Student Loan Blog : financial aid

Wyoming’s Largest Student Lender to Stop Making Student Loans

Student Loan Girl — Mon, 02 Nov 2009 15:02:00 GMT

Nonprofit Wyoming Student Loan Corp., the state’s largest student loan lender, has announced that, as of April 1, 2010, it will no longer be issuing any new parent or student loans.

In a statement from president and CEO Phil Van Horn, the company, also known as WyoLoan, said that it will continue to fund any student loans that are already approved for the current 2009–10 academic year and for which all loan proceeds will disburse by March 31, 2010 (WyoLoan announcement of student loan suspension, Oct. 20, 2009).

“WyoLoan is making this announcement at this time so that any student who has applied or who may apply for a loan and for which funds would be released after March 31, 2010, can make other arrangements through their respective school financial aid offices,” the statement reads. “At the present time, we estimate the number of students who will have to resubmit applications to be less than two dozen.”

The company will also continue servicing its current 25,000 customers who already hold student loans, which total $350 million, The Associated Press reported (“WyoLoan to Stop Making Student Loans,” Oct. 30, 2009).

In the lender’s 30-year history, the company website says, WyoLoan has issued over $1 billion in education loans to more than 75,000 students and parents.

Congress Considers the End of the Road for Student Loan Lenders

The company’s decision comes in response to proposed federal legislation moving through Congress that would put an end to the federal student loan program known as FFELP (Federal Family Education Loan Program), which allows private third-party lenders like WyoLoan to issue government-backed student loans.

Currently, the government pays these private FFELP lenders a subsidy for the federal parent and student loans they originate. A second federal student loan program — the Federal Direct Student Loan Program, begun in 1992 — issues federal student loans directly to borrowers through the U.S. Department of Education, with no third-party involvement from a bank or other FFELP lender.

Under the proposed legislation, known as the Student Aid and Fiscal Responsibility Act (H.R. 3221), all federal parent and student loans would become Federal Direct loans, issued directly to borrowers through the government rather than through third-party FFELP lenders — effectively putting most private lenders like WyoLoan out of business.

President Obama has been a vocal backer of the SAFRA bill, maintaining that FFELP subsidies funnel government money to banks and away from students. Supporters claim that the elimination of FFELP subsidies will generate $87 billion in savings to taxpayers over the next decade.

Critics, however, dispute this savings figure and say that the legislation amounts to a government takeover of student loans, stripping students of their right to choose their own lender.

Wyoming’s congressional delegation has come out alongside WyoLoan against the SAFRA bill.

The bill was approved by the House of Representatives on Sept. 17 and now awaits a Senate vote.

Should the measure fail to pass, Van Horn said, WyoLoan will consider lifting the suspension of its student loan program.

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SEC Investigates University of Phoenix Owner, Apollo Group

Student Loan Girl — Thu, 29 Oct 2009 19:03:00 GMT

Apollo Group Inc., the parent company of the University of Phoenix, the largest for-profit college in the country, announced on Tuesday that the Securities and Exchange Commission has launched an “informal inquiry” into the company’s revenue accounting practices.

This new probe, being conducted by the SEC’s enforcement unit, marks the second time this year that the SEC has targeted Apollo’s accounting operations for investigation. In February, the corporate finance division of the SEC also revealed it was reviewing Apollo’s revenue recognition practices.

“The ‘revenue recognition’ issue revolves around how Apollo determines when a student drops out of a class and how much income Apollo can leave on its balance sheet, and for how long,” The Associated Press explains in its reporting on the new SEC inquiry (“Ahead of the Bell: Apollo Shares Sink on SEC Probe,” Oct. 28, 2009).

Nearly 90 percent of Apollo’s income — most of which is generated from student tuition — comes from federal student loans and other government financial aid. Federal student aid accounted for roughly 86 percent of the company’s revenue in the 2009 fiscal year, Bloomberg reports, up from 82 percent in fiscal 2008 and 48 percent in fiscal 2001 (“Apollo Shares Plunge as SEC Starts Accounting Inquiry,” Oct. 28, 2009).

Apollo Defends Accounting Policies

In a conference call with investors on the same day that it released the news of the SEC probe, Apollo defended its accounting practices (webcast of Apollo’s fourth-quarter 2009 earnings conference call, Oct. 27, 2009).

Analysts on the call directed questions toward Apollo’s revenue recognition policies, asking the company about its attendance records and how revenue is booked when a student drops a class.

Apollo responded that it stops recognizing revenue not immediately upon a student’s withdrawal from a course but only once a tuition refund is processed. The company books full tuition revenue for a course if a student attends more than 60 percent of the class sessions. In the case that a refund is delayed for any reason, the company will make the necessary revenue adjustments, Apollo said.

“The policies are straightforward and they are in accordance with GAAP — all of them,” said Apollo’s chief financial officer, Brian Swartz, referring to Generally Accepted Accounting Principles, the standard financial accounting guidelines that publicly traded companies are required to follow.

Analysts: SEC Targeting of More For-Profit Institutions Unlikely

After Apollo’s announcement of the SEC inquiry, the company’s shares plunged nearly 20 percent to their lowest levels in more than 19 months in New York trading.

But blowback from the news of the government’s scrutiny didn’t remain limited to Apollo: Shares of other for-profit education companies traded lower yesterday, the day after Apollo’s announcement, The Wall Street Journal reported, as investors questioned whether the SEC probe into Apollo is a precursor for an industry-wide crackdown (“Education Stocks Drop After Apollo Announces SEC Probe,” Oct. 28, 2009).

“For-profit colleges have come under fire numerous times for their methods of recognizing revenue,” the article in The Wall Street Journal notes.

Perhaps with this history in mind, “some investors have opted to scrutinize the company’s practices on student refunds and bad-debt expense, the implication being that this could be the beginning of an industry-wide review of practices,” a Wedbush Morgan analyst wrote in a note to investors Wednesday.

However, the Wedbush Morgan note went on to caution, “we remind investors that it’s plausible that the issue could equally relate to other parts of the business.”

Trace Urdan, who follows Apollo for the Signal Hill Capital Group, believes a larger regulatory examination into for-profit colleges is something to be taken into consideration. “I think there’s sort of two possibilities,” Urdan told The Arizona Republic. “Either the SEC’s got something on Apollo specifically and they’re moving in, or there’s something related to the industry” (“Apollo in Accounting Investigation,” Oct. 28, 2009).

Other analysts, however, feel the SEC action doesn’t represent anything broader in scope than a check into Apollo itself.

While downgrading their ratings of Apollo, analysts at Morgan Stanley noted there’s no reason to believe the SEC investigation signals a larger industry issue, The Wall Street Journal reported. And in a note to clients, RBC Capital markets analyst Robert Wetenhall asserted that his firm is confident the SEC accounting probe is specific to Apollo.

“We feel that the issues that are affecting Apollo are unique to it and not applicable to the broader sector” of for-profit education companies, Wetenhall said.

Analysts at Deutsche Bank, consulting with financial legal expert David Seide, concurred. In their estimation, the StreetInsider reported, the SEC issue “is probably company-specific, not part of an industry-wide sweep, as the SEC enforcement division focuses on potential violations, not policy” (“Apollo Group Can’t Find Traction After Disclosing SEC Probe,” Oct. 29, 2009).

Seide “did not rule out an industry sweep, but this seems like a lower-probability event.”

A Move Toward Increased Oversight of For-Profit Colleges?

Some market-watchers wonder if the SEC probe of Apollo, while not ushering in a federal swoop-down on for-profit colleges, may still be an indication of significant changes in regulatory attitudes toward these schools looming in the wings of the White House.

In this view, the SEC inquiry may have arisen out of the move toward generally increased consumer financial protections within the new government administration.

“It is no secret to insiders that the Bush-era education team has been favorable to for-profit education,” Citron Research declared, noting that Sally Stroup, the assistant secretary for post-secondary education during the Bush administration and the highest-ranking official overseeing for-profit schools, was a lobbyist for the University of Phoenix for eight years (“Citron Releases the Document That the Apollo Group Does Not Want You or the U.S. Government to See,” Jan. 13, 2009).

Citron has been fiercely critical of what it argues are Apollo’s fraudulent business practices and unethical, strong-arm recruitment tactics (“Citron Exposes Apollo’s Big Dirty Secret,” March 4, 2009).

“Count on the Obama administration to take a fresh, critical look” at Apollo, Citron predicted in January. “As the largest single recipient of student loans in this country, [Apollo] is a for-profit institution whose insiders have sold hundreds of millions of dollars of stock while collecting over 75 percent of their revenue from government-guaranteed loan funds, while delivering an education of questionable value amid a history of unsavory business practices.”

Continuing Legal Embroilments for Apollo

The changed tenor at the White House notwithstanding, specialists in financial circles say the SEC’s investigation into Apollo may never go any further than the current “informal inquiry.”

“We do not believe a formal inquiry or fraud allegations are a foregone conclusion,” Deutsche Bank analysts told the StreetInsider.

In fact, out of the roughly 800 informal investigations initiated each year by the SEC against corporations and individuals, only slightly more than half, about 450, result in formal investigations, the StreetInsider reports. Just 100 result in actions.

At the same time, even if this newly launched SEC review of Apollo’s accounting practices fades away with no further repercussions, corporate observers can’t escape the fact that this latest government probe is adding yet another chapter in a growing string of recent legal troubles for the company:

Sued by employees: In its fourth-quarter and year-end earnings report issued on Tuesday, the same report in which it disclosed the SEC inquiry, Apollo also revealed it took a charge of $80.5 million for the quarter to cover a possible settlement pending in a federal whistleblower suit (“Apollo Group, Inc. Reports Fiscal 2009 Fourth-Quarter and Year-End Results,” Oct. 27, 2009).

The lawsuit, brought in 2003 by two former University of Phoenix enrollment counselors, accuses the University of Phoenix of violating a federal ban that prohibits schools from paying recruiters based on the number of students the recruiter enrolls.

Apollo paid $9.8 million to the U.S. Department of Education in 2004 to settle alleged violations of the same rule, Bloomberg reports.
Sued by shareholders: That same year that Apollo settled with the Education Department for illegal recruiting, Apollo officials, after receiving a scathing report from government regulators on the company’s recruitment practices, decided not to publicly disclose the contents of the government report, out of concern for the potential negative reaction from shareholders.

The decision to hold back this information led to a securities class-action lawsuit from Apollo shareholders, accusing the company of misrepresenting and of failing to disclose “material adverse facts.”

In January 2008, a federal jury unanimously found Apollo guilty of securities fraud for misleading investors, delivering a verdict of $277.5 million, although the judgment was overturned seven months later on appeal.
Sued by students: Apollo has also been taken to court by its students: In December 2008, three former University of Phoenix students filed a federal class-action lawsuit against Apollo and the University of Phoenix, accusing the institutions of improperly denying them the use of federal student loans, in violation of the Higher Education Act.

The students alleged that, when they dropped courses shortly after enrolling, the University of Phoenix returned all of their federal student loan funds to the lenders without the students’ “knowledge or consent,” even though the students had already incurred tuition charges. The school then demanded immediate repayment from the students for the partial tuition owed.

By charging the students directly and not allowing them to use their federal student loans as payment, the complaint stated, the University of Phoenix denied these students the borrower protections and more generous loan repayment terms offered by the federal government.

Returning the students’ federal student loan money was also a “transparent attempt” by the University of Phoenix to unlawfully manipulate its federal student loan default rate, the lawsuit charged, since students who don’t finish their education are at the highest risk of defaulting on their student loans. In this case, the school effectively prevented these high-risk students from defaulting on federal student loans. If the students failed to pay their tuition charges, they would be defaulting on a debt to the school, not to the government — a default that wouldn’t affect the school’s eligibility for federal funds.

Student loan default rates were also the focus of a recent government assessment of for-profit schools. The Government Accountability Office released a report last month critical of the high student loan default rates at for-profit colleges like those run by Apollo (“Proprietary Schools: Stronger Department of Education Oversight Needed to Help Ensure Only Eligible Students Receive Federal Student Aid”).

For-profit schools, the GAO found, exhibited a tendency to admit unqualified students who are more likely than other students to drop out, as well as a pattern of allowing students to remain enrolled despite a lack of academic progress.

On the company’s Tuesday conference call, Apollo’s co-chief executive, Chas Edelstein, assured investors that the company is working to “ensure that only students who have a reasonable chance to succeed enroll in our universities,” as a means of trying to scale down the number of students who default on their student loans.

Apollo’s bad-debt expense — defaulted student loans the company has written off as uncollectable — rose to 4.2 percent in the fourth quarter, up from 3 percent.

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‘Gap Loans’ at For-Profit Colleges Escape Proposed Legislation

Student Loan Girl — Tue, 27 Oct 2009 19:47:00 GMT

While acting last Thursday to approve the creation of a Consumer Financial Protection Agency, which will expand federal oversight of private student loans, a Congressional panel at the same time voted to reject a proposal that would have included school-sponsored “gap loans” under the authority of the new CFPA.

The House Financial Services Committee, in a vote of 39 to 29, approved the Consumer Financial Protection Agency Act of 2009 (H.R. 3126), a centerpiece of the Obama administration’s pursuit to overhaul the nation’s financial regulatory system. The approved legislation would create a new federal agency, the CFPA, which would have the authority to write new consumer protection rules in the arenas of lending and credit, including private student loans (“House Panel Moves to Regulate Private Student Loans,” Oct. 26, 2009).

Gap loans, however, could potentially be exempted from the CFPA’s oversight due to language included in the bill meant to shield small businesses and local merchants that extend credit to their customers. A proposed amendment to the CFPA Act that would have clarified that gap loans are subject to CFPA regulation was narrowly defeated in the House committee by a vote of 35 to 33.

Gap Financing on the Rise at For-Profit Schools

“Gap” student loans — so-called because they’re intended to cover students’ financing gaps, any college costs that aren’t covered by a student’s financial aid (scholarships, grants, federal student loans) — are increasingly being offered by for-profit colleges and vocational schools to boost enrollment as these institutions encounter a swelling influx of unemployed and low-income students looking to return to school to obtain a higher-earning degree, learn a new trade, or acquire additional training for their résumé.

“Because the economic meltdown has made it harder for students to get bank loans, several of these schools are increasingly stepping in, financing degrees in the same way a furniture store or used-car dealer might extend credit to customers,” explains Justin Pope, an education writer for The Associated Press (“For-Profit Colleges’ Increased Lending Prompts Concerns,” Aug. 15, 2009).

For-profit schools, also known as “proprietary” colleges, that provide gap financing, which include national heavyweights ITT Technical Institutes, Corinthian Colleges, and Career Education Corp., say that their financing programs allow students to attend school who wouldn’t otherwise be able to afford a college education.

But these gap financing programs are risky and expensive for students, consumer advocates maintain. Gap loans typically carry high interest rates, sometimes in the double digits, and large monthly payments that the schools’ generally low-income students often aren’t able to handle — all while allowing the schools to reap hundreds of thousands of dollars in federal money from the federal financial aid that students use to pay the bulk of their attendance costs.

“I believe we have an obligation to ensure that these schools are not allowed to continue to prey on students,” said Rep. Maxine Waters, D-Calif., who sponsored the defeated CFPA amendment. “By subjecting these schools to CFPA’s authority, the quality of the student loans these schools provide will improve” (“House Panel Approves Expanded Oversight of Private Student Loans,” The Chronicle of Higher Education, Oct. 22, 2009).

Consumer Groups Push for Regulation of Gap Financing

Consumer and student advocate groups, concerned about the potential for student loans made by proprietary schools to be exempted from the CFPA legislation under the bill’s small-business clause, had been lobbying in support of the Waters-sponsored amendment to explicitly bring gap loans under the authority of the CFPA.

“We just want to make sure that the risky financial products that some colleges, for-profits in particular, have been making to students are still covered by this agency, and not undercut by a well-intentioned suggestion of how to make sure that the neighborhood grocer isn’t unfairly and unduly impacted” by increased regulation, said Lauren Asher, president of The Institute for College Access & Success (“Regulating Private Student Loans,” Inside Higher Ed, Oct. 19, 2009).

Asher and TICAS joined a number of other consumer and student advocacy groups in drafting a letter earlier this month to Rep. Barney Frank, the Democratic chairman of the House Financial Services Committee, urging the committee to clarify that school-sponsored loans wouldn’t be shielded from the CFPA’s reach (letter to Rep. Barney Frank regarding H.R. 3126, Oct. 7, 2009).

“To effectively protect consumers, the CFPA must have full authority to regulate private student loans regardless of the institution offering them,” the groups wrote. “For consumers, a private student loan can pose the same serious risks whether issued by a financial institution or by a school. The CFPA should apply and enforce standards based upon the product and not the issuing institution.”

Gap Loans vs. Gap ‘Financing’: The Non–Student Loan

Proprietary colleges argued against the Waters amendment, saying that gap student loans are already regulated by the federal Truth in Lending Act.

New TILA rules, mandated under last year’s Higher Education Opportunity Act (H.R. 4137) and which will go into effect in February, will require student lenders to disclose more details about their private loan programs, including interest rates and estimated monthly payments, and to inform applicants for private student loans about federal student loan options.

Consumer advocates, however, hold that TILA regulations aren’t sufficient and that the stricter oversight of the CFPA is necessary in order to protect student loan borrowers.

In pushing for the Waters amendment, consumer and student advocacy groups pointed to the move being made by some schools to offer their gap funding under the auspices of “consumer financing” rather than as a student loan program. By structuring their gap funding programs as consumer financing rather than as private student loans, schools are able to skirt the student loan–specific requirements, regulations, and borrower disclosures mandated by the Higher Education Opportunity Act.

“It’s very alarming,” said Deanne Loonin, director of student loan borrower assistance project at the National Consumer Law Center. Schools “can structure the products in all kinds of ways — things like revolving credit lines, unsecured loans, even secured loans. It’s this new thing, and we’re worried about it.”

One for-profit school, Colorado-based Westwood College, is currently defending itself against a class-action lawsuit brought by students accusing the school of fraud in its student financing. The lawsuit charges Westwood with violating state banking laws. Westwood’s student financing program carries a relatively high interest rate of 18 percent, but the school doesn’t call its financing student loans.

The For-Profit Risk

Students at proprietary colleges are particularly vulnerable to the schools’ high-interest loans and financing programs, consumer and student groups say, because of who these students are: lower-income, higher-risk borrowers.

Low-income students, who tend to drop out of college in greater numbers than higher-income students, generally end up struggling to repay their student loans. And for-profit colleges, with their student populations that skew toward lower income levels, on average have lower graduation rates and higher loan default rates than other schools.

In 2007–08, students at proprietary colleges defaulted on their student loans at a rate of 11.1 percent, according to the Department of Education, compared to a default rate of 6.0 percent for students at public nonprofit colleges and universities and a rate of 3.8 percent for students at private nonprofit institutions.

Students at for-profit schools are also taking on increasingly higher debt loads: The percentage of proprietary college students borrowing at least $40,000 nearly tripled to 30 percent between 2003–04 and 2007–08, says Mark Kantrowitz, founder of the financial aid website, FinAid.org. The proportion of proprietary college students taking out private student loans has also come near to tripling, rising to 43 percent from 15 percent in that same time period, according to an analysis of federal data by the nonprofit group Education Sector.

Nonetheless, critics charge, as long as proprietary schools can continue to bring in significant federal funds with each student, the schools have little incentive to refine their lending practices to ensure that students aren’t taking on unmanageable debt.

“Consider, for example, a school charging $10,000, hoping to enroll a student who has lined up $9,000 in aid from the government and elsewhere,” writes Pope. “Even if the school loses half of the $1,000 it lends to get the student in the door, it comes out $9,000 ahead.”

And “for many of these students, if you don’t apply these thousand dollars, they’re not coming to school,” says Jeff Silber, an industry analyst with BMO Capital Markets.

From the school’s perspective, you’re realizing “all those other revenues,” he elaborates, “even if you write off $500 [of that $1,000] right away. … Financially it still makes sense to do this.”

And with last week’s defeat of the CFPA amendment, the stage is set for schools to press on with their gap financing programs, having sidestepped, at least for now, the impending shadow of the CFPA and increased federal oversight.

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Cost of College Continues to Climb, Even in a Recession

Student Loan Girl — Wed, 21 Oct 2009 20:14:00 GMT

Even as the recession has depressed consumer prices and the cost of living has fallen over the last year, college tuition rose in 2009, with the largest percentage increases coming at community colleges and public four-year schools — the mounting expense of an education revealed in the College Board’s latest reports on financial aid and the cost of college, released yesterday (“Trends in Student Aid 2009” and “Trends in College Pricing 2009”).

Squeezed by state budget cuts, public colleges and universities have found themselves forced to raise tuition prices. Tuition and fees at public four-year institutions rose by 6.5 percent for in-state students, to an average of $7,020 in the 2009–10 school year from $6,591 in 2008–09, and by 6.2 percent for out-of-state students, to $18,548 from $17,460.

The rise in community college tuition, to $2,544 this year from $2,372, although only a little shy of $200, represented the sharpest increase percentage-wise, a jump of 7.3 percent.

Costs at private four-year universities also crept upward, although at a slower rate of 4.4 percent, to $26,273 from $25,177.

“Given the financial hardship of the country, it’s simply astonishing that colleges and universities would have this kind of increases,” said Patrick Callan, president of the National Center for Public Policy and Higher Education. “It tells you that higher education is still a seller’s market” (“College Costs Keep Rising, Report Says,” The New York Times, Oct. 20, 2009).

Noting that the high school graduating class of 2009 was the largest in history, Callan went on, “Colleges and universities are capitalizing on that more than any other institution in the economy. If you walk around a shopping mall, nobody else is raising prices at the same rate” (“College: More Expensive Than Ever,” CNN Money, Oct. 20, 2009).

The Impact of Financial Aid

Only about a third of students pay these published “sticker” prices, however, underscored Sandy Baum, a senior policy analyst for the College Board and author of the two reports. Most students’ actual out-of-pocket costs are thousands of dollars lower because they receive some type of financial aid in the form of scholarships, grants, and student loans.

“If you look at net prices students pay, considering the grant aid and tax benefits, students at public two-year institutions are actually paying less, in inflation-adjusted dollars,” Baum pointed out. “Even though the sticker price, adjusting for inflation, is up 20 percent in the past five years, the net price is actually lower than it was five years ago.”

Net prices are also down at both public and private four-year universities.

Student Loans Still on the Rise

This drop in out-of-pocket costs notwithstanding, the gap between families’ available resources and the overall cost of attending college remains on a steady incline. Grant funding hasn’t kept up with the hikes in college costs, leaving students in a position of having to take out ever-larger amounts of money in student loans, particularly in the current economic climate, as more families struggle with unemployment, stagnant wages, and curtailed sources of credit.

“There’s a certain cruelty to a rise in education costs amid an economic slump,” observes Randy James, in a piece for TIME. “It makes the single most effective tool to help the underemployed and jobless out of their rut become all the more unreachable” (“The Incredible Climbing Cost of College,” Oct. 21, 2009).

Total education borrower increased by 5 percent from 2007–08 to 2008–09, the latest year for which student aid data are available. The volume of federal student loans — Stafford loans, Grad PLUS loans, and parent PLUS loans — grew by $14.7 billion last year.

“The level of debt we’re asking people to undertake is unsustainable,” said Callan.

In one bright note for student debt watchdog groups, this surge in federal college loans was accompanied by a sharp decline in nonfederal education loans. Nonfederal private student loans tend to have less flexible repayment terms, typically carry higher interest rates, and are generally more costly than federal student loans.

The volume of private student loans shrunk by half last year, to $11.9 billion.

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Report: High Scorers May Benefit Most From Standardized Test Preparation

Student Loan Girl — Wed, 27 May 2009 20:35:00 GMT

Students who receive above-average scores on standardized college admissions tests, such as the SAT, may benefit the most from commercial test preparation services, according to new report from the National Association for College Admission Counseling, although the benefits of such test preparation may not outweigh the costs for many families (“Test Preparation May Help High Scorers Most, Report Says,” The Chronicle of Higher Education, May 20, 2009).

Research indicates that commercial test preparation services may raise students’ SAT scores by up to 30 points, however the score gains may not be directly attributable to the coaching alone, says author of the NACAC report Derek Briggs, associate professor of education at the University of Colorado at Boulder.

In his report, “Preparation for College Admission Exams,” Briggs suggests that students who don’t use test prep services may still be able to achieve the same range of score increases seen by those students who do use the services just by purchasing a test preparation handbook and taking a series of practice tests.

“If there are effects to be gained through preparation,” Briggs said, “can you get the same effect without spending the money? That’s a pertinent question in this economy.”

Does Test Prep Coaching Improve Admissions Chances?

Of all the colleges Briggs surveyed in his study, only one third said that in some cases an increase of 20 points on the math portion of the SAT or an increase of 10 points on the critical-reading section could “significantly improve” an applicant’s chance of being admitted. This was especially true, the report indicated, at highly selective colleges where applicant scores tend to fall within a narrow range.

“If you come from a wealthy family and have high scores to begin with and can spend $1,000, then test prep might be worth it for those 30 points,” Briggs said. “What’s unfortunate is if middle- class or poorer families think test prep is going to raise their scores by 300 points. If you’re a kid with scores between 400 to 500, I’m not sure it’s going to make any difference.”

Seppy Basili, a vice president at Kaplan Test Prep and Admissions, is concerned what effect Brigg’s findings might have on test takers, especially black and Hispanic students who typically don’t score as high as white students on the SAT.

Basili said, “I wouldn’t want the message to minority students to be that you can’t benefit by preparing.”

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Ohio Schools Prep for No-Cost College Education Program for Vets

Student Loan Girl — Tue, 19 May 2009 22:53:00 GMT

Last summer Ohio Gov. Ted Strickland offered American military veterans worldwide a no-cost education at any of Ohio’s public colleges. The state has just now finished tallying its number of veteran students in preparation for the program’s Aug. 1, 2009 start date, the same day the new GI Bill goes into effect, reports The Columbus Dispatch (“Colleges Put Out Welcome Mat for Vets,” May 13, 2009).

Currently about 10,600 veterans and their family members take classes at Ohio institutions, including about 850 veterans at Ohio State University.

But about 57,000 veterans residing in Ohio who have served in the ongoing Gulf wars will be able to receive benefits under the expanded GI Bill, which covers the cost of in-state tuition at the most expensive public college, a small housing stipend, and $1,000 annually for books.

Veterans may also take advantage of the Ohio GI Promise initiated by Gov. Strickland, which extends in-state benefits, including tuition costs, to out-of-state veterans and their families as part of the state’s effort to eliminate brain drain.

Creators of the Ohio GI Promise program are hoping that the combination of their program with the new GI Bill benefits will attract 230,000 students to the state by 2017.

Programs Expand to Accommodate Anticipated Veteran Enrollment

When the new GI Bill goes into effect this August, Ohio State alone estimates an additional 300 to 400 students will enroll. To accommodate the projected hike in veteran enrollments under the new GI Bill, the school is analyzing what services it currently offers and how its programs can be expanded to meet the needs of these students.

Veterans will be able to participate in counseling, healthcare, and mentoring opportunities as well as attend monthly meetings with other veterans for encouragement and support through Ohio State. The school will offer veterans-only general education classes that facilitate the return of former military members back to civilian life.

Columbus State Community College has also instated a service that puts veterans in touch with counseling, housing, and financial services.

If a large number of veterans choose to remain in Ohio following graduation, Ohio leaders believe that a higher number of skilled workers will repopulate sections of the state that have been depopulated because of military campaigns in the Gulf.

“We see it as a magnet,” said Ohio Board of Regents Chancellor Eric Fingerhut, “to lure veterans to come and build a life in Ohio.”

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$17,000 Obama Scholarship to Be Awarded to 1,600 Arizona Students

Student Loan Girl — Fri, 15 May 2009 21:01:00 GMT

Arizona State University officials have decided to rename the school’s largest financial aid program after President Barack Obama in honor of his commencement address to ASU’s 2009 graduating class, reports The Arizona Republic (“1,600 ASU Freshmen Will Qualify for Obama Scholarship,” May 7, 2009).

Approximately 1,600 incoming ASU freshmen could now qualify for an award under the President Barack Obama Scholars Program, after the school increased the qualifying family income from $25,000 to $60,000. Worth up to $17,000, the need-based scholarship will cover tuition, fees, books, and room and board and will require recipients to take on a work-study job on campus.

The decision to rename the scholarship program came shortly after ASU began receiving negative publicity for not choosing to award President Obama with an honorary degree. ASU President Michael Crow apologized for the stir created by the university’s controversial decision but stood by his adherence to the school’s policy, which doesn’t allow for honorary degrees to be awarded to sitting politicians.

Crow says that the scholars program meets Obama’s goal of allowing more students to attend college. He said, “This is an important commitment on our part to make certain (that) students still have access to the universities.”

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After 86% Tuition Increase, Texas Senate Says “Enough Is Enough”

Student Loan Girl — Thu, 14 May 2009 19:09:00 GMT

The Texas Senate has voted to limit future tuition hikes, including a 5–percent yearly cap for the largest universities in the state, after seeing the state’s 35 public universities increase tuition and fees 86 percent since 2003, reports The Dallas Morning News (“Bill Limiting College Tuition and Fee Hikes Clears Texas Senate,” May 5, 2009).

Under the proposed law, all colleges and universities whose rates currently exceed the state’s median tuition and fee rate would either have to hold their tuition and fees at 5 percent or at the average rate of inflation, whichever figure is lower. If the bill becomes law, the new restrictions would apply to 17 state universities.

The bill will “make sure all Texans who seek the opportunities higher education can provide are not priced out of a world-class education,” said Lt. Gov. David Dewhurst.

Six years ago lawmakers handed over the control of setting tuition rates and fees to the governing boards of the state’s colleges and universities, a move that legislators have since regretted after seeing tuition jump so dramatically in such a short period of time, according to The Dallas Morning News.

Sen. Judith Zaffirini, the bill’s sponsor, drafted the legislation not only in the hopes of preventing similar tuition increases in the future, but also to remove the possibility of wiggle room for schools when setting their tuition and fees: the measure includes provisions that expressly prohibit schools from raising fees or levying any additional charges of any kind.

“There will be no more games played” by universities with tuition and fees, Zaffirini said, citing complaints from Texas families statewide.

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Attention Freshmen and Transfer Students: Colleges Still Have Openings

Student Loan Girl — Thu, 07 May 2009 22:25:00 GMT

Almost 260 colleges and universities around the country still have openings for students, and most of these schools still have ample financial aid available, according to survey results from the National Association for College Admission Counseling (“NACAC Survey: Space and Financial Aid Still Available for Students On College Campuses,” May 2009).

Results from this year’s NACAC annual survey, Space Availability Survey: Openings for Qualified Students, indicated that schools still have spaces available for both freshmen and transfer students who may have not been accepted to their first choice schools or who have yet to apply to college. And, 97 percent of the institutions said they had housing space remaining.

The survey, conducted shortly after the May 1 “decision date” deadline, by which many schools require students to confirm their attendance and submit deposits, is designed as a tool for families, counselors, and teachers to help students who have not yet completed the college admissions process.

More than 70 percent of the 258 NACAC member schools that, in the survey, said they still had spaces available were private institutions. Many of these schools had anticipated lower enrollment numbers this fall after a separate survey found that the recession was forcing one out of six students to change their college plans (“Will the Economy Really Change Students’ College Plans? Signs Say Yes,” The Chronicle of Higher Education, April 24, 2009).

That survey, conducted by the College Board and the higher-education consulting firm the Art & Science Group, indicated that 41 percent of students were seriously considering a public college closer to home over a private institution.

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University of Michigan Not Going Private, President Says

Student Loan Girl — Wed, 06 May 2009 00:28:00 GMT

University of Michigan President Mary Sue Coleman has stepped forward to set the record straight with TIME magazine after an article in the publication began circulating rumors about the university being forced to privatize due to state budget constraints, The Detroit News reports (“U-M President Refutes Report That University Will Go Private,” April 28, 2009).

“No such discussions are under way, nor are they being considered,” Coleman wrote in a letter to TIME, refuting the magazine’s April 23 article.

TIME reported in its article that this year’s graduating class from the University of Michigan would have “the distinction of possibly being one of the last graduating classes of a genuinely public institution.”

Earlier this year a work group was tasked with finding ways to cut some $326 million in state appropriations to the school’s higher education budget. Privatizing the university was the commission’s fourth suggestion, but the idea never gained any notable public support.

“It is a provocative idea but not very realistic,” said Cynthia Wilbanks, the university’s vice president for government relations, in a statement. “Further, it would take more than a recommendation from the commission. There would have to be legislative and citizen involvement in a decision like this that involves a constitutional change.”

President Coleman’s letter to TIME also addressed the fact that the magazine inaccurately portrayed the University of Michigan’s budget situation.

“Due to careful management, we are in better financial shape than many of our peers, both public and private,” Coleman wrote in her rebuttal. “It is true that we have worked to boost revenues from other sources as the state’s financial support has declined, but what defines a public institution goes far beyond its funding sources.”

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‘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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Student Records at Texas Women’s University Compromised

Student Loan Girl — Thu, 30 Apr 2009 20:05:00 GMT

After discovering an online loophole that allowed him to access student records, Texas Women’s University student Josh Ingram thought he could use the loophole to change the recorded grades of any student he wanted, the Denton Record-Chronicle reports (“TWU Shuts Down, Secures Computer System After Student Finds Way to Access Adviser Reports,” April 25, 2009).

But school officials say no one, including authorized users of the student record system that Ingram breached, can change grades in the system since any changes made in the university’s Degree Audit Report System can’t be saved.

The online tool isn’t the university’s official record but a copy, school administrators said, that allows students to track their degree progress by viewing student grades and adviser reports. Officials assured students that the incident didn’t leave students vulnerable to identity theft.

“What we’re talking about is student's names, grades, and courses,” said Robert Placido, associate vice president of informational technology services for the Texas school. “It [the system] doesn’t do anything; you can’t save anything. I understand why the student who found it thought you could change information, but you can’t.”

The loophole left the university’s record system, which is typically accessible to only 803 authorized users, exposed to more than 12,000 unauthorized users, Placido said.

Before the university could step in and shut down the site, which took approximately four hours, Placido said that as many as 28 unauthorized individuals had accessed the system. The site has now been secured and is back online, he said, and the issue has been fixed.

As part of securing the system and getting it back online, Placido said, the university added harsh language to the adviser-access section of the site, warning violators who misused the portal that they could be prosecuted.

“We want everyone to understand their information is safe,” Placido said. “The loophole in the system is now closed.”

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Colleges Receive $70 Million in Anonymous Donations

Student Loan Girl — Wed, 29 Apr 2009 22:21:00 GMT

An anonymous donor is playing secret Santa with at least a dozen colleges and universities nationwide, but instead of giving $5 trinkets this Santa has left schools with $1 million to $10 million gifts, The New York Times reports (“Anonymous Donor Gives Millions to Colleges,” April 24, 2009).

Over the past two months the donor has given away $70 million to select schools. To remain anonymous, the donor employs a bank to contact the schools either with a call or letter that relays sentiments similar to what was written in one letter: “It is hoped that this will make a substantial difference to your students during these challenging times… enabling a more confident, sharper focus on their studies with improve career and life prospects.”

None of the school officials at the selected schools know whether the donations are coming from a man, woman, or organization, and no one seems to want to jeopardize their gift by speculating too much about the reasoning behind the donor’s selections. There’s a pretty clear consensus, however, that the schools share one common trait: they’re all led by women.

Lois DeFleur, president of Binghamton University in New York, is more than fine with this reasoning, if it is indeed the case, “The actions say, ‘I’m investing in an institution because it has achievements and I believe that with women leaders it will have future accomplishments.’ That’s pretty powerful in my view.”

The donations, which at some schools have been the single largest donation in the school’s history, have ranged from the $10 million given to Michigan State University, to the $1.5 million given to the University of North Carolina in Asheville. In return the donor has asked for complete anonymity and for the majority of the donation — 50 percent to 80 percent of the total donation in each case — to be used for financial aid.

The schools say they are extremely grateful for being chosen, particularly since higher education institutions across the country have seen an increasing demand for financial aid at the same time that state funding and endowments are drying up.

“In the best of times we never have enough scholarship money for students who have financial need,” said Susan Cole, president of Montclair State University in New Jersey. “In these difficult times, that is multiplied. The gift is incredibly important to us. I cannot adequately express the depth of our gratitude.”

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Top-Performing Students Denied State Scholarship Funds

Student Loan Girl — Mon, 27 Apr 2009 23:02:00 GMT

Some 1,500 Georgia high school students will not receive the state scholarship funds they were promised for becoming valedictorians or for graduating in the top of their class, The Associated Press reports (“Georgia Scholarships to End for 1,500 Students,” April 26, 2009).

In a last-minute decision, state legislators cut the Governor’s Scholarship Program out of Georgia’s 2009 state budget, leaving the state’s Student Finance Commission to notify students they won’t be receiving the financial aid they were promised for the coming academic year.

The scholarship program was created in the mid-1980s to encourage the state’s top high school graduates to choose in-state schools for their college education. Over the past few years the state has significantly reduced funding for the scholarship, cutting the program’s funds from more than $4.5 million in the mid-1990s to $1.3 million in recent years.

Governor’s Scholarship recipients also receive Georgia’s HOPE scholarships, which give students up to $3,500 to cover tuition, fees, and books at the state’s public institutions. The Governor’s Scholarship is intended to help students pay for room and board and other miscellaneous college expenses.

Some state officials have argued that the funding cuts to the program may have made it difficult for the program to meet its intended goal of retaining the state’s top students.

“[$900 is] not enough to say, ‘Instead of going to Harvard or going to Vanderbilt or going to Duke, I am going to the University of Georgia,” said president of the Georgia Student Finance Commission, Tim Connell. “It’s probably became more of an ‘attaboy’ for valedictorians.”

State Representative Kathy Ashe, a former teacher and a member of the House Education Committee, said she wasn’t made aware of the program’s elimination until she received a copy of the Student Finance Commission’s letter to students but she believes that these incentive programs are needed.

“We need to make it a priority to reward these deserving students and keep them in the state,” Ashe said. “I think it’s one of those places where priorities become very clear.”

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$1M Awarded to Unnamed Whistleblowers in Federal Student Aid Suit

Student Loan Girl — Fri, 24 Apr 2009 21:22:00 GMT

Alta Colleges, operating 17 campuses in six states, recently settled a lawsuit involving student-aid fraud allegations and has agreed to pay the federal government $7 million, The Chronicle of Higher Education reports (“Proprietary College to Pay $7-Million to Settle Federal Student-Aid Charges,” April 20, 2009).

Unnamed whistleblowers filed the suit, which alleges Alta Colleges made false claims to be eligible for federal student aid, under the False Claims Act. The act allows individuals to sue on behalf of the federal government and get a portion of a suit’s monetary settlement, in this case, about $1.19 million.

The suit accuses Denver-based Alta Colleges Inc. of improperly obtaining a state license to operate in Texas under the name Westwood Colleges by lying that its campuses complied with state requirements on job-placement reporting.

To obtain the licensing, Alta claimed that more than 90 percent of its students received jobs after graduation when the actual figure was 54 percent and only about 33 percent of Alta graduates were actually placed in positions by the school, reports The Associated Press.

Alta was also accused of misrepresenting its interior design program, The Chronicle reports, saying that its program complied with professional interior design industry licensing requirements when it did not.

George Burnett, Alta CEO, assured school faculty and staff by letter that the company believes it had acted lawfully, but chose to settle with the government due to the projected cost and time involved in litigation.

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