Financial aid

What we don't know about college student debt

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Despite growing concern over loan burdens, some key data points remain completely unclear -- including how much students borrow, on average, at specific colleges.

CFPB is investigating Corinthian Colleges, possibly focusing on student lending

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The Consumer Financial Protection Bureau enters the for-profit fray with an investigation of Corinthian Colleges, that references the company's loans to students. Will investigation expand?

How student debt became a focus of the presidential campaign

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In the first weeks of the 2012 campaign, Obama and Romney focused not on economic or foreign issues but on the student loan interest rate. Could student debt play a significant role in this year's elections?

Study suggests limitations in CARD Act's effectiveness

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Study turns up mixed reviews in the effectiveness of the CARD Act of 2009, parts of which were intended to protect students from aggressive marketing by credit card companies, on and off campus.

Colleges worry about end of federal aid based on "ability to benefit"

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High school dropouts used to be able to qualify for federal grants and loans based on a basic skills test. That ends in July, and community colleges are worried about what will happen to these students.

Education Department raises hackles over clock hour definition

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The Education Department's take on the definition of "clock hour" programs is too broad and could unfairly cut into federal aid, say a Texas state agency and for-profits.

Obama plan to tie tuition prices to aid eligibility draws criticism

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With Obama proposing to make colleges that increase tuition too much ineligible for some federal financial aid, many say that would only make matters worse.

Higher education proposals included in State of the Union

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In State of the Union speech, Obama calls for keeping student loan interest rates low and warns colleges to stop raising tuition -- or risk losing federal support.

Budget compromise would preserve maximum Pell grant, NIH funding

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A budget compromise would slightly increase funding for the National Institutes of Health and change eligibility for the largest federal grant program for college students.

New U.S. rules on financial aid disbursement will hurt students (essay)

Earlier this summer, the Department of Education proposed new regulations addressing the management of Title IV funds and the distribution of financial aid refunds. As a system with 32 community college campuses that serves nearly 200,000 students, Ivy Tech processes on average 155,000 financial aid balance disbursements each year.

This is a huge undertaking and one that we take very seriously, as students use their disbursements to pay for books, supplies and other living expenses.

Many of our students -- 61,000 of whom receive Pell Grants -- rely on the speedy and safe delivery of their student aid to ensure they can pay their bills and continue their education. Without significant modification, the proposed regulation would create unnecessary challenges for us to provide students with their financial aid refunds in a timely, secure manner. While many provisions of the proposed regulation seek to limit fees and tighten security measures, several aspects unfortunately have the opposite effect.

A Move Back to Paper Check

Today, institutions can decide whether to offer paper checks as an option for disbursement among the other options for electronic disbursement. In the event that students do not choose any method for receiving their funds, they will be mailed a paper check. This method has allowed institutions to encourage and promote electronic delivery, which is a more secure and a timely method for students and institutions. Requiring institutions to provide the up-front option of a check goes against decades of encouraging electronic transfer of funds for many consumer purposes, including government benefits and employee earnings.

This will be operationally challenging for our system, and it also would provide a ready market for check cashing services and their exorbitant fees. Again, other provisions of this regulation seek to limit fee exposure to students. Unfortunately, the requirement to provide paper checks up front will expose many students to check cashing fees.

Increased Risk of Financial Aid Fraud

Under the new requirement, colleges would be limited in what information they could share with their third-party disbursement providers. No data, other than a student’s name, address and email, would be permitted -- information that is too vague and opens up exposure to financial aid fraud.

Without the ability to securely authenticate the identity of the student and share additional information, including the amount of a student's disbursement, third parties would have no way to process these transactions with the level of security and accuracy that they do today. We need to find middle ground on this issue, which could be accomplished by giving third-party providers access to refund amounts and unique, nonpersonal student identifiers.

Federalization of the Disbursement Process

Under the proposed regulations, the education secretary is reserving the authority of the department to operate the credit balance disbursement process -- essentially an invitation for unnecessary complication and delay.

Institutions and their students would be required to use the department’s system, whether or not it met the unique needs of a particular college and despite logistical burdens on both institutions and the department. Additionally, any system developed by the department is unlikely to deal with non-Title IV funds, requiring institutions to have redundant systems for the delivery of this aid, which could lead to more delays and errors.

The distribution of financial aid disbursements to our students is a process we take extremely seriously. Students must receive this aid quickly and securely to ensure they can benefit from the education they receive at Ivy Tech and other institutions across the country.

Like the department, we want to protect our students’ financial well-being and provide the least expensive, least burdensome and most financially secure systems. Unfortunately, despite good intentions, the proposed regulation in its current form would be a step in the wrong direction -- a step many students can’t afford to take.

Thomas J. Snyder is president of Ivy Tech Community College, Indiana’s statewide community college system.

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