Former For-Profit Students Intervene in Borrower-Defense Lawsuit

Two former students of an Education Management Corporation-owned for-profit college have filed suit to intervene as defendants in a lawsuit challenging borrower-defense regulations.

The Department of Education cited the lawsuit, which was brought by an association of California for-profit colleges, in announcing a delay of the borrower-defense rule this week.

The students attended New England Institute of Art in Massachusetts and were subject to a forced-arbitration clause blocking students from bringing suit together. They planned to file a lawsuit against the for-profit alleging violation of the Massachusetts Consumer Protection Act after the borrower-defense rule's prohibition on enforcement of forced-arbitration clauses took effect.

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Education Department on track to update College Scorecard

The Department of Education appears ready to update the College Scorecard later this year.

Lawmakers Concerned About Loan Servicing Shift

More than 150 House and Senate Democrats sent Education Secretary Betsy DeVos a letter Monday that objected to her department's recently announced shift in how it chooses the contractors that service federal student loans.

After withdrawing new consumer protections in loan servicing issued by the Obama administration last year, DeVos on May 19 announced that the department would select a single servicer to handle student loans -- a departure from the current multiservicer system.

"This decision could create a monopolistic, unresponsive and inflexible student loan system that would produce poorer results for both borrowers and taxpayers," the lawmakers wrote.

They also highlighted concerns that DeVos had rescinded requirements including sending information to borrowers in Spanish and that direct payment be allowed online.

Last week, the Education Finance Council, an industry group representing not-for-profit loan servicers, wrote to DeVos with similar objections to the sole servicer arrangement announced last month.

"Moving to a single servicer -- who would be given sole discretion over subcontracting -- would create a monopolistic environment with little to no incentive to ensure the single servicer provides the highest quality of customer service to student loan borrowers," wrote EFC President Debra Chromy. "I urge the department to continue to involve multiple servicers to foster competition while preventing the formation of a too-big-to-fail monopoly."

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Court Orders Education Department to End Delay in Ruling on Loan Discharge

A federal district court judge last week ordered the Department of Education to rule within 90 days on an application for loan relief by a former Corinthian Colleges student. The application has been pending for more than two years.

The plaintiff in the case, Sarah Dieffenbacher, took out $50,000 in federal student loans while attending Everest College (part of Corinthian) from 2007 to 2012. She submitted an application for loan cancelation alleging fraudulent conduct by the for-profit college in March 2015, a month before Corinthian announced it was closing down campuses operated by Everest and its other remaining brands. 

While waiting for a ruling on the application, Dieffenbacher had her loans go into default and her wages garnished. She filed the lawsuit with representation from the Project on Predatory Student Lending after the department overruled her objections to the wage garnishment. 

She said in a statement she was fighting for herself and other students defrauded by for-profit colleges. 

Toby Merrill, director of the Project on Predatory Student Lending, said the ruling confirms "student loan borrowers have rights that exist independently of political winds and caprices. 

"It is inexcusable to delay and thereby deny Sarah and other borrowers in similar positions their contractual and statutory rights," Merrill said. 

The slow resolution of discharge applications by student borrowers who pursued borrower defense to repayment claims came under intense scrutiny from student debt activists and Democratic lawmakers under the Obama administration. And under the Trump administration, resolution of those claims appears to have ground to a halt at the Department of Education. 

Some advocates pushed for the department under Obama to grant automatic group discharge to student borrowers who attended failed for-profit institutions. The department said it did not have the power to do so, insisting that borrowers make individual claims of fraud. 

Since January, however, even student borrowers already promised relief by the department in response to discharge applications have not seen their loans forgiven. This week, a group of state attorneys general wrote Education Secretary Betsy DeVos a letter seeking an explanation for the delay in granting those discharges as well as the delay in resolving applications still pending. 


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Bipartisan Bill on Competency-Based Education

A bipartisan bill introduced in the U.S. House of Representatives last week would create a demonstration project for competency-based education programs. The project would grant statutory and regulatory flexibility to participants, such as in the application of federal financial aid rules, while also creating new requirements aimed at accountability and transparency.

Co-sponsors of the proposed legislation are Luke Messer, a Republican from Indiana, and Jared Polis, a Colorado Democrat. Both serve on the House Committee on Education and the Workforce. The House passed a similar bill in 2014, but the U.S. Senate did not follow suit.

Dubbed the Advancing Competency-Based Education Act of 2017, the proposed legislation would require an annual evaluation of each competency-based education program in the project to measure quality, student progress toward degrees and their ability to pay off loans and find employment after graduation. It also would require accrediting agencies for participating institutions to set standards for competency-based education.

Information gleaned from the project could be used by Congress as it seeks to reauthorize the Higher Education Act, which is the law that governs federal financial aid.

"Nowadays more and more college students are older, returning for a degree after years in the work force and pursuing their studies while working full-time simultaneously," Polis said in a written statement. "That’s why with the input of forward-thinking schools, like Colorado State University Global, this legislation will allow more students to get credit for what they know, rather than how much time they spend in the classroom."

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Access to Data Tool Restored for Borrowers

Student loan borrowers looking to enroll in income-driven repayment programs -- or to recertify their income levels -- can once again automatically transfer their tax return data into applications. The Department of Education announced Friday that it had restored access to the IRS data retrieval tool for those borrowers.

The IRS removed the DRT in early March in response to cybersecurity concerns. The website was a key tool for many students applying for federal financial aid as well as borrowers applying to enroll in more affordable repayment plans.

Former Federal Student Aid chief James Runcie told lawmakers last month that borrowers would be able to access the tool again by the end of May. The department expects that access for student aid applicants will be restored by Oct. 1, in time for the next federal aid cycle.

"We thank the Department of Education and IRS for working together to restore secure access to this critical tool, and for doing so without creating burdensome new requirements that would make it difficult for low-income students to use the DRT," said Diane Cheng, associate research director at the Institute for College Access and Success.

Both Democratic and Republican lawmakers have requested regular briefings from Education Secretary Betsy DeVos on progress restoring the tool as well as additional steps from the department to mitigate negative consequences of the tool's removal for students.

“I have been urging Secretary DeVos to take swift action to fix this issue and find relief for students and families -- so I am pleased that the department has taken this step to help struggling student loan borrowers," said Senator Patty Murray, the ranking Democrat on the Senate education committee. "While this is a good start, more must be done, and I will continue to hold the Department of Education to their word that all students will have full access to the financial aid tool by Oct. 1.”

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Why the Upward Bound budget should not be cut (essay)

Since 1964, millions of high school students from low-income homes have become the first in their families to earn a college degree thanks to the federally funded Upward Bound programs that operate in each state. Established as part of President Lyndon B. Johnson’s War on Poverty, these programs invite high school students from low-income families to study on a college campus. During the school year, they have access to tutoring and academic counseling to keep them on track for graduation, and come summer, they move into dorms and enroll in classes designed to prepare them for the year ahead.

Campus communities rally around Upward Bound students, providing crucial resources and developing in them a sense that they belong in college. The parents of such students may offer them unwavering support, but they cannot pass down nostalgia for and understanding of a college they never attended. They may instill discipline and be generous in their encouragement to pursue a college education, but they are unlikely to be of much help to their child when it comes to filling out the Common App or choosing which admissions test to take. Knowledge of these processes, though less valuable than a parent’s love, is no less consequential.

Programs like Upward Bound exist to counteract the countless barriers that keep poor, talented children out of college. Too many of these students find themselves just one missed deadline, financial aid application error or SAT question away from seeing their dream of a formal education slip farther out of their hands. Upward Bound programs offer crucial outreach and counseling services, including increasing academic and financial literacy for students aimed at assisting students during the college application process.

It is too ironic, then, that dozens of Upward Bound programs were recently imperiled due to minor formatting errors made on their grant applications. Previously, under the direction of Secretary Betsy DeVos, the U.S. Department of Education denied funding to programs on 44 campuses due to double-space or font mishaps. In light of recent circumstances, however, the currently imperiled Upward Bound programs across the country may be safe, at least for now. Last week, during her testimony in front of the House Committee on Appropriations, Subcommittee on Labor, Health and Human Services, and Education, Secretary DeVos committed to reconsider the ineligible applications using funds and direction provided by Congress in the 2017 omnibus spending bill. Although the timeline and formal process for the reconsideration of these applications is unclear, this is good news for the students who stand to benefit from the great work that Upward Bound programs across the country do.

While the secretary’s decision to review these ineligible applications will hopefully resolve with the immediate funding scare for this program, we should not and cannot lose sight of the larger picture that this administration is drawing. Proposed cuts to TRIO funding, which includes Upward Bound, will shut the doors of these vital centers across the country.

And just that quickly, a sense of belonging 50 years in the making can evaporate, along with the security of an academic support system that bridges the resource gap between the rich and the poor.

Upward Bound programs serve children of every background: black and Latino children in big cities; white children in small, rural towns; and everyone in between. They are neither wasteful nor experimental. They offer the counseling, tutoring and mentorship that has been the cornerstone of high school success and a pathway to higher education for generations.

New York City, where the Upward Bound concept was conceived and first implemented, will certainly feel the loss of this critical investment in our young people. The Double Discovery Center, which houses a program at Columbia University, has educated thousands of children from surrounding neighborhoods, like Harlem and Washington Heights. Those graduates continue to contribute to their communities in various capacities. They are business leaders and teachers, lawyers and nurses, counselors and artists, and they serve this country as members of the military.

Some Upward Bound programs will survive, temporarily buoyed by the resources of their home campuses, but others will cease to operate should this administration’s budget be enacted. Although the Department of Education will no longer mandate formatting features in future grant applications, this directive will not help the programs that will no longer receive funding due to the proposed slashing of TRIO's budget, ultimately leaving those who need these programs the most in the dark. Over the longer haul, the proposed cuts in the TRIO program, if implemented, could have lasting impact. An unknown number of students will not go to college because of a callous indifference to their success.

Through systematic and unfounded cuts to education programs of all types, including Upward Bound, the administration’s recently released budget proposal will destabilize and destroy a system that is meant to help our students. However, this should not surprise us -- President Trump and Secretary DeVos have embraced a voucher-centric brand of school choice that leaves underserved students behind and undermines the ability of public education to function by funneling desperately needed money away from our public education system and into private schools.

Meanwhile, Upward Bound programs help relieve overburdened and understaffed school districts. In most schools, the average guidance counselor is responsible for nearly 400 children -- well over the 250-to-one student-to-counselor ratio recommended by the American School Counselor Association. In other words, Upward Bound is a crucial component of a broader system that makes public schools work.

In this moment, we all stand witness to the dismantling of the public infrastructure. The wounds sustained will be both concrete and emotional. Children who eagerly enroll in summer school and Saturday classes will be punished for mere technicalities, while leaders in our government escape any accountability for the promises they break, the legacies they destroy and the personal and economic reverberations of those actions.

Otherwise, more damage will be done before any rebuilding can begin. Rather than making drastic cuts to our critical domestic education programs without any foundation in policy or well-reasoned basis, we should be investing in our future, which means investing in our students. Programs like Upward Bound serve to close the education gap that exists between far too many low-income or minority students and their peers. Ensuring Upward Bound is maintained today guarantees participating students have an opportunity to achieve educational success in their future.

Representative Adriano Espaillat is the first Dominican-American to serve in the United States Congress, where he represents the 13th congressional district of New York, which includes Washington Heights, Upper Manhattan and the Bronx. He is a member of the House Committee on Education and the Workforce. Shaun Abreu is a graduate of the Double Discovery Center Upward Bound program, George Washington High School and Columbia University. He is currently attending Tulane Law School. Amber Moorer is an education researcher and a former Upward Bound counselor.

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Moving Student Loans to Treasury Gets Little Traction

The Trump administration has held internal discussions about relocating some functions of the Department of Education to other federal agencies, including moving its $1.4 trillion student loan portfolio to the Treasury Department, according to media reports. But that idea, which has periodically resurfaced for years, hasn't found serious interest among members of Congress.

And key Democrats indicated serious opposition to the idea after those reports last week.

Senator Elizabeth Warren, a Massachusetts Democrat, said the federal student loan system desperately needs reform, but there is no evidence that Treasury would be any better at advancing student interests. "Disruptive organizational changes that do not address this basic concern will be at best meaningless and at worst harmful for the millions who struggle daily with these loans," Warren said.

Representative Bobby Scott, the ranking Democrat on the House education committee, said that Treasury's focus is on collecting money, not access to higher education. And Treasury's record administering the Earned Income Tax Credit does not suggest it views outreach and customer service as core parts of its mission, he said.

Representative Virginia Foxx, the Republican chairwoman of the committee, said the idea should be considered by Congress in light of what she called a history of inefficiency and mismanagement at FSA.

“Having a debate on ideas to ensure our federal financial aid system serves the best interests of students, families and taxpayers is a debate worth having," Foxx said.

The Department of Education declined to comment directly on whether those talks had taken place. Liz Hill, a department spokeswoman, said Secretary Betsy DeVos looked forward to replacing Runcie with someone qualified who will restore public trust in the Office of Federal Student Aid.

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New York Approves Free Tuition Regulations

The New York State Higher Education Services Corporation Board of Trustees approved regulations for the state’s new tuition-free public college tuition program Thursday, including some key regulations that would seem to address concerns about residency and credit-completion requirements.

Several provisions address a requirement that students complete 30 credits in a year in order to remain eligible for the program or risk having to pay their tuition back. One of the new provisions would allow students to count college credits earned in high school toward the 30-credit requirement. Another would apply to students who enrolled in the last two years but fell six or fewer credits short of the 30-credit-per-year requirement. It would allow them the chance to catch up on credits and be eligible for 2018-19 academic year and afterward.

Other provisions apply to requirements that students live and work in New York State for the same number of years they received program grants or have their grants turned into loans. One allows for the residency obligation to be waived for military service requirements. Another would prorate repayment of awards if residency and work requirements are not met.

The regulations also address the possibility of repayment waivers and postponements for cases of extreme hardship, allow students to interrupt study for military obligations and authorize students with disabilities to attend college part-time and receive prorated awards.

Students from New York families with annual incomes of up to $100,000 per year will qualify for the program in its first year, and it will scale up over the next two years to cover students from families with incomes of up to $125,000 annually. The program, called the Excelsior Scholarship, functions as a last-dollar program, enabling such students to attend two- and four-year institutions in the State University of New York and City University of New York systems without paying tuition.

Estimates show 940,000 families qualifying for the scholarship program when it is fully in place. Applications are expected to be available June 7.

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