APSCU Releases Best Practices in Financial Literacy For All of Higher Education

Financial literacy reflects students’ understanding of how the financial decisions will collectively impact their lives.

Washington, D.C., November 26, 2013—Recognizing the financial challenges in balancing life’s demands with postsecondary education, the Association of Private Sector Colleges and Universities (APSCU) released “Best Practices in Financial Literacy.” The recommendations address ways all postsecondary institutions can provide students with accurate information, financial management techniques, and real-world practices to promote and increase basic, financially responsible behaviors.

“Today, with the growing costs of postsecondary education, financial literacy has become an important component in the lives of many students. Our institutions are committed to having these conversations with prospective, current and former students in the management of their finances,” said Steve Gunderson, the president and CEO of APSCU. “Financial literacy will empower students to make appropriate decisions during and after their college studies; and throughout life.”

To develop these best practices, APSCU established a Task Force in Financial Literacy, which convened a broad group of professionals who share in the commitment to provide students with the resources to lead financially responsible lives. The task force was led by Co-chairs Jennifer Hoepner, director of alumni support at Herzing University, and Tommy Sims, senior debt management program advisor of ECMC Solutions. The methods and techniques were cultivated from APSCU’s member institutions that meet the needs of the extremely diverse group of students interested in attending a postsecondary institution.

These best practices offer all postsecondary institutions examples of programs that best serve the growing new traditional student population. New traditional students often balance the needs of family, full-time or part-time work and postsecondary education.

The best practices recommendations are organized into four areas with each section providing examples for all of higher education to consider.

  • What a Student Should Know
    • Elements of a robust financial literacy program may include: How to set up and follow a budget; How to choose a bank; How to avoid hidden fees; Savings plans; How credit works; What a credit score means; How interest works.
    • Provide information in clear, easy-to-understand language, explain college-cost calculators, provide simple budgeting tools, and offer real-life examples.
  • Multiple Touch Points in Promoting Financial Literacy
    • The Enrollment Stage – understanding loan types, reading the status of a loan, and repayment options and obligations.
    • While In School – knowledge of resources for assistance or more information on interest accumulation, loan repayment obligations and programs and the negative consequences of poor debt management.
    • Approaching Graduation or Upon Withdrawal from School – appropriate effort should be made to reach out to graduates to provide resources and information regarding their financial options and the events that will trigger repayment.
  • Delivering the Information
    • Identify students who may need specific financial literacy information and provide such prior to or at enrollment.
    • Institutions need to determine the most efficient and effective means of providing financial literacy information to their students.
  • After College
    • Grace Period – Communicate information on grace periods for student loans, impact on interest accumulation, and the due date of the first payment.
    • The Repayment Period – Provide information on different federal loan repayment plans, optimization calculators, the long-term impact of various options, and loan-management techniques.
    • Difficulty with Loan Repayment – Provide access to the institution’s financial aid staff; Facilitate contact (with consent) for e-mail, phone calls, and text messages; Provide information on lender/servicer changes, interest rate changes, new repayment options and options for deferments.
This is the fourth set of best practices. The previously released sets are Best Practices in Recruitment and Admissions, Best Practices for Military and Veteran Students and Best Practices in Career Services and Placement.

The Atlantic: The Federal Student Aid Program Is Breaking Its Promise to the Poor

 Theodore R. Johnson Nov 25 2013, 1:39 PM ET

Students from households with more than $100,000 in income received more federal aid in recent years than those from households with less than $20,000 in income.

One hundred dollars.

This is all that stood in between my aunt Gwen and the 1960 Olympics and a college degree. Following her senior year of high school in 1956, Ed Temple, the legendary coach of the U.S. Women’s Olympic Track and Field team, invited Gwen to the prestigious summer training camp at Tennessee State University. Her roommate there was Wilma Rudolph, the fastest woman in the world and first African-American woman to win three Olympic gold medals.

 Over Christmas dinner last year, Gwen told the family how Coach Temple had offered her a scholarship to cover most of school, but that she’d need to come up with the remaining $100 on her own. That amount may sound small—about $900 in today’s dollars—but it was insurmountable to my grandparents, who were sharecroppers in the Deep South. It wasn’t that they didn’t value an investment in the education of their eldest daughter of eight children; it’s just that they couldn’t afford it.

In 1956, there was no such thing as federal student aid. And in the Jim Crow South, blacks below the poverty line had little to no chance of being approved for a private loan. So instead of standing on the podium collecting Olympic gold with her Tigerbelle teammates from Tennessee State, she spent decades in Newark and Boston working hourly-wage jobs.

It’d be nice to think federal student aid programs were originally created to help indigent students access the opportunities afforded through higher education. But the initial motivation came courtesy of the Soviet Union. Fearing that the American technological advantage had been lost following the Soviet’s successful launch of the Sputnik satellite, President Eisenhower signed into law the National Defense Education Act of 1958. Title II of this statute—the National Defense Student Loan program—was specifically instituted to create more teachers, engineers, linguists, mathematicians, and scientists to keep the nation competitive against the Soviets.

The Civil Rights era highlighted that domestic socioeconomic disparities could present as much of a threat to the stability of the United States as the Soviet Union. So in addition to the progress made in voting rights and desegregation, President Johnson signed into law the Higher Education Act of 1965 that effectively created federal student aid. At the bill’s signing, Johnson remarked that the bill “means that a high school senior anywhere in this great land of ours can apply to any college or any university in any of the 50 states and not be turned away because his family is poor.” He solemnly declared that this was the nation’s promise to them.

Though the federal student aid program was created explicitly to help the poor gain access to college and lift them into the middle class, today it seems to have lost that focus. If my aunt did not happen to be an exceptional athlete, it is possible that even in 2013, she would still be effectively shut out of higher-education opportunities. The federal student aid program is increasingly leaving the poor behind.

Today, the Department of Education annually disburses around $150 billion dollars in student loans and grants. Nearly 60 percent of undergraduates, and more than 14 million students in all, use federal aid to help pay for college. These dollars are supposed to make college affordable for students that do not otherwise have the means.

The primary question centers on what constitutes affordability. For students from impoverished households, federal aid can cover the entire cost for some low-cost, public colleges and universities at their in-state rates. For many of them, this type of aid package is the only thing that makes college affordable. Unfortunately, as state budgets tighten, even these schools have annual costs that exceed the amount of federal aid available to students. Families below the poverty line have little to no resources to make up the gap in coverage, and often do not qualify for, or cannot afford, higher-interest student loans through private lenders.

Data from the National Center for Education Statistics drives this point home. In 2007-2008, the average cost for tuition, fees, and room and board at a 4-year university was $13,748 for public institutions and $30,945 for private institutions. For that same year, the latest available, the average federal aid package of grants and loans was $8,070, leaving a gap for students of more than $5,000 annually at public institutions and over $20,000 at private schools.

Though many schools have aid packages to supplement federal money, they increasingly use this money, not for need-based students, but to attract desirable students—that is, those who can afford to pay a significant amount of the tuition. Though this approach leaves some needy students in the cold, it also makes for a better bottom line.

A recent report called “Undermining Pell” from the New American Foundation provides remarkable evidence that student aid is not finding its way to needy students as it should. It states that colleges’ and universities’ business practices are straying from the nation’s commitment to “remove financial barriers that prevent low-income and working-class students from enrolling in and completing college.” Instead, institutional dollars are used for tuition discounts and merit aid—the “merit” being the ability to pay for a slightly reduced tuition. In fact, NCES data from 2007-2008 shows students from households with more than $100,000 in income received more federal aid than those from households with less than $20,000 in income ($8,470 versus $8,060).

The report cites a university administrator that makes the case this way: it makes better business sense to offer four students $5,000 worth of aid and have them pay the remainder than to offer one needy student $20,000 worth of aid. This is a practical example of the report’s sobering finding that student financial aid has become “affirmative action for the wealthy.”

This conundrum is further exacerbated by changes to student loan interest rates, uncertainty about federal student aid funding due to another round of sequestration cuts, and changes to PLUS loan credit requirements that hit the neediest families hardest. Though the individual changes to each of these programs are relatively small, when coupled together along with university practices, this primarily leads to two things. First, it raises the amount of money students are required to pay after exhausting all financial aid. This has the effect of making college prohibitive, just as it was for my aunt in 1956. And according the New America report, this is a purposeful strategy used by some universities called “admit-deny,” which admits a needy students but keeps costs high as an enrollment deterrent. This practice frees up slots for potentially less academically qualified students who have the means to pay for school.

Second, those poor students who manage to navigate the federal aid program and obtain further help from private lenders with much higher interest rates leave college encumbered with huge debt that suppresses their ability to obtain credit for homes, credit cards, and cars with favorable interest rates. Though a college degree increases their earning potential, the high cost of obtaining the degree can perpetuate the socioeconomic disparities that qualified them for need-based help. For example, they’ll have less money available for housing, which may mean they have to live in an area with inadequate schools, high crime, and a shortage of doctors. This makes it unnecessarily difficult to break the cycle of poverty as federal aid was designed to facilitate.

The federal aid program has helped many students obtain an education they would not have otherwise had. But the funding is no longer maximized or focused on the needy students as it was originally intended. The end results are maintained disparities and the curbing of access to college for the poor, to say nothing of the shattered American dreams left in the wake.

For my aunt, the lack of help forever changed her life, through no fault of her own. And in 2013, despite progress, her experience is still a reality for many students.

Fortunately, four decades after she had to give up her dream, she was able to use federal aid and years of personal savings to obtain her bachelor’s degree. And she did not stop there. When she died of brain cancer this past May, she held a doctorate in theology. The government’s delayed investment in her education reaped rewards for the nation—not in the form of gold medals, but in her community through the many lives she touched and the children she inspired to seek a college education

Some Thoughts on the Latest Round of Gainful Employment Negotiatied Rulemaking Part 2

Posted: 22 Nov 2013 07:00 AM PST
CONTRIBUTED BY: Dennis Cariello

Something that seems clear after two rounds of negotiated rulemaking is the lack of trust those aligned with consumer advocates have for proprietary schools.  As I recall, one negotiator suggested they needed to think “deviously” when considering how a proprietary school would game the rules.  I understand these folks hear some very sad and angering stories from students that have been legitimately harmed – and we need to protect those students that are treated unfairly at any institution.  But, as one negotiator said, “the plural of anecdote is not data.”  The vast majority of schools are attempting, in good faith, to help their students improve their lives through education and, in fact, are doing a pretty good job providing students with the skills and education sought.  Even the NY Federal Reserve – in a report I will discuss in another post – noted that proprietary schools offering two-year degrees and certificates have completion rates that are “reasonably good” (57% graduate in 150% of normal time for two-year degrees, 66% graduate in 150% of normal time for degrees under two years).  Indeed, the proprietary school negotiators selected by the Department are sterling examples of my point.

The issue came to a head, I think, as related to Marc Jerome’s proposal to, in essence, be able to supplant student borrowing with institutional aid if that program has failed for one year to meet the debt-to-income or debt-to-discretionary income test.  As I see it, this is a very pro student proposal; in essence, he wants the ability to give away money to students to keep them from borrowing.  It would be done with the knowing consent of the students (they’d have to sign a document, presumably showing how much they could have borrowed and that they are not going to take out a loan for that amount and will instead get funds from the school).  The questioning however, was as intense as it’s been about anything else.  Concerns were expressed about letting a failing program have a “second bite at the apple,” and how schools would use this to game the rules – including finding ways to raise tuition and use this to reset the bar at the upper limit of the metric set by the Department.  It seemed, amidst these attempts to figure out how some school could leverage this proposal to ”gamin” the rule, that the proposal at issue was one in which an institution could request the ability to provide free money to students to lower student debt.  To the Department’s credit, it embraced this idea (John Kolotos called it the “most proactive” idea negotiators put forth related to student debt). It seems, however, everyone should rally around such a pro-student measure, notwithstanding their opposition to each other on other issues.

Career College Central Blog: No Surprise The Department Of Education Can’t Answer Questions On Gainful Employment Rule

November 21, 2013

By Kevin Kuzma, Editor
Article Overview: 
Editor Kevin Kuzma shares the frustration of Rep. Virginia Foxx of North Carolina when it comes to the Department of Education's negotiated rulemaking committee's second round of discussions about the "gainful employment" rule.

“Oh, Virginia … don’t be so surprised. You know this is the way it works in Washington. Committees are formed, directives are given, decisions are made – and then, when questioned, no one can really explain what the impact is going to be. That’s just how it goes. The point is a committee was formed. We have serious business to address … regardless of how it impacts people.”
As smug as those words about the inner-workings of Washington might sound, it was not beyond reason to imagine a Department of Education representative speaking them to Rep. Virginia Foxx of North Carolina earlier this week at the department’s negotiated rulemaking committee’s second round of discussions about its “gainful employment” rule.
While it’s nothing new for leaders in our nation’s capital to pretend not to know the impact of decisions they’ve personally been involved in – think the government shutdown and Obamacare – it’s something else for a committee tasked with redrafting a rule that will impact so many not to know how to respond to basic questions.
  • How many programs would pass or fail under the latest proposal?
  • How can we move forward as a committee without the answer to that question?
  • When will the information be available? Soon? How soon?
The answers seem simple enough, and yet the department couldn’t provide any real numbers to the deliberators who need them most.

Rep. Foxx, a Republican and opponent of the rule in the past, sat in on a morning’s worth of the rulemaking committee’s deliberations. Comprised of 28 negotiators, 14 primary and 14 alternates, the committee represents a number of constituencies -- and none of them seem willing to come to any consensus on how the final rule should be drafted. The group has been drastically divided on the subject of whether or not a rule of this kind is even possible to install since its first meeting in Washington in September.

This time around, the draft of the rule before them would fail programs much faster (with one possibility being the immediate loss of eligibility) and easier. The current version now includes stipulations that would almost instantly take down programs that can’t provide gainful employment for lacking adequate approvals and accreditations. And in perhaps the department’s most unexpected move, this draft also includes penalties that would do more than revoke federal student aid. Failing programs might also be called on to pick up the tab on some outstanding loan dollars even before students bail out.

After about 90 minutes in the audience, Foxx left, expressing her frustration at the committee’s inability to answer questions about how its baby would affect hundreds of colleges and, in turn, thousands of students. She reportedly said on departure, “One of the things that I’m interested in is that the department is so ill-prepared in terms of answering questions.”

Foxx had listened to the committee’s career college representatives question the department about its reasoning for introducing a more stringent proposal than what was offered in the initial draft. The lack of information about how many colleges it impacts obviously proved to be a major sticking point.

The disappointment is widespread. The higher education community probably expected the Association of Private Sector Colleges and Universities (APSCU) to condemn the final rule, in whatever form it takes, but it’s quite another thing for APSCU to be forced to shoot down the rule because no one – including the committee – can explain what a toll it might take.
APSCU's official press release on this week's sessions condemns the department for making "bad public policy." Here’s APSCU President and CEO Steve Gunderson's comments in the release suggesting a different body handle this matter:

“If the Department continues with the current flawed regulation, they will deny millions of students access to postsecondary education, new skills, and good jobs. This will hamper the ability of our country to meet the President’s goal of closing the skills gap by increasing the number of Americans with postsecondary credentials – leaving employers without access to the skilled workforce they require.

“Student outcomes, program quality, eligibility, accountability and transparency are matters for Congress and the reauthorization of the Higher Education Act, a view that is supported by the higher education community.”

The department is going to a great deal of trouble just to run through the motions on this rule. Career college sector leaders have rightfully suggested all along that if the department cannot find consensus even among schools the rule would not impact, that means the rule is fundamentally flawed. But now it seems clear they are intent on pushing forward a rule even more stringent than before. And why not? What’s stopping them? No one is going to be willing to stand behind the work of this committee when its time runs out. This committee clearly exists for the sole purpose of existing.

Career College Central

APSCU Press Release: Department Continues Bad Public Policy Negotiating Rulemaking

Will Displace Millions of Students Over the Next Decade; Inhibit Employer Needs for Job Ready Workforce

Washington, D.C., November 20, 2013—Today, the U.S. Department of Education was supposed to conclude its gainful employment negotiated rulemaking session. Instead, it announced additional negotiations for some point in December 2013.

The negotiated rulemaking process is taking place in parallel with a larger conversation on outcomes in higher education. In the last month, leaders in higher education have cautioned the Department to take into consideration an institution’s mission and students served before arbitrarily applying policies. Comments include:

Their concerns with rating institutions and programs based on earnings are well founded considering an October 2013 National Center for Education Statistics (NCES) report that found 26% of bachelor’s degree recipients at public four-year institutions, who were repaying their loans, faced monthly loan payments greater than 12% of their monthly income. At private non-profit institutions, 39% exceeded the 12% debt-to-earnings threshold and 35% at private sector institutions exceeded the threshold.

Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, released the following statement on the negotiated rulemaking session:

“If the Department continues with the current flawed regulation, they will deny millions of students access to postsecondary education, new skills, and good jobs. This will hamper the ability of our country to meet the President’s goal of closing the skills gap by increasing the number of Americans with postsecondary credentials – leaving employers without access to the skilled workforce they require.

“Student outcomes, program quality, eligibility, accountability and transparency are matters for Congress and the reauthorization of the Higher Education Act, a view that is supported by the higher education community.”

Inside Higher Education: Education Dept. Extends Talks on ‘Gainful Employment

November 21, 2013

The federally appointed committee tasked with rewriting the Obama administration’s “gainful employment” regulations will continue its deliberations in December, an Education Department official said on Wednesday. Negotiations over the rules were slated to end Wednesday, but members of the panel were not close to reaching an agreement after more than five full days of debate over the last several months. The committee is charged with rewriting rules that were blocked by a federal judge earlier this year.

The regulations would condition federal student aid to career-training programs at for-profit and community colleges on their ability to meet certain standards. The department is proposing metrics that would judge graduates’ earnings relative to their earnings, the rate at which former students default on their student loans and whether former students are paying down at least the interest on their loans.

Negotiators were still at odds Wednesday over how those standards should be set, which programs ought to be exempt, and what information schools should be required to disclose to students.
Representatives from for-profit and community colleges said the rules would unfairly harm their institutions, punishing them for enrolling low-income and otherwise disadvantaged students. Several members of the panel have also said they cannot effectively discuss the department’s latest proposal, which is more stringent than previous drafts, until the department releases an analysis of how the rules would impact institutions.

Department officials have said they are in the process of producing that data on how many programs would pass or fail under its proposal. John Kolotos, the department's representative on the committee, told negotiators Wednesday that the data would be available before the next meeting in December. That session has not yet been scheduled.  The department would be bound by a set of regulations that the panel unanimously supports but would be free to push ahead with its own proposal if negotiators failed to reach an agreement.

Inside Higher Ed

Inside Higher Education: FTC Joins For-Profit Fight

November 14, 2013
By:Paul Fain
The Federal Trade Commission is getting tougher with for-profit colleges, opening a new front in the latest Obama administration-led attempt to crack down on the sector.

The independent agency functions as the federal government's primary consumer cop. Last week it released stricter guidelines on deceptive marketing practices by for-profit colleges that feature vocational programs. The commission advised colleges against misrepresentations about their accreditation status, transferability of credits, job placements, graduation rates or salaries of graduates.

The new standards followed a tip sheet the commission put out last month to help veterans and members of the military better scrutinize for-profits before enrolling.
Both releases included strong language.

“Not every school has got your back. Some for-profit schools may care more about boosting their bottom line with your VA education benefits,” Carol Kando-Pineda, a lawyer with the commission, wrote in a blog entry. “Some may even stretch the truth to persuade you to enroll, either by pressuring you to sign up for courses that don’t suit your needs or to take out loans that will be a challenge to pay off."

The commission’s recent actions are the culmination of a process that began in 2009, with a request for public comments about its vocational school guidelines, which had not been updated in more than a decade. Several consumer groups responded by describing the fraudulent and deceptive marketing practices of some for-profit institutions.

Agency officials apparently heard the message, said Maura Dundon, senior policy counsel for the Center for Responsible Lending. She said the guidelines should serve as a warning to the entire industry.

“We’d really like to see the FTC actually go after some of these guys,” Dundon said. “The FTC has a much stronger enforcement capability than does the Education Department.”

Eight groups submitted comments to the commission. The Association of Private Sector Colleges and Universities, which is the primary for-profit trade group, was the sole commenter to argue that the guidelines are unnecessary and create additional burdens for institutions.

The revised guidelines cite “problematic practices by a range of for-profit colleges,” and mention the scathing report on the sector that Sen. Tom Harkin, an Iowa Democrat, released last year.
In addition, Kando-Pineda’s blog entry said 70 percent of the fraud investigations the U.S. Department of Education’s Office of Inspector General is currently pursuing focus on for-profits.
A spokesman for the association declined to comment on the new guidelines. But the group sent a letter to the commission about the blog post on veterans, arguing that the commission was wrong to suggest that for-profits are not supporting their military or veteran students.

"The eight questions listed are the exact questions all students should be asking when picking a college and I applaud your efforts to share this information with veteran and military students," wrote Steve Gunderson, the association's president and CEO. "However, it is unfortunate that you used an opportunity to share sound advice to also attack all private sector colleges and universities by accusing institutions of being more interested in the bottom line than our students."

The commission’s guidelines technically apply only to vocational programs at for-profits that do not offer degrees. That means mostly small, mom-and-pop institutions, like cosmetology schools.
However, the agency has a broad jurisdiction. It generally creates guidelines rather than legally binding rules, said Dundon. And those guidelines can be applied more broadly than the specific language suggests.

“Although the guides specifically address only for-profit institutions that provide vocational and distance education,” the commission said in its guidelines, “the commission believes that the guides can also provide useful guidance to any for-profit colleges that engage in similar practices.”
The commission said it has the authority to dial up law enforcement on deceptive or unfair practices, regardless of whether a college is covered under the language.

The guidelines are designed to address several specific forms of misrepresentations. Those broad categories include deception about licensing exams, availability of financial aid, transferability of credits and in the student recruiting process, such as with bogus depictions of graduation rates or job prospects.

For example, the commission said it is deceptive for a college to use any promotional materials that misrepresent the “availability of employment after graduation from a school or program of instruction.” That includes false descriptions of the type of employment available, graduates’ success in landing those jobs and their salary ranges.

Likewise, the commission spelled out eight questions for veterans and military students to ask about an academic program they may be considering at a for-profit. Those questions revolve around cost of attendance, average debt levels, accreditation status and transfer credits. The commission also provided links for students to find some of that information.

David Hawkins is director of public policy and research for the National Association for College Admission Counseling. His group submitted comments about the commission’s guidelines.
He said the revised language is a “substantial re-entry” for the commission in overseeing for-profits, and he hopes it will be a “positive force for compliance.”

(Note: This article has been updated from an earlier version to add new comments from the Association of Private Sector Colleges and Universities.)

Inside Higher Ed

Inside Higher Education: Going Further on Gainful Employment

November 12, 2013 
The U.S. Department of Education has upped the ante in its pursuit of “gainful employment” accountability requirements for vocational programs at for-profit institutions and community colleges.

On Friday agency officials released draft regulatory language that is substantially stiffer than what they proposed in September, before a group of negotiators began discussing the issue. And experts said the latest draft also goes further than proposed and final rules from the previous gainful employment battles a couple years ago.

Not surprisingly, consumer groups liked the new language. The for-profit sector did not.
The department’s initial stab at the standards this time around was based only on two measures of the debt-to-earnings ratios of graduates of academic programs. That rankled critics of for-profits, who said the rules would not account for students who fail to graduate or earn a credential.
The revised draft, however, includes both a loan default metric and a measure of repayment rates across a program’s entire “portfolio” of loans. Both would include students who borrow but don’t complete.

“Bringing back the repayment rate is huge,” said Debbie Cochrane, research director for the Institute for College Access and Success, an advocacy group.

Cochrane said the two loan-related rates would close “loopholes” for some for-profit programs that have high dropout rates.

The proposed language arrived about a week before the committee of department-selected negotiators begins its second round of meetings. The gulf between the viewpoints its members have shared so far has been wide, and most observers predict the meetings will fail to result in a formal consensus.
If that proves to be true, the department can still move forward with its favored approach to the rules. And federal officials can choose to accept guidance from the committee, or ignore it.

For-profits are certain to fight the loan repayment rate thresholds. The issue was the sticking point that scuttled the previous version of gainful employment.

In response to a lawsuit filed by the Association of Private Sector Colleges and Universities, which is the for-profit sector’s primary trade group, a federal judge ruled that the department had failed to adequately justify the 35 percent minimum repayment rate it established. However, the judge also said the department was on firm ground with its overall philosophy of seeking to set gainful employment standards.

A spokesman for the for-profit association said the latest iteration is evidence that the Obama administration’s Education Department is pursuing regulations that are based on ideology.
“The revised regulation could have represented the diverse views expressed at the negotiation table, but the department pursued another path,” Noah Black, the association’s spokesman, said in an email. “The impact of this ideologically driven regulatory process will be the students most in need of an opportunity denied access and a nation in need of skilled workers wondering why they don’t exist.”

Estimating the Impact
Both critics and supporters of new proposals were forced to scramble over the weekend to make sense of the 73-page draft. And, as was the case with the September release, the department picked the eve of a federal holiday to drop the language.

Some observers said they would seek clarification on aspects of the draft rules. One reason, they said, is that the feds did not include an analysis of the expected impacts of the standards this time. The department typically includes those estimates with its proposals.

In September, for example, department officials said the initial proposed rules would apply to 11,359 total programs, more than double those covered by the stalled standards from a couple years ago. More would fail, with roughly 90 percent of programs clearing the bar set by the previous rules, according to the analysis, while 79 percent would pass under the first draft of the new standards.
Jee Hang Lee, vice president for public policy and external relations at the Association of Community College Trustees, said his group planned to write to the department to request more information about various details of the proposed rules, including about reporting requirements and triggers for loan repayment rate thresholds.

“We would like to know what problems they’re going after,” Lee said.

The New America Foundation, which is supportive of tighter regulation of for-profits, on Monday published a detailed analysis of the proposed language.

Ben Miller, a former department official who is a senior policy analyst for the group, wrote that the newly bulked-up language sends a strong signal that the department is willing to be aggressive.
“This proposal contains provisions that would almost immediately knock out programs that can’t possibly provide gainful employment because they lack sufficient approvals and accreditations,” he wrote. “And for the first time penalties would go beyond just of loss of federal student aid -- programs here could be on the hook for some loan dollars even before they leave the program.”
The program cohort default rate was first raised by the department in September, during the negotiators’ initial batch of meetings. The proposed programmatic rates are similar to existing rules for institutions, with a maximum threshold of 40 percent of borrowers in default for one year, or 30 percent for three consecutive years.

Newly proposed is a “loan portfolio repayment” rate. Miller said the rule would require that the total principal owed on all loans borrowed for a program is less at the end of the year than at the beginning.

The draft language also includes a student protection measure, which would require programs that might lose their federal-aid eligibility under gainful employment to set aside money for student borrowers.

Miller called that provision a “huge win for consumer advocates.”

Direct link to article: http://www.insidehighered.com/news/2013/11/12/feds-release-tighter-proposed-language-gainful-employment-rules

Inside Higher Education: Big Shift for Veterans' Advocate

November 8, 2013

By: Michael Stratford

The former head of Student Veterans of America, who previously criticized some for-profit colleges, is now working for the trade association that represents those institutions -- a move that has riled some veterans’ advocates and illustrates the high-stakes battle the industry is facing when it comes to veterans' education.

The Association of Private Sector Colleges and Universities, the main group that lobbies in Washington on behalf of for-profit institutions, announced this week that it had hired Michael Dakduk as its vice president for military and veterans affairs, a newly created position. Dakduk previously served as the executive director of Student Veterans of America, a nonprofit organization with more than 900 chapter affiliates.

Under his leadership over the past several years, SVA tangled with the for-profit industry on several occasions. For instance, the national organization in 2012 suspended 40 of its chapters at for-profit colleges for improperly promoting the universities and not being sufficiently student-run.

Dakduk's move to APSCU comes as veterans' issues at for-profit colleges are once again heating up on Capitol Hill. And just in his first week, Dakduk found himself in the position of lobbying against policies he promoted in his previous capacity at the veterans' advocacy group.

On Wednesday, for example, a handful of Democratic senators who have been vocal critics of for-profit colleges reintroduced legislation that would tighten the so-called “90/10 rule” that applies to for-profit institutions. That law caps colleges’ receipt of federal student aid money at 90 percent of their total revenue. But federal educational benefits for veterans and active-duty service members don’t count toward the limit.

Dakduk, in 2012, referred to that exception in the 90/10 law as a “loophole” that needed to be closed. 

“By not counting military tuition assistance and GI Bill benefits in the equation, some for-profit institutions are using the loophole to aggressively and deceptively recruit veterans,” he said in a statement, echoing the language that critics of for-profit colleges have used in describing the rule. Those critics argue that the current 90/10 law leaves a perverse incentive for for-profit schools to aggressively recruit veterans, since every dollar in veterans' benefits that a school receives effectively raises, by nine dollars, its ability to accept other forms of federal student aid, such as Pell grants or government loans. 

Testifying before Congress in 2012, Dakduk also pushed for legislation that would tighten the 90/10 rule.

“Quite frankly any business that complains about having to compete for 10 percent of their customers should not be in business,” he said in written testimony to the House veterans' committee.

This week, though, Dakduk said in a statement released by APSCU that the renewed effort to tighten the 90/10 rule would “harm postsecondary access and opportunity” for veterans and active duty service members.

“The 90/10 rule is not a measure of institutional quality,” he said. “It is a measure of the socioeconomic position of the student population served.”

For APSCU, the hiring of Dakduk gives the organization a boost on veterans' issues at its institutions, which are increasingly under scrutiny from lawmakers, state attorneys general, and some veterans and consumer advocacy groups. At stake for the industry is a huge market of veterans and active-duty service members, who are turning to higher education as they return home from two wars.

The industry group has taken steps in recent months to be more aggressive about self-regulation and to focus on best practices among its institutions. APSCU, for instance, convened a blue ribbon taskforce -- on which Dakduk served as a special adviser -- to develop recommendations on how to best serve veterans at for-profit colleges.

Dakduk said in an email that he chose to join APSCU because he believes its members “play a critical role in the transition of service members into postsecondary education and ultimately onto career pathways.”

“I found in my previous career that it is too easy for people to be critics,” he added. “Anybody can talk about problems; what I am focused on is rolling up my sleeves and working with people on the frontlines of education to address the challenges our service members and veterans may face.”

Still, news of Dakduk’s departure to APSCU was greeted with disappointment by some in the veterans advocacy community, according to Ted Daywalt, the president of VetJobs, another advocacy groups. The leaders of several other groups expressed similar feelings but declined to speak publicly.

“I know that his decision is very disappointing to many people in the veteran community," Daywalt said. "Because some people see the organization he is joining as not having had the concern they should for the way the predatory for-profits have been taking advantage of and ripping off veterans."

“However," he continued, "I hope he will use his new position coupled with his understanding of the problems that veterans and their families have had with predatory for-profit schools, to educate the predatory for-profit schools to change their ways.”

Dakduk's successor at Students Veterans of America, D. Wayne Robinson, said in an interview Thursday that the organization would continue pushing for stricter rules on for-profit colleges, such as tightening the 90/10 law. But he said he also wanted the group to take a balanced approach to the issue.

“We’re very hesitant to paint the entire industry with a broad stroke," he said. "But I certainly want to use our voice and advocacy on behalf of veterans that have been preyed upon.”

Read more: http://www.insidehighered.com/news/2013/11/08/veterans-advocate-changes-jobs-and-positions#ixzz2k3wun4u0

Inside Higher Ed

The Chronicle of Higher Education: Negotiators Offer Proposals Ahead of 2nd Session on ‘Gainful Employment’ Rule

November 5, 2013

by Nick DeSantis

The U.S. Department of Education has posted online a series of proposals submitted by negotiators who are seeking to shape its revised “gainful employment” rule, ahead of a negotiating panel’s second formal gathering, set to take place this month.

A federal judge last year struck down the department’s previous version of the controversial rule after the Association of Private Sector Colleges and Universities, the main trade group representing for-profit colleges, challenged the regulation in court. In August the department released draft language for a new version of the rule, which would penalize career-oriented programs whose graduates struggle to repay their student loans, as defined by two benchmarks—a debt-to-income ratio and a debt-to-discretionary-income ratio.

The panel of negotiators began working to revise the rule in September, and the group is set to resume those talks on November 18.

The documents posted by the Education Department describe proposals in several areas of the gainful-employment talks, including the approval of new programs, program-level cohort default rates, and other topics.

Meanwhile, a paper released on Tuesday by the New America Foundation lays out its own set of proposals for improving the gainful-employment rule. The paper calls the department’s proposal a “generally solid way to leverage governmental oversight to encourage these programs to improve,” but says that its own suggestions would “close some important loopholes and ensure that students enrolling in programs can expect at least some minimum returns for their investments.”

Direct link to article: http://chronicle.com/blogs/ticker/negotiators-offer-proposals-ahead-of-2nd-session-on-gainful-employment-rule/68717

Inside Higher Ed: In the Dark on Data

November 4, 2013

By: Paul Fain

Websites that measure how colleges stack up are all the rage these days. But prospective adult students aren’t using those tools, and are instead relying on information from friends, advertisements and college websites.

That is one of the central findings of a newly released report from Public Agenda, a nonprofit research group.

For example, a national survey that was part of the research found that only 18 percent of adults who were considering enrolling in college had used interactive websites like the Campus Explorer or the White House’s College Scorecard. In accompanying focus groups, few said they had even heard of those sites.

Only 21 percent of the survey’s respondents spoke to a counselor who advises students about how to get into college in the past year, while 30 percent said they learned about colleges from a financial aid adviser.

In contrast, 76 percent of the surveyed potential students said they learned about colleges from friends, families and colleagues. And 64 cited advertisements on TV and billboards as sources.
Yet a full three-quarters of respondents said enough quality information about colleges is “out there."
That probably isn’t true, the report said.

“Despite being confident that they can find the advice and information they need to make good decisions, most prospective students lack what many experts and policymakers consider to be key pieces of information,” it said.

The study, which is dubbed "Is College Worth It for Me? How Adults Without Degrees Think About Going (Back) to School," was based on a national survey of 803 adult prospective students as well as meetings of eight focus groups. Public Agenda received funding from the Kresge Foundation for the research, which was used for a previously released report on attitudes about online learning. A related report on the for-profit higher education sector is forthcoming.Source: Public Agenda
The new study also delved into the contentious debate over for-profits.

Potential students had little understanding about for-profits' financing and governance structures, according to the survey. They became more skeptical about the sector when the term “for-profit” was used in the focus group and when they were told about the “basic differences” between how for-profits and nonprofits operate.

For example, researchers showed focus-group participants graphs that compared for-profits with other institutions on prices, graduation rates and loan default rates.

The focus groups appeared to be one-sided attacks on for-profits, said Noah Black, a spokesman for the Association of Private Sector Colleges and Universities, the industry's primary trade group.
"Much like we have witnessed in the public policy arena," Black said in an email, "if you put forth biased and one-sided information and accusations about institutions, you can negatively impact the opinions."

He said the study's principle findings, including adult students' favorable take on online courses and quality instruction, support the reasons why adult students often choose for-profits.

In its recommendations, the report suggested consideration for “leveling of the playing field for marketing to adult prospective students.”

For-profits tend to spend heavily on TV and web ads that often reach this group. As a result, “more marketing of unbiased information and better outreach by nonprofit institutions might be necessary, or at least explored,” the report said.

However, Black said nonprofit institutions do plenty of marketing, including through big-time college athletics.

Don't Know, Don't Care
Adult students are a large and growing portion of American higher education. Slightly more than a third of first-time students do not enter college right after high school, the report said, and a third of undergraduates are older than 25.

This group doesn’t just lack awareness about how to find data on college performance; prospective adult students aren’t particularly interested in key “accountability” metrics, according to the research.
Lawmakers, foundations and consumer groups are pushing hard for colleges to make more information available about how their students fare, including graduation and transfer rates, average debt levels and what sort of jobs graduates get.

Yet the survey found lukewarm feelings among potential students about whether those measures are valuable. Only half of respondents said knowing the average debt levels of graduates is essential information about a college. Faring worse were graduation rates (47 percent) and information about what jobs and salaries graduates typically get (45 percent).

Furthermore, just 17 percent of respondents cited significant worries about dropping out of college. That contrasts with the reality that more than half of adult students will fail to complete a bachelor’s degree within six years.

"It's not going to work to just put the data out there," said Carolin Hagelskamp, vice president and director of research at Public Agenda.

One reason for the apathy about metrics, according to participants in focus groups, is a common belief that they reflect more on students than an institution. “I don’t really care about what their graduation rate is, because that’s on me” said a man during a focus group that was held in El Paso.
Potential students liked the information on College Scorecard and similar websites, at least when prompted to try them out by focus group organizers. And respondents who had heard of those tools gave them good marks.

Some focus group participants wondered why the websites weren’t better-marketed and felt “cheated” for not having seen them before.

One woman at a Detroit focus group had substantial debt from an online degree program that she didn’t finish, according to the report. “I wish I had had this information a couple years ago,” the woman said. “That would have been wonderful.”Source: Public Agenda