Washington Update

U.S. to Earn $66 Billion from Student Loans Despite the Program’s Uncertainty

Education | Permanent link

It is difficult to know with certainty the future costs of the federal student-loan program, and therefore almost impossible to set an interest rate that guarantees the government does not make too large a profit or simply break even, according to a study from the non-partisan Government Accountability Office (GAO). The GAO’s January 31 report says the government is on track to generate $66 billion in income from loans it made between 2007 and 2012. That number is simply an estimate, however, because the real cost or profit of a student loan to the government can fluctuate wildly each year, depending on such things as the amount of money the borrowers repay and the government’s own borrowing costs. For example, the GAO report says that the government initially estimated it would make $9.09 for every $100 in loans it disbursed in FY08. But just one year later, it estimated that those same 2008 loans would actually cost taxpayers 24 cents per $100 disbursed. As a result, the GAO study was unable to provide a particular interest rate that borrowers should be charged in order for the government to break even. The report is the latest in a two-year debate over the interest rate the government should set for student loans. Last year, legislation was passed tying the interest rate for student loans to 10-year Treasury notes, which put the rate at 3.9% for undergraduate borrowers and 5.4% for graduate students, lower than those offered by private lenders. The total cost of the student loan program to the government is also clouded by the growing administrative costs that have arisen as the Department of Education handles an increasing number of student loans previously handled by banks. According to the GAO study, the department spent $864 million administering Direct Loans in 2012, more than twice as much as the $314 million it spent in 2007.

Sen. Marco Rubio (R-FL) Proposes Accreditation Reform

Education | Permanent link

Florida Republican Sen. Marco Rubio (R-FL) has proposed setting up a new independent board to accredit free online courses, in addition to announcing his support for a proposal by Sen. Mike Lee (R-UT) permitting states and companies to accredit academic courses. The White House has also floated the idea of creating a new system of accreditation aimed at measuring both the cost and value of higher education, with those measurements linked in some way to federal financial aid. Rubio explained in a February 10 speech: “Action on this issue can and should be swift... Members of both parties are beginning to realize that for every day we delay bold accreditation reform, our education system leaves more Americans behind to languish in a dwindling market.” Rubio suggested prioritizing two other notable higher education proposals: setting the default payment plan for federal student loans as income-based, and creating an alternative to student loans known as “Student Investment Plans” to be used to pay for college tuition. These plans would be run by an “approved and certified private investment group” that would finance a student’s tuition in exchange for taking a fixed percentage of that student’s income for a set period of time after the student graduates. The Student Investment Plan would consider a student’s major of study, matriculating institution and academic record to develop a repayment formula.

Impact of FY 2014 Appropriations on Academic Dentistry

Education | Permanent link

On January 17, 2014, President Obama signed into law the Consolidated Appropriations Act of 2014, H.R. 3547. The bill provides $1.012 trillion for domestic discretionary programs in FY14. The bill includes amounts to offset the effects of the FY13 budget cuts known as the sequester. Overall, the appropriation includes increases over FY13 funding for most of the programs of concern to academic dentistry.

Obama Administration Addresses College Access for Low-Income Students

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Colleges and organizations participating in a recent White House summit meeting on higher education committed to a range of actions to help low-income students, including providing more scholarships to those pursuing careers in science, technology, engineering or mathematics (STEM) fields. 

Department of Education Releases Gainful Employment Disclosure Template

Education | Permanent link

The U.S. Department of Education (ED) has announced the release of a template, which institutions that offer “gainful employment” programs must use to meet their disclosure responsibilities under regulation 34 CFR 668.6(b). Use of the template will ensure that prospective students have a complete set of information that they can use to compare programs. Gainful employment regulations apply to allied or advanced dental education programs that terminate with the awarding of a certificate but not a degree. Negotiators in December failed to reach a consensus on proposed gainful employment standards for vocational programs at for-profit institutions and community colleges. The disclosure template produces an output document that includes all of the required gainful employment disclosures. It also provides compliance with a requirement that disclosures be done in an open manner and ensures that the information will be accessible to individuals with disabilities. The department also released new guidance on how institutions should display links to their disclosures from various pages on their websites. Institutions were required to use the template to meet their Jan. 31, 2014 disclosure requirements. Additional information and a Quick Start Guide are available here.  

Department of Education Releases Proposed Gainful Employment Rules.

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The Higher Education Act (HEA) requires career education programs at for-profit schools and community colleges to “prepare students for gainful employment in a recognized occupation” in order to participate in federal student aid programs. As a reminder, gainful employment regulations apply to allied or advanced dental education programs that terminate with the awarding of a certificate but not a degree. Last month, negotiators failed to reach consensus during the last of three rulemaking sessions.      Inside Higher Ed reports that representatives of both for-profit and public institutions took issue with the draft proposed regulations. The publication reported that representatives of for-profit programs praised the most recent revisions but criticized the rules overall. According to the article, groups representing for-profit and public institutions also disagreed on how the rules should handle borrowing for expenses other than tuition and fees, such as the cost of books and other academic supplies. Also at issue is whether low-cost programs at community colleges should be exempt from the regulations since few students incur any debt to attend low-cost programs. New regulatory language released in November 2013 reintroduced a standard for loan repayment that would have measured the amount of all outstanding principal owed on federal student loans at the end of each year and penalized schools if their principal balances rose over time. This elicited complaints from the for-profit sector, and this more stringent formula was eventually dropped from the standards, provoking harsh criticism from consumer advocates.   Data prepared by the U.S. Department of Education estimated that under the most recent version of the proposed rules, 13% of the existing 11,735 programs would fail to meet the standards. Next steps, it will be up to the U.S. Department of Education to draft final regulations and submit those for public comment.

Controversy Surrounds Proposed Higher Education Ratings System

Education | Permanent link

As part of a wide-ranging plan to curb rising college tuition and make college affordable to more Americans, this summer the Obama administration laid out a series of steps it wants to take, including a controversial proposal to develop a ratings system that would assess the “value” of each college. According to a fact sheet released by the White House in August, the ratings would be based on three broad categories: affordability, accessibility to low-income students and student outcomes. The Obama administration wants to publish the ratings by the 2015 academic year and eventually convince Congress to tie student financial aid to each college’s rating results. Many higher education professionals, however, say that “value” is a subjective term that defies a metric categorization. Advocates for community colleges are particularly skeptical of the utility of a ratings system, even for informational purposes. They have noted that most community college students picked a school based on its geographic location, not on published metrics. It has been reported that Secretary of Education Arne Duncan has acknowledged that a ratings plan has “potential pitfalls” but emphasized that the ratings system will compare only similar institutions and take differences in student populations into account. He has called criticism of a rating system that does not yet exist premature.

Department of Education Launches Financial Aid Information Website

Education | Permanent link

The U.S. Department of Education has launched a new site, FinancialAidToolkit.ed.gov that provides one-stop shopping for all financial aid questions. The “Financial Aid Toolkit” is a searchable, online database that consolidates financial aid resources and content in one spot on the web. It is designed to help school guidance counselors and other professionals more easily navigate the complicated area of financial aid and provide better support to students. Secretary of Education Arne Duncan unveiled the new website on December 4 before more than 6,000 people at the 2013 Federal Student Aid Training Conference for Financial Aid Professionals. “This toolkit builds on the administration’s ongoing efforts to improve college access and affordability, and it is an important step toward meeting the President’s 2020 goal of having the most college graduates in the world,” said Duncan. The database has four subsections that cover the basics of financial aid; these include a primer on financial aid, advice on conducting financial aid outreach, information on training to becoming a financial aid counselor and a database searchable by topic, audience type and type of media—from social media to infographics.

FTC Recommends Changes in Proposed Standards for Dental Therapists

Education | Permanent link

The staff of the Federal Trade Commission (FTC) has advised the Commission on Dental Accreditation (CODA) that proposed accreditation standards for dental therapy education could impede rather than promote the development of a nationwide dental therapy profession. The FTC staff, in an advisory letter, said CODA’s Accreditation Standards for Dental Therapy Education Programs include unnecessary statements on supervision, evaluation and treatment planning, language that could have the effect of limiting competition in the supply of dental care services. “We respectfully suggest that CODA consider dropping such statements,” the FTC wrote. Among the statements singled out by the FTC is one saying that supervising dentists “will be responsible for assessment of the implications of the patient’s medical condition, diagnosis, risk assessment, prognosis and treatment planning.” The FTC letter notes that “such statements ordinarily are not found in the accreditation standards of education programs for other allied dental professionals who are also supervised by dentists” and could “constrain states’ discretion … to define broadly dental therapists’ scope of practice to include oral evaluation and treatment planning.” The FTC recommended that CODA consider omitting categorical statements on topics that are typically addressed through state licensure and scope-of-practice laws, and that CODA consider developing accreditation standards for graduate-level dental therapy programs.

Senate Task Force to Assess Higher Education Regulations and Reporting Requirements

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A Senate-sponsored task force of 14 college and university experts has been formed to make recommendations to “reduce and streamline confusing or costly regulations.” The task force was announced on November 18 by four members of the Senate Committee on Health, Education, Labor and Pensions (HELP), which oversees higher education and education-related federal regulatory requirements. “The stack of federal regulations on colleges and universities today is not the result of evil doers, it is simply the piling up of well-intentioned laws and regulations without anyone spending an equal amount of time weeding the garden first,” said committee member Sen. Lamar Alexander (R-TN), a former Secretary of Education, in a statement. “Let’s face it: the federal government has become one of the greatest obstacles to innovation in higher education…. This task force will help Congress weed the garden.” The task force is co-chaired by Vanderbilt University Chancellor Nicholas Zeppos and University System of Maryland Chancellor William Kirwan, and includes 12 other college and university presidents and higher education experts. The American Council on Education will provide organizational assistance. A press release from American University, whose president, Cornelius Kerwin, will also serve on the task force, said the group would come up with specific recommendations to streamline confusing “regulations, legislation and reporting requirements” and “review in detail the extent of all federal reporting and regulatory requirements placed on institutions, including estimates of time and costs associated with that reporting.”

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