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Study finds poor economic results for students who enroll in certificate programs at for-profit institutions

New analysis says that students in certificate programs gain more economically from attending public institutions -- or no institution at all -- than for-profits.

Education Department to Propose Compromise in Borrower-Defense Negotiations

As part of the ongoing negotiations over a student loan forgiveness rule, the Trump administration is proposing a change to evidentiary standards for debt relief claims that would be a compromise between the positions of colleges and student advocates.

The borrower-defense rule -- crafted by the Obama administration to clarify how students defrauded or misled by their institutions could apply to have their federal loans forgiven -- was originally set to take effect last year. But Education Secretary Betsy DeVos blocked the rule and announced she would pursue an overhaul that reflected the concerns of colleges.

A panel of negotiators representing a range of higher education stakeholders is set to meet next week for a third negotiating session, where the department will propose that borrowers filing a loan forgiveness claim meet a "substantial weight of the evidence" standard -- essentially, the borrower's claim they were defrauded, plus some form of evidence. That would be a compromise position between the tougher "clear and convincing" standard sought by college representatives and the lower "preponderance of evidence" standard pushed by student advocates.

The department's proposal also drops what amounted to a "rogue employee" exception for borrower-defense claims. But it maintains an "intent standard" for those claims, leaving in place potentially the biggest hurdle for negotiators to reach consensus on a new rule.

The proposal also adds a three-year limit for the government to seek reimbursement from a college after it determines there is reason to approve a borrower-defense claim.

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Report on Alternative to Gainful-Employment Metrics

Using Bureau of Labor Statistics earnings estimates as an alternative to actual earnings data for gainful-employment programs would seriously mislead prospective students about the value of those programs, according to a report released today by New America.

The Obama administration's gainful-employment rule was written to hold career education programs accountable for graduating students with debt they couldn't repay. It did so by tying access to Title IV federal student aid to programs' performance on a debt-to-earnings metric reflecting graduates' earnings two to three years after leaving a program.

Both for-profit colleges and the Department of Education have under Secretary Betsy DeVos proposed applying the rule to all higher ed programs using BLS earnings for workers in a given occupation and in a given region. New America's report finds that that proposal would, on average, overstate median annual earnings for career ed programs by 80 percent.

In 96 percent of programs subject to gainful employment, actual earnings were lower than median BLS median earnings, the report finds. That's because the data reflect earnings in a field regardless of credential level, what institution a student attended or how many years of experience they have in a field. And the report's authors raise concerns that BLS data have limited value for online students and that they don't always neatly reflect a particular field of study.

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Senate Democrats Issue Principles for Higher Ed Act

Senate Democrats last week issued a set of principles they say should guide the reauthorization of the Higher Education Act, among them: college affordability, access for low-income students, safety on campuses and accountability for institutions.

They released the document shortly after Tennessee senator Lamar Alexander's office issued a staff white paper focusing on accountability. That paper suggested that a loan repayment rate measure would be more appropriate than the existing cohort default rate benchmark designed to put colleges on the hook for high student loan defaults. But it appeared to endorse dropping the 90-10 rule and the gainful-employment rule that targets poor-performing career education programs. Both rules improperly addressed only one sector of higher ed, the paper said.

The Democrats' principles, in contrast, say that it is more important than ever to provide extra scrutiny of for-profit colleges after the collapse of Corinthian Colleges and ITT Tech. The paper also said accountability should involve better data on student outcomes, including the repeal of a ban on a federal student-level data system.

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Alexander White Paper Lays Out Framework for Higher Ed Accountability

Senator Lamar Alexander, the Tennessee Republican who chairs the Senate education committee, released a white paper Thursday suggesting that current federal accountability measures for higher ed institutions are inadequate or simply unfair. 

The paper found that the cohort default rate -- which attaches Title IV federal aid to the percentage of student borrowers who default on their loans after leaving an institution -- rarely sanctions colleges and provides little incentive to improve. The paper suggested a loan repayment rate, an alternative favored on both the right and the left, would be preferable.

But the paper suggested the 90-10 rule, which requires 10 percent of an institution's revenue to come from nonfederal sources, and the gainful-employment rule, issued by the Obama administration to hold career education programs accountable for high student debt, were faulty because they targeted only certain kinds of programs, namely for-profit colleges. Those conclusions are unsurprising coming from the Republican side of the committee. But they won't be well received by Democrats or liberal higher ed groups. 

While the Department of Education is rewriting the gainful-employment regulations, Democrats have called preserving the rule and strengthening it by closing the so-called veterans' loophole.

Alexander, who chairs the Senate education committee, called for public comment by Feb. 15 to inform the committee's process as it pushes forward with plans for a reauthorization of the Higher Education Act.

“As the Senate’s education committee continues our work to develop legislation to reauthorize the Higher Education Act by early spring, I am asking for input from every corner of the higher education community -- students and their families, professors, institutions, and others interested in our colleges and universities,” Alexander said in a statement. “My goal is to create accountability measures that ensure students are receiving degrees worth their time and money, and I welcome input from all perspectives as Senator Murray and I work to reach a bipartisan result.”

Washington Senator Patty Murray, the ranking Democrat on the committee, said in a statement that Congress should hold all colleges accountable for all groups of students. 

"Unfortunately, the principles from Chairman Alexander would move us in the wrong direction and make it very clear we have some serious and tough issues to work through as we negotiate a comprehensive reauthorization of this important legislation, but I remain hopeful we can get this done as quickly as possible," she said. 

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Laureate sells several global assets

Global education giant Laureate sells off some international institutions and refocuses on emerging markets. 

New U.S. data show lower student borrowing after surge in Pell spending

U.S. report shows undergraduate borrowing was down in 2015-16 from four years earlier, across nearly all types of institutions. Meanwhile, the proportion of students receiving grant funding rose.

Former ITT Students Closer to $1.5B Settlement

A group of former ITT Technical Institute students reached an approved settlement Wednesday that would allow them to participate in bankruptcy proceedings with the institution's parent company.

The agreement allows the students to claim $1.5 billion and cancel nearly $600 million in debts for students who attended ITT between 2006 and 2016. It would also return the $3 million students paid directly to ITT after the company declared bankruptcy.

The students filed a lawsuit in the Southern District of Indiana last year to be named as creditors in ITT's bankruptcy proceedings. The lawsuit alleged that ITT engaged in deceptive practices, violated consumer protection laws and enrolled unqualified students to generate revenue from federal and private student loans.

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Beauty School Owner Sentenced to Prison for Fraud

The former owner and chief executive officer of Alden's School of Cosmetology and Alden's School of Barbering, Alden Hall, was sentenced to 30 months in federal prison last week for a scheme to defraud the U.S. Department of Education and steal Pell Grant funds.

The court also ordered Hall to make restitution payments of about $276,000, and she will be under mandatory supervision once she's released from prison.

Hall was found guilty last year by a jury of three counts of theft of government funds, one count of fraudulently obtaining financial assistance funds and one count of money laundering through the Louisiana-based institution.

"This defendant -- over several years -- systematically used her position of authority and trust with her students to fraudulently steal funds meant to educate underprivileged students," said Corey Amundson, acting U.S. attorney, in a news release. "Today she has been held accountable for her fraudulent scheme and her efforts to conceal her criminal conduct. It is our hope that this sentence strikes a chord with anyone else who may be tempted to steal from the Department of Education."

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DeVos Waters Down Disclosure Requirements of Gainful-Employment Rule

The Department of Education last week said it was further weakening disclosure requirements in the gainful-employment rule.

Under the new 2018 gainful employment disclosure template, career education programs would no longer be required to disclose median earnings data of graduates or charges for room and board. The template also allows those programs to list the job-placement rate from multiple accreditors.

Last year, weeks after saying she would launch a regulatory rewrite of the gainful-employment rule, Education Secretary Betsy DeVos told those programs that they would have until July 2018 to disclose to prospective students information on graduate employment rates or typical graduate debt levels -- a year later than originally scheduled.

The Obama administration crafted the gainful-employment rule to hold career education programs accountable for producing too many graduates with student debt they couldn't repay. It tied access to federal student aid to performance on a debt-to-earnings metric. But additional transparency and disclosures to potential students were also significant components of the rule.

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