studentaid

Two For-Profits Issued Illegal Loans

Minnesota's Supreme Court ruled this week that Globe University and the Minnesota School of Business issued illegal loans to students, that carried interest rates of up to 18 percent and were not properly licensed, the Pioneer Press reported.

The U.S. Department of Education froze federal aid payments to the two related for-profit institutions last year, after a Minnesota District Court ruled that they had operated fraudulent criminal justice programs. Most of the two institutions' campus locations subsequently closed, although some have continued to operate in Wisconsin under a different ownership structure.

Minnesota's attorney general, Lori Swanson, said she would seek for loans of 6,000 former students to be discharged as well as refunds for previously repaid loans. A judge in the state also has ruled that the two for-profits must pay restitution to defrauded students.

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Trump Administration Has Approved No Borrower Defense Claims

The U.S. Department of Education has not approved any borrower defense applications since the beginning of the Trump administration, a department official told Democratic senators this month. 

Borrower defense to repayment, until recently an obscure provision of the Higher Education Act, allows borrowers to seek to have their student loan debt discharged if they were the victim of fraud or misrepresentation by their college or university. Education Secretary Betsy DeVos announced last month that she would suspend and overhaul an ambitious Obama administration borrower defense rule that established federal guidelines for discharge of loans. She said at the time that the department will continue to process claims submitted under existing rules.

But in response to an inquiry from Illinois Sen. Richard Durbin and four other Senate Democrats, acting Under Secretary James Manning said in a July 7 letter that no borrower defense claims had been approved since January 20, the beginning of the Trump administration. The department, meanwhile, received nearly 15,000 new borrower defense claims over the same period. 

Manning stated in the letter to lawmakers that more than 65,000 claims were still pending review. The bulk of those -- more than 45,000 -- were from former students of Corinthian Colleges, the now defunct chain of for-profit institutions. (Manning included enclosures listing claims by state and institution.

Liz Hill, a department spokeswoman, said the department inherited a large backlog of borrower defense applications and is working to make progress on reviewing those claims. 

"We are diligently looking to set up a process to start approving claims once again," she said. 

DeVos in May told lawmakers that the department would honor borrower defense claims already approved by the previous administration after multiple unanswered inquiries from Congressional Democrats and state officials. The Associated Press reported last month that about 7,000 -- less than half -- of those claims had been discharged. The department has been working to discharge the remainder of those approved claims before beginning the review of new claims. 

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Ashford University Notches Win in GI Bill Dispute

In the latest development in an eventful saga, Ashford University on Wednesday announced that it is closer to preserving access to Post-9/11 GI Bill benefits. 

The online university enrolls roughly 5,000 student veterans. But last year Iowa's state approval agency attempted to strip the university's GI Bill eligibility, citing a previous decision by Ashford to close its physical location in the state.

Earlier this week an Iowa court dismissed a petition from Ashford. But on Wednesday the university's parent company, Bridgepoint Education, said it has received approval from Arizona for Ashford to remain eligible to receive GI Bill benefits. That move will require a type of administrative approval from the U.S. Department of Veteran Affairs, however, according to the company. In the meantime, Bridgepoint will continue to pursue approval in Iowa for Ashford through its ongoing lawsuit.

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Early Success in Detroit Promise Program

The  Detroit Promise Path, a college tuition-free program for the city's high school graduates, is showing early signs that full-time enrollment and second-semester persistence is increasing under the initiative. 

A new paper from MDRC finds Detroit Promise students who received mentoring and other resources were 11.5 percent more likely to stay enrolled compared to those students who weren't in the program. 

The program provides a last-dollar scholarship to cover tuition and fees to five Metro Detroit community colleges for up to three years. MDRC partnered with the Detroit Regional Chamber to expand the scholarship to the Detroit Promise Path that adds four additional supports to the scholarship. Those additional resources include campus coaching twice a month, a $50 a month stipend for expenses not covered by financial aid, summer enrollment opportunities or local summer employment, and data tools to track participation. 

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Letter Calls on Congress to Tie Pell Grant to Inflation

More than 300 higher education institutions and advocacy groups sent a letter to congressional leaders today asking that the value of the Pell Grant be indexed to inflation. After the upcoming academic year, the value of the grant will not automatically go up to adjust for inflation for the first time in six years. 

"Pell Grants are the foundation of our national investment in higher education, giving low-income students the opportunity to go to and graduate from college and pursue careers that increasingly require a postsecondary education," the groups wrote. 

In the coming year, the groups told lawmakers, Pell Grants will assist more than 7.5 million college students. But the maximum value of the grant covers less than 30 percent of the average cost of a four-year public university. That's the lowest purchasing power for the grant in 40 years, the groups said.

Congress in May restored year-round Pell Grants, a policy change long sought by higher ed advocates. But the higher ed groups noted that Pell recipients are more likely to take out student loans and hold higher average debt than their peers, showing the need to boost the value of the grant, they said.

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House Passes Update to GI Bill

The House of Representatives unanimously voted Monday to pass an update to the Post-9/11 GI Bill that, among other provisions, would restore benefits to veterans affected by closures of for-profit institutions like ITT Tech and Corinthian Colleges.

The package of legislation would also lift the current 15-year time limit for veterans to use GI Bill benefits for postsecondary education. It also expands access to student aid for members of the National Guard and reservists and would grant full eligibility for student aid to Purple Heart recipients, regardless of their length of service.

House leaders have moved the bill swiftly through the chamber, introducing the legislation, holding hearings and scheduling a vote, all in a little over a week. The Senate is expected to hold a hearing soon on identical legislation with bipartisan backing.

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Feds Restrict Title IV Access for West Virginia Public Universities

The Department of Education has placed restrictions on access to federal student aid for West Virginia public universities after the state was late submitting required annual financial statements for the third year in a row. The restrictions, known as heightened cash monitoring, mean that for five years higher ed institutions in the state must disburse aid to students first and then ask the feds for reimbursement.

It's a rare move to apply those restrictions to public institutions, much less a whole state. West Virginia Governor Jim Justice promised last week that "heads will roll" when his office determines who is responsible for the late financial statements.

“There is going to be finger-pointing like crazy, but the only way to improve is to admit that something isn’t working,” he said in a statement. “I didn’t break it, but I’ll fix it. In the past our federal delegation was able to correct this, and I hope they can help me fix it again this year.”

West Virginia Senators Joe Manchin, a Democrat, and Shelley Moore Capito, a Republican, along with members of the state's House delegation, expressed concern over the consequences of the restrictions to Education Secretary Betsy DeVos in a letter Friday.

“The people who will be harmed most by these sanctions are the low-income students who rely on federal financial assistance to attend college,” the lawmakers wrote.

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GOP budget would mean billions in cuts for higher ed

Many cuts proposed by Trump have been avoided in House appropriations bill, but GOP budget resolution could lead to major changes to student aid.

Excess credit hour policies increase student debt

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A new research paper finds that excess credit hour policies don’t lead to completion, just more student debt.

Larger Pell Grant Voted Down in Committee

House appropriators Wednesday voted down a proposed amendment to increase the maximum size of the Pell Grant during a markup of a funding package that included education spending.

The package approved by the appropriations committee takes $3.3 billion out of the Pell Grant surplus while leaving the maximum grant flat at $5,920 for the 2017-18 academic year -- the first time in six years the size of the award has not increased.

Representative Mark Pocan, a Wisconsin Democrat, called for the committee to allocate those cuts from the program surplus to increase the size of the grant by $135. Pocan and other Democrats argued that money taken out of the Pell surplus should be reinvested in the program. But the amendment failed on a party-line vote.

A coalition of 40 higher ed and civil rights groups, including the Institute for College Access and Success and the American Federation of Teachers, sent lawmakers a letter this week arguing against the cuts to the Pell surplus. The groups pointed out that the cut came on top of $1.3 billion removed from the surplus in a May spending agreement for fiscal year 2017.

"Cutting an additional $3.3 billion in [fiscal 2018] would put much‐needed investments to strengthen the Pell Grant further out of reach, and place the program at risk of future cuts to grant amounts or eligibility that would exacerbate student debt and limit access to higher education," the groups said.

A House GOP budget resolution introduced this week claimed that the Pell program was on "shaky financial ground" and hinted at reform proposals that would restrict access to the program.

Also during the markup Wednesday, lawmakers voted down an amendment from Representative David Price, a North Carolina Democrat, to restore funding for the Fulbright-Hays international education program, which funds travel and research abroad by doctoral students. The appropriations package zeroed out funding for the $7 million program.

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