Department of Education

18 States Sue Department of Education

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18 democratic attorneys general from states across the country have filed a lawsuit against the Education Department and Secretary Devos to enforce a ruling on protecting students from predatory loans. “The borrower defense” rule was installed by the Obama administration to allow students who felt they were defrauded to get their student loans potentially forgiven. Last month, the Education Department rescinded the “borrower defense rule” before it went into effect in July, citing a federal lawsuit filed by a group of for-profit colleges against the law.

The lawsuit filed Thursday argues that Devos broke federal rules by stopping the ruling without enough public input or justification.  The suit also argues that for-profit schools benefit from taxpayer funded loans while “the students themselves struggle under the burden of a student loan debt they cannot afford” after working towards degrees “that may be of questionable value to them.” According to Inside Higher Ed, Massachusetts Attorney General Maura Healy said the Trump administration and Devos have sided with the for-profit sector over students since “day one.”

The education secretary criticized the rule, saying it “puts taxpayers on the hook for significant costs” and called it “a muddled process that’s unfair to students and schools.”  A spokeswoman for Devos said the lawsuit is “ideologically driven.” Devos plans to establish a new committee to reconsider the issue completely.

for-profit school

Devos Halts Two Regulations on For-Profit Schools

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The Department of Education will roll back two regulations from the Obama administration aimed to protect students and hold for-profit colleges more accountable. The U.S. Secretary of Education, Betsy Devos said, “Our mission in the student loan servicing procurement process is to provide high quality customer service to federal loan borrowers in a cost-efficient and effective manner.” She continued, adding “Unfortunately, this process has been subjected to a myriad of moving deadlines, changing requirements and lack of consistent objectives.”

The Department is reworking the “gainful employment” rule that was passed in 2010.  The rule required programs at for-profit higher education institutions and nondegree programs at community colleges to meet minimum requirements in relation to the debt-to-income rates of their graduates. Programs that consistently failed to meet the minimum requirements would potentially lose federal financial aid, thus risking closure. The rule was designed to weed out programs that burden students with unmanageable student loan debt and few quality job prospects.

The second rule, “borrower defense to repayment,” was intended to go in place this July.  The regulation was put into place to make it easier for students who said they were defrauded by their schools to get their loans potentially forgiven. Though the Department of Education has completely rescinded this rule, it did release a statement saying that the 16,000 borrower defense claims currently under review will be processed. According to The Chronicle of Higher Education, Devos said, “We are working with servicers to get these loans discharged as expeditiously possible. Some borrowers should expect to obtain discharges within the next several weeks.”

Several Democratic lawmakers quickly decried the moves. According to Senator Dick Durbin of Illinois, “Her (Devos) actions to eliminate important protections in higher education will harm students and waste millions in taxpayer dollars.” Additionally, advocacy groups vowed to fight the new change. Harvard University’s Project on Predatory Student Lending vowed to “use all legal means” to combat the delay of the borrower defense rule.

Critics of the gainful employment rule are mostly for-profits, who say it unfairly singles them out, but does not punish underperforming programs at nonprofit institutions. Devos stated that prior rulemaking “missed an opportunity to get it right. The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs.” The department is planning to start drafting new regulations this October.

Penn State Initiates Radical Changes to Greek Life

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The Board of Trustees at Penn State has announced all Greek life at the school will be reformed with initiatives that transfer all disciplinary responsibility to the University. The school has accepted that the self-governance model of Greek life has failed to regulate hazing, underage drinking, and sexual assault. Eric Barron, Penn State’s president, said “We are going to take much more control of the Greek system.”

The decision comes after the death of 19-year-old sophomore Timothy Piazza, who fell while intoxicated and sustained serious head injuries.  An investigation into the death of Piazza led school officials to discover “a persistent pattern of serious alcohol abuse, hazing and the use and sale of illicit drugs” at the fraternity. The fraternity, Beta Theta Pi, has been permanently banned as a chapter at the university. Barron said, “I am resolved to turn the pain and anguish radiating through our entire community into decisive action and reform, concentrating on the safety and well-being of students at Penn State.”

At Penn State, the new ruling is an effort to get Greek organizations to recognize the best of their missions—leadership and philanthropy—rather than the secretive, dangerous and unhealthy aspects. New regulations listed by Penn State include:

  • University control of the fraternity and sorority organizational misconduct and adjudication process.
  • Hazing that involves alcohol, physical abuse, or any behavior that puts a student’s mental or physical health at risk will result in swift permanent revocation of University recognition for the chapter involved.
  • Monitoring of social events by University staff members.
  • Beer and wine will only be permitted, no hard liquor or kegs.
  • Organizations may no longer hold all day events and each chapter is limited to 10 socials with alcohol per semester, instead of the current 45.

Fraternity culture has continued to frustrate colleges and universities across the country. The North American Interfraternity Conference (NIC) has acknowledged that fraternities’ self-governance model is broken and has failed to prevent problems on campuses nationwide. According to Inside Higher Ed, in the past academic year, at least 80 fraternity chapters were suspended or investigated over allegations of racism, hazing, alcohol abuse and sexual assault. The Huffington Post found that over 30 fraternities were suspended just in the month of February.

As fraternities and sororities continue to face increased scrutiny, it seems many schools are looking to fix a broken system. According to Emily Pualwan, executive director of Hazing Prevention, “A lot of institutions are looking at what Penn State does and will look over the next few years at the effectiveness of these measures, if it can be measured.” If Penn State’s institutionally run fraternal system does work, it may set a new precedent for how Greek-life operates on campuses in the future.

Massive For-Profit to Nonprofit Conversion being Reviewed by Feds and Accreditors

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In March, The Dream Center Foundation announced its plan to purchase the majority of campuses owned by the struggling Education Management Corporation. The Los Angeles based philanthropic organization currently funds programs across the country for under privileged people. The Education Management Corporation (EDMC) was once one of the largest for-profit college chains in the country, with more than 150,000 students. According to Randall Barton, managing director of the Dream Center Foundation, the acquiring of EDMC aligns with the foundations desire to use education as a means of transforming lives.

The move would be one of the largest for-profit changeovers into nonprofit schools on record. The campuses being bought include Argosy University, South University, and the Art Institutes.  In the coming months, it will be up to the Federal Education Department, under new Secretary Betsy DeVos, and EDMC’s institutional accreditors to determine the fate of the deal.  According to the Higher Education Directory, Argosy University is accredited by the Western Association of Schools and Colleges, while South University is accredited by the Southern Association of Colleges and Schools.  With multiple accreditors, EDMC’s conversion to a nonprofit entity will be that much more complicated.

This past week, 30 consumer, student, and veterans’ groups wrote an open letter to Secretary Devos, urging her to impose conditions on the sale of EDMC.  The letter states, “Congress has vested authority in you, as the Secretary of Education, to approve changes in ownership and control for institutions of higher education that wish to continue to participate in federal student loan and grant programs. Given the deeply troubling past performance of EDMC, the proposed transaction should not be rubber stamped behind closed doors.”  The letter also asks the approval be conditioned based on three questions:

  • Whether the operations of the schools going forward are likely to avoid the predatory practices that plagued the company previously.
  • Whether the claim of a nonprofit control structure is justified and will set and maintain a path for the schools that is in the best interest of students and taxpayers.
  • If taxpayers are adequately protected against financial insolvency that could trigger immense public costs.

Many are concerned that the Dream Center will continue to operate the institutions for sale in the same manner as before. The letter notes that if change of ownership is approved, it should be done on a provisional basis, and that the Department of Education has the opportunity to “prevent another repeat of the scandalous mistreatment of students and taxpayers.” The decision made by the Department of Education is expected this summer, and will set an important precedent for how the Trump administration approaches the issue of for-profit to nonprofit college conversions.

Schools Using College Data in New Approach to Course Placement

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A new movement across college campuses is emerging to rethink – and revise – the single test, single cut score approach that places new college students into remedial or credit-level courses.  Several state systems and institutions are beginning to use additional indicators to gauge a student’s college readiness. Studies show that taking into account multiple measures could be a more accurate way for students to succeed in college-level courses, and reduce the chance they will be placed in remedial courses.

Recent studies from the Community College Research Center (CCRC) found that a student’s high school GPA is often a better indicator of future college level performance rather than only using their standardized test scores (such as the SAT or ACT) or general placement exam scores.  Prior to using multiple measures, North Carolina released a report prepared by the CCRC, that revealed nearly one third of its students were being severely misplaced, resulting in significant costs to both students and the system.  With these findings, the state of North Carolina established a system, based on a hierarchy, that first looked at students’ high school GPA when considering placement.

At least 15 states and college systems now incorporate multiple measures to determine a student’s initial course placement.  These measures include GPA, high school English and math grades, diagnostics exams, previous college courses, and student self-placement.  In Ohio, the placement policy allows campuses to look at writing assessments, high school GPA, and other indicators­ – such as previous college coursework.  Hawaii is experimenting with using grades in specific high school courses as an indicator on whether or not students are placed into credit-bearing courses.

North Carolina and California’s community colleges and most schools in Connecticut, Massachusetts, and Texas have recently required the use of multiple measures for course placement.  Although many states still use single standardized testing to determine placement, research has shown the move toward multiple measures could lead to fewer students being directed toward remediation and far more completing their degree.

College Phishing

Don’t Take the Bait: Phishing Scams on College Campuses

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New phishing scams are targeting colleges and students nationwide.  Reports from Amherst College, Louisiana State University, Dartmouth, and more say students have reported multiple types of online phishing schemes in recent weeks.

Phishing scams are usually performed online, through email.  One scam features emails that contain fake job opportunities and request student’s personal information.  The Department of Homeland Security reports that scammers use email pretending to be interested in hiring a person. The email then asks for critical information, such as one’s address or social security number.  Once the information is obtained, scammers are able to access bank accounts and personal information.

Several thousand students at Dartmouth received emails that appeared to come from President Phil Hanlon.  In reality, the messages were linked to malware designed to steal information.  At LSU, IT Services Communications Officer Sheri Thompson said spam bots were impersonating the university’s help desk.  She said, “Be skeptical, be skeptical about any links that you get, any request for information that you get. Even if it says it’s coming from an LSU person, be skeptical.”  Wellesley college recently alerted students of fake versions of its student login page.  The school’s IT department said, “This scam copied our login page, even using our Wellesley College Images! What set the scam website apart was that it was not located at Wellesley.edu and wasn’t a secure website.”

University Employees have also been targeted through scams. Institutions across the country are experiencing a phishing fraud with an email that indicates a change in their employee’s human resource status.  The email then directs the employee to a fake login page.  If employees provide login information, their login can be stolen and paychecks can be rerouted to the scammers.

As attackers continue to impersonate emails and web portals, it is important that faculty and students take extra precautions to protect themselves.  The Research and Education Networking Information Sharing and Analysis Center (REN-ISAC) warns that these attacks are particularly prevalent during both calendar and fiscal end of year financial wrap ups.  Users should be cautious when accessing email and never send account information to others.  In addition, students receiving unsolicited emails should remain skeptical, and be alert to poor spelling and demands for a rapid response.  To report phishing emails, forward them to spam@uce.gov – and to the organization, company, or college impersonated in the email.

 

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Student Loan Defaults Grow in 2016

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New data released by the U.S. Department of Education indicates that millions of Americans are currently defaulting on Federal Direct Loans.  These loans are serviced through companies, hired by the federal government, to help students in debt.  In 2016 alone, 1 million Federal Direct Loan borrowers defaulted.  The end of 2016 resulted in 4.2 million total Federal Direct Loan borrowers defaulting.  The number is up from 3.6 million in 2015.

Rohit Chopra, Senior Fellow at the Consumer Federation of America is quoted as saying, “3,000 preventable student loan defaults each day in America is 3,000 too many.”  He went on to say, “Our broken system works well for the student loan industry, but is failing borrowers, taxpayers, and our economy.”

According to the Consumer Federation of America, the data validates recent claims made by federal regulators that service providers are putting borrowers at higher risk by purposely failing to help them find the best repayment plans for their needs.

Four major servicers are contracted by the US Department of Education to collect payments on loans.  The report notes that Navient, formerly Sallie Mae, has the lowest percentage of loans being paid using the PAYE and REPAYE plans, which are designed to help struggling borrowers.  Navient was sued in January by the Consumer Financial Protection Bureau for making it more difficult for borrowers to repay loans.  Navient has disputed all charges, and The Department of Education has declined to comment.

As the cost of student’s tuition has risen, so has student debt.  In 2013, the average student borrower owed $26,300.  Since then, the average owed per borrower has jumped 17%, to $30,650.  One positive is that less people are defaulting for the first time.  However, the number of individuals defaulting for the second or third time is up.

Many are wondering why such a rise in defaults given the strengthening labor market, lower unemployment, and higher wages.  Research shows that many borrowers in default never graduated and haven’t found consistent work.  One reason for the rise in the overall balance owed may be that more graduate students are borrowing.  The typical graduate school loan is much higher than undergrad.

The Obama administration tried to reduce debt defaults by highlighting plans that set borrowers’ monthly payments as a share of their incomes, and then ultimately forgive part of their balances.  Enrollment in the plan has grown steadily in the past few years.  President Trump proposed to offer a similar version of income driven repayment plans during his campaign.  So far, the administration has yet to announce details of such a plan.