Top Obama administration officials on Thursday held a meeting at the Treasury Department with more than a dozen financial institutions and loan servicing entities to discuss ways to improve the private student loan market. Education Secretary Arne Duncan, Consumer Financial Protection Bureau Director Richard Cordray and Acting Deputy Treasury Secretary Mary Miller were among the administration officials and government regulators who met with executives from the largest student lenders and servicers.
“Participants discussed strategies to assist borrowers in successfully managing their private student loans, including servicing best practices and approaches to private student loan modifications and refinancing,” according to the Treasury Department’s account of the closed-door meeting.
Miller urged the banks and loan servicing companies “to continue their efforts to expand options for repayment in the private student loan marketplace,” the department said. "Private student lenders and servicers can and should do more to offer more affordable repayment options so borrowers can avoid default," Cordray said in a statement after the meeting.
Cordray’s agency has been critical about some practices in the private student loan market. The CFPB previously raised concerns about problems with the servicing of private student loans, especially with regard to military service members. Starting in March, the bureau will begin more closely monitoring of the largest student loan servicing companies. Private lenders and loan servicers have also drawn scrutiny from consumer advocates and several members of Congress. A group of Senate Democrats is pushing legislation by Sen. Dick Durbin of Illinois that would increase regulation of private student loans and how companies service those loans.
Attending the meeting from the private student loan industry included executives from: Sallie Mae, Wells Fargo, JP Morgan Chase, RBS Citizens Financial, PNC Financial Services, CommonBond, SunTrust Banks, Discover Financial Services, American Education Services (also known as the Pennsylvania Higher Education Assistance Agency), Great Lakes Higher Education Corporation, and the Missouri Higher Education Loan Authority.
Most prepaid tuition programs were pitched to cover public four-year institutions and, in some cases, private colleges. But in Florida, the state is increasingly promoting -- and finding people receptive to -- prepaying for community college degrees, The Orlando Sentinel reported. Prepaying community college costs less than prepaying for a state university, but now most of Florida's colleges also offer four-year degrees.
Critics charge that the Educational Credit Management Corporation uses "ruthless" tactics to collect student loans, ignoring legitimate and serious medical issues (such as cancer) in evaluating borrowers' ability to repay, The New York Times reported. Educational Credit is the main entity used by the federal government to contest borrowers' right to try to declare bankruptcy. Officials of Educational Credit defended their analyses and its defenders say that other borrowers and taxpayers benefit when everyone repays loans.
To: President Barack H. Obama Subject: Missing from Your College Plan: 45 Million Peanut Butter Sandwiches. Per Week.
Forty-five million peanut butter sandwiches a week?
This 45 million idea came to me the other day, at a sink. I was washing peanut butter from the wooden paddle hungry students use every day to make peanut butter and jelly sandwiches at the Boston community college where I work. Bread donated via Panera and the Minute Man High School Parents Association. PB&J bought with donor funds.
Why not, I thought, one peanut butter sandwich per school day for each of the nine million students (source) on a Pell Grant? How many of these are the same students who were eligible for free and reduced lunch in high school? No one knows and no one is counting. How many are from households on food stamps? No one’s asking, either.
Why not, then, 45 million peanut butter sandwiches at colleges each week? Until we come up with a better idea.
In your proposed evaluations and rankings of colleges, where’s hunger? Or poverty? Is hunger an obstacle to college completion?
We don’t know. Hot lunches are better, but let’s start simple. Just give the nine million on Pell Grants a peanut butter sandwich at school every day.
Most? Many of these students, Mr. President, received federal free and reduced lunch in high school, didn’t they? Why? Because their families cannot afford enough food for the family. Why have we, the people, snatched lunch from these low-income students going on to college?
“Why?” Students are arriving on college campuses without having eaten that day. Or even the day before.
Where? My office and others at Bunker Hill Community College in Massachusetts (12 electoral votes). I have credible reports of college hunger in Wisconsin (10 electoral votes), Florida (27 EVs), New York (31 EVs), California (55 EVs), Louisiana (9 EVs), New Jersey (15 EVs), and New Mexico (5 EVs).
Peanut butter? Let’s take a page, a few tablespoons from public health and acute hunger. Public health has long known of the astonishing effects from this simple dose of peanut butter, plumpy’nut, nourimandba.
My late discovery, the peanut butter solution, beyond that sink, arrived in the new book, To Repair the World, by the public health leader Paul Farmer. Listen: “One remedy for acute malnutrition is known as ready-to-use therapeutic food – RUTF for short. Colleagues from Medicins Sans Frontieres showed in Niger that a miraculous and tasty peanut paste could save the lives of most children with moderate and acute malnutrition.” Click here for more on RUTF. (Yes, sounds like, but not the same as, the AUMF that has been dogging you so, Mr. President.)
Acute malnutrition? In the U.S.? In colleges? Quibble over semantics as you wish, Mr. President. I’m talking about, say, the mother of two who showed up in my office late one afternoon this summer. She told me she and her children had had nothing to eat that day. Or the day before.
Exaggeration? Let’s compare these two statements, one from U.S. public higher education, one from global public health.
Listen: To President Madeline Pumariega of the Miami Dade College (total seven-campus enrollment 175,000) Wolfson campus: “When a student is hungry, he does not feel safe, and it is hard to help him synthesize class material. We have to meet students’ basic needs in order for them to fully concentrate on assimilating the information in a class in a way that they can apply it, learn, and take it forward.” That’s in a report: Clearing the Path to a Brighter Future: Addressing Barriers to College Access and Success, published this summer by Single Stop USA and the Association of Community College Trustees, authored by Sara Goldrick-Rab, Katherine Broton, and Christin Gates of the University of Wisconsin.
Listen: To Medicins sans Frontieres, from the Farmer book: “An example: one of the lessons we’ve learned since the early days is that it’s difficult, sometimes impossible, to treat patients who don’t get enough food to eat.” (Emphasis added.)
Mr. President, let’s connect some dots.
Wouldn’t the same go if we rephrased: “It’s difficult, sometimes impossible, to educate students who don’t get enough to eat.”
Another dot: Don’t the same students eligible for federal free and reduced lunch through high school need lunch at college, too?
I mean even me, a sometime English professor and an obscure columnist, can see the overlap across Pell Grants, free and reduced K-12 lunch, and food stamps. Aren’t all these programs synonyms for poverty for many of the same people?
Any critics? “But if people are on food stamps, then they aren’t hungry, right?” A knuckleheaded Hill staffer, happy to tell me which prep school he had attended, said this to me last spring. Reply: Food stamps seldom last the whole month. Hummus can counter peanut butter allergies.
Listen: To the national anti-poverty NGO Single Stop USA. “So far Single Stop has sites on 17 community college campuses across the country. In 2012, Single Stop USA and its community college partners helped over 2,300 students nationwide access more than $6 million in food stamps. Roughly half of the people who received a public benefit through Single Stop in 2012 received food stamps. These numbers help illustrate how widespread the issue of hunger and poverty is on community college campuses.”
Listen: To Sadhana Dharmapuri, M.D., Medical College of Wisconsin, Adolescent Medicine: "Food insecurity and its complex effect on the individual, such as, increase in psychological stress, the physiological changes due to starvation, as well as, other financial hardship due to lack of food is not clearly defined for individuals pursuing a post-secondary education. Although there is data identifying the association of starvation with cognitive functioning, little is known how these changes affect college retention and completion rates, and whether lack of food and/or access to food, has a long term effect on potential learning, earning, and health outcomes.”
Listen: To the April 2011 Study Food Insecurity at CUNY (City University of New York): Results from a Survey of CUNY Undergraduate Students. The study invited a random sample of 6,883 students to participate, of whom 1,086 responded to USDA-validated survey questions.
39.2 percent of students sampled reported experiencing food insecurity during the previous 12 months. About twice as many (45.1 percent) reported that they worried they would not have enough money for food as reported they often or sometimes went hungry for lack of money (22.7 percent).
In addition, 19.1 percent reported that they knew of other students who had food or hunger problems.
Listen: To me? Bunker Hill Community College this week will have its 20th Mobile Market/Food Pantry in as many months. The Greater Boston Food Bank brings a truckload of food that nearly 200 students each time have collected for themselves and their families. Bunker Hill receives and distributes each weekday several cases of leftover but fresh bread from Panera. I shall persist and admit that I have again keep failed to persuade the American Association of Community Colleges to count how many of the nation’s 1,200 community colleges have services to address student hunger. The American Council on Education is helping raise these questions.
My proposal? Nourimandba, peanut butter, as 45 million peanut butter sandwiches that we, the people, provide each week. Estimate: Nine million times five days a week. Some distributed Saturdays and Sundays. As a start, I’m willing to assume that the Pell students would be grateful for some food. (Oh, have you seen the Weekend Backpack Program in Cambridge, Mass., where you and Secretary Duncan went to school? This sends a backpack of food home so that eligible public school students can eat during the weekends.)
Listen: To me? Another peanut butter, plumpy’nut story. I was closing up one evening last summer. We hadn’t been able to find a shelter for a homeless student. The student kept telephoning shelters. Bread and peanut butter I had. I made him five more peanut butter and jelly sandwiches for the weekend. I put them into a bag for him. What the heck? I put the jar of peanut butter and a loaf of bread and a plastic knife into the bag, too. "All this?" he asked me. "Sure. Just finish your education, run for president, and make sure no one in the U.S. is ever homeless again," I said.
"My dream is to have no homelessness for students in college or any young people," he said.
"What's your plan?"
"I'd have shelters by age. There should be shelters for middle school students, then for high school, then for college," he told me.
We just never know. I gave him paper, pens and a folder. "Come back Monday with your plan, and we'll send it to Senator Elizabeth Warren,” I said.
The U.S. Senate on Wednesday gave final approval to a compromise budget bill that sets federal funding levels for the rest of this fiscal year and next year.
Lawmakers passed the deal on a 64-36 vote and sent it to President Obama, who supports the measure and is expected to sign it into law.
Higher education advocates supported the legislation because it is expected to alleviate automatic, across-the-board cuts to research funding and campus-based student aid programs. The bill increases the overall pool of money available to those parts of the budget, but Congressional appropriators will now have less than a month to hammer out funding for individual programs and agencies.
Part of the legislation passed Wednesday immediately eliminates part of a 2010 student aid law that allowed certain not-for-profit entities eligible for no-bid contracts from the Education Department to service federal student loans. The program entitled those servicers to a minimum of 100,000 borrower accounts, for which the department pays more compared with its accounts with its other, larger loan servicers.
Critics of the program, which included Rep. Paul Ryan, the Wisconsin Republican who helped craft the budget deal, say it is wasteful of taxpayer funds to provide those loan servicers with “special treatment.”
Although Congress has now ended the program, the Education Department announced Wednesday that its existing contracts with the several dozen not-for-profit servicers would remain in effect, meaning there would be no immediate changes for the approximately 3.5 million borrowers whose loans are managed by those entities.
The department also said it would continue plans to allocate another batch of student loans to the not-for-profit servicers next year, so long as Congress allocates the agency enough money to do so. Those allocations will be based on whether the servicers receive yet-to-be-determined minimum scores on their quarterly performance evaluations.
The Education Finance Council, the trade association representing not-for-profit servicers, said it was pleased with the department’s announcement.
“We’re glad the contracts won’t be canceled and will be working with appropriators to ensure sufficient discretionary funds are appropriated,” said Samantha DeZur, the group’s spokeswoman.
A separate provision in the legislation passed Wednesday would cuts the amount of money that guaranty agencies receive for rehabilitating loans in the now-defunct Federal Family Education Loan program.