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Education Secretary John King announced a new program Monday through the office of Federal Student Aid that will pair loan guarantee agencies with minority-serving institutions to improve graduation, retention and cohort default rates at no cost to those colleges and universities.
The pilot program will begin at the end of 2016 and could also include financial assistance to students. FSA has invited institutions to participate in the program that it found to have the capacity to improve those metrics and the staff to dedicate to the project.
The list of participating institutions has not been finalized, but the Department of Education expects 50 colleges and universities to be involved in the program at its launch and about 250 institutions to take part by 2018. Costs of the program have likewise not been finalized, the department said.
"That new initiative, I think, reflects our ongoing commitment to making sure students not only get to college but that they get through college and [that] we are providing all the necessary supports," King said in remarks to attendees at the National HBCU Week Conference in Arlington, Va., where he announced the program.
The designation "minority-serving institutions" includes historically black colleges and universities, Hispanic-serving institutions, tribal colleges and universities, and Asian American-, Native American- and Pacific Islander-serving institutions.
Guarantee agencies have come under fire recently from critics who say they are no longer fulfilling their public interest missions. A report released last month by the Century Foundation called on the Department of Education to more closely scrutinize how guarantee agencies are using their financial assets. The agencies are state or private nonprofit entities set up to administer the federal guaranteed loan program. While their core mission disappeared with the end of federally backed private student loans in 2010, they continue to collect revenue from outstanding principal on private student loans. And some agencies have begun to mix up their sources of revenue and the types of education-related programs they spend money on.
