studentaid

Lawmaker alleges colleges require aid applicants to fill out fee-based form

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Congressman accuses elite colleges of misleading students into believing they must fill out fee-based form to qualify for federal aid.

Tenn. Governor Seeks Free Community College Tuition

Gov. Bill Haslam of Tennessee burnished his credentials as a higher education governor Monday night by promising in his State of the State speech to make two years of a community or technical college education free to graduating high school seniors in the state.

Haslam, whose state has aggressively overhauled its postsecondary system under both him and his predecessor, Phil Bredesen, proposed using lottery reserve funds to create an endowment to cover the tuition and fees of high school graduates who attend a community college or one of the state's colleges of applied technology. He called it the "Tennessee Promise."

"It is a promise that we have an ability to make," he said in a prepared text of his remarks. "Net cost to the state, zero. Net impact on our future, priceless."

The governor's 2014-15 budget proposal also calls for expanding the Degree Compass program developed at Austin Peay State University to help students navigate academic paths and creating a data system to help colleges identify adults who are likely to return to college and earn a degree.

Consumer Bureau Says Loan Servicing Issues Vary

Continuing its focus on problems with the servicing of private student loans, the U.S. Consumer Financial Protection Bureau on Monday released an analysis of its voluntary request for information from the private student loan industry. The bureau was especially interested in information about how loan servicers process the payments of borrowers seeking to pay down their debt ahead of schedule. The CFPB has said it’s concerned that some loan servicers apply prepayments in a way that maximizes their profits but makes the cost of the loan more expensive for borrowers.

In its report, the CFPB found that servicers varied in how they apply prepayments to student loans. Some were able to accept a borrower’s instructions through their online payment platform, while others were did not accept such instructions for certain types of loans. The bureau did not release the names of which entities responded to its request for information.

Rohit Chopra, the bureau's assistant director and student loan ombudsman, vaguely alluded to potential compliance issues in Monday’s report. He noted that it is illegal for companies to charge student loan borrowers a penalty for making early payments on their debt and said that one way for some servicers to ensure compliance with that requirement would be to automatically direct prepayments to a borrower’s loan with the highest interest rate first. In analyzing the servicers' prepayment policies--all of which were submitted voluntarily -- the CFPB did not check to see whether the policies were complying with the law. However, prepayment issues on private student loans could become a focus of the agency's efforts when it officially begins its supervision of large student loan servicers in March. 

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Cost estimates for federal student loans are unreliable, report says

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A new federal report says that it's impossible to set interest rates on federal student loans in advance so that the government breaks even on the program.

Survey: Parents Up College Savings Goals

A survey by Fidelity of parents who are already saving for college for their children found that 60 percent have a goal of saving more in 2014 than they did in 2013. Including those parents, 88 percent said that they plan to save at least as much as they did in 2013. Of the majority of such parents who have a specific target for savings, the average is $405 per month.

 

Modest Uptick for Income-Based Repayment

The number of federal direct student loan borrowers who were enrolled in an income-based repayment program rose by 20 percent in the last three months of 2013, as the Education Department launched a large outreach campaign to get more people to use the benefit.

Slightly more than 1.3 million borrowers had loans in an income-based repayment plan at the end of last December, an increase of 210,000 from the end of September, according to recently released federal data.

The increased participation in the program occurred as the Obama administration in November and December sent emails directly to more than 3.5 million borrowers that it believed could benefit from enrolling in the plans, which cap loan payments at a percentage of a borrower’s discretionary income and forgive any outstanding balance after 20 or 25 years.

During the same period, the number of borrowers participating in the similar but less generous income-contingent program remained roughly the same at 580,000.

Despite efforts by the Obama administration to better publicize and ease the application process for the income-based repayment program, enrollment remains relatively low compared to the overall federal direct loan portfolio, which includes 11.7 million people who are currently actively repaying their federal direct loans. An additional 5.5 million are in deferment or forbearance, and another 2.4 million direct loan borrowers are in default.

The Education and Treasury Departments planned to announce on Friday another aspect of the administration's campaign to enroll more borrowers in the programs. TurboTax will display a banner on its website that links to the Education Department's "repayment estimator," which provides information on enrolling in the programs.

The government will also include, during the upcoming tax season, a message about federal student loan repayment options on the envelopes of tax refund checks mailed this year. About 25 million of those envelopes will be mailed to tax filers this year, the departments said. 

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Education Dept. Reschedules ‘Symposium’ on Ratings

The Education Department has again rescheduled its “technical symposium” on the Obama administration’s proposed college ratings system. The new date for the daylong, public meeting is February 6, according to an email sent Thursday to presenters.

Education Department officials, citing poor weather conditions in Washington, D.C., earlier this week postponed the event and set February 20 as the new date. But, according to emails to speakers, officials have since decided they want to hold the conference sooner.  

The symposium will feature presentations from more than a dozen people with expertise in higher education data who will make presentations on various aspects of the department’s proposal to develop a ratings system.   

Colleges Pitch Possible Experiments With Competency-Based Programs

A group of institutions that favor a competency-based approach to student learning have offered examples of the sorts of approaches they would try in a program the U.S. Education Department is contemplating to encourage such experimentation. The department in December issued an invitation to institutions to propose ways in which a waiver of certain federal financial aid rules, as part of an "experimental sites" program, might allow them to improve student outcomes, speed time to degree, and lower costs for students.

In their submission, the institutions -- which include a mix of traditional public and private institutions, online only institutions, and community college systems -- proposed "testing new or alternative federal definitions of attendance and satisfactory academic progress," "decoupling federal financial aid from time-based measures," and allowing federal aid to flow to a degree program that mixes competency- and credit-hour-based learning, among other approaches.

The institutions are: Alverno College, Antioch University, Brandman University, Broward Community College, Capella University, Cardinal Stritch University, Charter Oak State College, Council for Adult and Experiential Learning, Excelsior College, Kentucky Community and Technical College System, Lipscomb University, Northern Arizona University, Southern New Hampshire University, SUNY Empire State College, University of Maryland University College, the University of Wisconsin-Extension and Westminster College.
 

Ohio Northern wants students to consider the cost of changing majors

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Ohio Northern University requires students to consider the financial costs before changing field of study.

Consumer Advocacy Group Calls for Tighter Oversight of Sallie Mae, Other Loan Servicers

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The federal government needs to do a better job of overseeing the companies it hires to service student loans, especially the largest player, a new report says. 

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