mills and the use of fake educational credentials. Representatives from OPM discussed current efforts to identify fake degrees in the Federal workforce, while the FBI and the FTC shared their experiences in handling investigations of diploma mills domestically and internationally.

One of the strategies discussed for combating the problem involved developing a comprehensive list of diploma mills. If a national list of diploma mills could be developed, it would be available to the public and employers wishing to ascertain the legitimacy of an education credential issued by a postsecondary institution. Students seeking a postsecondary education could avoid those institutions. Employers concerned about the knowledge and skills of potential employees could identify those institutions providing fake credentials.

However, I think most of the attendees at the meeting agreed that maintaining a comprehensive national list of diploma mills would be an overwhelming challenge. The majority of diploma mills are now Internet-based and their ability to rapidly appear, disappear, and morph into other forms is unlimited. An alternative proposed at the meeting is the creation of a "positive list" of postsecondary institutions. That list would consist of all postsecondary institutions accredited by agencies recognized by the Secretary of Education. From our discussions, it was clear that such a master list of accredited postsecondary institutions would greatly assist people who are verifying credentials as part of the hiring process.

After discussing this matter with Secretary Paige, he instructed the Office of Postsecondary Education to begin compiling such a list of postsecondary institutions. The burden of collecting the names of accredited institutions is relatively small as recognized accrediting agencies are already required to periodically provide this information to the Department. The majority of accrediting agencies maintain a list, in electronic format, of the institutions they accredit, so we will collect the names of these institutions and compile this information into an easily accessible database. This first phase, to be completed this year, is to identify institutions currently accredited by recognized agencies. People interested in attending an institution in the near future or employers interested in recent credentials of job applicants will find this initial list of immediate assistance. A second phase will involve compiling historical information with respect to institutions that had previously been accredited. A historical list will be needed to verify credentials in a number of situations. For example, a previously accredited institution may no longer be accredited, an institution may no longer exist or an institution may have merged or changed its name. In those situations, an institution will have awarded a perfectly valid credential during a specified period.

I think it is important to point out that the list that will be compiled and maintained by the Department will in no way be a perfect list. In the United States, there are many postsecondary institutions providing a quality education that have chosen to not participate in the Federal student aid programs, and may not have sought accreditation which is required for Federal student aid purposes. Those institutions will not appear on the Department's list. Therefore, in making a "positive" list available, the Department will exercise great care in explaining what the list represents, as well as what it does not represent. Postsecondary institutions that do not appear on the list should not be presumed to be a diploma mill. We expect that persons using our list will consider it a first source of information and would hope that further investigation takes place whenever an institution does not appear on the list.

In closing, I think many of us who attended the January meeting concluded that the challenge of effectively confronting the diploma mill problem cannot be solved by states or Federal agencies working independently. The dialogue initiated at the conference must continue with action, coordination, and cooperation so that the manufacturing and use of fake degrees is controlled, if not eliminated. The Department of Education is pleased to be able to help in this process by creating a list of institutions accredited by recognized agencies and by offering its continuing support in this important effort.

Thank you for your time and the opportunity to testify before you today. I would be happy to answer any questions you might have.

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