The U.S. Department of Education on Tuesday said it was cutting off federal student aid eligibility at three Medtech College campuses, located in Maryland, Virginia and Washington, D.C. A department investigation found "egregious misrepresentation of job placement rates" by the Medtech campuses, alleging that the for-profit college overstated placement rates to its accreditor, the department and prospective students.
The three campuses enroll a total of roughly 750 students, the department said, and received about $16 million in federal grant and loan aid in 2014-15. To continue to be eligible for federal aid at its other campus locations, the company must post a letter of credit equal to 80 percent of its annual federal aid revenue, worth about $37 million.
The Education Department has released a new list of colleges and universities under heightened cash monitoring, which means that they are subject to far greater oversight than other colleges in federal student aid programs. A variety of compliance issues can land a college on the list. Most of the colleges on the list are for-profit institutions.
The latest list, which has 513 colleges on it, was current as of June 1 and may be found here. That total is down slightly from the 528 colleges on the March 1 list.
General Assembly, the largest coding and skills boot-camp provider, has laid off 50 employees, which is roughly 7 percent of the New York City-based company's work force, The Wall Street Journalreported last week. Jake Schwartz, the company's CEO and cofounder, told the newspaper that the layoffs were to make sure “we are completely self-sustainable and ready to control our own destiny for as long as it takes.”
Access to venture capital recently has tightened for many start-ups, the WSJ reported. General Assembly reportedly brought in $70 million in revenue last year. The company plans to make an announcement soon about new strategic investments, Schwartz said, while it seeks to continue growing a relatively new corporate training program.
A second-semester student at Gordon State College in Georgia has received more than $180,000 in donations after campus police officers discovered him living in a tent near a college parking lot. Two officers responded to a call about the tent on July 9, the Barnesville Herald-Gazette reported, and asked the man inside to come out with his hands up. The occupant, 19-year-old Fredrick Barley, emerged and presented police with his Gordon State student ID. He explained that he’d ridden six hours from his hometown on his brother’s 20-inch bicycle ahead of classes resuming to register for courses and find a job. He carried with him only a duffel bag, a tent, a box of cereal and two gallons of water, according to the Herald-Gazette.
Barley reportedly had been living on campus for three days when he was found, riding around on the undersize bike to complete job applications. The police officers took Barley to a motel and each paid for one night’s stay. He was scheduled to move into his dorm on Monday. “Fred told us this would be his second semester at Gordon as a biology major and we could tell he was serious about his education,” Maria Gebelein, one of the officers, told the Herald-Gazette.“We helped him because we felt it was the right thing to do.”
Police shared Barley’s story on Facebook, and local residents soon delivered gift cards, food, clothes and new mountain bike. An online donations page exceeded its original goal of $150,000, and Barley found a job at a local restaurant washing dishes. “I was not expecting any of this support and am in awe of how this community has come together to help me,” said Barley, who hopes to major in biology and attend medical school. “I was just trying to go to school, find a job and make it on my own.”
Earlier this month, the Treasury Department announced in a blog post on its site that in a pilot program to collect defaulted federal student loans, it had lower collection levels than private collection companies.
As New America policy analysts Ben Barrett and Alexander Holt write, the pilot program was launched to find out if the agency could collect loan debts without aggressive tactics often used by private contractors -- a source of complaints from borrowers. But the department only managed to resolve 4.4 percent of loans made to 5,729 borrowers, compared to 5.5 percent resolved by a control group of private companies contracted through the department.
Treasury staff members limited contacts with borrowers to one call per week and did not threaten wage garnishment during the first 11 months of the pilot program. The results of the pilot, Barrett and Holt write, indicate that “if we are interested in rehabilitating borrowers, the answer is not to be more gentle.”
College is not free, and never will be. Someone is always paying -- taxpayers, private donors, students or some mix of the three. That obvious truth is missing from much of our political debate and the growing panic over student loans, which casts education debt as a tragedy rather than an investment. The hardening rhetoric against student loans threatens to undermine national success in broadening access to higher education, discouraging the very students we need.
This may sound strange coming from someone whose signature career achievement is a no-loans aid program. The whole idea behind the Carolina Covenant, which we launched at the University of North Carolina at Chapel Hill in 2003, was to assuage growing worry about student debt by eliminating loans for our lowest-income students.
But if we’re going to put higher education within reach of the millions more who would benefit, loans are going to be a crucial part of the equation. And that means students from all backgrounds -- especially low-income, first-generation and minority students -- need to understand reasonable student debt as an opportunity, not a crushing burden.
Middle- and upper-income families already have that view, which is why they’ve been willing to shoulder modest loans to earn valuable degrees. The vast majority of the increase in aggregate debt over the past few years -- the much-decried $1.3 trillion in student debt -- has come from more Americans pursuing a degree, a public policy success we ought to be celebrating. Millions of Americans have correctly seen higher education as a bridge to a better future.
For low-income and first-generation students, that bridge too often looks like a trap. Even modest loans can be frightening for families that have no experience of college investment, so they’re less willing to take that step. Overblown angst about debt threatens to entrench this class divide in ways that will prove deeply destructive to American higher education.
The promise of a no-loans education is as much about communication as about financing. For our lowest-income students at Carolina, it was meant to overcome the impression of debt as a hardship and a barrier. Our own research showed that it wasn’t a hardship -- students taking out modest loans for a quality education are almost invariably better off. But the perception was so strong among historically disadvantaged families that a no-loans promise for those students made sense.
We’re fortunate to have the resources for such a program, but most colleges and universities don’t -- especially not the regional public universities and community colleges that serve a disproportionate share of first-generation and minority students. If we’re going to move the needle on college access in the United States -- and we must, given our shifting demographics and the economic stakes -- then families have to get comfortable with personal investment in education.
That was certainly the story for my family many years ago. Having grown up in a small Midwest farming community with no resources for college, I took out more than $6,000 to cover my undergraduate education -- a sum that exceeds $41,000 in today’s dollars. And then there was the follow-on debt for graduate and professional education. It was scary, but it was also a privilege to use someone else’s money to improve my life. And that, fundamentally, is what students are doing when they use student loans to pursue an education.
If a “no loans” sentiment takes hold among students and policy makers, it will undermine access to college and make stories like mine less likely. It would reverse the democratization of higher education, devastating community colleges and public universities that are already stretched thin in their effort to serve a diversifying student body.
We badly need a more focused conversation about the right balance of taxpayer money, donor support and other university funds that can offset the cost to students. But in any scenario I can envision, short of creating a true K-16 entitlement, student loans are going to remain a necessary part of the mix.
If we cut off opportunity capital in the name of protecting students or taxpayers, we will end up with less opportunity. The relatively few families who can afford it will continue to buy high-quality, immersive education for their children. And others -- no matter how talented, no matter how driven -- will be left with meager options.
That would be a tragedy, not an improvement. The lamentations of the antidebt crowd assume that policy makers will ride to the rescue with new funding, but it won’t happen. Money is not that plentiful any more -- not from the states, and not from the federal government, despite what some of the presidential campaigns have promised. The students who benefit from higher education are going to remain personally invested, and there’s nothing regrettable about that.
We should stop scaring families with misleading tales of ruinous debt, and stop heeding pundits who would prefer to make education a rarefied luxury. When it comes to opening doors for our most vulnerable students, responsible borrowing is a solution, not a problem.
Shirley Ort is associate provost and director of the Office of Scholarships and Student Aid at University of North Carolina at Chapel Hill.
The Republican Party's platform, which was released on the first day of the GOP convention in Cleveland, included criticism of the Obama administration's handling of sexual discrimination on college campuses as well as calls to decouple accreditation from federal financial aid and to bring the private sector back into the financing of student loans. The document also criticized the dominance of liberalism on college campuses and argued for the encouragement of new systems of learning to compete with traditional, four-year colleges.
The platform decried ideological bias in public higher education, saying state officials should "preserve our public colleges, universities and trade schools as places of learning and the exchange of ideas, not zones of intellectual intolerance or 'safe zones,' as if college students need protection from the free exchange of ideas." It also condemned infringements on free speech and campus-based boycott, divestment and sanction campaigns against Israel.
On Title IX, which is the federal law that prohibits discrimination based on sex in federally funded programs, the Republican document said the White House's alleged "distortion" and micromanagement of the way colleges deal with allegations of abuse "contravenes our country's legal traditions and must be halted before it further muddles this complex issue and prevents the proper authorities from investigating and prosecuting sexual assault effectively with due process."
Citing rising college pricing, the GOP said public policy should advance affordability, innovation and transparency in technical institutions, online universities, lifelong learning and work-based learning in the private sector, while recognizing that a "four-year degree from a brick-and-mortar institution is not the only path toward a prosperous and fulfilling career."
Likewise, the platform said accreditation should be decoupled from federal financing to encourage new modes of higher education delivery to enter the market, while states should be "empowered to allow a wide array of accrediting and credentialing bodies to operate."
The federal government should not be in the business of originating student loans, according to the document, reversing a change the Obama administration made. The restoration of private sector participation would help bring down college costs while giving students access to a multitude of financing options, according to the platform.
The Lumina Foundation last week released a new series of white papers on how public colleges are responding to performance-based funding policies in their states. The five papers by outside experts follow two previous batches the foundation funded and produced. The latest round focuses on how colleges can structure their academic programs and finances to support student success.
Lumina said the papers "focus on how institutions can align internal finances, student supports and incentives, and educational delivery to respond to funding formulas that create incentives for on-time degree completion and year-over-year increases in the numbers of students of color and at-risk students who earn degrees or other credentials."