College Affordability Now

Great news! As a result of our efforts, this morning the Department of Education released a draft regulation on the gainful employment issue. What's more is that this regulation has been released in enough time to ensure it is finalized and in place in time to protect this year's class of students. You can read the full draft at the Department of Education's website.

This draft takes many positive steps towards ensuring that our nation's students will be protected against deceptive practices by for-profit institutions. The regulations propose that a program's loan repayment rate would include both students who both do and do not finish, which is a much more accurate way of measuring student success. Also, the regulation provides that an independently verified data will be used to determine the debt-to-earning measure.

However, though this progress is positive, the regulation still lacks clarity on a definition of gainful employment, meaning there is no metric to determine how successful students from for-profit programs are post-graduation. It is essential that a clear definition of gainful employment be included in the final version of this regulation so that it is both enforceable and more apt to address the problems with many for-profit programs that over promise and under deliver.

We encourage you to comment on this draft regulation and urge the administration to include a clear definition of gainful employment in its final draft. For information on how to officially comment on the regulations, visit: www.regulations.gov(the Regulation ID is FR Doc # 2010-14107).

Please continue to check our website: www.collegeaffordabilitynow.org for updates.

A report released last week by the Georgetown University Center on Education and the Workforce demonstrated that the United States is on a dangerous path. The report concluded that based on projections on the growth of the work force, not enough students are completing college. The study found that, “by 2018, we will need 22 million new college degrees—but will fall short of that number by at least 3 million post¬secondary degrees, Associate’s or better. In addition, we will need at least 4.7 million new workers with postsecondary certificates. At a time when every job is precious, this shortfall will mean lost economic opportunity for millions of American workers.”

To correct this problem, we not only need to encourage our students to pursue post-secondary degrees but we need to provide more financial support to students that choose to get post-secondary education and to the schools that need to grow their populations. If we do not invest in higher education now, specifically in community colleges and career training programs, our nation will fail to meet the challenges of the global economy and our economy will inevitably suffer.

Unfortunately, the recent trend has been to dis-invest in higher education as states face recession induced budget crises and the federal government pulls back on needed help

To read the full report visit: http://cew.georgetown.edu/jobs2018/ and for updates and information on how you can take action, keep visiting this site and follow our Twitter feed (@CampaignforCA).

If someone had told you five years ago how to prevent the financial crisis that has recently devastated the United States, wouldn’t you listen? Well, that just may be the situation the country currently faces with regard to the for-profit education industry, according to one Wall Street veteran.

In a recent speech, Steven Eisman, portfolio manager of the FrontPoint Financial Services Fund, a man who was credited with predicting the financial fallout created my sub-prime mortgage companies, had this to say about the for-profit education industry:

“Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong. The For-Profit Education Industry has proven equal to the task.”

Eisman explained the problem saying:

“The for-profit industry has grown at an extreme and unusual rate, driven by easy access to government sponsored debt in the form of Title IV student loans, where the credit is guaranteed by the government. Thus, the government, the students and the taxpayer bear all the risk and the for-profit industry reaps all the rewards.”

So this time, will we pay attention? Will we act now to save the United States from yet another financial disaster?

To read the full text of Steven Eisman’s speech go to: http://www.nypost.com/p/news/opinion/opedcolumnists/subprime_goes_to_col...

For more information on how you can take action now, keep checking this site and our Twitter feed (@CampaignforCA) for updates.

The draft regulations issued by the Department of Education last week were lacking a key provision that would define gainful employment. In short, gainful employment is a term that describes the ability of students to find jobs post graduation that are both in their field of study and provide a salary that corresponds to the income necessary to pay back the amount of loans they took out to cover the cost of tuition. As it stands, all schools are required by law to prepare their students for such “gainful employment” yet there is no official means of measuring whether or not they do so.

As a result, many questionable, for-profit institutions have been able to lure students into programs that are uncertified, and lacking in substantive content, making it nearly impossible for these students to find suitable employment after graduating.

While the Department of Education debated the gainful employment issue in the weeks leading up to the release of their set of new regulations, when the regulations were released they did not include rules to enforce the gainful employment requirement. The Department of Education noted that they are continuing to examine the issue and hope to release a second set of regulations regarding gainful employment in the coming weeks.

It is essential that the government issue their regulations on gainful employment as soon as possible, so that they may be finalized by November 1st and go into effect for the 2011 school year. If they do not finalize the regulations in time, students will continue to be subject to the deceptive practices of certain for-profit programs for another year.

We must act now to ensure that these regulations are issued without delay. Write to your representatives today and urge them to issue a definition of gainful employment now. Visit http://protectstudentsandtaxpayers.org/ to find out how and keep checking our blog and twitter (@CampaignforCA) for updates on the status of gainful employment.

Last Wednesday the Department of Education released a draft of new regulations aimed at curbing fraud and abusive marketing practices in the for-profit education industry. The regulations also included other provisions benefiting students seeking Federal financial aid. While the regulations below are still open to revision and commentary in the coming weeks, here are just some of the ways the regulations in their current form would help America’s students:

• Any student without a high school diploma would be able to apply for aid after completing six credits of college work
• Filling out a student’s FAFSA would be made easier by greatly reducing the amount of information students need to provide
• The Department of Education would have more authority to take action against institutions that were misleading students about the value of educational offerings through deceptive marketing and recruitment tactics
• The regulations would remove “safe harbor” provisions which currently provide a loophole through which an admissions counselor can encourage students to take out loans they cannot afford or enter programs for which they are not qualified
• If a student needs to repeat a course, they now would be able to apply that course towards “full time student” status, necessary for most financial aid rewards
• Students in the greatest need would be able to receive their aid funds earlier in order to allow them to purchase books and supplies using this money

These changes are ones that would certainly improve the ways that students both obtain and use financial aid, and protect them against many deceptive practices currently in place in the for-profit education industry. You can read about the proposed regulations in detail here: http://www.ed.gov/news/student-aid-rules-protect-borrowers-and-taxpayers.

Still, the regulations are missing a critical component needed for protecting students against fly-by-night for-profit institutions: standards for measuring gainful employment. Without specific standards whether or not students receive opportunities post graduation that are congruous to their tuition investment in the school, many for-profit institutions can accept tuition from students without providing them with virtually any viable job skills. Keep checking this blog and our twitter feed (@CampaignforCA) for updates on this issue.

Early Friday morning, Congress finally settled on a joint version of the financial reform bill. The Campaign for College Affordability applauds their work, and is happy to report that included in the bill are crucial provisions to help protect students from predatory lenders.

The bill includes a provision for the creation of a Consumer Financial Protection Bureau. This bureau will be given the authority to write and enforce regulations on, among other groups, private student loan lenders. This is excellent news for students who for too long have been subject to the deceptive marketing ploys and unregulated lending practices. As a result of the lack of oversight on the private loan industry, many students who are not aware that they may qualify for more secure federal aid, end up taking out private loans that they cannot afford, and accumulating debt that they cannot pay off or even discharge in bankruptcy. This problem only compounds the crisis of rising higher education costs in our country, at a time when our nation’s economy demands more and more graduates with college and advanced degrees.

Another advantage of this new bureau is that it will provide more protections for those students who hold credit cards. Much like the authority it will be given to regulate private loan companies, allowing them to monitor interest rates and keep student from falling victim to predatory marketing strategies that encourage them to accumulate multiple credit cards, and in turn, significant credit card debt.

The creation of the Consumer Financial Protection Bureau is the first of hopefully many steps that the government will take to help protect our nation’s students and ensure that anyone who chooses to can attend college affordibly.

The final version of the bill is expected to be passed by the House and Senate next week and submitted to President Obama for his signature by July 4. For more updates on the financial reforms and the development of the new bureau, follow us on Twitter @CampaignforCA and keep visiting this blog.

The Campaign for College Affordability has joined with others to strongly support new Department of Education efforts to implement comprehensive standards for compliance with the “gainful employment" standard established by Title IV of the Higher Education Act of 1965.

As it stands, too many for-profit educational institutions are taking advantage of hard-working American students by encouraging them to take out expensive loans to cover high tuition for educational programs that may not result in job offers after graduation or sufficient income to ever pay off those loans. The consequence of this is that these schools end up profiting off the massive debt they are forcing upon their students. What’s more, the quality of many of these schools’ programs is so poor, that their students don’t have a reasonable chance of succeeding in the job market after graduation.

The burden of this problem falls very heavily on students enrolled in for-profit vocational and certificate training programs. Many of these students are working mothers and fathers, who take the jobs they can during the day while going to school at night to prepare themselves for something that will better support their families. These are precisely the types of students that cannot afford being bated into massive loan debt by the schools they are attending with little chance of improving the current income situation.

Furthermore, American taxpayers are inadvertently funding these deceptive practices and low-quality academic programs, simply because they qualify as educational organizations and are provided access for government backed loans. Without regulation, these sometimes less than legitimate organizations are quite simply taking advantage of their students and profiting off the taxpayers. The available data puts the problem into clear and alarming perspective. According to The Institute for College Access and Success (http://projectonstudentdebt.org/pub_view.php?idx=537), a full 44% of all student loan defaulters attended for-profit institutions, even though just 7% of all students attend for-profit schools.

Therefore, the Campaign for College Affordability supports the Department of Education’s current efforts to more closely regulate academic programs and for profit institutions to insure that their costs are in keeping with the success of their students. The plan is to do this by imposing standards by which the Department of Education can measure a schools rate of “gainful employment”, essentially the success of a program’s alumni. There are several ways the department has looked at doing this, a recent op/ed by Secretary of Education Arne Duncan (http://www.ed.gov/blog/2010/04/aol-news-op-ed-debate-we-only-want-to-mak...) outlined many suggestions, “including re-examining the relationships between student debt and potential earnings in the occupation students are being trained for, the rates of students completing a program and getting jobs, and the rates of students repaying federal loans.” While it remains unclear which methods the Department will be using, we applaud their efforts on behalf of students and taxpayers. The Campaign for College Affordability will continue to update this blog and our Twitter (@campaignforca) feed with developments on this issue.

There has been much discussion recently about the fight for student loan reform, but now that the legislation has passed, students may still have questions about what this reform means to them. Below is a breakdown of some of the biggest benefits for students included in the legislation’s final form:

1. More Money for Pell Grants: The new bill will increase the maximum amount of money that a qualifying student can receive in annual Pell Grants to $5,550 in 2010. This number is expected to increase annually and reach $5,975 by 2017.

2. Lower Caps on Loan Repayments: While current law allows for student loan borrowers to cap payments at 15 percent of their discretionary income, the reforms will allow borrowers to lower that cap to 10 percent, keeping more money in the hands of students rather than banks. This provision will encourage graduates to enter public service professions such as teachers, social workers, driven by a desire to enter such fields rather than the need to earn more money to cover large student loan debt.

3. Earlier Debt Forgiveness: Students who qualify for the limits above would see their loan balances completely forgiven after 25 years. The new law forgives outstanding student loan debt balances after 20 years.

4. An easier FAFSA financial aid application: The form has been condensed to a simple, two-page document. Planning for textbook costs is now easier as well, the reforms require schools to provide information on textbook costs in advance of the semester.

5. Investment in Community Colleges: The reforms allot $500 million each year over the next four years to Community Colleges. This means more classes designed to prepare students fr jobs in the new economy, more up-to-date classrooms and facilities and greater training and retraining options for the unemployed or underemployed.

These are just a few of the many benefits the new reforms offer students. For more information on what the reforms mean to you, visit the U.S. House Committee on Education and Labor for a state by state rundown of the changes at: http://edlabor.house.gov/blog/2010/03/education-reconciliation-landm.sht..., and keep checking our blog for more updates as the reforms go into effect.

Last week, supporters of student loan reform were able to breathe a sigh of relief as a dangerous amendment to the Senate Wall Street Reform bill was defeated.  The amendment, proposed by Senator Richard Shelby (R-AL), would’ve severely restricted the ability of the Consumer Financial Protection Bureau (created by the bill) to protect student loan borrowers.

As it stands, the administration of private student loans remain largely unregulated.  Financial regulation doesn’t apply to private student lenders because they are not operating within the government system.  As such, there is little to no protection for students or parents of students that take out private loans.  Federally backed loans or direct loans have more protections and are also helped by reductions in debt repayment for public service or lower income borrowers.  Private student loans are one of the only types of debt that cannot be discharged in bankruptcy.  What’s more is that there are virtually no limits on the interest rates private companies can charge, and with these companies encouraging students to take out bigger and bigger loans, students today are faced with essentially insurmountable debts after graduating. 

The proposed Consumer Financial Protection Bureau aims to combat this issue.  Under Senator Chris Dodd’s (D-CT) Wall Street Reform bill, the bureau would be given the authority to independently regulate private loan companies to the aim of protecting consumers.  This would include giving the bureau the ability to potentially cap interest rates, and extend protections for federal loan borrowers to borrowers of private loans.  The amendment proposed by Senator Shelby would have essentially stripped the bureau of all funding, authority, and oversight, rendering it powerless against the country’s loan powerhouses or fly by night lenders and providing no protection to student borrowers. 

Now that the Shelby amendment has been defeated, the bill moves on to be further debated by the Senate.  For updates on the bill, other amendments, and the debate continue to check our blog, or follow us on Twitter @CampaignforCA.

FOR IMMEDIATE RELEASE:
March 19, 2010

Contact: Robert Brandon, Campaign Coordinator
202-331-1550 | rmbrand@robertbrandon.com

Budget Reconciliation Package to Invest in Students, Workers, Families
Coalition Commends Inclusion of College Access and Affordability Measures in H.R. 4872

Robert Brandon, Coordinator of the Campaign for College Affordability, released the following statement in response to the unveiling of H.R. 4872, The Health Care & Education Affordability Reconciliation Act of 2010:

“I applaud Speaker Nancy Pelosi and Chairman George Miller of the Education and Labor Committee, who recently announced the inclusion of college affordability measures into the 2010 reconciliation budget bill. By integrating the health reform and student aid bills, the House leadership has displayed an unending commitment to students, workers, and their families.

“This legislation comes at a critical time for our country.  America is falling behind in completion rates, while allowing debt to put financial strain on college students and graduates. Meanwhile, there is a huge gap in the middle-skill level work force, and predictions show that we will fail to meet our labor needs by 2025 with a shortage of 16 million college graduates. Low skill workers need training, and laid-off workers need new skills in order to meet the evolving requirements for success in today’s competitive global economy.

“H.R. 4872 will take the savings from the direct student lending reform and make landmark investments in higher education. The money from eliminating the wasteful subsidies of the FFEL program—approximately $67 billion dollars—will be used to fund an increase in the maximum Pell grant to nearly $6,000 by putting $36 billion into a program that ensures young people the opportunity to attend college.

“The savings will also be used to make investments in Minority-Serving Institutions such as HBCU’s, Hispanic-Serving Institutions, and Tribal Colleges, to aid lower income students in receiving a quality higher education. The bill strengthens the Income-Based Loan Repayment system and allots funding for the Community Access Challenge Grant program. Investments in community colleges amounting to $2 billion will also help ensure fair access and worker retraining through partnerships and new programs.

“Our coalition of student groups, teachers, and workers unites to commend the announcement of this bill, and to urge its swift passage. To vote in its favor would be a historic stride for millions of Americans, helping to make college accessible and affordable to all and to decrease the burdens of education’s high cost and associated debt.”

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