studentaid

Education inspector general calls for tighter debit card regulations

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Department of Education’s inspector general joins other federal investigators in calling for stricter rules on campus debit cards, as the agency contemplates new regulations on the products.

Lawmaker Praises Colleges’ Changes to Financial Aid Sites

The Democratic Congressman who last month accused more than 100 colleges of misleading students about the requirements for federal student aid said Monday that he is satisfied with the changes institutions have since made to their websites.

Representative Elijah E. Cummings of Maryland, the ranking member of the House Oversight Committee, wrote in a letter to Education Secretary Arne Duncan that “it appears that all 111 of the identified in my investigation have made changes to their websites to clarify their requirements for student aid applications and to ensure that they are in compliance with the law.” He added that the changes colleges made to their websites reflect "a commitment to ensuring that students receive appropriate instructions when applying for financial aid.”

Cummings previously posted a list of colleges that appeared to be either requiring student to submit the fee-based CSS Profile as a condition of receiving federal aid or insinuating that the form was required to access federal grants and loans. Federal law prohibits colleges from imposing such a requirement. 

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Missouri Backlash Against Western Governors U.

Missouri lawmakers have attached to a budget bill a ban on using state student aid at institutions that do not have, for purposes of accreditation, a headquarters in the state. The Columbia Daily Tribune reported that this is an effort to limit the use of state funds at Western Governors University Missouri, an offshoot of the competency-based online university. Governor Jay Nixon is a big proponent of Western Governors, but some legislators say that it will take money that is needed for other institutions in the state.

Obamas Promote Federal Student Aid Application

President Obama on Friday will lay out more details about the education proposals in his budget and also discuss his administration’s efforts to get more students to apply for federal student aid.

The President and First Lady Michelle Obama plan to visit a high school in Miami where they will kick off a previously-announced initiative by the Education Department to boost completion of the Free Application for Federal Student Aid, known as the FAFSA. Education Department officials will share data with states and high schools on which of their students have begun the FAFSA so that counselors can work with those students to actually complete the form, which is required to receive federal grants and loans for college.

As part of her recent higher education push, Mrs. Obama has been speaking out about the importance of applying for federal aid. Last month she tapped a public service announcement encouraging students to fill out the FAFSA.

In a fact sheet accompanying the Obamas’ trip, the White House touted a 33 percent increase in the number of FAFSA forms filed over the course of the Obama administration, which shortened and streamlined the application.  The number of FAFSA submissions increased from 16.4 million in 2008-2009 to 21.8 million in 2012-2013, the White House said. But efforts to target low-income students, in particular, have had more mixed results. The percentage of low-income students who filed a FAFSA for the first time in the 2013 fiscal year ticked down to 57.1 percent from 60.3 percent the previous year, failing to meet the department’s own goal.  

Department officials have said they are also considering allowing web developers to build third-party services and applications that can interact with the FAFSA form, which is currently available only through the government’s website. 

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Progressive groups launch new campaign to tackle student debt, college affordability

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A new campaign is focused on refinancing existing student debt, pushing states to reinvest in higher education, and seeking to hold colleges more accountable for tuition costs. 

Obama budget calls for changes to education tax benefits

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President Obama will seek to make a tuition tax credit permanent and exempt student loan debt forgiveness from taxation.

Undocumented Students Eligible for Aid in Washington State

A new law has made Washington State the fifth state where students who lack the legal documentation to live permanently in the United States are eligible for state student aid, Reuters reported. Governor Jay Inslee, a Democrat, said that the law would help "thousands of bright, talented and very hard working students across the state of Washington."

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GOP tax plan would combine tuition tax breaks, end popular deductions for colleges

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House Republicans' vision for tax reform would consolidate tuition tax breaks into a single, more refundable credit -- but end benefits for student borrowers, repeal deduction for those who purchase football tickets, and tax the cherished tuition remission for college employees.

Sallie Mae Splits In Two, Names New Loan Servicing Unit 'Navient'

     

Sallie Mae’s loan servicing operations will soon be housed in a separate business entity called Navient, the company announced Tuesday.

As it first disclosed last year, Sallie Mae--formally known as SLM Corp.-- is in the process of splitting up into two distinct companies: Navient and Sallie Mae.  

Navient, starting this fall, will service most of Sallie Mae’ existing private student loan portfolio and also assume responsibility for Sallie Mae’s contract with the U.S. Department of Education to manage the payments of federal student loan borrowers.

The company’s consumer banking business will continue under the name Sallie Mae and will originate new private student loans and service those loans.

Sallie Mae is the largest servicer of the federal government’s portfolio of direct student loans, with some 5.7 million accounts.

The Education Department also issued guidance Tuesday about the changes, which will begin to affect borrowers this fall. The department described the impact on federal student loan borrowers as “minimal.”

Federal borrowers whose accounts are currently managed by Sallie Mae will be able to contact Navient at the same phone numbers and mailing address, but they will need to log on to their accounts at a new website. In addition, borrowers will have to write checks using the new name and change any online bill paying services. A borrower who has set up automatic debiting from a bank, however, no action will be required, the department said.

Sallie Mae said in a statement that those borrowers would receive this spring and summer “personalized information about their account and any changes needed to ensure a smooth transition.”

The company’s split comes as its student loan servicing practices have come under scrutiny from federal regulators, several members of Congress and consumer advocates. Sallie Mae is facing multiple inquiries over how it applied the loan payments of military servicemembers, who are entitled to special borrower benefits.

Sallie Mae has disclosed to investors that it set aside $70 million, as of the end of 2013, to cover the “expected compliance remediation” relating to those inquiries.

Consumer advocates, Senator Elizabeth Warren of Massachusetts, a Democrat, have also complained that the Education Department is too lax in its oversight of how Sallie Mae services federal loans.

A group of state attorneys general, led by Illinois Attorney General Lisa Madigan, are also probing the company’s debt collection, loan servicing and other practices. 

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Audit urges Education Department to tighten distance education regulations

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The U.S. Education Department must do more to prevent financial aid fraud in distance education, a federal audit says.

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