forprofit

Senate Democrats Seek Answers on Falwell Panel

After a slow drip of news about a higher education task force to be led by Liberty University President Jerry Falwell Jr. -- with Falwell himself the source -- Senate Democrats are demanding details from Education Secretary Betsy DeVos. 

Falwell has said in interviews that the task force would re-evaluate "overreaching regulation" by the federal government in areas such as accreditation, student recruitment and loan discharge for defrauded students. The Senate Democrats who signed a letter to DeVos -- Elizabeth Warren of Massachusetts, Patty Murray of Washington, Richard Durbin of Illinois, Sheldon Whitehouse of Rhode Island, Tammy Baldwin of Wisconsin and Maggie Hassan of New Hampshire -- said those regulations provide important protections for students. And they told DeVos that a task force without a diverse membership could tilt its recommendations toward the interests of colleges and universities that receive large taxpayer subsidies. 

Falwell's own financial interest in regulation of higher education also concerned the Democrats. Last year Liberty University took in $766 million in revenue from federal Title IV aid and was the third-largest recipient of federal student loans in the country, they wrote. 

The senators asked DeVos to provide by March 9 answers to a number of questions about the task force, including the mission and scope of the task force as well as the process for identifying prospective members. 

Falwell himself has said in recent comments that he has not had discussions with the Trump administration about the specific aims of the task force. 

Ad keywords: 
Is this diversity newsletter?: 

Career Education Settles False Claims Suit

Career Education Corp. on Wednesday announced that it had settled a false claims lawsuit with private plaintiffs. The suit against the for-profit chain and its American InterContinental University was originally filed in 2008.

The federal government declined to intervene in the case. However, Career Education said it would pay the United States $10 million under the terms of the settlement. Under a separate settlement, the company said it would pay $22 million to the lawyers who represented the plaintiffs.

Career Education did not admit to any violations of law or liability under the settlements.

"[B]y eliminating the distraction caused by this lawsuit, the company’s management can provide more attention to the company’s core operations and its goal of enhancing retention and outcomes for its students," Career Education said in a corporate filing.  

Is this diversity newsletter?: 

Federal watchdog protects students and taxpayers (essay)

Recently, Republican Senators Mike Lee and Ben Sasse called on President Trump to fire Consumer Financial Protection Bureau chief Rich Cordray, yet another salvo in an ongoing effort to undermine the agency’s effectiveness since its creation in 2010. Meanwhile, the U.S. Court of Appeals, which had decided that the CFPB’s single-director structure was unconstitutional, recently reversed that decision and has decided to review the case again, in May.

College students have particular reason to be concerned about the hostility toward the CFPB, given how effective the agency has been in solving their problems with debt. But taxpayers should be alarmed, too.

One of the vulnerable populations receiving special attention at the agency, college students over the past several decades have experienced increasing financial barriers to their educational paths, despite our intent to remove those barriers. To ensure that all qualified students get the education that we want them to pursue, we, the taxpayers, support the federal financial aid programs by spending $128 billion on them in 2015, not to mention spending billions more to fund public institutions in every state.   

Despite that support, student debt remains a huge obstacle for graduates. Sixty-nine percent of college students are graduating with an average of $28,950 in debt. This debt is a drag on individual borrowers, who will see a decrease in their lifetime savings as their money is spent paying down educational debt. It has also become a drag on the economy as a whole, as borrowers put off purchasing a home and starting a family until they achieve the firmer footing we hoped they’d have at graduation.  

Unsurprisingly, yet of significant concern, borrowers from the lowest income backgrounds carry more student debt than their more financially well-off counterparts, a financial reality that undercuts our national hope that education be ‘the great equalizer.’  

These problems stem from shrinking state budgets for education and grant programs that don’t keep pace. But they are exacerbated when students lose even more money to tricky financial products and predatory lending schemes that are marketed right on campuses. 

During the financial crisis, 67 percent of students reported being stopped on campus to be offered a credit card application. Often, these offers were accompanied by freebies -- pizza, a tee shirt or even a chance to get an iPod -- if the student just applied. Unfortunately, the rates paid by those with the worst credit, such as traditional-aged students with their spotty to non-existent credit histories, were upward of 20 percent, plus an additional 23 percent in fees on their balances. Now, the CFPB is the leading watchdog of the campus credit card marketplace, conducting a bi-annual survey of the trends on campuses.

Students, as the captive audience they are, have become targets for higher-priced private loans than what they can get on the open market. In 2007, then-Attorney General Andrew Cuomo found that students and families were assuming pricey private loans because their college aid offices, enticed by banks hoping to gain more federal loan customers at the institutions, were pushing them over other products, sometimes even including loan offers in aid awards. CFPB generates an annual report on the private loan marketplace to Congress, highlight the troubling developments.

Also, in 2009 the for-profit chain Corinthian Colleges revealed to investors that it would issue $130 million in private loans for the year to its students, even as it admitted its students wouldn’t be able to repay them. Now, CFPB has specific authority to investigate deceptive lending practices on campuses, which has led to lawsuits against prominent for-profit college chains such as ITT Tech, Bridgepoint, and Corinthian. For instance, it won $480 million in relief for borrowers at Corinthian schools, who were tricked into assuming private loans that carried interest at almost 10 percent.

Importantly, in 2009 the defaulted federal student loan portfolio crossed $50 billion; the billions in default was not just the result of borrowers falling behind. In the past two years, CFPB has sued several banks for servicing practices that increase debt, including Wells Fargo and Discover Bank. Discover denied consumers information they needed to obtain federal income tax benefits, eventually paying $18 million back to borrowers in a settlement.  

And recently the agency announced a lawsuit against Navient, the student loan servicing giant formerly known as Sallie Mae, which services 12 million borrowers. The lawsuit alleges that the firm cheated borrowers out of their right to lower monthly payments and lower interest accrual by downplaying enrollment and renewal deadlines for those programs.

These problems are especially outrageous on two fronts. First, they undermine the ability of students to get an education. Second, they devalue the investment that taxpayers have made in our college students, as our financial aid dollars end up flowing away from the students we aim to help, and toward predatory lenders that are breaking the law.

As over 50 student and consumer and educational groups declared in a recent letter to Congress, neither students nor taxpayers should have to tolerate these problems. Now is not the time to render ineffective the agency that is stepping in on our behalf.

Christine Lindstrom is the higher education program director for U.S. Public Interest Research Group student chapters.

Image Source: 
Istock/korinoxe
Is this diversity newsletter?: 

Q&A with author of book on rise of for-profits in a new economy

A new book argues that the focus on credentials and growing inequality led to the rise in for-profit colleges. 

Bob Jones U to Become Nonprofit Again

Bob Jones University lost its nonprofit tax exemption after the U.S. Internal Revenue Service in 1976 found that the conservative religious college was practicing racial discrimination with its ban on interracial dating. That decision sparked a long court battle, which ended when the U.S. Supreme Court in 1982 upheld the IRS's decision.

The university in 2000 dropped its dating ban and later apologized for practicing racial discrimination.

Now Bob Jones is set to become a nonprofit institution once again, the Greenville News reported. The complex financial reorganization includes the for-profit merging with the operation of a nonprofit elementary school that shares roots with the university.

The transition is scheduled to be completed by next month. Bob Jones is also seeking regional accreditation with the Southern Association of Colleges and Schools Commission on Colleges.

Is this diversity newsletter?: 

For-profits say Obama administration data error undermines borrower defense and gainful employment

For-profit-college advocates cite Obama administration data goof on loan repayment rates as justification for revisiting borrower-defense and gainful-employment rules.

Faculty Layoffs at University of Phoenix

About 170 full-time faculty members at the University of Phoenix are losing their jobs, Phoenix Business Journal reported. Some of those faculty members, however, may be hired back as part-timers. The layoffs follow enrollment declines. A university statement said that in 2013, the university converted many part-time positions to full-time slots, hoping to improve retention rates, but that studies have not found a difference in retention rates in courses taught by full-time or part-time faculty members.

Ad keywords: 
Is this diversity newsletter?: 

Cosmetology Group Sues Education Department

The American Association of Cosmetology Schools filed a lawsuit against the U.S. Department of Education Friday over its gainful employment rule. The organization, which represents about 750 institutions, is seeking relief from the regulations.

The organization argues that gainful employment undercounts cosmetology graduates' income because many self-employed workers rely on gratuities and are paid in cash. Many cosmetologists simply underreport their incomes, according to the organization.

"A provision that is supposed to protect our students, in fact, hurts them badly," said Adam Nelson, executive director of AACS, in a news release. "We are proud that our graduates, many of whom were the first in their families to attend any kind of post-high school education, are quite often joining the middle class, establishing themselves in new beauty businesses and raising families and supporting themselves at a very good income level over long-lasting careers."

Ad keywords: 
Is this diversity newsletter?: 

Wis. Governor Pushes to Eliminate For-Profit Oversight Board

Wisconsin Governor Scott Walker is once again calling for the elimination of the Educational Approval Board by next year, according to the Minneapolis Star Tribune.

Walker's budget unveiled Wednesday would eliminate the board that regulates the state's for-profit colleges and transfer its duties to the Department of Safety and Professional Services. The governor originally made the proposal four years ago, saying that eliminating the board would remove unnecessary financial and regulatory burdens on for-profit institutions. His opponents, however, find that the board plays an important role in the state's higher education system.

Ad keywords: 
Is this diversity newsletter?: 

Laureate becomes largest college to become a benefit corporation

For-profit Laureate Education becomes a publicly held company and the first such company to adopt benefit status, signaling its intent to focus on mission as well as money.

Pages

Subscribe to RSS - forprofit
Back to Top