studentaid

Education Department Signals Possible Changes to Gainful-Employment Rule

In documents released this week ahead of a negotiated rulemaking session on the gainful employment rule, the Department of Education signaled potential limits to Obama era regulation that went into effect last year.

The gainful employment regulation was written to weed out poor-performing career education programs that produce too many graduates with debt they can't repay. To hold programs accountable, it ties access to federal student aid funds to performance on a debt-to-earnings metric.

For-profit colleges sued twice to block the rule, but it went into effect last year and the first set of full data for career programs subject to the rule was released in January. However, Education Secretary Betsy DeVos said in June that she would appoint a rulemaking panel to overhaul the rule, taking account of many of the complaints from colleges. 

Materials provided to negotiators ahead of the first rulemaking session next week signal an interest in applying the regulation in whole or in part to all higher ed programs. That fits the priorities of for-profit groups like Career Education Colleges and Universities. It also wouldn't be possible under current law without making gainful employment simply a transparency measure by removing accountability measures -- another question raised by the materials for negotiators.

Virginia Foxx, the Republican chair of the House Education and the Workforce committee, is a longtime critic of the rule. Legislation expected from her committee this week would prohibit future action on the gainful employment rule by the department, according to reporting by the Wall Street Journal. The legislation, a reauthorization of the Higher Education Act, will instead propose a new tool tracking program-level data on completion, earnings, and average debt, the Journal reported.

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Gainful Employment

How the Senate and House tax bills would hit higher education

On eve of vote on Senate tax reform plan, we compare it to the House version, which would hurt students and families more. Both would hit colleges and universities hard by imposing new taxes and constraining state budgets.

Report: For-Profit Looking to Sell 2 Law Schools

For-profit law school chain InfiLaw is looking to sell its two remaining law programs, The Wall Street Journal reported over the weekend.

Arizona Summit Law School was placed on probation in March by its accreditor, the American Bar Association. Florida Coastal School of Law, meanwhile, was warned by ABA in October that it was "significantly out of compliance" with accreditation standards.

A third InfiLaw program, Charlotte School of Law, shut down in August after it failed to win renewed access to Title IV federal aid programs and its state regulator rejected a request to extend its license to operate. The Obama administration had cut off Charlotte's access to Title IV funds last year after the ABA put the law school on probation.

The Journal reported that InfiLaw is in discussions with nonprofit law schools to take over operations of its two remaining programs, according to Donald E. Lively, the president of Arizona Summit.

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Education Department unveils new mobile FAFSA application

Education Department plans a new platform aimed at smoothing applications for student aid and helping borrowers manage loan payments. But Congress must act to remove the most serious obstacles to completion of the FAFSA.

Servicers and states seek answer from DeVos on whether feds pre-empt state regulations

As states become more active in regulating the companies that collect and handle student loan payments, servicers seek answer from Secretary DeVos on whether federal policy pre-empts new rules.

Citibank Must Pay $6.5M for Loan Servicing Failures

The Consumer Financial Protection Bureau ordered Citibank to pay $3.75 million to consumers and another $2.75 million civil penalty for student loan servicing failures it said led to incorrect late fees and interest charges.

The CFPB also found that Citibank misled borrowers about their tax-deduction benefits, overstated minimum monthly payments and didn't provide required information after refusing to release a co-signer for a loan.

“Citibank’s servicing failures made it more costly and confusing for borrowers trying to pay back their student loans,” said CFPB Director Richard Cordray in a statement. “We are ordering Citibank to fix its servicing problems and provide redress to borrowers who were harmed.”

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Student loans

Democratic Senators Urge VA, Department of Defense to Protect Ashford Students

In separate letters to the Department of Defense and Department of Veterans Affairs Monday Tuesday, Democratic senators called for additional steps to protect student veterans and service members enrolled at Ashford University, which is slated to lose GI Bill eligibility within 60 days.

Ashford last week said it would suspend enrollment of new student veterans who receive Post-9/11 GI Bill benefits -- the latest development in a dispute between the for-profit and the VA. The agency told Ashford that Arizona regulators had not provided sufficient evidence of jurisdictional approval over its online programs. 

The VA said it would suspend Ashford's GI Bill eligibility within 60 days if corrective action was not taken. Although Ashford disagreed with the decision in a corporate filing, it agreed to voluntarily suspend enrollment of new student veterans. 

The senators urged Secretary of Veterans Affairs David Shulkin and Secretary of Defense James Mattis to warn GI Bill recipients and DOD Tuition Assistance recipients of Ashford's status and prohibit further enrollments. 

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How financial aid policies are like tax policies (essay)

In recent weeks, people across the country have paid quite a bit of attention to tuition resets.These discussions almost always start with a premise about “unsustainable discount rates,” which results in the impression that colleges are giving away too much financial aid to those who don’t need it. I dislike the terms “discounting” and “discount rate” and think those unfortunate terms have done real damage to the purpose of financial aid, the value of financial aid policy and even the perceived value of a college education.

Recently, however, I think I’ve found a way to refresh this conversation in way that could add some value. Unfortunately, my inspiration comes from our tax code -- which has also been receiving a great deal of interest lately, given the GOP plans to reform it.

I heard a segment on American Public Media’s “Marketplace” program about the U.S. tax code and how it’s used to influence behaviors and accomplish goals that go well beyond just fueling our government with the resources it needs to function. I found myself thinking it sounded similar to how financial aid is awarded in higher education. Tax policy and financial aid policy are both complex and not well understood by the public, and are both under fire from various stakeholders. Financial aid and tax breaks both cost their sources (higher ed and the feds) at the outset, and the policies are difficult to change once they are established.

But for the purpose of my question, the most important characteristic they share is that they are both designed to influence behavior.

Americans love a good deal -- which in taxation can translate into a good tax deduction or break, and which in the college decision process often is related to a scholarship offer or need-based financial aid. If colleges suddenly stopped offering financial aid, with an accompanying tuition reset or not, some colleges would be just fine, enrolling the same number of students. But the composition of the student body would be quite different from what it is today and nowhere near as diverse. And that is because higher education uses financial aid to shape the student body in ways that are deemed most beneficial to the college and its students.

This is a valuable observation when one thinks about how the tax code works, too.

Tax deductions, tax credits or tax preferences are designed to accomplish something that is needed or offers value. In the interview on “Marketplace,” Daniel Hemel of the University of Chicago described the tax code as an anti-poverty program, a housing program, a primary way to fund health care and so on. The tax code can incentivize taxpayers to give to charity, save more for retirement, etc. The basic argument is that the tax code supports the things that the government needs and wants to do. If you take away the incentive, worthy efforts suffer.

Similarly, financial aid is designed to influence behavior and accomplish some altruistic goals, too. Financial aid is awarded for many reasons, including making higher education affordable. It is also part of many colleges’ business plans to sustain enrollment.  And financial aid is awarded to accomplish institutional goals and influence the behavior of students and families during the college decision-making process.

So rather than viewing financial aid as discounting the cost to attend college, what if we thought of institutions’ investments in it as advancing affordability, geographic diversity, racial diversity, overall student academic profile, musical or athletic talent, and academic program distribution? By definition, “discounting” implies that colleges could otherwise command those dollars from students, which is very unlikely in many circumstances.

I understand that the anti-taxers will find folly in this argument because they’d like to support only what is needed. And the anti-discounters will want to make similar arguments that discounting jeopardizes the sustainability of our colleges. It may, yet if it done strategically, it might actually be what saves some colleges and enriches the experience for students.

Meanwhile, I believe it would benefit the higher education community to think in terms of how financial aid represents a college’s values -- not in terms of offering families a so-called discount. Perhaps the simplest way would be to actually adopt another term rather than “discount,” and one that’s pulled directly from the language of taxes: “incentive.” This term works transparently for both institutions and families and certainly works for public policy makers. A college or university would communicate that it is offering an incentive to enroll a student to advance its goals, and the student would receive another incentive to apply to that institution.

Whatever the terms we use, we should think about financial aid as something that advances important, strategic and even noble goals -- and that benefits the student and the institution. That could enrich the conversation we are having about the cost of higher education and help us find better ways to address and solve the problem.

By W. Kent Barnds, Executive Vice President for External Relations at Augustana College in Rock Island, Ill.

 

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House passes tax plan with many provisions opposed by colleges

Plan targets large endowments of private colleges and eliminates many deductions benefiting student loan borrowers and graduate students.

Education Debt Held by Older Americans

Recently released federal data show that 17 percent of federal student debt holders are over the age of 50. This group of older borrowers collectively hold $247 billion in student debt, an amount that has roughly tripled since 2003.

Likewise, a 2016 report from the U.S. Government Accountability provoked alarm for showing that the federal government is withholding a portion of Social Security benefits from a growing number of older Americans to cover defaulted student loan debt.

Amid this context, the Urban Institute on Thursday released an analysis of federal survey data on older student debt holders. The group found that 3.5 percent of Americans over 50 hold student debt for their own education, compared to roughly 8 percent with debt for their children or grandchildren. 

Older borrowers with debt from their education tend to have more precarious finances, the report found. For example, 55 percent of this group reported struggles with money compared to 33 percent of those with student debt for their children. In addition, black adults over age 50 are roughly three times as likely to hold education debt for themselves as are their white peers.

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