The Consumer Financial Protection Bureau is investigating Wells Fargo over its student loan servicing practices, The Wall Street Journalreported on Thursday.
Citing multiple anonymous sources, the Journal reported that the consumer bureau’s inquiry into the bank goes back at least to late last year. It’s not clear what loan-servicing issues the CFPB is investigating.
The CFPB has recently stepped up its scrutiny of servicing of both private and federal loans. Officials at the consumer bureau last month said they were exploring new regulations for the industry.
The bureau has also said it is prioritizing enforcement efforts of student loan servicers.
In July, Discover Bank agreed to pay $18.5 million to resolve the CFPB’s allegations of illegal loan servicing practices. The CFPB is also considering legal action against Navient, the company disclosed to investors last month.
Congress is currently considering cutting funding for the campus-based Federal Work-Study Program that helps the most economically disadvantaged students pay for postsecondary education. Such action would be ill-advised. It would hurt not only deserving students but also cities and towns where college students supported by the program are working in an array of community service jobs.
Rather than cutting funds for Federal Work-Study, Congress should bolster the program’s financial support and expand its community service component. That would provide more educational benefits and career training to college students, and it would also strengthen local communities and schools by requiring more college students to work in jobs such as tutoring children in preschool, elementary school and middle school in reading and math.
Some 3,400 postsecondary institutions currently participate in the Federal Work-Study program. It provides crucial financial support for hundreds of thousands of full-time students with demonstrated financial need -- those from lower-income families. They work at a variety of jobs on and off campus while going to college, earning an hourly wage not less than the federal minimum wage. Participating colleges and universities are required to make the maximum effort in placing Federal Work-Study students in jobs that directly support their academic programs or career objectives.
By increasing funding for Federal Work-Study, Congress would be expanding access to higher education to students across the board. More financial support would give Congress the flexibility to adjust the funding formula for Work-Study, which currently provides less money to students attending public institutions than those going to private colleges.
Increasing support for Federal Work-Study has also surfaced as an issue on the presidential campaign trail, where some candidates have made increasing support for Federal Work-Study a key part of their plans to dramatically lower or even eliminate college tuition.
Participants in the Federal Work-Study program are more likely to graduate and get a job after college, as well, according to a new study by two researchers at the Community College Research Center (CCRC) at Columbia University’s Teachers College. But their research also showed a worrisome aspect of the work-study program. Participants are much more likely to take out loans during their first year of college. One reason that the researchers cited is that colleges typically package loans and work-study grants together, increasing the probability that a student will take out loans. Colleges should be more attentive to this issue and make sure that their neediest students can take advantage of Federal Work-Study without an undue loan burden.
We believe the community service component is one of the greatest values of Federal Work-Study. Beginning in the early 1990s, a key requirement of the Federal Work-Study program became that an institution spends at least 7 percent of its annual allocation on community service jobs. That’s a relatively low bar, especially considering the educational and community benefits and the challenging fiscal climate in our country. Many colleges -- including Oberlin College, where one of us works -- allocate a much higher percentage of their annual work-study funds to community service positions. This trend parallels growth in community engagement over all and signals that colleges are interested in becoming good citizens through meaningful contributions to their local areas. It results in a win-win situation, because well-run community service work-study programs provide students with ways to learn new skills and engage with diverse learning opportunities.
As at more than 65 other colleges and universities, Oberlin students’ community service jobs are organized through Bonner Scholars and Bonner Leader Programs, created in collaboration with the Corella and Bertram F. Bonner Foundation to give underrepresented and first-generation students “access to education and opportunity to serve.” The Bonner program provides a model for using Federal Work-Study funds to support students who make a sustained commitment to community service during college and help them develop as leaders and change agents in the local community and beyond.
The program works to identify community service jobs through consultation with local nonprofit, governmental and community-based organizations and to design jobs that will improve the quality of life for community residents -- particularly low-income people. In the past, some members of Congress were concerned that colleges and universities didn’t have the infrastructure to manage student community service positions. But now almost every campus in the country has an office or center for community engagement.
Expanding the community service component of the Federal Work-Study program is not a new idea. Harris L. Wofford, a former U.S. senator from Pennsylvania and president of Bryn Mawr College, is a longtime advocate for service learning and expanding the community service component of Federal Work-Study. In an article published in 1997 in the Journal of Public Service & Outreach, he provided a description of the benefits of Community Service Federal Work-Study that still applies today: “Moving work-study jobs off campus can be a win-win for all involved. Students benefit from the challenge of working on critical social issues and learning citizenship and problem-solving skills that will help them throughout life. Colleges benefit from improved relations with the surrounding community. And communities benefit from tapping the skills and energy of college students to help solve urgent local problems.”
Placing students in community service jobs fits especially well with the ethos and purpose of residential, liberal arts education. The Association of American Colleges and Universities (AAC&U) defines liberal education as an approach to learning that empowers students and prepares them to deal with complexity, diversity and change. It provides students with broad knowledge of the wider world -- science, culture and society -- as well as in-depth study in a specific area of interest. A liberal education helps students develop a sense of social responsibility, as well as strong and transferable intellectual and practical skills such as communication, analytical and problem-solving skills, and a demonstrated ability to apply knowledge and skills in real-world settings. Studies by Northeastern University and the AAC&U found that most employers are looking those qualities in the college graduates they hire.
Having students develop their skills in a real-world setting while helping pay for their undergraduate education is the essence of Community Service Federal Work-Study, benefiting not just liberal arts students but all students in multiple ways. College students receive classroom teaching experience while working with schoolkids who are often from a more racially and economically diverse community than one finds on campus. They often develop useful career contacts with people who can provide references on future job applications. In short, community service jobs get students outside the “campus bubble.” By working with people who are not between 18 and 22 years of age and who are not students at a residential liberal arts college, they learn to see the community in which they are attending college from a different perspective.
In some instances, our Bonner students work throughout their four undergraduate years with the same community partners. Those partners include local schools and churches, early childhood centers, visual arts and musical organizations, local governments and businesses, retirement communities, and sustainability and sustainable agricultural initiatives.
Community partners say they appreciate having college students working with them. Many K-12 schoolteachers say they like having extra help in the classroom. They value having college students make a difference in a child’s life, and they like the creative energy and ideas that college students bring.
That’s a big footprint in any community. And a lot of bang for the taxpayers’ bucks. One of the statutory purposes of Federal Work-Study is “to encourage students receiving federal student financial assistance to participate in community service activities that will benefit the nation and engender in the students a sense of social responsibility and commitment to the community.”
That is exactly what Community Service Federal Work-Study does. It is a valuable program that has not received additional funding in years. Rather than chipping away at it, Congress should act to increase the community service requirement for the Federal Work-Study and help relieve students’ debt burden by providing more funding, not less.
Marvin Krislov is president of Oberlin College, and Robert Hackett is president of the Bonner Foundation.
The National Merit Scholarship Program has announced that it is phasing out its National Achievement Scholarship Program, which has provided aid to black students since 1964. The National Merit Scholarship Program has been widely criticized for picking semifinalists for its program based on PSAT scores, and black students, on average, do not score as highly as white or Asian students on that test. The program announced that the program for black students -- after meeting commitments to current scholars -- would be transferred to the UNCF. That organization will run a new program to provide assistance to high-achieving college graduates from underrepresented groups.
Education Secretary Arne Duncan will step down as the nation's top education official in December, an Education Department source confirmed Friday morning.
Duncan has overseen a department that has taken an activist role in higher education policy making, from revamping the student loan programs to aggressively cracking down on for-profit colleges and sexual assault to turning up the accountability pressures on colleges.
As has been true with many U.S. education secretaries, whose backgrounds have universally been in K-12 education, Duncan has sometimes not appeared to be the primary driver of the policy changes themselves.
Other news organizations report that President Obama plans to appoint John B. King Jr., the deputy secretary focused on elementary and secondary education, to replace Duncan. A news conference is scheduled for this afternoon to discuss the changes.
A more expansive article on Duncan's resignation will appear later on this site.
The Advisory Committee on Student Financial Assistance, which since 1986 has advised the Education Department and Congress on student aid matters, has apparently provided its last advice.
Congress failed to pass legislation by Wednesday's end of the 2015 fiscal year that would have extended the life of the panel. (The legislation would also have sustained the Perkins Loan program, which supports low-income students.) Congress specifically slipped the renewal of another federal higher ed panel, the National Advisory Committee on Institutional Quality and Integrity, into a continuing resolution earlier this week, but did not do so for the financial aid committee.
The U.S. Senate failed to take action on a last-ditch effort to renew the federal Perkins Loan program, letting the program lapse.
Both houses of Congress needed to pass legislation renewing the program by Sept. 30, the last day of the 2015 fiscal year, and the House of Representatives did so on Tuesday.
But at the urging of Senator Lamar Alexander, the Republican who has argued for the program's elimination as part of an effort to simplify and streamline the federal government’s student loan programs, the Senate did not follow suit.
The proportion of student loan borrowers who defaulted on their debt within three years fell to 11.8 percent for those entering repayment in 2012, down sharply from 13.7 percent the year before, the U.S. Education Department announced today. Department officials credited the Obama administration's various efforts to protect borrowers, including its push to encourage borrowers to enter its income-based repayment program, for some of the decline in the default rate.
A list of institutions that could face the loss of eligibility for federal student aid programs because of their high default rates is below. The list contains no historically black colleges and universities, but the department appears not to have taken the extraordinary measures it took last year (when it adjusted the data of some institutions facing the loss of federal aid to protect them, drawing sharp criticism) once again. In a separate statement, the department said, “As of September 2015, all 101 eligible HBCUs have official … three-year cohort default rates that fall below regulatory thresholds,” and credited the historically black colleges with using “innovative approaches” to keeping their default rates down.
The cohort default rate, as this measure is known, has been the federal government's primary way of holding colleges accountable for how their students fare postgraduation, despite widespread dissatisfaction with the rigor of the default rate tool. The Education Department recently published data on the loan repayment rates of individual colleges' borrowers, which some see as a tougher and better way of gauging the fate of student loan borrowers.
Institutions subject to loss of aid:
Umpqua Community College, Oregon
Eastern West Virginia Community & Technical College
Ohio State College of Barber Styling, Ohio
Guti, the Premier Beauty and Wellness Academy, Florida
Capstone College, California
L T International Beauty School, Pennsylvania
Florida Barber Academy
Jay’s Technical Institute, Texas
Memphis Institute of Barbering, Tennessee
Northwest Career College, Nevada
Northwest Regional Technology Institute, Pennsylvania