Student Loan Blog : College Access

Audit of State Student Loan Agency Calls for Major Reform

Student Loan Girl — Thu, 21 Aug 2008 21:23:00 GMT

The Pennsylvania Auditor General Jack Wagner has recommended sweeping changes for the Pennsylvania Higher Education Assistance Agency a year after the state student-loan agency was found to be lavishly overspending on internal operations, according to a Forbes.com article (“Pa. Audit Seeks Loan-Agency Board Overhaul,” Aug. 19, 2008).

In a performance audit of the agency, Wagner concluded that “The PHEAA was governed and managed within a culture that sometimes allowed self-reward to supersede fiscal prudence. In those instances PHEAA failed its mission by not using all available resources to benefit Pennsylvania students.”

Wagner began the audit in April 2007, after news reports accused the agency of overpaying executives and staff members and freely spending hundreds of thousands of dollars on extravagant banquets, bar bills, golf outings, and spa treatments — all while failing to increase college grant amounts to keep pace with rising tuition costs.

Now, after a year-long investigation that analyzed the agency’s spending and management practices between July 1, 2004, and June 30, 2007, Wagner is asking the student loan agency to trim the salaries of PHEAA’s 12 executives whose combined income totaled $121 million during the three-year period of the audit.

Wagner is also urging the PHEAA to replace half of the 16 lawmakers on the 20-member PHEAA board with heads of banking and community agencies, leaders of colleges and universities, and a full-time college student.

PHEAA Bends on Some of Report’s Recommendations

PHEAA President and Chief Executive Officer James Preston said while the agency agrees with most of Wagner’s findings, the audit is based on “really old information.”

“What you have to look at is what’s really happened going forward,” he said. “Our board and our management and employees are dedicated to reform.”

Over the last 18 months, PHEAA has overhauled its spending practices, instituted annual internal spending audits, and increased oversight of its travel policies.

But Preston rejects Wagner’s proposal to alter the makeup of the agency’s board — a change that would require legislative approval — saying that too many adjustments to the board’s organization would jeopardize the PHEAA’s ability to retain its tax-exempt status, which allows the agency to receive state funding for its student loan programs.

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More Rigorous Admissions Standards at Nevada Universities May Affect Minorities

Student Loan Girl — Tue, 17 Jun 2008 00:05:00 GMT

NAACP and ACLU officials warn that with the University of Nevada, Las Vegas, and the University of Nevada, Reno, increasing their minimum grade point average from 2.75 to 3.0, minority students may be discouraged from pursuing a higher education, according to an Associated Press article (“NAACP, ACLU Concerned About Tougher Admission Standards at Nevada Universities,” June 15, 2008).

Citing a report that showed a drop in enrollment among minority students the last time these schools raised their minimum GPA requirements, the two organizations have expressed concerned that this move may have a disproportional impact on minority students.

In 2006, the two universities increased the minimum GPA requirement from 2.5 to 2.75, which resulted in a 22-percent decrease in black student enrollment and a 50-percent drop in Native American and native Alaskan students at UNLV for that year, according to another Associated Press article (“Freshmen Enrollment Dips at Nevada Universities,” June 14, 2008). That same year, University of Nevada, Reno experienced a 10.6-percent decrease in Hispanic student enrollment.

University administrators claim that those students who meet the new, more rigorous standards will be better able to succeed in the classroom. High school students seeking admission to UNLV or the University of Nevada, Reno with low GPAs, will be able to apply with their SAT or ACT scores instead of their grades.

Students denied admission due to low GPAs may improve their academic performance at a state or community college prior to attending one of the two state universities.

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Department of Education Planning Emergency Financial Aid Survey

Student Loan Girl — Fri, 18 Apr 2008 23:45:00 GMT

In an effort to better gauge the availability of federal student loans, the U.S. Department of Education is planning to issue an emergency survey to the 4,500 colleges that participate in the Federal Family Education Loan Program.

With almost 50 FFELP lenders having already suspended their federal student loan programs, the survey — which will be sent electronically to financial aid offices at all FFELP schools — will ask administrators to confirm that they have secured lenders for the 2008–09 academic year and to provide the Education Department with a list of those lenders.

In a notice published April 16 in the Federal Register, education officials wrote that the survey is designed to help the Department of Education ensure that students have continued access to federal student loans. Survey results are expected to highlight the difficulties families may be experiencing in accessing FFELP loans.

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The Working Poor in College—Does School or Work Come First?

Student Loan Girl — Wed, 11 Jul 2007 03:50:00 GMT

For many of the working poor, a college degree is the key to a better job, more opportunities, and, ultimately, a way out of a life of poverty. But even though the working poor who are enrolled in college classes may regard themselves as students first and employees second, their job schedules, financial obligations and family responsibilities can interfere with their ability to take classes full-time, which can limit their access to financial aid and make it more difficult for them to earn their degree, according to a report released today by the Institute for Higher Education Policy, “College Access for the Working Poor: Overcoming Burdens to Succeed in Higher Education.” Two articles published today, one by Elizabeth Redden at Inside Higher Ed (“The Working Poor and College Access”) and one by Elyse Ashburn at The Chronicle of Higher Education (“Report Suggests Steps That Lawmakers and Colleges Can Take to Help the Working Poor”), discuss some of the salient points of the report.

Who Are the Working Poor?

The authors of the report define the working poor as adults who work at least 25 hours per week and have family incomes at or below 200 percent of the poverty level. The “nonworking” poor are those who work fewer than 25 hours per week or for less than half of the weeks enrolled in a higher education program. But one of the surprising findings of the report, writes Redden, is the fluidity of the term “working poor.” “The working poor can periodically move into the ‘nonworking poor’ category and vice versa as individuals make constant trade-offs about whether to take time off from work and attend college full time … or step up the hours in the workplace to pay for course work and the cost of living.”

A Financial Obstacle Course

As both Redden and Ashburn note in their articles, even after receiving financial aid, working poor adults must be able to come up with an average of about $4,000 a year to cover their college costs. The report makes this observation, as quoted in Redden’s article: “Like poor students in general, working poor students are left with significantly higher amounts of financial need after all aid has been awarded compared with their counterparts with greater economic resources.”

The report also found that working poor adults are less likely to attend college full time, with 37 percent of working poor undergraduates attending school exclusively full time, versus 48 percent of the nonworking poor. And because more working poor adults tend to enroll as part-time students, their financial aid eligibility seems to be affected, Redden writes. In 2003–04, 54 percent of working poor adults received a grant averaging around $3,000. In the nonworking poor category, however, where full-time attendance rates are higher than among the working poor, 67 percent received a grant averaging more than $3,500.

The net effect of these financial and time constraints on the working poor is measurable: According to the report, only 18 percent of working poor adults have earned an associate, bachelor's, or advanced degree, compared with 22 percent of the nonworking poor and 46 percent of nonpoor working adults

Reaching Out to Keep College Doors Open

As far as current financial aid policy, the report advocates congressional reform that would (1) increase the amount of money working students can earn and still qualify for full student financial aid benefits and (2) increase the amount of income a family can earn before being expected to contribute to a dependent student’s college costs. But the solutions proposed by the report go beyond just giving out more financial aid, as Ashburn discusses in her article. The report also proposes changes to the current welfare system, to allow college attendance to count as work. Another of the report’s recommendations is to make Hope and Lifetime Learning education tax credits refundable—which would allow students and families who don’t earn enough to owe any federal income taxes to receive money back to cover education expenses.

The report also calls on schools to make changes, to expand their outreach programs to students from low-income families and to bolster their institutional support by offering evening or weekend hours for student services like academic advising and offering extended hours for libraries and computer labs.

Even though the difficulties the working poor face are significant, the report doesn’t see them as insurmountable. There are, Redden quotes, “many examples of programs and practices—such as improved counseling, child-care services and flexible schedules—that help the working poor overcome these obstacles.”

Talk to the education finance advisors at NextStudent. They have all the information and advice you need on student loans. Check out www.nextstudent.com.

Be sure to tune in next Tuesday for my next blog about this week in student loans.

Student Loan Girl

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College Access to be Improved by Government—Really?

Student Loan Girl — Thu, 05 Apr 2007 15:02:00 GMT

In the midst of all the talk about the new student loan legislation comes discussion and debate regarding how the department of education and the federal and state governments can improve access to college. While this is nothing new or even earth-shattering, it appears that U.S. Secretary of Education Margaret Spellings and our leadership in Washington is getting down to business and considering some key solutions to an ongoing problem.

Regardless of Solution, Fundamental Concerns Exist

With respect to the proposed “fixes,” in an article by Ronald G. Ehrenberg titled “How Governments Can Improve Access to College” that appeared in the April 6, 2007 issue of The Chronicle of Higher Education’s The Chronicle Review, he wrote:

“Whether those fixes involve tuition or student aid, or focus on the pipeline from elementary and secondary schools, all must confront some fundamental concerns. First, the United States no longer leads the world in college-completion rates; improving those rates is important to the nation’s economic well-being. Second, the inequalities in access for students from different income groups have narrowed only slightly during the last 25 to 30 years, and inequalities in college-completion rates have narrowed even less. Finally, the population groups that are growing the most rapidly have historically been underrepresented in higher education.”

State Programs, Policies Hint at a ‘Reasonable Fix’

In the article, Ehrenberg reviewed in-depth the stated concerns, then posed the following question along with what a few states have been doing to resolve the access issue: “Given this picture, how can the United States meet its social objective and bridge the divide in access to higher education?”

Both Florida and Virginia have come up with unique ways to increase access according to the article:

“Florida helps to achieve that with a common course-numbering system across community and four-year colleges, which permits students to easily transfer credits. Both the Senate and the House of Delegates in Virginia have passed legislation that would allow community-college graduates in certain fields to continue to pay lower community-college tuition levels if they transferred to the University of Virginia or another four-year institution in the state; the two bodies are now trying to reach agreement on how the program would operate. The lower tuition would reduce the financial barriers for needy students at the state’s flagship institutions.”

In addition, a few states have approached the access question from a different angle altogether, as reported in the article:

“A number of states also have programs that offer scholarships or loan-forgiveness programs to public and private-college students who remain in the state after graduation and work in fields that the state judges to be socially important — for example, nursing, teaching, and social work. In the public sector, to the extent that tuition rises rapidly and students more and more take on large loan burdens to finance college, such programs are likely to play an increasingly important role in attracting high-quality students into majors that lead to relatively low-paying jobs.”

It is important to keep up to date on student loan news and higher education. What goes on in government and in your state can have a great impact on your student loans and your college education.

For all the information you need about student loans, go to www.nextstudent.com.

Be sure to tune in next Wednesday for my next blog on student loan legislation in the news.

Student Loan Girl

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