Student Loan Probe Casts Shadow, Extends Winter For-Profit Colleges’ Winter

An investigation into student- lending practices of for-profit colleges is being expanded by the Consumer Financial Protection Bureau and state attorneys general, according to government officials and regulatory filings. The Wall Street Journal reported that Jack Conway, Kentucky Attorney General and chair of a group of 32 state attorney generals investigating such colleges, said that states are working with the CFPB to weed out unfair or otherwise deceptive student lending practices. “I expect in 2014 you’ll see action by the CFPB in coordination with states in coming months,” Conway told the WSJ. Corinthian Colleges, along with ITT Educational Services, disclosed in recent regulatory filings that the CFPB is considering legal action over the companies’ lending practices. A CFPB spokeswoman declined to comment on this claim…

via Affordable Schools Online:

An investigation into student- lending practices of for-profit colleges is being expanded by the Consumer Financial Protection Bureau and state attorneys general, according to government officials and regulatory filings.

The Wall Street Journal reported that Jack Conway, Kentucky Attorney General and chair of a group of 32 state attorney generals investigating such colleges, said that states are working with the CFPB to weed out unfair or otherwise deceptive student lending practices.

“I expect in 2014 you’ll see action by the CFPB in coordination with states in coming months,” Conway told the WSJ.

Corinthian Colleges, along with ITT Educational Services, disclosed in recent regulatory filings that the CFPB is considering legal action over the companies’ lending practices. A CFPB spokeswoman declined to comment on this claim.

According to the WSJ, the probe “focuses in part on loans provided by outside investors through the colleges as well as on the for-profit-colleges’ job-placement promises, ramping up pressure on an industry that receives about $30 billion annually in taxpayer-funded federal grants and loans.”

The federal crackdown is occurring during a larger battle between federal regulators and the for-profit-school sector. That sector has been criticized by both the Obama administration and Democratic lawmakers for “allegedly charging high-interest loans without fully disclosing the loan terms and exaggerating students’ future earnings potential,” according to the WSJ.

The larger showdown has set in motion probes by the Securities and Exchange Commission and Justice Department. In addition, the WSJ reported that the Education Department is also “moving forward with a plan to deny federal student-aid dollars to vocational programs at for-profit and community colleges if their former students defaulted at high rates or had high debt levels relative to their incomes after graduating.”

ITT and Corinthian disclosed the SEC probes last year. And this past September Corinthian disclosed a Justice Department investigation “into whether the company manipulated attendance records to retain federal education funds. The probe also looked at the company’s recruiting and financial-aid practices,” the WSJ reported.

CFPB officials appear focused on whether students are adequately informed of loan risks. “We’ve seen instances when some of the for-profit schools are anticipating as much as a 50% default rate on loans they make to students,” CFPB Director Richard Cordray said in an interview with a student-advocacy group in 2012. “They’re not telling the students that, but they are disclosing that information to their investors.”

“We believe that all of our actions were lawful and we intend to vigorously defend ourselves,” an ITT spokeswoman said of the CFPB and SEC probes. A Corinthian spokesman said all students are provided with detailed descriptions of the terms of their loans and are told “clearly and in writing that no student or graduate can be guaranteed employment.”

Corinthian was also sued in October by California Attorney General Kamala Harris. The lawsuit cited internal Corinthian documents saying the company targets students who are “isolated” or “individuals with low self-esteem,” through TV ads and telemarketing campaigns.

ITT has said that it has “not identified any third-party private education loan programs for our students’ use since 2011,” according to an ITT spokesman said. A Corinthian spokesman said loans made through its program are “well-below” market rates, with a maximum rate of 9.9%.

According to the WSJ, for-profit colleges account for a rising share of federal financial aid in recent years, increasing from 11% of federal student loans in 2000 to 23% in 2010. These estimates are based on a report by the Center for Analysis of Postsecondary Education and Employment.

The post Student Loan Probe Casts Shadow, Extends Winter For-Profit Colleges’ Winter appeared first on Affordable Schools Online.

For more info: Student Loan Probe Casts Shadow, Extends Winter For-Profit Colleges’ Winter

Affordable Schools Online

Student Loan Probe Casts Shadow, Extends Winter For-Profit Colleges’ Winter

The post Student Loan Probe Casts Shadow, Extends Winter For-Profit Colleges’ Winter appeared first on FX FOREX.

via WordPress http://ift.tt/MPHto7



Personal Finance, count, events, financial, financial aid policy, kentucky, news, private, street, student loans, wsj

All I Want I for Christmas…

Unfortunately, what I would like to have seen by Christmas this year is something nobody is going to get: a reauthorized Higher Education Act (HEA). With Congress headed home for the holidays, it’s safe to say the Higher Education Act will join the long, long line of expired federal education legislation at the end of 2013. POLITIO notes that the act is in good company: With ESEA, IDEA, WIA and Perkins and more all expired, there are no major pieces of federal education legislation that aren’t overdue for renewal. The Higher Education Act was originally passed by Congress in 1965 to increase financial resources provided to colleges and universities by the federal government. The law requires that the act be reauthorized every five years to change and…

via Affordable Schools Online:

Unfortunately, what I would like to have seen by Christmas this year is something nobody is going to get: a reauthorized Higher Education Act (HEA). With Congress headed home for the holidays, it’s safe to say the Higher Education Act will join the long, long line of expired federal education legislation at the end of 2013. POLITIO notes that the act is in good company: With ESEA, IDEA, WIA and Perkins and more all expired, there are no major pieces of federal education legislation that aren’t overdue for renewal.

The Higher Education Act was originally passed by Congress in 1965 to increase financial resources provided to colleges and universities by the federal government. The law requires that the act be reauthorized every five years to change and add to the existing policies to keep up with evolving educational systems. With 2008′s reauthorization due to expire at the end of this year, the act was being reviewed by the Senate Education Committee for a five year renewal.

No one knows when Congress will actually finish renewing it or how the deep partisan divide that pervades Capitol Hill will complicate what is already a lengthy process. Last time around, it took five years to renew the act after it expired. While the Higher Education Act expires at the end of 2013, that date isn’t a hard deadline — the law will remain in effect, and no one is going to be particularly surprised by a delayed reauthorization.

As the U.S. Senate’s education committee formally began the process of updating the massive law governing federal student aid back in September, its chairman laid out a straightforward plan: hold 12 fact-finding hearings over the next several months and then produce a draft Higher Education Act by early next year.

But a number of obstacles stand in the way of that goal, put forth by Senator Tom Harkin, the Iowa Democrat who leads the panel. In this Congress, the education committees are also mired in the process of updating the Elementary and Secondary Education Act.

Further complicating the timeline for the Higher Education Act were comments by Senator Lamar Alexander of Tennessee, who is the senior Republican on the education committee. Alexander said he had asked his staff to consider drafting a new Higher Education Act “from scratch.”

Such an approach is not “an ideological exercise,” he said, but an attempt to ease the regulatory burden on colleges that he said has multiplied with each recent reauthorization of the Higher Education Act. Alexander said that the obligations for colleges that had piled up were stunting innovation in higher education, according to Inside Higher Ed.

The first of 12 the panel plans to hold, was focused on the on the multi-layered system the federal government uses to oversee colleges and universities receiving federal student aid. The system, known as “the triad,” involves a web of requirements placed upon institutions by the U.S. Education Department, state regulators and accrediting bodies.

At the federal level, colleges and universities have long complained that they are unduly burdened by an array of legislative and regulatory obligations that are often confusing and unevenly enforced by the Education Department.

According to Inside Higher Ed, Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, suggests that before piling on additional responsibilities for colleges, Congress ought to commission an independent review of the existing approval and eligibility process that institutions go through to participate in the federal student aid programs.

The reauthorization of the Higher Education Act is taking place against the backdrop of an Obama administration proposal to develop a rating system for colleges based on student outcomes and value.

The Education Department announced in September that it had begun an effort to gather input on how to develop metrics for those rating system. The administration plans to develop and implement a ratings system by 2015, but it will need the help of Congress to implement its ultimate goal of linking a rating system to federal student aid dollars.

That affordability theme also permeated early hearings on the triad, perhaps foreshadowing a larger battle over how, and whether, to use the Higher Education Act to prod colleges to keep down costs.

Several Democratic have Thursday questioned whether the interlocking oversight triad of federal, state and accrediting bodies had gone far enough to keep down the costs of college.

So I guess, I’ll just scratch the HEA reauthorization off of this year’s list and ask Santa for it next year.

Merry Christmas, everyone!

The post All I Want I for Christmas… appeared first on Affordable Schools Online.

For more info: All I Want I for Christmas…

Affordable Schools Online

All I Want I for Christmas…

The post All I Want I for Christmas… appeared first on FX FOREX.

via WordPress http://www.evvi.net/3940/personal-finance/all-i-want-i-for-christmas.html



Personal Finance, american, christmas, democrat, federal, financial, financial aid, financial aid policy, president, senate, tennessee