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by Agnes Jasinski

A financial aid officer at a for-profit college that closed this week has been charged with felony theft of more than $7,600 in students’ tuition payments. The school, Ascension College in Louisiana, closed quite suddenly to the surprise of the students there, and has been under investigation for what officials say is a misuse of federal aid.

According to an article in The Chronicle of Higher Education, the school had to close when the U.S. Department of Education ruled that it was no longer eligible for federal aid, the school’s primary source of income, based on new rules targeting for-profits. The school already had financial problems before the Education Department’s decision. In recent weeks, students had begun to complain about the cost of their educations there versus the quality. The school had been awarding certificates in fields like office administration and dental assistance.

The news comes on the heels of a report released today by the Government Accountability Office (GAO) pointing to evidence that recruiters at for-profit colleges encouraged prospective students to lie on financial aid applications in order to receive more federal funding. The report also shows widespread misinformation from the recruiters about the cost of their for-profit programs, their quality, and how much money graduates would be expected to make once they received their degrees.

The GAO used four undercover investigators posing as potential students at 15 for-profit colleges to get the information. Recruiters at four of those 15 encouraged financial aid fraud; in one example, a recruiter suggested an applicant not report $250,000 in savings when applying for aid. All 15 of the for-profit recruiters made statements the GAO described as “deceptive or otherwise questionable” in their report. In one example, a recruiter based tuition costs on nine months of classes rather than 12, making the total costs seem much lower than they actually were. In another, a recruiter told an applicant that barbers can earn up to $250,000 a year, a gross exaggeration. The GAO also discovered how incessant some recruiters can be once they know a student is interested in a for-profit education. According to the report, one of the investigators received 180 phone calls in one month at all hours of the day and night after registering to receive information on for-profit colleges.

The GAO was quick to note, however, that there were instances where the investigators were given helpful information, such as warning students about borrowing beyond their means. While the report overall doesn’t bode well for for-profits, especially at a time when legislators are watching the industry more closely and calling for more federal review, there are good options in the for-profit sector. For students looking to get into a particular trade, a flexible schedule, or alternatives to a traditional four-year university, for-profit schools do meet a need. The most important thing is to get your facts from a reliable source. Don’t ever take everything a recruiter at any college, for-profit or not, says at face value. Do your own research in the college search to make sure you’re making the right decision and investing wisely.

by Agnes Jasinski

A report released today examines what policy makers should be paying attention to when crafting educational policies that benefit all college students. The report also comes to the conclusion that many decisions regarding Latinos in higher education are based on misconceptions about that student population.

The report, "Taking Stock: Higher Education and Latinos," was put together by Excelencia in Education, an organization that looks at racial and ethnic trends to identify where the need exists for more effective educational policies. The Lumina Foundation for Education, Jobs for the Future, the Congressional Hispanic Caucus Institute (CHCI), and the National Association of Latino Elected and Appointed Officials (NALEO) supported the report.

In a preview of the report earlier this week, The Chronicle of Higher Education described conversations at a panel discussion on Monday morning with the report's authors and leaders from a number of Hispanic organizations. The panelists suggested that public policy is based less on facts and more on stereotypes that define Latinos as an immigrant population with high drop-out rates. A majority of Latinos, however, are native-born and want to succeed in higher education.

Other highlights of the report include the following:

• Administrators should look into expanding current college and university programs that are proven to accelerate Latino success and graduate Latino students.
• Policy makers should consider the success of Latino students, a rapidly growing student population, when considering the educational success of the entire country.
• In order to meet President Obama's degree-completion goals, policy makers must make degree completion among Latino students more of a priority.

According to the National Center for Education Statistics, the number of Hispanics enrolled in college rose from 20 percent in 1996 to 24 percent in 2006, a greater increase than seen among white students. Still, Hispanic students are still lagging behind other groups when it comes to college admission, retention and graduation rates. Studies looking into that attainment gap suggest that while most Hispanic students believe in the value of a college degree, their educations may be cut short for a variety of reasons. In data released in October by the Pew Hispanic Center, about 74 percent of respondents said they had to leave school because of personal and family responsibilities. Others said poor English skills hampered their ability to keep up with the rigors of college, and even high school. About 40 percent said it was just too expensive to go to college.

All minority students should know there is help out there when it comes to funding your education. Scholarships for minorities are the most common student-specific awards out there, and minority students are eligible for funding from not only the federal government, the state, and their intended colleges, but outside organizations that aim to diversify college campuses. Try conducting a free scholarship search to find not only Hispanic scholarships, but scholarships based on a myriad of criteria specific to you.

Yesterday, the House of Representatives formally introduced legislation to reshape federal student loans, federal Pell Grants, and other aspects of student financial aid. The Student Aid and Fiscal Responsibility Act of 2009 builds on presidential budget recommendations and features several substantial changes to student aid.

A preliminary breakdown of the bill provided by the National Association of Student Financial Aid Administrators lays out the following proposed changes:

• Dividing the Federal Pell Grant into mandatory and appropriated funding, then fixing the mandatory portion to the consumer price index plus 1 percent. Currently, the mandatory portion of the grant is $490 and the appropriated portion is $4860, so if these proportions remain the same, increases in the Pell Grant would still largely be at the whim of Congress each year.
• Eliminating several questions on the FAFSA related to assets, but preventing anyone with assets of over $150,000 from qualifying for federal student aid.
• Ending the Federal Family Education Loan Program and moving all federal Stafford Loans to Direct Loans.
• Ending subsidized Stafford Loans for graduate and professional students in 2015.
• Reverting to a variable interest rate that would be capped at 6.8 percent for subsidized Stafford Loans.
• Expanding the Federal Perkins Loan program, with part of the new funding going specifically to schools that keep tuition low and graduate a high proportion of Pell-eligible students.
• Changing the rules for drug offenses to make students ineligible for aid only if they've been arrested for selling a controlled substance.

The Democratic majority in the House has indicated a strong intention to pass this bill quickly, with the Committee on Education and Labor planning to vote on it as early as next week.

Students who are interested in applying for private loans may soon see the process changing. The House of Representatives passed consumer protection legislation last week that would further regulate private student loans, ensuring that students interested in borrowing them are aware of rates, federal alternatives, and borrowing limits at their school.

The bill moves to further regulate Wall Street in the wake of the credit crisis and ensuing economic recession, and also creates a consumer financial protection agency that's responsible for overseeing consumer credit such as credit cards, mortgages, and other bank loans. An amendment introduced by Democratic Representative Jared Polis of Colorado ensures that private loans to students are also included under this umbrella, and sets up additional rules that lenders and colleges must follow in issuing and certifying private loans.

Under this legislation, all private loans will have to be certified by a student's college, verifying the student's enrollment and the amount he or she can borrow. Before a school can certify a private loan, it must also inform the borrower of the availability of federal student financial aid. This builds on rules that will go into effect in February that state that students must be informed of interest rates and repayment terms up front by banks, and must certify that they have been informed of federal student loan options.

Effectively, it puts an end to direct-to-student private loans, which students can borrow without even informing the financial aid office, and which can be taken out for more than the student's cost of attendance for the academic year. With rising student loan default rates, risky loans like these have increasingly come under fire. These loans can be a quick way for students to find themselves in excess debt, as they make it easy for students to borrow more than they need to pay for school without having to investigate alternatives first.

The bill still needs to pass the Senate and be signed by the President before it can be enacted. Whether the Senate introduces language similar to the Polis Amendment remains to be seen, as it's unlikely financial legislation will be debate until after they finish with healthcare.

According to newly released data, default rates on federal student loans continued to climb in 2008, reaching a nine-year high of 6.7 percent, most likely as a result of the recession. The annual cohort default rate, released by the Department of Education on Monday, covers federal student loans that went into repayment between October 2006 and September 2007 and had gone into default by September 2008.

The 2007 cohort default rate was 1.5 percentage points higher than the rate for the previous year, as significant increases took place across the board. Defaults were higher in the bank-based Federal Family Education Loan (FFEL) Program than in the Federal Direct Loans Program, which is typically the case, but the discrepancy between the two grew this year. A total of 7.2 percent of loans in the bank-based system were in default, compared to 4.8 percent of the loans in the Direct Loans program.  he numbers for 2006 were 5.3 and 4.7 percent, respectively.

Much of this discrepancy can be attributed to a higher percentage of students at proprietary schools participating in the FFEL Program, as these schools carried a default rate of 11.1 percent, compared to rates of 6.0 percent and 3.8 percent at public and private colleges. Still, the lower default rate in the direct lending program is likely to be brought up as Congress debates moving all lending from FFEL into Direct Loans.

Default is defined as failure to make payments on a student loan according to the terms of the master promissory note the borrower signed, and federal student loans are considered in default only after several months of missed payments. This means that 6.7 percent of students in this cohort had stopped making payments for 270 days or more within 1-2 years of their first loan payment coming due. It's likely that the cohort default rate numbers released paint an optimistic picture of the number of borrowers currently having trouble making payments on student loans.

New repayment options may help troubled borrowers, though, and several have been introduced in recent months. One is the federal Income-Based Repayment Plan, which allows students to make payments they can afford and forgives all remaining debt after 25 years. Borrowers worried about repayment can also look into loan forgiveness programs offered in exchange for public service, which have been expanded under the Higher Education Act and national service legislation.

The best way for students to avoid the prospect of defaulting on loans is to limit borrowing as much as possible. Put some serious effort into a scholarship search, and consider affordability when doing your college search, as well. Practices such as keeping your options open and landing a scholarship can go a long way towards reducing your loan debt and your risk of being unable to pay once you graduate.

by Agnes Jasinski

Congress has a lot going on right now, from the ongoing health care debate to a number of bills looking to improve student lending and credit card practices. But that doesn't mean college football fans shouldn't have their day in government.

Just in time for this season's Bowl Championship Series (BCS), a House Energy and Commerce Committee subcommittee approved legislation Wednesday that would change the way the current championship series is run. Rep. Joe Barton of Texas, who introduced the bill, said college football champions should be crowned through a playoff method rather than a series of bowl games, such as the Fiesta, Sugar, Meineke Car Care and Rose Bowls, among others. The bill, named the College Football Playoffs Act, would ban the promotion of a postseason NCAA Division I football game as a national championship, which Barton called unfair, unless it's the outcome of a playoff.

An article in the Dallas Morning News today details how the subcommittee came to its decision, noting that even President Obama has voiced his displeasure over the lack of playoffs in college football. One legislator said the current process was less about finding the best team out of dozens but about revenue sharing. Another said schools with less fundraising power are less likely to find themselves in a Bowl game. The one dissenting vote, Rep. John Barrow of Georgia, said Congress had better and more important things to do than worry about college football.

In other college football news, a recent study released by the Institute for Diversity and Ethics in Sport at the University of Central Florida showed that of the 67 schools surveyed, 57 had graduation success rates of 66 percent or more for white football players participating in bowl games. But 21 colleges (up from 19 in 2008-2009) graduated less than 50 percent of their African American football athletes; 35 colleges (up from 29 in 2008-2009) had graduation success rates for African American football athletes that were at least 20 percent lower than their rates for white football athletes. What's it all mean? Racial gaps remain between white and African American football student-athletes despite any progress with overall graduation rates. As the findings only looked at schools appearing in bowl games this year, it would be interesting to see what kind of data exists across the board.

by Agnes Jasinski

As tuition and fees continue to rise and students need more financial aid to complete their college educations, ideas on how to both keep costs for students low and bring schools' budgets under control continue to crop up among lawmakers.

Sen. Lamar Alexander, a former president at the University of Tennessee turned Republican lawmaker, has an editorial on the topic in Newsweek this week, where he compares the three-year degree track to a fuel-efficient car. It would save students money, ease the dependence on federal and campus-based financial aid, and allow students  to move into the working world or to pursue an advanced degree in less time. And it would be up to the students to decide whether to complete their degrees in three years.

Many schools allow students to complete their degrees in three years, but few have official programs set up where students enter college knowing they'll be done in three years. Hartwick College has allowed students to complete their studies in three years for a while, but announced earlier this year a more official academic program for high-performing students that could be completed in three years. Students in that program will save about $43,000 in tuition and fees by forgoing a fourth year. This fall, 16 first-year students and four second-year students entered into the three-year program at Hartwick. Lipscomb University also unveiled a three-year option this year to students willing to attend classes in the summer. The state of Rhode Island has legislation on the table this month that would require all schools in the state to offer a three-year option.

On the other side, Waldorf College will stop offering the three-year programs it had set up as most students and staff preferred a traditional four-year track. Many students want the full four (or however many) years on campus. I still often wish I was back there. Students who have compressed a four-year program into three years have less time for what often makes the college experience memorable - time for friends, social outings and extracurricular activities that make you more well-rounded and able to juggle many aspects of your life at once. Alexander acknowledges possible obstacles in his piece, but maintains that something needs to be done to stay competitive and address an economic fallout that could affect schools for years to come.

Why not leave the choice to the students? What do you think of the opportunity to complete a college degree in three years? It could make sense for students looking at completing advanced degrees in addition to their master's. And the cost-saving aspect of the idea would turn many students on to the idea, especially returning adult students. Let us know whether you're planning on completing a degree in three years, and whether you think all schools should offer a three-year program as an option.

by Suada Kolovic

The U.S. House of Representatives passed legislation Wednesday to give undocumented students who’ve graduated from high school, completed two years of college or military service and have no criminal record a shot at citizenship. The bill, known as the Dream Act, passed by a 216-198 vote after heated debates stemming from the fact that said students would also be eligible for federal financial aid.

The legislation is backed by President Obama who, according to the Huffington Post, called it “an important step” toward comprehensive immigration reform. In a statement, Obama said, "This vote is not only the right thing to do for a group of talented young people who seek to serve a country they know as their own by continuing their education or serving in the military, but it is the right thing for the United States of America.” Republicans, on the other hand, have slammed the bill and repeatedly referred to the Dream Act as a “nightmare act.” Rep. Dana Rohrabacher (R-Calif.) described the bill as nothing more than “mass amnesty that will undoubtedly encourage millions more to illegally immigrate into our country.”

Today, the Senate is scheduled to vote on whether to begin debate on a slightly different version of the bill...though it’s unlikely Democrats can muster the 60 votes needed in the 100-memeber chamber to advance it.

On August 1, the new GI Bill will kick in, bringing with it increased education benefits for people who have served in the military since 2001. At least in theory.

The new GI Bill covers an undergraduate student's full tuition and fees at any four-year state college anywhere in the country, which is a more generous benefit than the veteran aid students received under the old GI Bill. Eligible students will also receive an additional monthly housing stipend and, thanks to the recently approved HEA Technical Corrections legislation, these benefits won't be counted as income for purposes of determining federal student financial aid eligibility.

The GI Bill also includes a new program that gives veterans benefits at private colleges and allows schools to match federal VA benefits for their students. More than 1,100 private colleges signed up to participate in the Yellow Ribbon Program, which should allow veterans to attend a larger number of institutes of higher education at little cost.

However, the formula for determining benefits under the Yellow Ribbon Program has been mired in controversy since its announcement, and as the deadline for the GI Bill to go into effect nears, many people are looking at the wide disparity in Yellow Ribbon benefits nationwide and scratching their heads.

Veterans attending private colleges can receive up to the full amount of tuition and fees at the most expensive public college in the state from the government, with their institution agreeing to assist with additional tuition costs at Yellow Ribbon schools. But the amount the federal government will cover varies widely from state to state, with government benefits ranging from just over $2,000 to just under $40,000, depending on how the department of Veterans Affairs calculated the maximum in-state tuition in each state.

These differences have caused some private schools to limit their Yellow Ribbon participation, meaning many veterans may still be on the hook for most of their college costs if they choose to attend private colleges. The wide variation in benefits also can cause confusion and uncertainty for veterans considering attending private universities but unsure of the financial aid they'll be eligible to receive.

Earlier this week, U.S. Bank announced that it would cease to act as a lender for Stafford Loans issued through the Federal Family Education Loan Program. U.S. Bank was the sixth largest participant in FFELP as of 2008, according to the Student Lending Analytics Blog, yet this news has caused barely a ripple.

This is partially due to the fact that the stream of lenders leaving FFELP has slowed considerably since last year and this particular student loan crisis seems largely to have passed. However, the news of another lender exiting FFELP seems less noteworthy or surprising in the face of increasing uncertainty about the future of FFELP as a whole. In what has been widely regarded as placing another nail in FFELP's coffin, the Department of Education has sent a letter to colleges currently participating in FFELP, detailing the steps being taken to ease their transition into issuing Stafford Loans through the federal Direct Loans program.

While Congress has not yet voted to move all federal student loans into the Direct Loan program, and while lenders and other organizations are still proposing alternatives to President Obama's suggestion of eliminating FFELP, many people seem to already regard the move as a done deal, regarding it as unlikely that any lenders will be around for much longer than the next academic year. Time will tell whether this proves to be the case, but for now students who were previously borrowing from U.S. Bank will still need to switch lenders at least one more time.