Draft rules on campus debit cards would ban certain fees, restrict marketing

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Education Department proposal would ban certain campus debit card fees and restrict the marketing associated with the controversial products. Colleges would have to disclose agreements.

Federal judge orders TICAS to supply emails in probe of former Education Department official

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Federal judge orders college access advocacy group to turn over emails in connection with investigation of former Education Department official. 

New report says Obama ratings proposal will lead to same problems as rankings

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A new paper by the American Council on Education says the Obama administration's ratings proposal is likely to lead to the same negative consequences as college rankings. 

Sallie Mae Says Its Loan Servicing Outperforms National Average

Sallie Mae, under scrutiny from consumer advocates and several lawmakers for how it manages payments for federal student loan borrowers, released new data Tuesday touting the performance of those loans.

The company said that 9.3 percent of the federal direct loans it services were enrolled in an income-based repayment plan at the end of 2013, compared with the previously-released 7.7 percent national rate for all such loans. In addition, Sallie Mae said that the federal loans it serviced were less likely to be in forbearance, comparing the company’s 9.4 percent rate of forbearance with the 11.1 percent rate for all federal direct loan borrowers.

The Education Department has not released such detailed data on how federal direct loan borrowers fare under each of the different loan servicers it hires. Some consumer advocates have charged that loan servicers aren’t doing enough to help struggling borrowers enroll in income-based repayment plans, which allow borrowers to cap their payments as a percentage of their income. Senator Elizabeth Warren of Massachusetts, a Democrat, has specifically called out Sallie Mae’s practices.

Sallie Mae’s release of its data comes as the department is negotiating the renewal of the loan servicing contracts it has with Sallie Mae and the three other main servicers of federal loans.

Under the current contract, the department assigns each of those companies a performance score based on how well, relative to the others, they are keeping borrowers out of default and satisfying different stakeholders. The scores determine how many new loans the department assigns to the companies. Last year, Sallie Mae received the lowest overall score and is therefore receiving the smallest share of new federal loans to manage on behalf of the department. The company performed the second best on the default metrics, but it received the lowest customer satisfaction scores from surveys of students, college financial aid officers, and Education Department employees.

The company’s chief executive officer, John F. Remondi, told investors last year that he is pushing for the department’s allocation methodology to more heavily weight the default metrics.

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New Arizona scholarship program aimed at asset-building for low-income students

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A new scholarship program at Arizona's state universities requires low-income students to have a special savings account -- the sort of asset-building approach that is becoming increasingly popular in some states. 

Appeals Court Reinstates Suit Against Lenders

A federal appeals court has partially revived a whistle-blower lawsuit against several student loan providers accused of improperly inflating their portfolios to obtain higher subsidies from the Education Department.

The case, brought by on Jon H. Oberg, a former Education Department researcher, alleges that a handful of lenders took advantage of a loophole in federal law to collect hundreds of millions of dollars in excess federal subsidies.

On Thursday, the U.S. Court of Appeals for the Fourth Circuit ruled that a lower court erred in dismissing the lawsuit against two of the defendants: the Pennsylvania Higher Education Assistance Agency and the Vermont Student Assistance Corporation. The district court will now have to reconsider whether the case against them can proceed.

But the court also upheld the lower court’s decision to dismiss the suit against the Arkansas Student Loan Authority, concluding that the loan provider was clearly a state entity and therefore can not be sued under the False Claims Act.

Four of the other lenders involved in the case collectively paid $57.8 million in 2010 to resolve their part of the lawsuit.  

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Student advocacy group blames state disinvestment for tuition increases

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Grading states' support for higher education, an advocacy group for students makes the case that legislators and governors are responsible for rising public college tuitions.

House subcommittee approves bill that would cut NSF social science research

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House Republicans pass a measure to cut social science research and place new restrictions on the funding process. 

Congressional Aide Will Lead Private Lender Group

The top education adviser for Republicans on the House of Representatives education committee will leave his post to lead a trade association that represents private student lenders, loan servicers and collection agencies.  

James Bergeron, the director for education and human services policy under House education committee chair Representative John Kline of Minnesota, will next month become president of the National Council of Higher Education Resources, the organization announced Wednesday. Bergeron will succeed the current president of three years, Shelly Repp, who is scaling back his workload at the organization, according to a press release. 

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GAO cites 'serious weaknesses' in federal oversight of debt management system

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The Education Department's oversight of its debt management system has been lacking, say Congressional investigators and the agency's own inspector general. 


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