studentaid

California Legislature Nixes Governor's CalGrant Cut

A panel of state legislators in California on Thursday rejected a proposal by Gov. Jerry Brown to reduce spending on CalGrants, the state's generous financial aid program, the Los Angeles Times reported. Brown's plan would have reduced the amount of state aid that could be used at private and for-profit colleges, and also raised the minimum grade-point average for incoming students to qualify for grants.

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New Data on Extent of Student Debt

The outstanding balance on student loans has now hit $870 billion, more than the total credit card balance ($693 billion) and the total car loan balance ($730 billion), according to a report released Monday by the Federal Reserve Bank of New York. The rise in student loan debt is hardly a new trend, but the report documents the extent of the debt and the impact it has not only on borrowers, but their families. The report notes that "unlike other types of household debt such as credit cards and auto loans, the student loan market is incredibly complex. Numerous players and institutions hold stakes at each level of the market, including federal and state governments, colleges and universities, financial institutions, students and their families, and numerous servicers and guarantee facilitators."

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Consumer Bureau Taking Complaints on Private Loans

The Consumer Financial Protection Bureau began accepting complaints about private student loans Monday, a first step the agency is taking in regulating the private student lending market. The bureau is the sole agency regulating complaints about these loans, and is also preparing a report on the private lending market based on interviews with students, parents, college administrators and others, to be presented to Congress this summer. Before the agency, borrowers with complaints about their loans had to find a bank's regulator in order to lodge a complaint, which was effectively impossible, Rohit Chopra, the bureau's student loan ombudsman, said at a National Association of  Student Financial Aid Administrators forum on Monday.

The bureau is also investigating why students borrow the way they do -- including why they don't max out federal loan limits before turning to credit cards, second mortgages and other financial instruments, Chopra said.

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Does Cal State Cost More Than Harvard?

Is Harvard University less expensive than public universities in California? A Bay Area News Group article explores the question, using a hypothetical family of four with $130,000 in family income. With Harvard's generous financial aid for middle class families, such a family would pay only $17,000 for a student to spend a year at Harvard. At Cal State, with much lower tuition rates, but much less aid, an in-state resident would pay about $24,000. Many students say these figures illustrate the flaws of California's policy of increasing tuition rates without sufficient financial aid.

Texas Colleges Faulted on Student Aid Oversight

The state auditor's office in Texas has found numerous instances of public colleges and universities failing to follow federal rules for managing student aid, The Dallas Morning News reported. Ten institutions were found to be making incorrect calculations of the cost of attendance. Several institutions were found to award too much aid, or to fail to adequately monitor students' academic progress.

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U.S. Joins False Claims Lawsuit Against Texas Career College

The U.S. Justice Department announced Tuesday that the government would join a lawsuit in which former employees of American Commercial College, Inc., allege that the for-profit college chain falsely asserted its compliance with federal requirements that it derive at least 10 percent of its revenues from sources other than federal student aid. The class action was brought under the federal False Claims Act, which allows individuals to bring lawsuits on behalf of the federal government, claiming that the defendants have defrauded the treasury of funds and hoping to be joined by the U.S. Justice Department. The plaintiff shares in any financial penalties, which can include trebled damages.

American Commercial College, Inc., operates five campuses in Texas and one in Louisiana.

For-profit higher education providers have been a target of numerous False Claims Act lawsuits, and the federal government has joined several of them, including a high-profile case involving Education Management Corp. Some have speculated that the Obama administration -- which has toughened its oversight of the career college sector through regulation -- is increasingly turning to the courts to do so as well.

In announcing Tuesday's intervention, Tony West, assistant attorney general of the Justice Department’s civil division, said: “Colleges and universities that receive federal funds must be honest with the government and follow the law.... We will use the False Claims Act and other tools to protect students and taxpayers from for-profit institutions that fail to measure up to that standard.”

 

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House Passes Bill to Repeal Credit Hour, State Authorization

The House of Representatives voted 303-114 Tuesday to repeal the Education Department's credit hour and state authorization regulations, with 69 Democrats joining the all of the chamber's Republicans to back the bill. Higher education groups cheered the House's actions, but the next step for the measure is unclear.

While the bill might be able to attract enough Democratic support in the Senate to become law, the Obama administration has said it strongly opposes any attempt to repeal the regulations, and the chairman of the Senate Committee on Health, Education, Labor and Pensions has waged a high-profile fight against for-profit colleges. The state authorization and credit hour rules apply to nonprofit, public and for-profit institutions, but Democrats who voted against the measure characterized it as an effort to erode consumer protections.

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House to vote on repealing credit hour, state authorization

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The Obama administration opposes a bill to repeal newly enacted rules on the credit hour and state approval, but how Democrats will vote today is unclear.

Colleges Increasingly Dependent on Tuition, U.S. Study Shows

Public and private colleges alike saw a steady rise in the proportion of revenues they derived from tuition from 1999 to 2009, the Government Accountability Office said in a report Monday. The report, which examined financial and other data provided by institutions, found that net tuition and fees rose to 22 from 16 percent of total revenue at public colleges and universities, and to 40 from 29 percent at private nonprofit institutions.

Obama Urges Governors to "Invest More in Education" (and Rebuts Santorum)

WASHINGTON -- President Obama continues to make college affordability a key theme of his domestic policy agenda, but to tailor his message to his audience of the moment. On Monday, addressing the members of the National Governors Association, the president reiterated his views -- highlighted in last month's State of the Union address -- that higher education is increasingly important for individual Americans and for the country's economic future, and that rising prices threaten to put a postsecondary education out of reach for many. But while his speeches to campus leaders have focused on colleges' responsibility to contain their own costs and the prices they charge students (and federal carrots and sticks he might use to elicit that behavior), he used his appearance before the governors to reiterate his belief that states share significant culpability for driving up tuition prices.

"Nothing more clearly signals what you value as a state than the decisions you make about where to invest," President Obama said in urging the governors to "invest more in education." Describing the college affordability problem as a "shared responsibility," he said the administration has sought to do its part by significantly upping federal spending on Pell Grants and other student financial aid. But "[w]e can't just keep on, at the federal level, subsidizing skyrocketing tuition. If tuition is going up faster than inflation -- faster, actually, than health care costs -- then no matter how much we subsidize it, sooner or later we are going to run out of money.  So everybody else is going to have to do their part as well."

The president repeated that he had put colleges and universities "on notice" that "if they are not taking some concrete steps to prevent tuition from going up, then federal funding from taxpayers is going to go down." But the states have to do their part by "making higher education a higher priority in your budgets," the president said. "Over two-thirds of students attend public colleges and universities where, traditionally, tuition has been affordable because of state investments.... But more than 40 states have cut funding for higher education over the past year. And this is just the peak of what has been a long-term trend in reduced state support for higher education. And state budget cuts have been among the largest factor in tuition hikes at public colleges over the past decade. So my administration can do more, Congress can do more, colleges have to do more. But unless all of you also do more, this problem will not get solved."

Robert L. Moran, director of federal relations and policy analysis at the American Association of State Colleges and Universities, said his members were heartened by the president's remarks. They signal, he said, that "just as he's keeping our feet to the fire" on controlling public colleges' costs and prices, "he's not backing off the message that he needs to keep the fire on the feet of the state legislators and governors, too, because if state support goes down, tuition goes up." The president has comparatively little sway over state policies or priorities, Moran said, so his rhetoric and use of the bully pulpit matters.

(Side note: While he did so subtly, the president appeared to directly rebut criticism that a potential opponent in November, Rick Santorum, aimed at Obama over the weekend. Santorum called the president a "snob" for, he said, suggesting that all Americans should go to college, saying that there are "good, decent men and women" proud that their skills were "not taught by some liberal college professor." Without identifying the former Republican senator, Obama told the governors that "[w]hen I speak about higher education, we’re not just talking about a four-year degree. We’re talking about somebody going to a community college and getting trained for that manufacturing job that now is requiring somebody walking through the door, handling a million-dollar piece of equipment. And they can’t go in there unless they’ve got some basic training beyond what they received in high school.")
 

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