SLM (better known as Sallie Mae) is facing increasingly broad investigations from state and federal agencies, The Wall Street Journal reported. Illinois, under Attorney General Lisa Madigan, is leading several states in examining Sallie Mae's debt collection and loan servicing.
Clark University, in Massachusetts, has dropped need-blind admissions, in which applicants are admitted regardless of their ability to pay, MassLive.com reported. Going ahead, the university will become "need-aware" at the end of its admissions process, meaning that once the financial aid budget has been spent, applicants who can afford to pay will be admitted. Officials said that they remained committed to admitting low-income students, but that the need-blind policy had forced Clark to make cuts in other parts of its budget, and was no longer sustainable.
Congressional investigators said in a report Tuesday that they could not determine whether students' increased access to federal loans in recent years has caused college prices to rise.
The Government Accountability Office was tasked with analyzing what, if any, impact higher federal loan limits that took effect in 2008 and 2009 have had on the rising price of college. In its report, the GAO concludes that "it is difficult to determine if a direct relationship exists between increases in college prices and the [federal] loan limit increases because of the confluence of many other factors that occurred around the time the loan limit increases took effect," such as the economic recession and increases in other types of federal, state and institutional aid available to students.
The report also notes that the increased federal loan limits were correlated with a drastic drop, by more than 50 percent, in private student lending. A variety of factors explain that drop, the report says, including more stringent lending criteria, new consumer protections on private loans, and colleges' efforts to steer students away from private loans.
A new study (abstract available here) from the National Bureau of Economic Research tracks 10 year student loan default rates for those who earned bachelor's degrees in 1993. The study warns against common assumptions about who may default. "Given the importance of post-school earnings for repayment, it is natural to expect that differences in average earnings levels across demographic groups or college majors would translate into corresponding differences in repayment/nonpayment rates, but this is not always the case," the report says.
"Despite substantial differences in post-school earnings by race, gender, and academic aptitude, differences in student loan repayment/nonpayment across these demographic characteristics are, at best, modest for all except race." And while default rates for black students are higher than those of other groups, the study finds, this could be linked to lower levels of family income, since higher levels of family income have been found to minimize default rates.
Lower debt levels and higher income do predict loan repayment status, the report finds. "As a ballpark figure for all repayment/nonpayment measures, an additional $1,000 in debt can be roughly offset by an additional $10,000 in income," the study says. "For example, an additional $1,000 in student debt increases the share of debt in nonpayment by 0.3 percentage points, while an extra $10,000 in earnings nine years after graduation reduces this share by 0.4 percentage points."
The Education Department on Friday announced the negotiators who will hammer out new rules for PLUS loans, campus debit cards, state authorization for distance programs and other topics on the administration’s sweeping second-term regulatory agenda.
The negotiated-rulemaking panel will convene for the first time on February 19 and meet several times over the next several months to address a range of regulations for institutions that receive federal student aid and the companies the handle the disbursement of that money.
Among the more contentious issues the panel will focus on are the eligibility requirements for obtaining a PLUS loan. Consumer advocates and some think tanks have called for tighter eligibility requirements while some historically black and for-profit colleges, whose students and their families rely heavily on the loans, have said the department’s efforts to tighten the underwriting criteria have already cut off college access for low-income and underserved students.
The panel will also attempt to draft rules for student debit cards and other financial products on campus through which students receive disbursements of their federal loans and grants. Advocacy groups, lawmakers and other federal agencies have questioned the lucrative arrangements that some debit card providers have with colleges to offer such products.
In addition, the negotiated-rulemaking committee will also seek to rewrite the department’s state authorization rule for distance education programs. The rule, which required colleges providing distance education to obtain permission to operate from every state in which they enroll students, was thrown out by a federal appeals court in 2012. The panel will also tackle the conversion of clock hours to credit hours when awarding credit, and rules governing when a student can receive federal aid for repeated coursework.
Following are the list of negotiators:
Carney McCullough, U.S. Department of Education
Pam Moran, U.S. Department of Education
Chris Lindstrom, higher education program director, U.S. Public Interest Research Group
*Maxwell John Love, vice president, United States Student Association
Whitney Barkley, staff attorney, Mississippi Center for Justice
Toby Merrill, director, Project on Predatory Student Lending, The Legal Services Center, Harvard Law School
Suzanne Martindale, staff attorney, Consumers Union
Carolyn Fast, special counsel, Consumer Frauds and Protection Bureau, New York Attorney General’s Office
*Jenny Wojewoda, assistant attorney general, Massachusetts Attorney General’s Office
David Sheridan, director of financial aid, School of International & Public Affairs, Columbia University
*Paula Luff, associate vice president of financial aid DePaul University
Gloria Kobus, director of student accounts & university receivables, Youngstown State University
*Joan Piscitello, treasurer, Iowa State University
David Swinton, president, Benedict College
*George French, president, Miles College
Brad Hardison, financial aid director, Santa Barbara City College
*Melissa Gregory, chief enrollment services and financial aid officer, Montgomery College
Chuck Knepfle, financial aid director, Clemson University
*J. Goodlett McDaniel, associate provost for distance education, George Mason University
Elizabeth Hicks, executive director, student financial services, Massachusetts Institute of Technology
*Joe Weglarz, executive director, student financial services, Marist College
Deborah Bushway, chief academic officer and vice president of academic innovation, Capella University
*Valerie Mendelsohn, vice president, compliance and risk management , American Career College
Casey McGuane, chief operations officer, Higher One
*Bill Norwood, chief architect and director, Heartland Payment Systems
Russ Poulin, deputy director, research and analysis, WICHE Cooperative for Educational Technologies
*Marshall Hill, executive director, National Council for State Authorization Reciprocity Agreements
Dan Toughey, president, TouchNet
*Michael Gradisher, vice president of regulatory and legal affairs, Pearson Embanet
Paul Kundert, president and CEO, University of Wisconsin Credit Union
*Tom Levandowski, senior company counsel, Wells Fargo Bank Law Department, Consumer Lending & Corporate Regulatory Division
Leah Matthews, executive director, Distance Education and Training Council
*Elizabeth Sibolski, president Middle States Commission on Higher Education
Submitted by Ry Rivard on February 10, 2014 - 3:00am
A multimillion-dollar donation by a University of Virginia board member will help low-income students affected by the university's decision to scale back a popular financial aid program. U.Va. Trustee John Griffin gave the university a $4 million challenge grant last week, which he and the university hope will be at least matched by other donors. The money will help provide $500,000 in need-based aid to students over the next four years, as well as help fund an endowment set aside for financial aid.
Last year, the university altered its AccessUVa need-based aid program in an effort to curb costs. Starting this fall for incoming students, U.Va. is going to make some low-income students borrow up to $28,000 instead of guaranteeing them a debt-free graduation as it had in the past. Some said that with the new donation, the university was effectively reversing its decision, which has prompted significant opposition. It's unclear, however, to what extent the philanthropy will be used by the university to cover the bases AccessUVa has.
A university spokesman, McGregor McCance, said the university does not known how many students will receive assistance from the endowment or the value of those scholarships. Nor is it clear how many students will be helped by the $500,000 per year of grants over the next four years. "For some students, this could partially or fully eliminate loans or work study components of financial aid packages," he said.
The university had said it would turn to donors to try to help low-income students even as it was cutting its no-loan guarantee. The cost curbing to AccessUVa will eventually save about $6 million a year.
Still, fans of AccessUVa were pleased. "This announcement is effectively a reversal because before they were cutting grant aid to the poorest students, and now they’re investing a sizable infusion of funds directly back into those students," Mary Nguyen Barry, a graduate who received the no-loan version of AccessUVa, said in an email.