Student Loan Blog : Chronicle of Higher Education

‘Swine Flu’ Causes Colleges to Cancel Study Abroad Programs

Student Loan Girl — Fri, 01 May 2009 22:29:00 GMT

Although the swine flu virus (H1N1) hasn’t hit most U.S. college campuses, college health officials are starting to take precautions, including cancelling study abroad programs in Mexico, The Chronicle of Higher Education reports (“Swine Flu Prompts More Colleges to Cancel Study-Abroad Programs in Mexico,” April 28, 2009).

Earlier this week, the University of Minnesota announced it was suspending “all current and planned education abroad programs in Mexico until further notice” and advised its 21 students currently studying in Mexico to return immediately. The school also canceled several other Mexico-bound programs, involving an additional 52 students that were set to depart in May.

The University of Wisconsin at Eau Claire said that it would not be proceeding with its six-week summer program in Mexico, scheduled to begin May 26. The 23 participating students will be given the option to study abroad in Costa Rica instead.

Officials at Butler University in Indianapolis have called off a three–week Spanish language immersion program for more than a dozen students, which was scheduled to begin in about two weeks.

And study abroad administrators at Pennsylvania State University at Altoona said they would be calling off a program in the Mexican cities of Guanajuato and Mexico City, which was to begin in just over a week.

Many college officials are adopting a “wait-and-see” attitude regarding the spread of the swine flu virus in the United States to see how it may affect their campuses and are closely monitoring reports from the State Department and the Centers for Disease Control and Prevention for guidance.

So far, only two institutions — both in the state of Massachusetts — have reported possible cases of infection of the swine flu virus: Amherst College and the Harvard School of Dental Medicine and clinic.

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MyRichUncle Stops Making Student Loans, Files for Bankruptcy

Student Loan Girl — Thu, 19 Feb 2009 00:06:00 GMT

MyRichUncle, the student loan company that “caustically ridiculed the financial ties between colleges and student loan companies” has filed for Chapter 7 bankruptcy, The Chronicle of Higher Education reports (“Student-Loan Industry’s Caustic Rebel Now Cries Uncle,” Feb. 9, 2009).

Unable to secure funding to issue new student loans and unable pay its creditors, the student loan lender, with assets of $11 million and liabilities of $45 million, said it “has suspended all business operations.” But the bankruptcy filing could threaten the financial health of MyRichUncle’s subsidiary Embark, an online college planning company that MyRichUncle purchased from The Princeton Review in 2007.

Despite receiving increased financing from MyRichUncle to launch a new website this year, Embark, which sells online admissions software to hundred of colleges, has laid off 22 employees and has struggled to sell its wares to admissions offices “given MyRichUncle’s widespread alienation of financial aid officers,” Inside Higher Ed reports (“Collateral Damage in Lender’s Demise,” Feb. 18, 2009). Some of Embark’s competitors have even been murmuring to the company’s customers that Embark’s financial future is in danger.

MyRichUncle helped spark the widely-publicized probes of the student loan industry by New York Attorney General Andrew Cuomo that investigated the business relationships between private third-party lenders and colleges and universities.

The investigations revealed that colleges and financial aid officers received both payments and perks from lenders in exchange for placement on schools’ preferred lender lists, and that student loan lenders engaged in deceptive marketing practices, and resulted in the creation of a lender code of conduct that prohibits such practices.

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Former UC Students Get $33 Million Settlement

Student Loan Girl — Wed, 07 Jan 2009 23:58:00 GMT

The University of California school system paid out more than $33 million last month to nearly 35,000 former students after losing a class-action lawsuit over a fee dispute, The Chronicle of Higher Education reports (“U. of California Pays $33-Million to Settle Former Students’ Lawsuit Over Tuition,” Jan. 6, 2009).

A state judge determined the university system was guilty of unfairly raising fees for thousands of students in 2003 — a price hike that the judge said represented a breach of contract between the university and students. The UC system had pledged not to raise certain fees but eventually did so during a state budget crisis, leaving students at a handful of professional schools, including UC Berkeley’s Boalt Hall School of Law, with sharp fee increases, according to the Contra Costa Times (“Nearly 35,000 Get UC Holiday Present,” Jan. 6, 2009).

As part of the settlement, the University of California compensated former students for the difference between the tuition fees they paid and the tuition fees they had originally expected to pay. Former UC students received reimbursement checks for as little as $1 and as much as $12,000, although most students received between $200 and $300.

A UC spokesman said the school system would not be adversely affected by the payout despite recent state budget cuts, and that it would pay for the judgment, which rose to $42 million after interest, over the next five to six years using a portion of student fees.

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Enrollment Up at For-Profit Colleges Despite Economy

Student Loan Girl — Tue, 16 Dec 2008 17:30:00 GMT

While numerous nonprofit colleges have halted construction and are undergoing hiring freezes and other cutbacks due to the declining economy, for-profit colleges are seeing higher enrollment numbers and higher profit margins (“Economic Downturn Is a Boon for For- Profit Colleges,” The Chronicle of Higher Education, Dec. 10, 2008).

Enrollments at nine major publicly traded college companies grew faster than average for the past three years, The Chronicle of Higher Education reports, and profit margins for the current year are projected to be the highest they’ve been since 2005.

Many of the negative trends impacting the economy — state budget cuts, widespread layoffs, and a projected unemployment rate of 10 percent — may mean for-profit institutions will see even greater growth as laid-off workers return to school to gain new job skills.

Influx of Students Presents Opportunities for For-Profits

By contrast, many public and private schools have been negatively affected by state budget cuts and are struggling to accommodate new students. The California State University system, for example, recently announced that it plans to cap enrollment for the fall 2009 semester, and could turn away as many as 10,000 new students because it doesn’t have the financial resources to handle them.

For-profit institutions, on the other hand, are well positioned to benefit from the influx of new students, suggests The Chronicle. Recent changes to federal financial aid policies have made federal grants and subsidized student loans more widely available to students at for-profit schools.

And some for-profit institutions are doing so well financially they have created their own loan programs that enable them to lend directly to their students. Students who need additional funds to cover their college costs, including those with poor credit, can apply for unsubsidized private loans directly at their school, a new practice that many schools, including Corinthian Colleges, have recently initiated.

Although for-profit schools welcome the influx of new students, college administrators are concerned that the economy will not recover quickly enough for their job-seeking graduates.

To ensure that students land the positions they need, career experts like Rene Champagne, chairman of the Career College Association, say its best to begin the search process as early as possible, preferably prior to graduation.

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Colleges Want Piece of Federal Government’s “Bailout Pie”

Student Loan Girl — Thu, 20 Nov 2008 23:17:00 GMT

With 39 states anticipating budget shortfalls next year totaling more than $100 billion, colleges are urging Congress to include them in a second economic stimulus bill currently being drafted, The Chronicle of Higher Education reports (“As the Economic Crisis Hits Home, Colleges Seek Help From Congress,” Nov. 13, 2008).

Hard hit by the deteriorating economy and financial markets, many schools are dealing with declining endowments, reduced support from the state, and higher numbers of financially needy students. To help schools overcome these challenges, college lobbyists are asking Congress to include funds for financial aid, research, and infrastructure as part of the new economic-stimulus bill.

The Association of American Universities and the American Association of Medical Colleges are specifically lobbying Congress for more money for research, emphasizing the ways colleges support the economy by creating new jobs, graduating work-ready students, and promoting business development.

In a recent letter from the AAMC quantifying its claims, the organization stated that medical colleges were responsible for about 3 million jobs, $20 billion in state tax revenue and injected $451 billion into the economy last year.

Billions Requested by College Associations

Many college associations representing a wide array of interests have petitioned Congress for several billion dollars, each for distinct purposes:

The AAMC is requesting $1.9 billion for the National Institutes of Health.
The American Association of State Colleges and Universities and the Student Aid Alliance are asking for more than $5 billion to make up for a projected shortfall in Pell Grant funding and for Congress to provide enough funding to meet a recently passed $500 increase to the maximum Pell Grant award.
The Association of American Universities wants bailout money set aside for campus construction projects that have halted across the nation.

In their pursuit of funds, schools are competing with state governments, as well as the ailing airline and auto industries. And with the transfer of power on January 20, 2009 from the current Bush administration to the Obama administration, schools may have to wait until February or later to see if they get the capital infusion they seek.

With so many urgent needs confronting Congress — including the possible collapse of Ford, Chrysler and GM, and the loss of millions of jobs if the automakers don’t receive $25 billion in emergency government loans — colleges realize that they aren’t likely a top priority to receive government aid, the Chronicle suggests.

Cynthia Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities said, “There are so many people going to the trough who have legitimate needs that it’s going to be hard.”

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VA Keeps Processing of New GI Bill Education Benefits In-House

Student Loan Girl — Mon, 10 Nov 2008 20:10:00 GMT

The education benefits of the new GI Bill — which will provide eligible veterans of the wars in Afghanistan and Iraq with four years of college funding — will be processed in-house by the Department of Veterans Affairs and not outsourced to a private contractor as originally planned, reports The Chronicle of Higher Education (“Veterans Affairs Department Cancels Plan to Outsource New Education Benefit,” Nov. 6, 2008).

The VA said it abandoned its controversial plan to put a private contractor in charge of processing the benefits — a proposal opposed by some veterans groups and members of Congress — after the department didn’t receive enough bids.

Out of 10 submissions, five were selected for review, but the proposals failed to prove that the vendors “could deliver in the very short time frame that we have to stand this up,” said Keith Wilson, director of the VA’s education service.

The American Legion lauded the department’s decision, saying that a contractor can’t offer veterans the same level of service that VA employees can provide.

“The VA employs IT personnel with intimate knowledge of how to best serve the veterans’ community,” said David Rehbein, national commander for the Legion.

Administering the new GI Bill benefits will be unusually complex, says Patrick Dunne, the VA’s undersecretary for benefits, since payment amounts are based on both in-state tuition and living costs, meaning benefits would vary by state and by region.

The new GI Bill, which Congress passed in June, will give veterans enough financial aid to cover up to the cost of in-state tuition at the most expensive public college in their state, along with a stipend for housing and books.

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Changes to Student Loan Repayment Programs Not Enough, Advocates Say

Student Loan Girl — Thu, 30 Oct 2008 18:34:00 GMT

Despite 1,500 individuals and a dozen national organizations pushing for further changes to legislative provisions that help low-income college students repay their student loans, the Education Department recently issued the provisions’ final regulations without first making modifications to problematic language (“Low-Income Student Borrowers May Miss Some Intended Benefits,” The Chronicle of Higher Education, Oct. 26, 2008).

One issue involves the rules of a new student loan forgiveness program that would allow college graduates to have their federal loans forgiven in return for at least 10 years of public service in specific professions. Advocates of the program say that language in the program’s regulations fail to establish procedures that would inform college graduates ahead of time about which specific positions qualify for loan forgiveness.

Robert Shireman, executive director of The Project on Student Debt, a California-based advocacy group, believes that there may still be a way for the Department of Education to resolve this issue without having to backtrack through the regulatory process.

Education Department spokeswoman Samara Yudof, on the other hand, says that regulations for the loan forgiveness program “are clear, and provide a broad list of eligible occupations.” Department officials prefer to identify the eligible occupations in paperwork they give to applicants, instead of detailing the occupations within the regulations themselves, she says.

The other major regulatory issue creates a “double-counting penalty” for married couples under a new income-based repayment plan for student loans. If both partners are eligible for income-based repayment and they file joint income tax returns, supporters of the program say, the regulation’s language could be interpreted in such a way that the couple’s total joint income would be used to determine how much each spouse pays individually. This “double- counting” effect may require them to pay twice as much as two unmarried borrowers in similar financial circumstances.

“This is obviously unfair and inappropriate,” Shireman said, “and needs to be changed by Congress.” Yudof concedes that, in this case, Congress may need to take action to resolve the “double-counting” penalty problem.

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Technical College May Lose Ability to Offer Federal Financial Aid For Violating Newly-Relaxed Aid Rule

Student Loan Girl — Wed, 20 Aug 2008 20:05:00 GMT

Star Technical Institute, a technical college in New Jersey, may not be able to offer federal financial aid to students at two of its seven campuses for allegedly violating a federal law that requires colleges to obtain 10 percent or more of their revenues from nonfederal sources in order to participate in the federal student-aid program, reports The Chronicle of Higher Education (“Just as Congress Eases Aid Rule, College Is Accused of Violating It,” Aug.18, 2008).

A recent audit conducted by the U.S. Department of Education’s Inspector General found that from January 2004 to December 2006 the technical college relied on federal funds for 93 to 96 percent of its revenues at the two campuses, known as Star Upper Darby.

Since the college received more than 90 percent of its funds from the federal government, auditors recommended that both of the institute’s campuses located in Philadelphia, Pa., and Egg Harbor Township, N.J., have their eligibility for federal financial aid revoked.

Auditors also said that the school should return almost $10-million in federal grants and loans it received between 2004 and 2006.

New Legislation Seeks to Relax 90-10 Rule As Student Loan Borrowing Limits Increase

The allegations and recommendation to revoke federal aid are at odds with provisions in the College Opportunity and Affordability Act of 2008, just signed into law by President Bush, which seeks to ease the 90-10 requirement.

Legislators feared that earlier legislation passed by Congress, which raised the loan amount of subsidized federal Stafford student loans by $2,000 per student, would cause some institutions to run afoul of the 90-10 rule. With students’ ability to borrow more in federal financial aid — increasing the likelihood that they could pay for their college costs solely through grants and student loans — colleges run the risk of receiving more than 90 percent of their revenue from federal sources.

To account for the increased limits in student loans and to help institutions maintain their federal funding below the 90 percent threshold, the College Opportunity and Affordability Act allows schools to temporarily treat the extra $2,000 in federal student loan funds as part of their 10 percent, and enables them to work with the Department of Education to resolve violations within a two -year time period.

Resolution, Federal Funding Uncertain

It remains to be seen whether the Department of Education will work with Star Technical Institute to resolve the issues raised by the department’s inspector general under the new provisions of the law or if the department will proceed to revoke the college’s federal funding.

Star’s president, Karen Manin, disputes the audit’s findings and defends her position that the school received only 90 percent of its revenues from federal sources. In a formal letter to the Education Department, Manin noted that the Department of Education appeared to accept formulas her institution used in audits conducted prior to its current audit of 2004 to 2006.

Based on the department’s perceived approval of its previous formula calculations, Manin said, “Star Upper Darby reasonably relied on the DOE’s acceptance of these audits and made decisions about its business.”

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Nonprofit Lenders Hurt by Legislation Intended to Help Them

Student Loan Girl — Sat, 02 Aug 2008 01:53:00 GMT

Legislation that went into effect in October with the College Cost Reduction and Access Act cut federal subsidies to for-profit student loan lenders partly in an attempt to give nonprofit lenders a more competitive edge in the student loan market.

But as lenders continue to scale back or suspend their student loan programs amid a troubled economy and now-unprofitable federal education loans, newer legislation designed to help struggling lenders — nonprofit student loan providers in particular — may be doing more harm than good, writes Paul Basken in The Chronicle of Higher Education (“Federal Rescue Plan May Have Overlooked Nonprofit Lenders,” Aug. 1, 2008).

Government Positioned to Provide Lenders With Funds … But Only If Funds Are Already There

When it became clear that skittish investors, burned by the collapse of subprime credit markets, would no longer buy lender’s student loan portfolios in the secondary market, the government responded by passing the Ensuring Continued Access to Student Loans Act in May, allowing the Department of Education to purchase federal student loans from lenders or to use a lender’s student loan portfolio as collateral for a low-interest line of credit. Both provisions were intended to provide lenders with the needed capital to make new loans, which investors were no longer providing.

The continuing credit crunch, however, has hit nonprofit lenders so hard that they lack the liquidity to even begin issuing new student loans; without new loans, these lenders have nothing to sell or offer as collateral to the Education Department.

Peter Warren, executive vice president of the Education Finance Council, an association of nonprofit lenders, suggests that the recent legislation, by leaving nonprofit lenders still unable to bankroll federal student loans, has not done its job of shoring up the student loan market.

“You need to have access to funds in order to play in this game,” Warren says. “It’s essentially a Catch-22.”

Lower Interest Rates Cripple Lenders

Nonprofit lenders’ inability to secure capital has been even further aggravated by the recent drop in interest rates brought about by the subprime mortgage crisis, which has left student-loan lenders with a “negative subsidy” rate.

As Basken explains, lenders are now actually in the position of having to pay interest to the government on each unsubsidized student loan they issue, since the fixed 6.8-percent interest rate on these student loans is higher than current market rates. Meanwhile, lenders may not be receiving any corresponding principal or interest income from student loan borrowers, who aren’t required to make payments on these federal student loans while they’re in school at least half time.

These lenders, says Shelly Repp, general counsel for the National Council of Higher Education Loan Programs, simply “don’t have enough working capital to carry all the expenditures they’re expected to make.”

In response to the ongoing liquidity issues facing nonprofit lenders, lawmakers are pushing the federal government to come up with new solutions quickly, calling for a hearing next month to consider new options for student loan providers and asking President Bush to offer additional help to nonprofit lenders.

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Senator Pushes Colleges for Enhanced Oversight of Funded Research and Endowments

Student Loan Girl — Tue, 29 Jul 2008 04:57:00 GMT

Sen. Charles Grassley, ranking member of the Senate Finance Committee, wants colleges to be held more accountable in both their academic research and their endowment spending, according to a recent article in The Chronicle of Higher Education (“Sen. Grassley Pressures Universities on Science Conflicts and Financial Aid,” July 25, 2008).

In an exclusive interview with the Chronicle, Grassley said the National Institutes of Health should revoke any of the grants it awards to scientists if a researcher fails to report a conflict of interest with her or his institution. The senator has singled out several institutions of higher education, including Harvard University, Stanford University, and the University of Cincinnati, after his office determined that some scientists at these schools had not fully reported their own financial interests in research projects supported by the NIH, as research institutions are required to do by law.

Grassley has asked 20 other colleges and universities to provide details about possible financial conflicts of interest between university researchers and the NIH.

Colleges Need to Direct More of Their Endowment Funds Toward Financial Aid

The senator has also criticized academic institutions with large endowments for spending too little on financial aid for disadvantaged students. The senator recently asked 136 schools to specify how they spend their endowment income.

Institutions that responded indicated that much of these endowments comes from donors who have earmarked their financial gifts for purposes other than financial aid. The senator said he wasn’t persuaded by the argument and noted that he may still pursue legislation that would require universities to spend as much as 5 percent of their endowments each year, although he hopes such a requirement won’t be necessary.

Grassley stated that he may not sponsor such legislation if more schools begin voluntarily following the example set by some of the nation’s elite institutions that began funneling more of their endowment funds to student financial aid packages earlier this year.

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For-Profit Colleges Face Expulsion from Federal Student Aid Program for Awarding Too Much Aid

Student Loan Girl — Fri, 25 Jul 2008 18:50:00 GMT

Under new federal legislation, many students at for-profit institutions have seen the amount of their Pell and federal student loan awards increase and a larger number these students have been able to cover all their college costs with just these two types of federal financial aid, according to an article in The Chronicle of Higher Education (“For-Profit Colleges Seek Fix for Student-Loan Problem,” July 25, 2008).

However, school administrators fear that with the growing number of students able to take out larger amounts of federal student aid, these for-profit institutions may run afoul of the federal requirement that at least 10 percent of a school’s revenue come from non-federal sources.

If more than 90 percent of a for-profit institution’s revenue comes from federal sources, these colleges may become ineligible to participate in federal student-aid programs, and students may be required to pay for college with more costly funding sources like private student loans or credit cards.

Lobbyists for these for-profit institutions are working with Congressional leaders to alter and renew the Higher Education Act to resolve this issue so that students may still be able to receive greater amounts of federal aid without jeopardizing the federal student-aid programs in place at for-profit schools.

Though Congress is preparing to break before the 2008 elections, lobbyists are hopeful that their addendum will be added to the final version of the bill, which may be voted on before the end of the current legislative session.

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Controversial Admissions Policy Proposal Could Shake Up University of California System

Student Loan Girl — Mon, 21 Jul 2008 22:53:00 GMT

The biggest change in how the University of California system evaluates prospective applicants in 10 years could come from a major administrator-proposed revision to the system’s admissions policy, allowing schools to depend less on test scores and more on individual student evaluations when making admissions offers, according to an article in The Chronicle of Higher Education (“U. of California Proposes Sweeping and Controversial Admissions Changes”).

The new policy would give more discretion to admissions officials at each school, David Longanecker, president of the Western Interstate Commission for Higher Education, told the Chronicle. Longanecker also said that the move would bring the state’s college admissions policies more in line with those of private and public research universities.

Advocates say that the system’s current strict eligibility formula doesn’t adequately consider deserving students from minority or low -income backgrounds who have high GPAs, but who didn’t take the correct college-prep classes or the SAT II.

Under the newly proposed rules, students would no longer have to take this additional test or as many required college-prep courses. Administrators would be allowed to evaluate applicants on an individual basis and would be able to forego the system’s current formulaic admissions methods that depend solely on test scores or other pre-set criteria.

Those administrators who are in favor of the change say that while the new policy would only marginally affect the largest campuses, such as U.C. Berkeley and UCLA, those like the U.C. Riverside and U.C. Merced campuses, which are less selective, may see a significant shift in the composition of their freshmen class.

Critics contend that fewer students with the highest grades and test scores would be guaranteed a spot at a California state school; a factor that may violate the state’s constitution which requires that the UC system admit the top 12.5 percent of California’s high school students.

“It's a change in substance as well as in symbol,” said William Drummond, a Berkeley journalism professor. “Ever since the 1960s and the master plan, we’ve been telling kids from primary school on up that if you work hard, we will guarantee you a place. Now we’ll just guarantee that you’ll be reviewed.”

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Professors Pay Students’ Tuition With New 'Opportunity Scholarship'

Student Loan Girl — Thu, 17 Jul 2008 23:17:00 GMT

In an effort to stem the drop-out rate of low-income and immigrant students at California’s Santa Ana College, some professors are paying for their students’ tuition through the school’s new Opportunity Scholarship, according to an Inside Higher Ed article (“Professors Pay Student's Tuition,” July 8, 2008).

To be distributed for the first time this fall, the scholarship will cover a full year of tuition at Santa Ana for students who have unmet financial needs and who carry at least a B-average GPA. The idea for the scholarship came from Jeff McMillan, a chemistry instructor and former president of the Academic Senate, who wanted to help prevent students from dropping out of classes due to finances.

McMillan commented that since a large number of Santa Ana’s low- income students are ineligible for federal government aid, such as Pell grants or Stafford student loans because they are children of undocumented immigrants, they often experience difficulties finding enough funds to cover the costs of their education.

McMillan, along with Santa Ana College counselor Issac Guzman, approached the school’s vice president of student services with the idea of a scholarship program that would be funded by college employees.

Largely due to publicity about the program, including an article that ran in the Los Angeles Times emphasizing the program’s need for community involvement, the number of scholarships to be distributed ballooned from the original estimate of 10 to 25 up to 100. The increase in awards was made possible, in large part, by contributions from individuals outside the Santa Ana College community.

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Davidson College Sees Positive Results After Eliminating Student Loans

Student Loan Girl — Thu, 10 Jul 2008 03:44:00 GMT

While Princeton was the first university to completely eliminate student loans from its financial aid packages in 2001, it was Harvard’s announcement to follow in Princeton’s footsteps this fall that garnered national media attention as no-loan financial aid policies for 2008–09 began to turn up at elite colleges and universities across the country: Amherst, Columbia, Dartmouth, Stanford, Swarthmore, Yale.

So far, some 50 institutions across the country have implemented no-loan and loan-cap financial aid policies, according to the Project on Student Debt, a nonprofit advocacy group — in some cases for all students; in others, only for students whose families fall below a certain income cutoff, although that cutoff runs as high as $150,000 a year at some schools.

After stinging rebukes from legislators critical of yearly tuition-hikes that have outstripped inflation and the proliferation of costly private student loans in undergraduate debt loads, many of the nation’s richest schools have moved to reduce student dependency on college loans and to entice greater numbers of low- and middle-income students to enroll at their institutions.

But it’s a small, selective liberal arts institution in North Carolina — Davidson College — that’s already seeing the results of eliminating student loans from its financial aid packages (“At Davidson, Getting Rid of Loans Shows Early Signs of Success,” The Chronicle of Higher Education, July 11, 2008).

While the long-term, broader nationwide impact of these new financial aid policies may not be seen for a few years, Davidson — which got a head start over the rest of the Ivy Leagues by instituting its no-loan policy a year earlier, in the fall of 2007 — has already experienced a three-percent jump this year in the number of incoming students who demonstrate financial need.

Although Davidson’s endowment of $489 million is much smaller than the multibillion-dollar endowments of its Ivy League competitors, the school has set a goal to have 40 percent of its incoming students receiving only need-based aid by 2011 — a plan that Davidson’s dean of admissions and financial aid, Christopher Gruber, says will cost $3.5 million to implement.

"We're moving in the right direction with a year to promote it," Gruber says.

Davidson’s early results aren’t surprising, says Jonathan Epstein, from the education consulting firm Maguire Associates. But families shouldn’t expect no-loan policies to become the norm. “My take is, it’s not something that, as announced policy, is going to spread across the country.”

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Trade School Students No Longer Protected Under California Law

Student Loan Girl — Mon, 07 Jul 2008 23:50:00 GMT

California students at for-profit colleges now have fewer legal rights if their institution goes out of business. The state law that regulated for-profit colleges, which enroll some 400,000 students, expired at the end of June and lawmakers recently rejected a bill that would replace the law, according to a Chronicle of Higher Education article (“California's Oversight of For-Profit Colleges Lapses as State Law Expires,” July 1, 2008).

The rejected bill would have provided tuition refunds to California students at for-profit colleges through a state-run reimbursement fund and would have dropped the requirement that colleges place 70 percent of their graduates in jobs. The law would have also restricted students from suing their school over grievances.

Lawmakers, consumer advocates, and schools have battled for three years to negotiate terms of the new law without success. Advocates claim that some of these schools misrepresent the value and quality of their job-oriented educational programs, which causes students to incur large amounts of debt and leave many without viable options for employment.

Corinthian Colleges, one of the larger for-profit schools in California and a school that has been at the center of this controversy, recently settled a lawsuit requiring the school to pay $6.5 million for a charge that Corinthian exaggerated its job- placement record, according to an article in the Los Angeles Times (“Oversight of For-Profit Trade-Schools Expires in California,” July 1, 2008).

Robert Johnson commented that the for-profit college oversight bill that expired in June had so many requirements that he feared it would cripple smaller trade schools not part of a national chain like Corinthian. Johnson, the executive director of the California Association of Private Postsecondary Schools, said that the bill “was 112 pages of punishment.”

Lawmakers believe that the bill may reemerge later this year in a different form, although Governor Arnold Schwarzenegger may veto it, due to opposition from his Consumer Affairs Department. If the bill were to pass, it could go into effect as early as January 2009.

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