Pell Eligibility Restored for Some Whose Colleges Shut

The Department of Education has begun to notify students who attended closed institutions -- including Corinthian Colleges and ITT Technical Institute -- that their lifetime Pell Grant eligibility will be restored.

Democratic senators, led by Washington Senator Patty Murray, have pushed the department since last fall to grant students who attended those institutions the ability to get additional Pell funding so they could attend another university. After previously insisting that federal law did not give the department authority to restore Pell eligibility, the department in October said it would do so after all, citing a provision of the Higher Education Act identified by Murray.

In an update posted to the website of the Office of Federal Student Aid Monday, the department said it will begin to identify students who received a Pell Grant to attend a closed school and who were not reported in the National Student Loan Data System as having graduated. The department will adjust those students' lifetime Pell eligibility to remove the portion awarded to attend a closed school, the update said.

"This is an important step to provide relief to students, but it can’t be the last one -- and I am going to keep pushing this administration to put students and borrowers ahead of for-profit colleges and Wall Street investors," Murray said in a statement.

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For-Profit Westech College Shutters Abruptly

Westech College, a for-profit college with three campuses in Southern California, shut down this week citing financial issues, the Los Angeles Times reported. The abrupt closure, which surprised students, was related to the U.S. Department of Education apparently sanctioning the college with its heightened cash monitoring penalty over concerns about a "lack of financial and administrative capability."

The trade college offered two-year degrees and certificates in computer systems, HVAC technology, veterinary assistance and other programs. It is accredited by the Accrediting Commission of Career Schools and Colleges.

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Education Dept. Defends Gainful Employment

The Trump administration defended the gainful-employment rule in federal court Wednesday, suggesting that it may not quickly roll back the regulation designed to crack down on programs graduating students unable to pay down high student loan debt loads.

The American Association of Cosmetology Schools filed a lawsuit in February to block the rule, arguing that gainful-employment data undercounted income of cosmetology program graduates. The suit argued those workers depend on gratuities and cash payments, while many underreport income. Administration lawyers argued on behalf of Education Secretary Betsy DeVos in a court filing Tuesday that challenges to the rule itself had already rejected by the courts, that no cosmetology program has yet to have access blocked to Title IV aid, and that the association had failed to provide evidence that underreporting of income was widespread among cosmetology graduates.

Republican lawmakers have been outspoken in their criticism of the gainful-employment rule, which was issued last year after two rounds of negotiated rule making and multiple court battles. DeVos declined in a January confirmation hearing to commit to enforcing the rule in response to questions from Senator Elizabeth Warren, a Massachusetts Democrat.

The department earlier this month pushed back deadlines for programs to submit appeals of debt-to-earnings ratios, raising concerns among proponents of the rule that the administration would not aggressively enforce it.

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Report: Public Money Skews Gainful-Employment Rule

A new report from the American Enterprise Institute argues that state and local funding of public colleges stacks the deck against for-profit institutions under the gainful-employment rule, an Obama administration regulation that measures the ability of graduates of vocational programs to repay their student loans. The rule covers nondegree programs at nonprofit colleges -- mostly community colleges -- and all for-profit programs.

Roughly three-quarters of for-profit programs pass the rule, the report said, compared to a relatively small number of nonprofits that are covered under gainful employment. Direct public funding drives much of that disparity, according to the report's authors.

"Higher tuition at for-profits means students take on more debt, while public institutions have the luxury of charging lower tuition due to their direct appropriations," the report said. "Therefore, even if a for-profit institution and a public institution have similar overall expenditures (costs) and graduate earnings (returns on investment), the for-profit institution will be more likely to fail the gainful-employment rule, since more of its costs are reflected in student debt."

Congressional Republicans and the Trump administration have said they will seek to roll back gainful employment and other Obama-era regulations aimed at for-profits. But such nixing of the rules likely will take time. And this week the U.S. Education Department defended gainful employment in federal court.

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USA Funds' Ties to Education Department Adviser

Taylor Hansen last week ended a brief stint advising Betsy DeVos, the U.S. secretary of education. Hansen, who formerly worked for a for-profit higher education trade group, is the son of Bill Hansen, the president and CEO of United Student Aid Funds, a former student loan guarantee agency that recently changed its name to Strada Education Network and has expanded its work on college completion and career readiness.

The Education Department last week rescinded a 2015 guidance document from Obama administration that prevented guarantee agencies from charging collection fees for defaulted borrowers who begin repaying their loans quickly. In January, USA Funds paid $23 million to settle a lawsuit from borrowers, in which a federal appeals court sided with the Obama administration's take on collection fees.

Bloomberg News on Monday reported on USA Funds' ties to the younger Hansen. The article quoted critics of the department's decision last week, including Senator Elizabeth Warren, a Massachusetts Democrat, who said the Hansens' family connection was a conflict of interest.

In a written statement, Strada said it separated from the guarantee agency side of USA Funds in January.

"No one representing Strada Education asked Taylor Hansen to intervene on our behalf with the U.S. Department of Education to change its interpretation of the July 10, 2015, Dear Colleague letter regarding student loan collection fee policies," the group said. "The Department of Education violated the federal Administrative Procedure Act when it originally issued the Dear Colleague letter. The department’s March 16 decision to withdraw this Dear Colleague letter corrects that violation."

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Questions on For-Profit Official Hired by DeVos

Robert S. Eitel is working as a special assistant for Education Secretary Betsy DeVos while he is on unpaid leave as vice president for regulatory legal services at Bridgepoint Education Inc., The New York Times reported. It is not uncommon for some people with experience in the for-profit sector to take positions in the Education Department, but it is unusual for this to take place while they are on leave. A department spokesman said Eitel would recuse himself from any questions about Bridgepoint.

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Feds Release Financial Responsibility Scores

The U.S. Department of Education this week released the annual update of its financial responsibility test scores for private colleges, which is based on data from 2014-15. The 187 institutions that have a failing score -- most of which are small and either private nonprofit or for-profit -- will lose access to federal financial aid without a provisional certification from the department. The department may also require colleges with low or failing scores to take out a letter of credit or be subject to a sanction called heightened cash monitoring.

The test was designed to keep tabs on the fiscal stability of colleges, with an eye toward preventing financial aid from going to institutions that may shut down abruptly. For example, Dowling College, which shut down last year, has a failing score on the new list.

However, many private college officials have for years criticized the department's methodology for the test. They say the scoring system fails to use generally accepted accounting practices, is backward looking and does not capture the complexity of a college budget. For example, a decline in a college endowment's investment value is counted as an operating loss.

The department's Office of Inspector General recently agreed with some of that criticism, noting in an audit released last week that the test's methodology should be improved.

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Delay in Gainful Employment Deadlines

The U.S. Department of Education on Monday announced roughly three-month delays to deadlines for colleges to submit appeals or public disclosures under the gainful employment rule, Obama administration performance standards for the ability of graduates of vocational programs to repay their federal student loans.

The rule applies to for-profits and nondegree programs at community colleges and other nonprofit institutions. Congressional Republicans and the Trump administration have signaled that they will seek to roll back gainful employment.

The department's announcement this week means colleges have until July to submit appeals to academic programs' debt-to-earnings ratios. The deadline had been this month. Likewise, colleges will have until July to meet a previously set April mark for updating their public disclosures for 2017 rates. The Obama administration in December had announced a delay to a template for programmatic disclosures under the rule.

The Trump administration's Education Department said in a written statement that it decided to make the new delays to "allow the department to further review the gainful employment regulations and their implementation."

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University of Phoenix President to Step Down

Timothy Slottow, president of the University of Phoenix since 2014, has announced plans to step down, citing personal reasons.

Phoenix raised eyebrows with its hire of Slottow away from his post as executive vice president and chief financial officer at the University of Michigan. In an internal message he sent last week to Phoenix employees, Slottow said family challenges, including the recent death of his father-in-law, demand "my commitment and attention be devoted closer to home, with my wife, children and wider family."

Last month a group of private investors bought the university and its ownership company, the Apollo Education Group, for $1.14 billion.

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Large for-profit chain EDMC to be bought by the Dream Center, a missionary group

The Dream Center Foundation, a religious missionary organization based in Los Angeles, plans to buy EDMC, a struggling for-profit chain that enrolls 65,000 students. The resulting nonprofit college group will be secular. 


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