NASFAA Task Force Report on Free College Plans

After a debate over addressing the cost of college occupied much of the Democratic presidential primary, the National Association of Student Financial Aid Administrators assembled a task force in June to assess both existing and proposed free college plans.

NASFAA released the findings of the task force Tuesday as hopes of a national free college plan appeared largely dead but New York unveiled its own version of the proposal that was a key part of Hillary Clinton's presidential campaign.

The task force reviewed 11 plans -- four national, five state and two on the local level. It found many common elements between the various proposals and plans already in place. And the task force members found food for thought in the implications of each of those plans. Among those findings, the report concludes that any free college program will likely be built on existing aid programs. So reducing the complexity of the existing aid process should be included in plans in the works or developed in the future. The report also finds that new programs should better coordinate federal, state, local and private resources.

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Campus financial aid offices sort through income discrepancies

Months into the first year of an early FAFSA campaign, some campus financial aid offices are forced to sort out discrepancies arising from switch to prior-prior year income data.

Delayed Release of Gainful Employment Template

Last week the U.S. Department of Education announced a delay in the release of an updated template colleges are required to use next year to make gainful employment disclosures. The gainful employment regulations, which went into effect last year, set performance standards for the ability of graduates of vocational programs to repay their federal student loans. The rule applies to for-profits and non-degree programs at community colleges and other nonprofit institutions.

The department in November released its first batch of gainful employment data, which it plans to use to enforce the rule. The public release didn't include programmatic numbers, and the disclosure template is not slated to be available until the tail end of January, the department said. Colleges will have at least 60 days to post the required information once the template is out. Prior disclosure requirements remain in effect under the 2016 version of the template. But experts said specific gainful employment data might not be publicly available until the new template is out.

Congressional Republicans have been critical of the gainful employment rule and likely will seek to roll it back, or at least portions of it, probably with the backing of the incoming Trump administration.


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Withholding Social Security to Repay Student Debt

The federal government is withholding a portion of Social Security benefits from a growing number of older Americans to cover defaulted student loan debt, according to a new report from the U.S. Government Accountability Office. This so-called offset accounted for about $171 million of the $4.5 billion in defaulted student loan debt that the U.S. Department of Education collected in 2015.

The report found that among older borrowers (age 50 and older) who were subject to the offset for the first time between 2001 and 2015, about 43 percent had held their student loans for 20 years or more. And three-quarters of these older borrowers had taken loans only for their own education, with most owing less than $10,000.

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ABA Sues Education Dept. on Loan Forgiveness

The American Bar Association is suing the Department of Education over the denial of Public Service Loan Forgiveness to four attorneys employed at the association and previously approved for the program.

The lawsuit claims that three plaintiffs received employment verification for the program and a fourth believed she qualified because she worked at a nonprofit employer certified by the department before it dropped the ABA and other public interest law organizations from the program. The ABA says in the lawsuit that qualifying as an eligible employer under PSLF its essential to its recruitment and retention efforts. The lawsuit was filed after multiple attempts to resolve its eligibility with the department, the association said in a release.

Public Service Loan Forgiveness was enacted in 2007 to allow borrowers of federal direct student loans working in public service careers to have their loans discharged after 10 years and making 120 qualifying monthly payments under an income-driven repayment plan. Data released by the department in August showed that more than 430,000 student loan borrowers had submitted at least one employment certification form required to qualify for the loan forgiveness program.

"The PSLF program promised these dedicated lawyers a chance at financial stability in return for doing public service work," said ABA President Linda A. Klein. "After following the rules, these people had the rug pulled out from them."

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Federal Aid Cut to For-Profit Law School

The U.S. Department of Education announced Monday that it would block federal student aid funds to Charlotte School of Law as of Dec. 31, a major blow to the viability of the for-profit institution.

The American Bar Association placed the law school on probation last month, citing its failure to comply with standards that a program only admit applicants likely to succeed and pass the bar exam.

The department noted Charlotte's failure to comply with its accreditor's standards as well the department's regulations. And it said the law school had made substantial misrepresentations to students about the program's accreditation and the likelihood of graduates to pass the bar exam.

“The ABA repeatedly found that the Charlotte School of Law does not prepare students for participation in the legal profession. Yet CSL continuously misrepresented itself to current and prospective students as hitting the mark,” Under Secretary of Education Ted Mitchell said in a statement. “CSL’s actions were misleading and dishonest. We can no longer allow them continued access to federal student aid.”

The law school received $48.5 million in federal student last year, mostly from federal student loans. The program has until Jan. 3 to submit evidence to dispute the findings of the department.

A statement released by the law school to The Charlotte Observer said that the institution had "no warning" that the action was about to be taken, nor an opportunity to discuss the penalties with federal officials. The statement added that the law school would respond to the federal complaint and "protect our students."

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New Federal Loan Counseling Experiment

The Department of Education Thursday announced an experiment to find the best loan counseling services for student borrowers.

The department asked 35 public two-year and 14 public four-year institutions to test the effectiveness of required loan counseling for student borrowers. The announcement follows remarks from Under Secretary Ted Mitchell over the summer that the department was considering giving a handful of institutions the ability to require loan counseling using its experimental sites authority. Mitchell told attendees at the National Association of Student Financial Aid Administrators conference that the department wants to understand not just whether required loan counseling is effective but what kind of counseling is most effective -- whether that means in-person counseling or regular electronic communication.

The department has advised colleges and university financial aid offices that after completing entrance counseling they cannot require students to receive further guidance as a condition of taking out additional federal direct student loans.

Half of the 100,000 students participating in the experiment at the invited institutions will be placed in control groups, while another half will be assigned to receive additional forms of counseling chosen by the institution, according to a release from the department.

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Commission Report on Higher Education Financing

The University of Virginia's Miller Center and the affiliated National Commission on Financing 21st Century Higher Education on Wednesday released a report making the case for how to best fund increased college credential production in the United States.

The Miller Center in 2014 created the commission with funding from the Lumina Foundation to develop recommendations for long-term, sustainable financial models for higher education. The commission, which was led by a bipartisan group of former lawmakers and college leaders, generated 10 white papers by higher education experts. For example, two of the papers called for more state support of public higher education to go to open-access colleges and need-based aid.

The commission's final report drew from the papers. It included nine recommendations:

  • Increase federal and state institutional support;
  • Enhance state revenue to support higher education;
  • Stimulate the development and implementation of low-cost education delivery models;
  • Encourage productivity in the postsecondary system;
  • Create incentives for students to graduate on time;
  • Help students and their families make better decisions;
  • Increase and reform financial aid to target low-income students;
  • Develop additional private funding;
  • Take advantage of private-sector programs.

"While the U.S. higher education system is still the envy of the world, the nation is clearly at a major crossroads given the increased income inequality and the fact that many workers feel left behind economically," Mike Castle, commission co-chair, former Republican governor of Delaware and former U.S. congressman, said in a written statement. "It is our hope that national and state policy leaders gain valuable insights and policy direction from our work to build stronger federal, state, business and higher education partnerships focused on higher degree and certificate attainment rates."

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Activists and borrowers call on Obama administration to provide debt relief to defrauded students

Education Department officials say they will work through Jan. 20 to review claims of defrauded students, but borrowers and advocates call for more urgency.

Education Secretary Drops Recognition of Accreditor

In an expected move, John King Jr., the U.S. secretary of education, on Monday made the Education Department's final decision to terminate its recognition of the Accrediting Council for Independent Colleges and Schools (ACICS). The council is a national accreditor that oversees 245 institutions, many of them for-profits, which enroll roughly 600,000 students and collectively received $4.76 billion in federal aid last year.

ACICS had accredited many Corinthian College locations as well as ITT Technical Institute. King, citing "pervasive compliance" problems, followed through on a federal panel's decision to nix the council for failing to protect students and taxpayers from fraudulent and underperforming colleges. The council had appealed that decision, which the department backed previously and confirmed with King's decision this week. In a written statement, ACICS said it would "immediately file litigation seeking injunctive and other relief through the courts."

The colleges accredited by the council have 18 months to find a new accreditor or risk losing access to federal aid. Many have been scrambling to be accredited by other agencies, particularly by the Accrediting Commission of Career Schools and Colleges.

In the meantime, the department on Monday said it was adding new conditions for ACICS-accredited colleges to remain aid eligible. Those measures include monitoring, transparency, oversight and accountability requirements. The department said the conditions "establish triggers tied directly to milestones in the accreditation process to ensure that institutions not on track to receive accreditation from a federally recognized accrediting agency within 18 months are subject to progressively stronger student and taxpayer protections."

Council-accredited colleges have 10 days to agree to the new conditions or they will no longer be able to receive federal aid. The colleges must submit teach-out plans as part of the department's terms.

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