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Audit Faults Federal Oversight of Student Debt Collectors

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. 

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Report: Minority community college students denied access to federal loans

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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. 

Warnings About Debt Settlement Companies

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.

 

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Veterans groups, public universities spar over federal bill calling for in-state tuition for veterans

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Veterans groups and public universities are at odds over federal legislation that would require state institutions to provide recent veterans with in-state tuition.

Union Severs Ties to UNCF, Citing Koch Grant

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.”

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Senate committee grills NCAA president about college athlete rights

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At Senate hearing, NCAA's Mark Emmert says he lacks authority to enact many changes he’d like to see in college athletics and that association's members must address the problems.

House Republicans Propose Cut to Humanities Funding

The U.S. House of Representatives subcommittee that oversees the budget for the National Endowment for the Humanities on Tuesday proposed legislation to reduce that agency’s funding by more than 5 percent in the coming fiscal year.

The Republican-led panel released the text of a funding measure, which would cut NEH’s budget by $8 million, ahead of a scheduled subcommittee vote on Wednesday. (A similar cut is proposed for the National Endowment for the Arts.)

The Obama administration had asked Congress to keep the federal humanities agency’s funding at its current $146 million. A budget blueprint released earlier this year by Representative Paul Ryan, the Republican who leads the House Budget Committee, proposed ending all federal funding to the NEH, which many members of his party have long derided as an unnecessary federal expenditure. 

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Error in Top Spot on 'Most Expensive' List

The federal government’s annual list of the most expensive colleges in the country, released last week, incorrectly reported that Hult International Business School had the highest net price of any four-year private institution, according to Bloomberg Businessweek.

A school official told the publication that Hult had erred in reporting its data to the government, incorrectly listing some graduate and international undergraduate tuition rates on a form where it was supposed to report such information for U.S. undergraduate students.

The school said that it did not enroll any undergraduates in the U.S. during the 2011-12 year that the list was supposed to cover.

A department spokesperson declined to comment on the matter, Bloomberg Businessweek reported. A spokeswoman did not immediately return an email from Inside Higher Ed on Monday evening.

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NCAA, Republican lawmakers back Northwestern's appeal of football player union

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Republican lawmakers and the National Collegiate Athletic Association file amicus briefs urging National Labor Relations Board to reverse a regional director's decision allowing football players to unionize.

Essay calls for end to charging online students same as in-person students

Several hundred incoming Georgia Tech students made history this spring as the first cohort in the institution’s online master’s program in computer science.  While today it is hardly noteworthy that a prestigious university like Georgia Tech is offering a graduate degree online, the university’s decision to price it more than 80 percent less than the on-campus option is truly groundbreaking. At $6,600, the online program is one-sixth the cost of the on-campus one, a fact that higher education leaders should be examining closely.

Georgia Tech’s decision is indeed significant, given that more than 60 percent of large public U.S. universities typically charge online students a campus-equivalent tuition rate, while 36 percent command a premium, according to a 2013 report from the American Association of State Colleges and Universities and the Learning House. Not only is Georgia Tech challenging the status quo in online tuition pricing, but it is also shedding new light on the true cost of serving online students.

These days, two out of three students attending on-campus programs receive some form of generous subsidy or discount, while their online counterparts, generally ineligible for such assistance, foot the full sticker price even though they do not benefit from all the amenities of the revered campus life, do not take up parking spaces, inflict wear and tear on facilities, or take up as much instructor time. Instead of embracing these online learners who produce considerable incremental revenue for institutions, colleges and universities are penalizing them, which has troubling implications not only for students’ bank accounts, but also for universities’ own vaunted views of fairness. By introducing e-tuition, which is appropriately lower than the on-campus price tag, universities could easily capitalize on the scale, brand extension, and new revenue synonymous with online learning while maintaining far more equitable pricing for online students.

In his book Generation on a Tightrope, Woodrow Wilson Foundation head Arthur Levine writes that most nontraditional, online students shop around before choosing a university at which to enroll.  He says they look for low tuitions and fees, but more importantly, they want to be treated fairly and pay a fee commensurate with the benefits they obtain from an institution. However, this is not what is typically happening. For example, students in the Villanova University’s online MBA program will pay nearly 25 percent more for their education than their on-campus counterparts, $1,240 per credit hour versus $1,000 for residential students. While the differential may be less profound at other institutions, the fact that such a disparity exists is confounding and unfair.

Although a rapidly increasing number of universities see online programs as a means of expanding their footprint and a way to capitalize on the principles of scale — adding more students without adding more on-the-ground resources to serve them — the pricing dilemma has not been fairly addressed. 

Some universities, including several in Texas that Academic Partnerships represents, have found another way. Early adopters of online degree programs, Texas public universities have enrolled thousands of students at prices far lower than comparable on-campus options, substantially increasing their market share within two years and retaining that lead six years later.  One such institution now boasts the nation’s largest online public nursing program, while another is home to one of the largest online education programs in all of American public higher education.

Several of these universities have seen their online enrollments increase the total student body by more than 30 percent, with the new revenue generated by online programs allowing some of them to offer faculty raises as other campuses in their systems have tightened budgets.

Though there is some cost associated with launching online degree programs, it pales in comparison to the benefits they can bring as students from all over the world converge through the cloud. Program enrollment of a few hundred can scale by five- or tenfold at a very low incremental cost to the university, while, at the same time, on-campus enrollment increases due to universitywide brand-building driven by intense online marketing effort associated with a successful online rollout.

While higher education is struggling with leaner budgets, the growing wave of digital students creates a meaningful financial opportunity for institutions, especially when online programs are priced at fair e-tuition rates that drive scale. Online learning allows institutions to expand into new markets, extend their brand and prestige beyond regional borders, while at the same time allowing them to tap into legions of new students, building their global alumni base and seeding future fund-raising efforts.

The benefits of online learning are many, and so too are the beneficiaries. E-tuition is both a boon to students and a potential windfall for higher education.

Randy Best is the chairman and CEO of Academic Partnerships (AP). AP strongly encourages its partner universities to offer e-tuition rates to students enrolled in online degree programs.

 

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