New approach to Education Dept. oversight focuses on risk assessment and outreach

Department of Education names new key employees in student aid office, signaling more collaborative approach to overseeing colleges. Critics see gentler hand for colleges and universities.

Nominations Invited for Rule-Making Panels

The Department of Education on Tuesday outlined qualifications for potential negotiators taking up the borrower-defense and gainful-employment regulations in separate rule-making panels later this year.

Education Secretary Betsy DeVos announced in June that she would block the borrower-defense rule from going into effect and establish separate panels to reconsider both sets of regulations. The borrower-defense rule outlined a process for student borrowers defrauded by their institutions to seek discharge of their student loans. The gainful-employment rule sought to hold career education programs accountable for graduating students with more debt than they could pay off.

The department is seeking nominations for negotiators from a range of constituencies as is typical in the rule-making process. Among them, are students, consumer advocacy groups, service member organizations and representatives of higher education institutions. It is also seeking representation from lawyers and compliance officers as well as business officers for universities, which reflects calls for more subject-area expertise on the panel. And the department created two slots for representatives from the for-profit sector on both panels -- one representing institutions with 450 students or fewer, and another representing larger institutions. And it added a slot for a representative of business and industry, such as a labor economist, to the gainful-employment panel.

The department also created a subcommittee for the borrower-defense panel that will focus on a review of the financial responsibility provisions of the rule. It plans to name negotiators from groups with expertise in financial accounting and the department's financial responsibility standards.

Both sets of rules were heavily criticized by for-profit colleges. But traditional higher ed institutions, including private nonprofits and historically black colleges, had warned that the financial triggers in the borrower-defense rule -- which were designed to protect the taxpayer when institutions failed -- would have negative consequences for their sectors.

The negotiations over both rules will take place over three four-day sessions. The borrower-defense committee will meet Nov. 13-15, Jan. 8-11 and Feb. 12-15. The financial responsibility subcommittee will meet Nov. 16-17, Jan. 4-5 and Jan. 29-30, although its meetings will not be public. The gainful-employment committee will meet Dec. 4-7, Feb. 5-8 and March 12-15.

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Charlotte Law Faced Criminal Probe While Seeking Federal Aid

For-profit Charlotte School of Law and its parent company, InfiLaw, were under criminal investigation as they sought to negotiate restoration of federal student aid for Charlotte students, according to recently unsealed court filings from a whistle-blower lawsuit filed against the school.

Politico and the Charlotte Observer first reported the criminal probe. The lawsuit, which was brought by a former Charlotte Law professor, and the court filings were unsealed this month after the Department of Justice said it would not intervene in the lawsuit for now.

The Department of Justice was looking into allegations in that lawsuit that Charlotte Law defrauded the federal government to receive Title IV federal aid funds by, among other actions, admitting unqualified students and conspiring to avoid compliance with its accreditor's standards.

The law school closed its doors earlier this month after it lost its license to operate in North Carolina. The closure followed several months of negotiations with the Department of Education to restore access to the federal student loan programs, which the Obama administration shut off in December. Charlotte Law's state license expired, however, before it could agree to conditions with the department for renewing Title IV funds.

A spokesman for the department did not comment directly on whether it was aware of the criminal probe while negotiations with Charlotte took place.

"ED works closely with our partners at the Department of Justice on cases of mutual interest," the spokesman said. "We do not comment on pending cases."

The American Bar Association's Section of Legal Education and Admissions, which serves as the accreditor for law school programs, said it was not informed of any criminal investigation. Two other for-profit law programs operated by InfiLaw -- Arizona Summit Law School and Florida Coastal Law School -- remain accredited by ABA. Arizona Summit, however, was placed on probation in March.

Two other related federal whistle-blower lawsuits have been filed against InfiLaw in Florida, where the company is based.

In a statement, a spokeswoman for Charlotte Law confirmed that as of February 2017 there was an ongoing investigation by the U.S. Attorney for the Western District of North Carolina but said there had not been any follow-up requests for information since November 2016.

"We have cooperated fully in the investigation and provided information that we believe satisfactorily answered the questions raised," said Victoria Taylor, the Charlotte spokeswoman.

It's not clear if the criminal investigation is ongoing. But Taylor said Charlotte officials were pleased that the Department of Justice had filed notice that it would not intervene in the lawsuit brought by the former professor.

"The allegations in the lawsuit are without merit, and Charlotte School of Law will defend itself vigorously against these claims," she said.

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Sweet Briar Reports 95 New Students

Sweet Briar College enrolled just under 100 new students this fall in its second admissions cycle since alumnae blocked an attempt by the small private women’s college’s former board to close it.

This year’s new class totals 95 new students -- 81 first-year students and 14 transfers. On-campus enrollment stands at approximately 300 this fall.

Enrollments are significantly below those of last year, when Sweet Briar reported 134 degree-seeking first-time freshmen and 22 other first-year degree-seeking students on its Common Data Set. Sweet Briar reported a total of 350 full-time undergraduate students last year and 376 students counting part-time and graduate students.

Sweet Briar’s former board announced plans in March of 2015 to close the college at the end of that academic year, citing an unfavorable admissions climate and enrollment trends. College leaders moved to close while the institution still had substantial resources to pay for winding down operations. But alumnae fought the move in court, eventually winning a deal to keep the college open under a new president and remade board.

In 2014-15, the last year before Sweet Briar was nearly closed, it enrolled 641 full-time undergraduates. Its enrollment totaled 700 when graduate and part-time students were counted.

President Meredith Woo shared this year’s enrollment total Monday in a letter marking the start of the new academic year and summarizing recent Board of Directors meetings. Woo also detailed plans to grow and revamp the college’s academic offerings.

Sweet Briar plans to put a new core curriculum in place in the fall of 2018, a set of a dozen courses organized around the theme of leadership. Faculty members are also developing three centers of excellence around human and environmental sustainability, science and technology, and collaboration with the Virginia Center for the Creative Arts.

Woo also wrote of some three-week courses and giving students the chance to attend year-round in order to earn a degree in three years. A student could then earn a master’s degree in her fourth-year.

The college has relied heavily on fund-raising for the last two years. Fund-raising for 2016-17 included $14 million in gifts and grants and $6.8 million in future pledges. Sweet Briar’s endowment was valued at $73.9 million as of the end of June. When the former board decided to close the college, its endowment stood at approximately $85 million.

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Report: Boosting Quality More Effective Than Tuition Cuts

A newly released paper from the National Bureau of Economic Research finds that spending on improved educational quality is more effective for degree attainment than using the same funds to cut the cost of tuition. 

The paper, by Harvard education professor David Deming and University of California-Berkeley economist Christopher Walters, seeks to determine what is the most effective use of public subsidies to help more students graduate college. The authors found that price changes, while saving money for students and their families, had almost no effect on degree attainment. But spending on smaller class sizes and academic support like tutoring did more to get students across the finish line and graduate. 



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Report Examines State Funding Cuts

A new report from the Center on Budget and Policy Priorities compares state spending on two- and four-year public colleges and universities over a decade, finding funding at the end of the 2017 academic year was nearly $9 billion below its 2008 level, after adjusting for inflation.

On a per student basis, 44 of 49 states analyzed spent less in 2017 than in 2008, found the report, released today. The average state spent $1,448, or 16 percent, less per student.

Falling state spending has consequences, according to the center, a research and policy think tank focused on budget and tax policies that help low-income people. Today’s report draws heavily on data from two other well-known annual reports on higher education finance, the Grapevine survey and the State Higher Education Finance report from the State Higher Education Executive Officers association.

“State spending on higher education is important because state and local governments provide just over half of the money that public colleges use for educational purposes,” said Michael Mitchell, senior policy analyst at the Center on Budget and Policy Priorities and one of the report’s authors. “If that amount goes down, public institutions generally have to raise more funds through tuition, they have to cut their own campus budgets, or some combination of those two things.”

Since 2008, average annual published tuition at four-year public institutions has increased by $2,484, or 35 percent.

The report argues that families have had a difficult time shouldering higher tuition costs. Tuition costs can deter some students from enrolling in higher education, including students of color and low-income students, it said.

Federal aid may have helped some families keep up with rising tuition costs. Between 2008 and 2016, total Pell Grant aid increased by 68 percent. The average grant rose by 23 percent, to $3,034, as the grant’s value has in recent years been indexed to inflation. But low-income students are still saddled with heavy debt, according to the report. It also worries about the effects of proposals by Republicans to cut from the Pell program.

“Unfortunately, there are reasons to be concerned that federal student aid, including Pell Grants, will do less, rather than more, to help low- and moderate-income students afford college going forward,” said Sharon Parrott, senior fellow and senior counselor at the center.

The report concludes by saying that past higher education funding cuts would have been less necessary if policy makers had put in place a more balanced mix of spending cuts and revenue increases during the Great Recession. It calls for states to avoid tax cuts and consider options for raising new revenue in order to boost public higher education and its long-term benefits to the economy.

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Percentage of Borrowers Owing $20,000 or More Doubled Since 2002

The percentage of student loan borrowers leaving college owing $20,000 or more doubled over about a decade, according to a report released Wednesday by the Consumer Financial Protection Bureau.

Over 40 percent of student loan borrowers owe $20,000 or more when they leave college. That’s up from 20 percent in 2002.

More borrowers owe higher amounts as well. The portion of borrowers owing $50,000 or more spiked from 5 percent to 16 percent during the same period.

The statistics represent additional data points in the ongoing discussion about growth in student loans and how much debt is too much debt. About 44 million Americans owe a collective $1.4 trillion in federal and private student loan debt.

For Wednesday’s report, the CFPB analyzed anonymized credit reports for groups of borrowers who started repaying loans from 2002 to 2014, examining their repayments through 2016. It also found the following:

  • The percentage of borrowers beginning repayment after age 34 roughly doubled since 2003, from 25 percent to almost 50 percent.
  • The portion of borrowers starting repayment when they were younger than 25 years old dropped from 30 percent to 15 percent.
  • The percentage of borrowers not paying down loan balances almost doubled between 2008 and 2016, from 16 percent to 30 percent.
  • The percentage of borrowers who saw their debt grow while they were in repayment increased between 2008 and 2016, from 8 percent to 12 percent.
  • Borrowers who fully repaid their loans five years into repayment declined over the last 10 years, from 50 percent to 41 percent.
  • Of those borrowers not paying down their balances five years into repayment, 60 percent are delinquent on their loans.
  • Among borrowers not paying down their balances after five years, 75 percent of those with balances of less than $20,000 are delinquent on at least one of their loans.
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Report shows improving finances at private colleges, even though some small institutions struggle

Report argues private colleges have been improving their financial status but shows at least some small and poor institutions are struggling.

High-Deductible Plans Rise in Higher Ed

Colleges and universities increasingly offered high-deductible health plans, health-care benefits for part-time employees and stand-alone vision plans in 2017, according to a new survey. They continued to offer health-care benefits to domestic partners at high rates.

But in a move that some employees probably won't like, colleges and universities also demonstrated more interest in wellness programs.

Those are key points in a report released this month by the College and University Professional Association for Human Resources. The report covers survey responses from 358 institutions of different classifications and affiliations from across the country.

High-deductible health plans were offered by sharply more institutions in 2017 -- 62 percent of institutions offered the plans, which cost employees less than low-deductible policies but require users to pay more up front for procedures. That's up 16 points from 2015.

Health-care benefits in higher education, 2017. Percentage of institutions offering various health-care plans. For 2017, 84 percent offered PPO plans, 62 percent offered HDH plans, 37 percent offered HMO plans and 18 percent offered POS plans. Source: CUPA-HR

High-deductible plans were the second most popular type of plan to offer, behind more traditional preferred provider organization plans, which were offered by 84 percent of institutions. Those PPO plans were far and away the most likely type of plan to be offered in cases when an institution only offered one health plan option, however.

The rise of high-deductible plans could be popular with at least some employees because they come with lower premiums. What is less likely to be popular is a rebound in support for wellness programs in 2017.

The portion of colleges and universities with wellness programs in place has held relatively steady at about 59 percent over the past three years. But among institutions that don't have a wellness program in place, almost a third, 29 percent, plan to institute one next year. That's up drastically from about 10 percent last year, when interest had dropped dramatically.

Wellness programs, which attempt to encourage employees to adopt healthy lifestyles and get preventive care in order to head off expensive chronic health problems, can be controversial among faculty members and employees. They're sometimes seen as penalizing those who are sick by offering financial incentives to those who are healthier. Critics contend that in many cases, money spent on wellness programs could be better spent elsewhere.

“I'd much rather have these employers not invest in wellness programs but instead invest resources for targeted clinical services that we know have very high clinical and financial returns,” said Dr. A. Mark Fendrick, director of the University of Michigan Center for Value-Based Insurance Design.

Others maintain, however, that wellness plans can be successful if they evolve to address issues unearthed by data on a college's or university's employees.

“They're starting to make some investments back into the health of their population,” said Mike Rask, a senior vice president in the higher education practice with Aon Risk Solutions. “At the end of the day, the only way they're going to move the health-care cost trend is on the claims side.”

CUPA-HR found that in 2017, more than a third of institutions, 38 percent, provided health-care benefits to part-time staff, and 36 percent provided benefits to adjunct faculty. Both rates are up slightly after a substantial drop from 2015 to 2016.

More than three-quarters of institutions, 78 percent, provided a stand-alone vision plan in 2017, up significantly from two-thirds in 2015. There has been an increase in demand for vision plans in private industry as well, which could be because of higher costs, an older work force and increasing levels of computer work.

Higher ed offered benefits to domestic partners at significantly higher rates than standard industry, however. Over half of institutions, 51 percent, offered health-care benefits for opposite-sex partners in 2017, up from 25 percent in 2005. Almost three-quarters of institutions, 73 percent, offered health-care benefits to same-sex partners in 2017, up from 37 percent in 2005.

CUPA-HR noted that the 2015 Supreme Court case that expanded same-sex marriage rights across the country does not seem to have affected health-care benefits for domestic partners. It also noted that in private industry in 2015, just 32 percent of organizations offered health-care benefits to opposite-sex domestic partners and only 37 percent offered benefits to same-sex domestic partners.

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‘No Timetable’ for New Gainful-Employment Data

The Department of Education has yet to provide institutions this year with lists of graduates from gainful-employment programs -- a preliminary step for calculating debt-to-earnings ratios that measure whether career training programs saddle students with debt they can't repay.

The revelation, made by department officials last week in a written response to questions from Senator Dick Durbin, an Illinois Democrat, indicates that the department will be slow to release new gainful-employment data after delaying several provisions involving compliance by career education programs. The department released the first set of gainful-employment data in January of this year.

Durbin noted in questions to the department that career education programs received the lists of graduates, known as completers lists, by June 1, 2016. Programs have 45 days to submit corrections to those lists before debt-to-earnings rates are calculated.

"We don't have currently have any timetable to send completers lists to schools for 2017," officials said in a written response to Durbin last week.

The department is in the early stages of a negotiated rule-making process announced in June to overhaul the gainful-employment and borrower-defense regulations, which were crafted by the Obama administration but heavily opposed by the for-profit college sector and congressional Republicans. Last month, it also announced that it would delay certain disclosure requirements for gainful-employment programs and extend a deadline to file alternate earnings appeals.

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