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Americans Pay $38 to Collect $1 of Student Debt

By dianeravitch
May 29, 2017 //
8

Bloomberg News reported the astronomical amount spent to collect student debt for higher education. This is nuts.

https://www.bloomberg.com/news/articles/2017-05-19/americans-are-paying-38-to-collect-1-of-student-debt

“The federal government has, in recent years, paid debt collectors close to $1 billion annually to help distressed borrowers climb out of default and scrounge up regular monthly payments. New government figures suggest much of that money may have been wasted.

“Nearly half of defaulted student-loan borrowers who worked with debt collectors to return to good standing on their loans defaulted again within three years, according to an analysis by the Consumer Financial Protection Bureau. For their work, debt collectors receive up to $1,710 in payment from the U.S. Department of Education each time a borrower makes good on soured debt through a process known as rehabilitation. They keep those funds even if borrowers subsequently default again, contracts show. The department has earmarked more than $4.2 billion for payments to its debt collectors since the start of the 2013 fiscal year, federal spending data show.

“The findings, gleaned from the bureau’s analysis of about 600,000 borrower accounts, come as the Trump administration weighs a shakeup of the government’s student loan program. For years, defaults have mounted despite the improving U.S. economy and the money invested in collecting education debt. Education Secretary Betsy DeVos pledged earlier this year to “do a better job” than the Obama administration at managing the department’s loan contractors. Last week, DeVos suggested that the feds should “start afresh….”

“Debt collectors aggressively angle for new business from the Education Department because the contracts are among the most lucrative in the industry. The government values the latest round at $2.8 billion.

“The government often pays debt collectors nearly 40 times what they bring in, federal records show. Take the government’s rehabilitation program, which targets people who have defaulted on their debt—meaning they missed nine months of payments. If a borrower subsequently makes nine on-time monthly payments of as little as $5 during a 10-month period, their loans are returned to good standing and the default is supposed to be wiped from their credit reports 1 . But the CFPB found that more than 40 percent of these borrowers defaulted again within three years.

“Even when borrowers don’t default, debt collection efforts often yield little. Close to 80 percent of borrowers who rehabilitate their debt make the minimum $5 monthly payment, according to a 2015 estimate by the National Council of Higher Education Resources, a lobbying group that represents student debt collectors and servicers. That means the Education Department is paying its debt collectors up to $1,710 per borrower to collect around $45, regardless of whether the borrower continues to make her payments.”

All those billions for debt collectors, but not enough to provide debt-free awards to needy students.

Categories Higher Education, Student Financial Aid and Student Debt

DeVos Hires Top Official at For-Profit University to Help “Right-Size” Department of Education

By dianeravitch
May 28, 2017 //
13

Jennifer Berkshire reports that Secretary Betsy DeVos has turned to a top official from the scandal-plagued for-profit higher education industry to “right-size” the Department of Education.

As the New York Times said when his appointment was announced:

“As chief compliance officer for a corporate owner of for-profit colleges, Robert S. Eitel spent the past 18 months as a top lawyer for a company facing multiple government investigations, including one that ended with a settlement of more than $30 million over deceptive student lending.”

Eitel worked for Bridgepoint Education Inc., which took over a small private college in 2005, called Ashford College. Bridgepoint turned it into a colossus of online higher education. In 2005, Ashford had 300 students. By 2010, it had more than 80,000.

Berkshire interviewed Christopher Crowley of Wayne State, who explained how the business leaders of the new enterprises turned a struggling small college into a profitable success:

Crowley: When Bridgepoint bought Franciscan in 2005, the college was going bankrupt. The total result amount of student loan money that Franciscan was taking in at that point was $3 million. But less than two years later, the school, which was now called Ashford University, was getting $81 million in federal student aid and reporting profits of $3.1 million. By 2010, Ashford University reported $216 million in profit and was receiving $613 million in federal student aid funds. Part of the reason for this was a huge drop in how much less they were spending per student. Franciscan spent about $5,000 per year, per student on instructional costs. Ashford spent just $700. That’s an 86% reduction in spending over five years. That money went to pay for lavish executive compensation as well for marketing and recruitment. By 2010, Bridgepoint was spending $211.6 million on advertising, more than any other publicly traded education company in the United States at the time.”

Ashford’s transformation into a piggy bank for investors is a story of the triumph of opportunistic capitalism fueled by greed. But it is also a story that recounts the collapse of the higher learning. And one of The architects of that transformation will guide Betsy DeVos, who has no managerial experience, as she reorganizes the U.S. Department of Education.

Categories Betsy DeVos, For-Profit, Higher Education

Official in Charge of Federal Student Loan Program Resigns, Unwilling to Defend DeVos’ Policies and Mismanagement

By dianeravitch
May 25, 2017 //
16

James Runcie, the head of the agency in charge of federal student loans at the U.S. Department of Education, resigned in protest when he was directed to testify in support of Betsy DeVos’ policies before Congress.

DeVos has been shifting the Department’s policies to favor debt collection agencies, not students.

Categories Higher Education, Student Financial Aid and Student Debt

Politico Education: More States Picking Up College Costs

By dianeravitch
May 19, 2017 //
18

Politico Morning Education reports that the movement to make community college tuition-freeis spreading.

http://www.politico.com/tipsheets/morning-education/2017/05/19/states-picking-up-fight-for-free-college-220405

“STATES PICKING UP FIGHT FOR FREE COLLEGE: The push for free college didn’t die when Hillary Clinton lost the presidential election in November. Rather, the movement championed by Democrats last year has maintained momentum in what has been a big year for free college advocates. At least five states, including some red ones, have adopted or expanded programs to cover tuition for students, and more could still win approval. “It was a huge year for the movement,” said Martha Kanter, a former Education undersecretary under Barack Obama who is now executive director of the College Promise Campaign, which helps build and expand tuition-free programs.

“- Tennessee Gov. Bill Haslam is expected to sign a bill soon expanding the state’s well-known free college program to older adults. The program is currently available only to students who just graduated from high school. Lawmakers in New York last month approved a plan to provide free public college for students from families making $125,000 a year or less. The Hawaii legislature provided funding for free community college, as well, and Arkansas and Indiana approved programs to waive tuition for students pursuing degrees in desirable fields such as those in science, technology, engineering and math (so-called STEM fields). A grant program to cover tuition for some college students won approval in Montana, though lawmakers have yet to allocate funding for it. Rhode Island could be next. Lawmakers there are considering a statewide free college proposal.”

This will help many students achieve at least two years of college without being burdened by heavy debt

Categories Funding, Higher Education

Texas Southern University Cancels Senator Cornyn’s Commencement Speech Due to Student Opposition

By dianeravitch
May 16, 2017 //
66

Texas Southern University canceled Senator Jon Cornyn’s commencement speech, due to student opposition.

Trump gave the commencement address at Liberty University, Jerry Falwell’s university, where he knew he could expect a friendly reception.

It appears that neither Trump nor DeVos will be giving many commencement addresses, except at small evangelical colleges. Students are not passive, and they know that this administration cares more about the student debt collectors than students. They know that this administration will do nothing to reduce their debt burden. They know that this administration wants to take away their family’s health insurance.

The cancellation of Senator Cornyn’s speech suggests that campuses will not be friendly environments for anyone supporting the mean policies of the Trump administration.

Categories Higher Education, Resistance, Students

Nancy Bailey: Time for DeVos to Resign

By dianeravitch
May 15, 2017 //
39

Nancy E. Bailey writes here about Secretary Betsy DeVos’s unpleasant experience at Bethune-Cookman University, where she was booed by the graduates of the class of 2017.

She thinks it was a travesty that the students were not allowed any say in the choice of their commencement speaker. After all, the day is meant to honor them and their accomplishments.

Instead, they got a speaker who is in a job for which she has no qualifications, a woman who has acted to protect predatory lenders and debt collectors, a woman who has never shown any commitment to advancing civil rights.

The students know that public education is a basic democratic right, and they did not respect this representative of an administration pledged to privatization and stripping away their families’ health care.

Bailey writes:

On a day designated for students—a day to honor their achievements—they have to listen to a woman of privilege tell them how she understands their struggle. They cannot even end their college journey without hackneyed political browbeating.

Perhaps if DeVos had the right ideas about schooling, her appearances would be more palatable. Perhaps if she really wanted to help public schools work for all children, but that’s not what she is about.

Betsy DeVos is the topping on the cake after Duncan and Spellings. She is the final straw, meant to end public education altogether—to put in place a system that rings true to her religiosity—a separate system of the haves and have nots. She is welcoming back the time before Brown v. the Board of Education. But my guess is she saw herself as Joan of Arc on that stage Wednesday.

This is not about God or the students. Privatization has never been about the welfare of the student. And it is not about religion either, though they might make you think it is. It is about money and it is about race. School privatization has always been about that.

Betsy DeVos should resign. But she was placed in this position by one vote if we can believe that. The problem is many Republicans and Democrats sold out on public schools a long time ago. The Washington mindset really is Betsy DeVos. I know it and you know it.

So boo away students. Remember this day as you journey forth. Maybe you can make America really great again. The rest of us are betting on that.

Categories Betsy DeVos, Duncan, Arne, Higher Education, Student Financial Aid and Student Debt

Purdue Buys Online, For-Profit Kaplan, Over Faculty Objections University

By dianeravitch
May 8, 2017 //
13

Mitch Daniels, former governor of Indiana, is now president of Purdue, a soft landing for a politician with no academic bona fides. He has continued his assault on the academic integrity of the university by arranging the purchase of online “Kaplan University,” a for-profit business built on test prep.

The University Senate passed a resolution opposing this move, and Daniels said they felt bad about being left out of the decision-making process. Purdue paid $1 for the flailing online business.

Read about the deal in the Washington Post here:

Read today’s Politico education edition for more on this story.

Text of Faculty Senate resolution:

To: From:
Subject: Disposition:
Whereas,
Senate Document 16-19 4 May 2017
Purdue University Senate
Senators Alan Beck, Tithi Bhattacharya, Evelyn Blackwood, Elena Coda, Cheryl Cooky, Alan Friedman, Alberto Rodriguez, and Laurel Weldon
Resolution on the Purdue Purchase of Kaplan University University Senate for Discussion & Approval
Faculty governance and faculty control of curriculum are the lifeblood of any healthy University.
As, unfortunately, the unique nature of the announced purchase by Purdue of Kaplan University resulted in a violation of both of those central tenets.
1. No input was sought through regular faculty governance before this decision was made.
2. No assessment of the impact on the academic quality of Purdue, now or in the future, was made.
3. No transparency was demonstrated in this process.
4. No impact study has been taken of effects on faculty, curriculum, students and staff at Purdue.
5. Faculty governance and academic freedom at what will become the “New University” is not assured by the Purdue agreement with Kaplan.
6. The Faculty has already requested, in writing, that the administration use the Senate’s Academic Organization Committee when considering any re-structuring of programs or the creation of new ones at any campus.

Be it resolved that

Based on these violations of both common sense educational practice and respect for the Purdue faculty, we call on the President and Board of Trustees to include faculty in all aspects of decision-making regarding the proposed “New University” and to rescind any decisions, to the degree possible, made without faculty input.

Sponsors:
Alan Beck, Tithi Bhattacharya, Evelyn Blackwood, Elena Coda, Cheryl Cooky, Alan Friedman, Alberto Rodriguez, Laurel Weldon

In the Politico report this morning, you will also learn there about the Trump administration’s efforts to tamp down the fears that Trump was preparing to cut off capital funding of HBCUs, in grounds of “equal opportunity” (no favoritism based on race), which he seemed to imply in a recent signing statement.

Watch for Betsy DeVos’s commencement address at historically black Bethune-Cookman University in Florida on Wednesday. Undoubtedly she will praise the virtues of school choice since that is her only thought.

Categories Betsy DeVos, For-Profit, Funding, Higher Education

A Trillion Dollars of Student Debt, and DeVos Wants to Protect Lenders, Not Students

By dianeravitch
May 8, 2017 //
11

Susan Dynarski of University of Michigan wrote an article in The New York Times about the trillion dollars of outstanding debt for college loans, and the Trump administration’s regulatory decisions that will help and protect the lending industry, not the students.

As the saying goes, elections have consequences. Hillary Clinton adopted Bernie Sanders’ pledge to make higher education free for students whose family income was less than $125,000. Trump offered nothing, and DeVos made clear in her confirmation hearings that she was not at all concerned about students who were burdened by crushing debt.

So the consequence of the 2016 elections is that Betsy DeVos is rolling back efforts by the Obama administration to regulate the businesses that make student loans and protect students from predatory practices. She is also making it harder for students to apply for student aid by removing access to an online program created for that purpose.

But that’s not all.

Access to income-based repayment programs is more important than ever because of a separate Trump administration rollback of protections for borrowers. Now, those who fall behind on their payments are subject to much larger penalties.

The Obama administration had limited the ability of loan companies to impose punitive fees on borrowers who were in default. Before the Obama rules went into effect, borrowers could be required to pay back as much as 16 percent of their loan balance before they were allowed to enroll in an income-based program. On March 16, Ms. DeVos issued a directive that allows loan companies to again charge these fees.

If the Education Department fails to protect and assist borrowers, where can they turn for help? During the Obama administration, other agencies stepped in to monitor the behavior of the loan servicers and banks. The Consumer Financial Protection Bureau, in particular, appointed a student loan “czar,” who has collected thousands of complaints from borrowers and has published an annual report on student loans.

In a recent letter, a group of academics urged that the consumer bureau go further by collecting loan-level data on repayment, delinquency and default just as it does in monitoring the mortgage industry. I have suggested the same, in a previous column.

The Trump administration and Republicans in Congress have made the consumer bureau a target. They aim to strip the agency of its oversight authority and independence. As it stands now, the Federal Reserve funds the consumer bureau, which buffers it from political pressure. If the bureau is hamstrung, borrowers will have lost a powerful watchdog.

It is puzzling that Ms. DeVos has consistently said that government should be held accountable for the quality of the services it delivers to students, yet the Education Department has in short order made loan companies less accountable to both the government and to borrowers.

This is unfortunate. Dismantling the regulation of loan companies isn’t likely to unleash an innovative, private market that will improve services for borrowers, who have been assigned to a loan company and can’t shift to a better one. There is therefore no market discipline that will drive the bad companies out of business.

Deregulation, in this case, simply leaves borrowers at the mercy of an unaccountable corporate bureaucracy.

That seems to be the goal of Trump and DeVos. They know exactly what they are doing. They are acting on behalf of the industry, not students.

Categories Accountability, Betsy DeVos, Higher Education, Student Financial Aid and Student Debt, Trump

Trump Questions Whether a Funding Source for HBCUs is Constitutional

By dianeravitch
May 7, 2017 //
20

The Washington Post reports that Trump questioned whether an important funding source for Historically Black Colleges and Universities is constitutional.

“In February, President Trump invited leaders from historically black colleges and universities to the White House, a move they hoped signaled his support for the institutions and showed an effort to give them more clout in his administration. But critics had a more cynical description of the Oval Office meeting: a photo op.

“Those naysayers got more ammunition Friday after the White House released a signing statement connected to the recently approved federal funding measure. Tucked away in the last paragraph, the White House announced that it would treat a program that helps HBCUs get low-cost construction loans “in a manner consistent with the (Constitutional) requirement to afford equal protection of the laws.”

“People in higher education circles worried that the statement meant that the president was planning to get rid of a capital financing program that helps historically black colleges repair, renovate and build new facilities. Congress approved the program in 1992 after finding that “HBCUs often face significant challenges in accessing traditional funding resources at reasonable rates,” according to the Education Department.”

This raises many questions.

What about Trump’s pledge to be supportive of African Americans?

What will Betsy DeVos say about this when she speaks at an HBCU in a few days and receives an honorary degree?

What does Donald Trump know about the Constitution?

Has he ever read it?

Categories Betsy DeVos, Higher Education, Race, Trump

Math Professor: Why Our Freshmen Need Remediation

By dianeravitch
April 19, 2017 //
224

One of our regular readers, who is a member of a college mathematics faculty, sent this following comment about the state of math education today:

“I teach at a small four year college in NY. We administer a mathematics placement test to all incoming freshmen. The test we use was created in house and covers basic skills from algebra, trigonometry, and pre calculus. Questions are asked in a straightforward manner (unlike the current NYS common core based regents exams).

“Any student may take a statistics class (taught outside the mathematics department), regardless of placement score. However, we use the results of the placement test, high school coursework and individual discussions with the students to place students appropriately in the remedial algebra, college algebra, pre calculus, calculus sequence.

That said, fully 25% of our incoming freshmen place into remedial algebra–some should probably be placed lower than
remedial algebra, but we do not offer such a course. These students truly need the remedial work.

“The reasons why these students place low are varied. Some have not taken math courses for two years and have become rusty. Some students never really learned the material (the percentage of points required to pass the NYS regents exams is quite low and the tests are so poorly designed that scores are meaningless).

“I am continually bombarded by emails from companies who want to sell textbooks that combine remedial coursework with college credit coursework. Perhaps in some non STEM fields this approach works, but you cannot teach calculus to students who haven’t learned how to add fractions or who don’t understand basic laws of exponents.

“I do not blame their teachers. I blame a state system that shoves a scientific calculator in the hands of every fourth grader–before they’ve learned their multiplication tables, before they’ve learned how to add fractions, and before they’ve gained any practical sense of how numbers work, because apparently solving convoluted word problems is more important than understanding how numbers work. (Some never learn these basic skills–I have students in my classes who need a calculator to multiply 2 times 3).

“This same state system requires every student in algebra to have access to a graphing calculator with equally disastrous results. Calculator overuse is only a small part of the problem. The insistence that all students follow what used to be considered a college prep track and the subsequent rewriting of standards into a bizarre jumble of topics in which necessary skills and techniques are deemphasized in favor of solving pseudo “real world” applications are certainly major contributors.

“The regents exams have become a weird mishmash of questions with teachers left trying to guess all the permutations of how a question about a concept could be asked. I am afraid I have wandered off topic a bit. Anyway, many students truly do need remedial work that cannot be accomplished as part of another course. We do our best to get them through it and get them where they need to be mathematically. We are not 100% successful. Some simply do not have the ability, some do not make the effort, and saddest of all, some are just too far behind.”

Any comments from math teachers?

Categories Curriculum, Education Reform, Higher Education, New York
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