studentaid

Corinthian Facing Another Federal Investigation

Corinthian Colleges said Friday that the U.S. Department of Justice is investigating whether the company defrauded the federal government.

The investigation, under the False Claims Act, concerns “allegations related to student attendance and grade record manipulation, graduate job placement rate inflation and non-Title IV funding source misrepresentations,” the company told investors. The disclosure comes as Corinthian is also facing three criminal probes by the Department of Justice. Federal prosecutors in California, Florida, and Georgia have all issued grand jury subpoenas to the company. Corinthian is also in search of sources of liquidity as it seeks to sell off and close its campuses as part of an agreement with the U.S. Department of Education. 

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Student Advocacy Group Calls for Changes to Work-Study

The Federal Work-Study Program needs to be revamped to help serve more low-income students, says a report released Monday by Young Invincibles, a student advocacy group.

The group calls on Congress to replace the existing formula for distributing federal work-study money to campuses with a methodology that rewards institutions that enroll and graduate large numbers of low-income students. Under the current program, the group said, the most expensive private institutions that have been in the program the longest receive the most funding at the expense of many public institutions that serve larger populations of low-income students.

The report also said that the work-study program should require that colleges place students in jobs that are better aligned with their career interests and academic programs.

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Federal regulators accuse Corinthian Colleges of predatory lending scheme, strong-arm debt collection tactics

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The Consumer Financial Protection Bureau's lawsuit accuses the troubled for-profit college operator of luring students into predatory private loans and illegally harassing them to repay the debt.

Comic Targets GOP House Member Over For-Profits

Liberal comedian Bill Maher announced on his show last week that he would work to unseat Representative John Kline, the Minnesota Republican who chairs the House education committee. 

The host of the HBO series "Real Time with Bill Maher" cited Kline's support of for-profit colleges -- and the industry's donations to his campaign -- as one of the reasons why he chose to target Kline as part of his "Flip a District" campaign. Maher said he would travel to Kline's Minnesota district and perform a stand-up comedy show in an attempt to swing the seat from Republican to Democratic. 

Kline, after heading off a tough primary challenge earlier this year, is facing Democratic candidate Mike Obermueller, a former state lawmaker whom he defeated in 2012. 

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Education Finance Lobbying Group Names New Head

One of the main lobbying organizations that represnts loan servicers and other student loan entities has named its new president.

The Education Finance Council on Monday said that Debra J. Chromy would lead the group. Chromy was most recently a vice president at American Student Assistance. She replaces Vince Sampson, who left the council earlier this year to join a law firm.

The group represents nonprofit and state entities that provide student loans, as well as loan servicers, which have increasingly faced scrutiny in Washington over how well they help struggling borrowers avoid default.

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Authorities Investigate 23 for Possible Aid Scheme

Police at the College of Marin, in California, are investigating 23 people who are suspected of pretending to be students to obtain federal student aid, The San Francisco Chronicle reported. Their plot reportedly involved plans to obtain $200,000, and some of the funds have already been paid out.

 

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Warren Blasts Education Dept. on Loan Servicing Contracts

Senator Elizabeth Warren, the Massachusetts Democrat who has been a leading critic of how the U.S. Department of Education oversees the companies it hires to service federal student loans, indicated Wednesday that she is not satisfied with the department’s effort to overhaul its agreements with those companies. Under pressure from Senate Democrats like Warren, as well as many groups representing students, labor unions, and consumers, the Education Department announced last month that it had renegotiated new contracts with the four main entities it hires to manage payments for federal student loan borrowers.

The new contracts change the payment structure for loan servicers, increasing the rate at which they are paid for accounts in good standing and reducing the amount of money they are paid for delinquent accounts. The servicers will also receive new bonuses if they keep their borrowers’ delinquency rates at certain levels.

At a Senate hearing Wednesday, Warren grilled an Education Department official over the new contracts, asking why the loan servicing companies would be paid more to manage the payments of borrowers in good standing. She cited analysis by Compass Point that showed that Navient, the loan-servicing business that was previously part of Sallie Mae, stood to receive an additional $20 million under the payment structure without making any changes to the health of their portfolio.

Navient has drawn particular scrutiny from Warren and other student and consumer groups. Federal prosecutors earlier this year accused the company of overcharging military service members. It entered into a multimillion-dollar settlement with the Department of Justice, in which it did not admit any wrongdoing.

William Leith, the chief business operations officer for the department’s Federal Student Aid office, said that while the department estimated that the servicers, in aggregate, would receive more money to service loans, the contracts were designed to help borrowers. He said that the Education Department was on track to complete a 120-day review of whether any of its loan servicers, including Navient, had illegally overcharged service member borrowers. That review will be completed in the next several weeks, he said. 

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GAO Urges Pentagon to Better Evaluate Colleges

The U.S. Department of Defense has not done enough to guide the work of the contractor it used to evaluate the quality of colleges where service members enrolled using federal military education funds, the Government Accountability Office said in a report Monday. The Pentagon agreed with the agency's assessment and said it had decided not to renew its agreement with the contractor while it develops a better way of evaluating participating colleges.

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John Oliver Takes on Student Loan Issues

Student loan issues may not seem the ideal topic for comedy, but John Oliver thinks otherwise. Here's a segment on his new show "Last Week Tonight" (and below that you'll see that he highlighted the coverage of a certain higher education publication close to our hearts):

 

 

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Families' student loan debt grows, but rate of increase slows

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Federal report shows families' student loan burden grows while other forms of debt decline, but suggests a slight slowing of the rate of increase in families' college-related debt.

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