APSCU Press Release: APSCU Comments on Release of Cohort Default Rates and Adjustment of Calculation

Washington, D.C., September 24, 2014—Following the U.S. Department of Education's release of the official three-year federal student loan cohort default rate (CDR), APSCU Vice President of Public Affairs Noah Black released the following statement:

"It is a positive sign for students and the economy that cohort default rates continue to decline across the board. We are hopeful that as the economy improves and more borrower friendly policies are put in place, defaults can become a thing of the past.

"A comparison of institutions serving similar students—private sector institutions and community colleges—shows our institutions have equal or lower default rates and higher graduation rates than our peers. This is a result of our sector's focus on graduate employment, financial literacy and credentials in high demand fields.

"It is notable and disappointing that the Department continues to be opaque on how three-year CDRs are calculated.

"Now on the cusp of students and institutions losing access to Title IV funds, the Department appears to be admitting to certain flaws in how information is collected and CDRs calculated. As a result, they are making an adjustment for institutions that would have been subject to potential loss of eligibility this year. APSCU, and its members, raised this concern with the Administration repeatedly prior to the change in policy.

"Since the Department now thinks this is such an extraordinary situation, the logical question is, why are they not making the adjustment for all institutions? Doing so would certainly result in a more accurate measure of three-year CDRs—a metric that is used to determine eligibility for state grants, special disbursement rules and serves as the underpinning for the programmatic CDR in the proposed gainful employment regulation."

Direct link to article: http://www.career.org/news-and-media/press-releases/apscu-comments-on-release-of-cohort-default-rates-and-adjustment.cfm

The Chronicle of Higher Education:In 11th-Hour Move, Education Dept. Spares the Rod on Loan Defaults

September 24, 2014

On the eve of the much-anticipated release of its annual roundup of student-loan default rates, the Education Department has announced that it will spare some colleges whose high rates would have cost them their ability to award federal student aid.

In a notice published quietly on Tuesday, the department told colleges it had "adjusted" the rates of institutions that fell short of the strict new standard that took full effect this year, excluding some defaulters from the colleges' totals.

Colleges, many of which depend on student aid for their survival, welcomed the news. College leaders have argued that recent growth in the share of borrowers defaulting on their federal student loans is due in large part to factors the institutions can’t control—a weak economy, for one, and inadequate loan servicing, for another.

But student and consumer advocates accused the department of letting underperforming colleges off the hook and of undermining lawmakers’ efforts to hold those institutions accountable. They questioned the department’s decision to offer relief to colleges, but not to the borrowers whose loans are in default.

As many as two to three dozen colleges had been at risk of losing their eligibility under the stricter standard, which holds colleges responsible for defaults that occur over three years, rather than two. The department did not say how many institutions would remain eligible as a result of its adjustments, though the secretary of education, Arne Duncan, told a gathering of leaders of historically black colleges and universities on Tuesday that none of their institutions would be penalized.

In a speech at the department's National HBCU Week Conference, Mr. Duncan credited the "tremendous effort we made together" with defusing the threat to colleges.

"The hard work of lowering default rates remains, and some institutions remain troublingly close to the line," he said. "But we will continue to work with you to address this critical issue with urgency."
If HBCU leaders knew the announcement was coming, community colleges were pleasantly surprised. Those institutions, which have seen their default rates rise from 13 percent to 21 percent over the past six years, had been anticipating this week’s default-rate release with anxiety and dread.

What About Borrowers?

Congress raised the default-rate standard five years ago, in part to make it harder for colleges to manipulate their rates. Before, some colleges would routinely use deferments and forbearances to push defaults beyond the government's two-year measurement window.

Under the new standard, penalties kick in when a college’s cohort default rate—the share of students who default on their loans in a given period—exceeds 30 percent for three years in a row or 40 percent in a single year.

With the shift to a three-year standard looming, colleges have been scrambling to bring down their default rates. A growing number have turned to third-party vendors for default-management and financial-literacy services.

But default rates have continued their steady climb. Last year the percentage of borrowers who defaulted within two years of entering repayment reached 10 percent—the highest rate in nearly two decades—while the percentage defaulting within three years reached almost 15 percent.
While the struggling economy explains some of the increase, colleges also blame legislative changes that have resulted in some borrowers’ having loans assigned to more than one servicer. They say borrowers with "split servicing" are more likely to default on their debt than are borrowers with a single point of contact.

"A 50-percent jump in rates is not explained by the recession alone," said David S. Baime, senior vice president for government relations and research at the American Association of Community Colleges. "It did have to do with the servicing environment."

In the Tuesday announcement, the department acknowledged the difficulties that split servicing had caused some borrowers, without providing evidence that such borrowers default at higher rates.
To account for such borrowers, the department removed from its calculations those who had defaulted on a loan but who had one or more loans in repayment, deferment, or forbearance for at least 60 consecutive days, explained Jeff Baker, policy director for the Office of Federal Student Aid.
"In some cases, these adjustments resulted in an institution not being subject to a potential loss of eligibility," he wrote. Then, almost as an afterthought, he noted that "the borrower’s defaulted loan remains in its current status."

Consumer advocates say that’s not fair. "If schools are not going to be held responsible for defaults presumed to be caused by split servicing, borrowers shouldn’t be either," said Debbie Cochrane, research director at the Institute for College Access and Success.

In a written statement, the top Democrat on the House education committee also raised concerns about the department's reprieve.

"Any changes in the student-loan system that reduce transparency and consistency may compromise our ability to hold poor-performing colleges accountable," said Rep. George Miller, of California.

Direct link to article: http://chronicle.com/article/In-11th-Hour-Move-Education/148971/

Flake, McCain Introduce Bill to Increase Transparency in Gainful Employment Regs - Press Releases - United States Senator Jeff Flake

September 18, 2014

Washington, D.C. – U.S. Sens. Jeff Flake (R-AZ) and John McCain (R-AZ) today introduced S. 2863, the Transparency in Education Act as a Senate companion bill to legislation originally introduced by Reps. Matt Salmon (R-AZ) and Alcee Hastings (D-FL) in the House.

The bill would increase transparency during consideration of the gainful employment rule by requiring the Department of Education to determine the impact of the rule on all students participating in federal financial student aid – not just those at for-profit institutions – in order to better understand the impact on the higher-education system.

S. 2863 is cosponsored by U.S. Sens. Orrin Hatch (R-UT) and Johnny Isakson (R-GA).

“This administration has a troubling tendency to advance rules and regulations like this one without fully understanding how they might negatively affect people’s lives,” said Flake and McCain. “We're pleased to introduce legislation that requires a fair and transparent process on behalf of countless students who will feel the impact of this rule.”


Higher Education for All Blog:Private Sector Institutions’ Graduation Rates Head And Shoulders Above Community Colleges

11 Sep 2014 
By APSCU Communications 
According to the Integrated Postsecondary Education Data System (IPEDS), in the 2010-2011 school year, private sector colleges and universities conferred over 868,000 degrees between two and four year and certificate programs. This represents about 18 percent of all degrees conferred in the US that year. Not only do private sector institutions play a pivotal role in preparing hundreds of thousands of students for careers in a changing economy, but they do so for a population historically underserved by traditional higher education.

As the U.S. Department of Education data shows, two-year private sector institutions’ average graduation rate is nearly triple that of public community colleges – 62.7% at private sector institutions, compared to 21.9% at public community colleges.
This fact cannot be overlooked when discussing private sector institutions and the “gainful employment” regulation.

Private sector institutions and community colleges serve similar student bodies in terms of demographics, risk factors, and academic goals.  But as the data shows, they are doing so with drastically different results.

The simple fact that “gainful employment” regulation could potentially shutter programs that are graduating students at rates so much higher than the alternative again points out the flawed logic behind the gainful employment regulation.
Direct link to article: http://www.highereducationforall.com/private-sector-institutions-graduation-rates-head-shoulders-community-colleges-2/

Watchdog.org: The Department of Education can’t even count

September 9, 2014 

The U.S. Department of Education doesn’t know for sure how many comments the public submitted to it nearly four months ago about the controversial “gainful employment” rule.

Experts say the “witch-hunt” like rule ought to be able to stand up to feedback from those affected by it, but while the public comment period closed May 27, the department still hasn’t “counted up an exact figure” of comments received.

The department is instead “spending our time having conversations and crafting a rule that will best serve students,” a spokesman from the department said on background in an email to Watchdog.org.
The gainful employment rule is a proposed regulation within the Higher Education Act of 1965. It would rescind federal funds from vocational programs and for-profit institutions if its graduates defaulted on their student loans more than 30 percent of the time.

Additionally, if the average student’s ratio of debt was more than 12 percent of their incomes, the school or program could also become ineligible for funding.

The department spokesman confirmed staff received “less than 100,000 comments this go-around.”
Advocates worry the department’s opaque treatment of these comments is not only a transparency issue, but a disservice to the rule-making process.

“The word ‘public comment’ means ‘public comment,’” said Richard Vedder, director of the Center for College Affordability and Productivity. “People have the right to know the intensity with which people are commenting on things.”

The Institute for Liberty submitted 10,000 comments to the department.

Releasing the number of comments would send  “a clear signal to Congress that there is tremendous public interest in these issues,” said Andrew Langer, president of the institute.

“If the public feels strongly enough about agency actions to send tens of thousands of letters, then perhaps it signals to Congress that they need to weigh in,” he said.

The Association of Private Sector Colleges and Universities stated that over 57,000 comments sector-wide were submitted to the department.

“We hope the department carefully reviews and considers the input and concerns of those impacted by the regulation,” said Noah Black, vice president of communications at APSCU. “To date, this is something that has been missing from the regulatory process.”

The proposed rule has become controversial because of the impact it would have on for-profit institutions.

Inside Higher Ed reported in March that roughly 8,000 academic programs enrolling 1 million students would be required to comply with the standards.

“Most will pass,” said Arne Duncan, the education secretary, according to Inside Higher Ed’s report. “Many programs, particularly those at for-profits, will not.”

Experts believe gainful employment regulations disproportionately impact for-profit schools.
“They’ve created a witch hunt against the for-profit institutions,” said Lindsey Burke, Will Skillman fellow at the Heritage Foundation. “If it was really about limiting default, then they would also be shining a bright light on community colleges as well because they have comparable default rates and (attract) similar students.”

The department’s previous history with gainful employment regulations sheds light on how they are handling the rule-making process now, Vetters said.

In 2012, a federal judge struck down a previous attempt to create a gainful employment standard because the loan repayment metrics were found to be arbitrary.

“They’ve been beaten up on this gainful employment issue before,” he said. “The department has been working for years on this issue and probably just wants to get through this public comment period.”

Contact Bre at bpayton@watchdog.org, or follow her on Twitter @bre_payton. 

Direct link to article: http://watchdog.org/169338/gainful-employment-count/

Higher Education for All Blog:The “Gainful Employment” Regulation Will Cost Taxpayers Over $1.7 Billion

03 Sep 2014 /
By APSCU Communications 
Education Secretary Arne Duncan has acknowledged that private sector institutions are “helping us meet the explosive demand for skills that public institutions cannot always meet.” However, the U.S. Department of Education’s proposed “gainful employment” regulation will severely limit private sector institutions’ ability to meet these expanding needs. The “gainful employment” regulation will result in our nation seeing a gaping hole in educational capacity.

Research by Drs. Jonathan Guryan of Northwestern University and Matthew Thompson of Charles River Associates estimates that over 7.5 million students will be displaced by program closures resulting from the “gainful employment” regulation by 2024. The Department unrealistically and unconvincingly expects that 90 percent of displaced students will find comparable alternatives – Drs. Guryan and Thompson examining several scenarios found comparable alternatives at best for between 25 and 50 percent of displaced students.

Contrary to the Department’s claims, the “gainful employment” regulation promises to be just as costly to taxpayers as it is to student access. A recent study by Jorge Klor de Alva and Mark Schneider from the Nexus Research and Policy Center found that if states were to educate the students displaced from failed and zoned programs by the regulation, New York alone would have to appropriate an additional $68 million for one graduating class. A state like Arizona would face a crippling $509 million in costs if it had to educate the 2012 graduates in their own two or four-year institutions. Even taking into account state funding that some proprietary institutions receive for the benefit of individual students, taxpayers across the country would foot a total bill of nearly $1.7 billion per year in additional expenditures.

map tuition

These staggering numbers multiplied over future graduating classes would strap states with billions of dollars in extra expenditures. The “gainful employment” regulation will force states into an unpalatable choice between hiking taxes to cover the excess education expenditures, raising tuition, or simply turning away the students from unfunded programs. The likely result is a significant decrease in educational access, which promises to have severe individual and national economic consequences down the road. The Department’s ill-advised regulation is a lose-lose for students and taxpayers.

Direct link to article: http://www.highereducationforall.com/gainful-employment-regulation-will-cost-taxpayers/#.VAhyQmMYB72

The Florida Times - Union: Tuesday's Lead Letter: Career colleges provide valuable service

Friday, August 29, 2014

Keep the doors open to career education opportunities for Floridians.

Apryl Shackelford has been on both sides of the education access divide.

A former high school dropout, Shackelford went back to school and found her calling in teaching.

She was a kindergarten teacher, a middle-school reading teacher, a specialist in her school district’s Parents Academy and now the dean of students at a leadership school in the Jacksonville area.

This year, Shackelford was selected as a finalist for Florida Teacher of the Year following her 2013 award of Duval County Teacher of the Year.

A working mother of two, her return to education began at a career college and continues as she pursues her doctoral degree.

Yet students like Shackelford will be denied access to postsecondary education if a proposed U.S. Department of Education rule becomes law.

Seeking to shield students from excessive student loan debt, the federal government wants to hold institutions offering career-focused programs accountable for the future earnings and debt levels of their graduates.

While the 800-page gainful employment rule is complex, the end result is simple: Programs judged against an arbitrary standard could lose federal student loan eligibility.

Terminating eligibility, therefore, means closing programs, denying postsecondary access and harming students.

The move also will harm the Jacksonville area business community by shrinking the pool of talented job applicants.

If the U.S. Department of Education’s purpose is indeed to help students avoid excessive debt, there are far better and more direct ways to accomplish this goal.

Substantive actions include:

■ Reducing lending rates (lawmakers have called the federal government’s multi-billion dollar windfall lending profits obscene).
■ Expanding the use of income-based repayment programs.
■ Increasing the public service job categories for which loan forgiveness applies.
■ Restricting the use of student aid funds to educational costs.
■ Improving the budget counseling provided to borrowers.

Shackelford is a role model for every student but especially for those willing to invest in themselves and their second chances in life.

She also should be an example to federal regulators that there is no one path to career success.

Curtis Austin is executive director of Florida Association of Postsecondary Schools and Colleges in Tallahassee.  

Direct link to article: http://members.jacksonville.com/business/columnists/2014-08-29/story/tuesdays-lead-letter-career-colleges-provide-valuable-service