Fighting Fraud -- or Impairing Access?

Governor’s proposed changes in N.Y. aid program aim at for-profit abuses, but may harm low-income students, critics say.
January 18, 2006

Gov. George Pataki on Tuesday, proposed several changes to New York’s Tuition Assistance Program that experts say could drastically curb financial aid fraud at for-profit institutions. But the changes would also restrict the flow of aid to students from low-income families and at community colleges, advocates for students say.

Currently, to receive a TAP award -- which can amount to up to $5,000, depending on the academic year a student begins study -- students must meet several requirements. They must be legal residents of New York; take at least 12 credits a semester; and have either graduated from high school, have a GED, or have passed a federally approved exam demonstrating the student can benefit from the education offered. They also must maintain at least a cumulative "C" average after receipt of two annual payments and be charged at least $200 tuition a year.

Officials with the Commission on Independent Colleges and Universities, which represents more than 100 private nonprofit colleges in New York, said Tuesday that the federally approved exam, otherwise known as the "ability to benefit" test, has been abused by commercial institutions that sometimes admit unqualified students in an effort to get financial aid dollars from the state government. Last month, The New York Times reported that officials at a for-profit college known as the Interboro Institute often manipulated student financial aid forms and aided them in cheating on ability to benefit tests. This month, the institution's parent company said the state had imposed enrollment limits pending a continuing investigation.

According to a source with the New York State Division of the Budget, Pataki had the for-profit fraud issue in mind on Tuesday when proposing that institutions must "pre-finance" awards for first-time applicants to the Tuition Assistance Program in 2006-7 who are admitted without having a high school diploma, including those who have achieved a passing score on ability to benefit tests. Institutions would not be reimbursed by the state for the pre-financing costs until the student completed 24 credit hours or its equivalent.

The idea, said a source familiar with the Interboro case, is that for-profit institutions would not be able to reap financial benefits from the state without having the pre-financed dollars available to support a student for almost two years. The source said that the number of students admitted to nonprofit institutions under the ability to benefit provision is exceptionally low, so the new rule would not cost public and private institutions much money.

Pataki estimated that the annual cost savings from this measure would amount to about $30 million.
In addition to focusing on for-profit fraud, the governor also wants to redefine full-time study as 15 credits per semester (up from the current 12 credits) for receipt of a full TAP award. Students taking at least 12 credits but fewer than 15 credits would receive 80 percent of a full TAP award.

This measure, which Pataki estimates would save the state about $50 million, has drawn concern among experts who say that many community college students and some students at open-access four-year institutions could be adversely affected, since they often cannot take a full-time course load due to work and familial obligations.

Pataki proposed increasing state operating aid for State University of New York's and City University of New York's community colleges to $2,450 per student, an increase of $100 per full-time student.

Concerns about low-income students also emerged on Tuesday. “The governor’s higher education budget proposal will have the biggest impact on the state’s poorest students," Miriam Kramer, the higher education coordinator with the New York Public Interest Research Group, said in a statement. "Proposals to … restructure TAP are simply fiscal gimmicks that borrow from students to balance the state budget.”

Kramer was also concerned that 2006-7 proposed budget recommends allowing SUNY to raise tuition by $500 and calls for an automatic annual tuition increase tied to a price index for SUNY and CUNY.

Other highlights of Pataki’s proposal, which provides over $9.6 billion for the state’s public and private institutions of higher education, $9.6 billion proposal follow:

  • Recommends a gross operating budget of $3.1 billion for SUNY’s state-operated colleges, an increase of $115 million, or 3.9 percent. Taxpayer support would total $2 billion — an increase of $34 million, or 1.8 percent.
  • Recommends a gross operating budget of $1.4 billion for CUNY’s four-year colleges, an increase of $72.8 million, or 5.4 percent. Taxpayer support would total $775.3 million -- an increase of $27.2 million, or 3.6 percent.
  • Would provide $6 million in first-year funding for the Empire Innovation Program, designed to attract 200 new research faculty to SUNY over a five-year period. It would also provide $5 million for the innovation program to support critical research projects, academic programs and Master Plan Initiatives at CUNY.

CUNY officials offered a guarded assessment of the Pataki budget. Chancellor Matthew Goldstein said the university "deeply appreciated" the governor's overall budget support and his recognition of its "successful efforts over the last six years to increase standards, attract better prepared students, increase enrollments, and continue serving a diverse and talented student population."

But Goldstein said the university was carefully examining the impact that the increase in the credit hour requirements for the TAP program would have on its many students "who must juggle family responsibilities with full and part-time work."


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