Christine Mordach, former head of financial aid at Merrimack College, is facing federal fraud charges, The Boston Business Journal reported. She allegedly promised students grants, but then tricked them into taking Perkins loans, and didn't provide the help she promised with loan repayment. Mordach's lawyer predicted "a speedy resolution of this issue," but did not elaborate. Authorities indicated that the college was a victim of the fraud.
The Senate Appropriations Committee last week passed a bill to fund the Defense Department that would increase the Pentagon's basic research budget and also place new restrictions on the flow of federal dollars to for-profit colleges. The $549.3 billion funding measure, which lawmakers on the panel approved last Thursday, includes a 5 percent increase in funding for Department of Defense basic research. Such research would receive $2.27 billion in funding for the 2015 fiscal year, which begins October 1.
The Obama administration had sought a nearly 7 percent reduction in Pentagon-sponsored research.
The Association of American Universities on Monday praised the committee for rejecting that proposed cut. "We commend the Committee for taking another step toward closing the innovation deficit and will work to sustain this funding level as the bill advances and is ultimately reconciled with the House bill," said Hunter Rawlings, the group's president.
Separately, the panel also approved a provision, pushed by Senator Dick Durbin of Illinois, a Democrat, that would place a new restriction on some of the federal military benefits that are used at for-profit colleges. Durbin's language would change the so-called "90/10 rule" that caps for-profit colleges' receipt of grants and loans administered by the Education Department at 90 percent of their annual revenue. The bill would include money from the Pentagon's Tuition Assistance program as part of that cap. Such benefits, as well as veterans' educational aid, are not included in that calculation, which for-profit critics say makes them vulnerable to aggressive and predatory recruiting. For-profit industry representatives have rejected such efforts, arguing that they would reduce access to their institutions for servicemembers and veterans.
The U.S. Department of Education said Friday that it will automatically reprocess the federal financial aid applications of tens of thousands of students whose aid eligibility was likely reduced because of a decimal place error. The problem came to light this month after some students and families filling out the online Free Application for Federal Student Aid, known as the FAFSA, incorrectly entered both dollars and cents into a box that was supposed to accept only whole-dollar values.
As a result, the agency said, the government’s computer system interpreted a student reporting an income of $5,000.19 as having an income of $500,019, which would likely reduce that student’s eligibility for need-based grants and loans.
Department officials said in guidance to colleges on Friday that they planned re-process the applications of the “fewer than 200,000 applicants” nationwide who they believe were affected by the problem. The department also said that on July 1 it reprogrammed its online FAFSA form to automatically drop any fractional dollar amounts that are erroneously entered into the system in order to prevent the problem from recurring.
WASHINGTON -- The U.S. Department of Education has not properly overseen the companies it hires to collect defaulted federal student loan debt, according to an audit released Monday by the agency’s inspector general.
The report found that officials at the department did not “effectively” make sure that the 22 companies that the department hired were collecting debt in accordance with federal law and the terms of their contract. The inspector general also said that the department did not do enough to make sure that borrowers' complaints against debt collectors were properly received and resolved.
Under the terms of the government’s contract with the debt collectors, recurring borrower complaints are supposed to lead to a reduction in their performance scores. The audit says that, in spite of the more than 3,000 complaints the department received between the 2010 and 2012 fiscal years, officials never docked the scores of any of the companies. The department said in response to the audit’s findings that it had taken steps to “close gaps in our oversight” of the companies, including new directions to the debt collectors and a promise to take borrower complaints into account when evaluating the debt collectors.
The department has previously faced other criticism for its oversight of federally contracted debt collectors. A May 2013 inspector general report found that the department had paid out bonuses to the companies without verifying that they had actually been earned. A leading consumer advocacy group has also criticized department officials for keeping secret how it pays out bonuses to the debt collection companies. The National Consumer Law Center earlier this year filed a lawsuit to force the department to turn over records relating to those bonuses.
An advocacy group's new report shows that nearly a million community college students -- including a disproportionate share of underrepresented minorities -- lack access to federal student loan programs.
Debt settlement companies offer, for a fee, to help those in debt lower their monthly payments, and some of the businesses have been criticized over the years as not really helping borrowers. The New York Times reported that these companies, which have focused on credit card and mortgage debt, now see those with student loan debt as potential customers, and are increasingly going after that business.
The American Federation of State, County, and Municipal Employees is ending an internship and grant program for students at United Negro College Fund institutions, to protest the UNCF's acceptance of a $25 million grant from Koch Industries and the Charles Koch Foundation. The gift had critics from the moment it was announced, with people noting efforts by the Koch brothers that they viewed as inconsistent with the interests of many black Americans. In a letter to Michael Lomax, the UNCF president, Lee A. Saunders, president of AFSCME, pulled no punches. His title for his letter -- "A Principle Is a Terrible Thing to Waste" -- is a play on the UNCF's slogan.
"Like many supporters of the UNCF, I was deeply troubled by your decision to accept $25 million from David and Charles Koch. But I assumed that in accepting those funds you were in no way supporting or lending the name of the UNCF to the political or social causes or substantive views of the Koch brothers," wrote Saunders. "So I was truly stunned to learn that less than two weeks later, you attended and spoke at the Koch brothers summit in California. This was a betrayal of everything the UNCF stands for. The avowed purpose of this private event was to build support -- financial and political -- for the Koch brothers' causes. Your appearance at the summit can only be interpreted as a sign of your personal support and the UNCF's organizational support of the Koch brothers' ideological program. The Koch brothers and the organizations they fund have devoted themselves for more than a decade to attacking the voting rights of African Americans. They support voter identification laws. They seek to restrict early voting and voter registration. They support laws that threaten organizations that register voters in the African American community."
Lomax issued a statement about the letter. "UNCF has over 100,000 donors with a wide range of views, but they all have one thing in common: They believe in helping young students of color realize their dreams of a college education. For over 70 years we have never had a litmus test and we have asked all Americans to support our cause," he said. "While I am saddened by AFSCME's decision, it will not distract us from our mission of helping thousands of African American students achieve their dream of a college degree and the economic benefits that come with it.”