Tag Archives: Student Debt

The Case against the American Bar Association

On Friday, January 6, the for-profit Charlotte Law School announced it will remain open despite the Department of Education’s decision to withhold the school’s access to student loans. The crackdown follows the American Bar Association’s (ABA) decision to similarly clamp down on law schools with low bar passage rates.

There’s plenty of bad things to say about law schools that overcharge students, especially the poorly qualified sort who have a meager chance of getting a good enough legal job to pay back their student loans. With the second-highest tuition in North Carolina, Charlotte Law is certainly the overcharging type. Yet most people don’t consider that the real cause for exorbitant tuition and poor outcomes for law students is both the mandatory bar exam and the ABA’s monopoly on legal accreditation.

At law schools, the debt problem is exacerbated by the dim employment prospects awaiting graduates. More than 10 percent of law students find themselves without a legal job following graduation, and that number seems low when one considers that it conceals poor employment outcomes and large debt loads concentrated in low-tier schools.

Continue reading at FEE.

Watch out for this new Obama rule on student loans

If Pennsylvania residents think taxes are high now, wait until they catch wind of the bill they’ll be footing under a new Obama administration regulation that could allow thousands of students to default on their loans.NEW KAYTEE MOYER HEADSHOT.jpeg

The “borrower defense to repayment” regulation, created during the Clinton administration, was originally established to protect students from being exploited by universities.

If a university were to break state laws, students could petition to challenge their loan repayments.

However, new amendments to these regulations, which are currently in review before final publication, creates murky waters for students to evade repaying their loans, forcing taxpayers to pick up the tab.

Continue reading at PennLive.

Young Voices Podcast – Student Debt Relief could leave Universities and Taxpayers on the hook

Today’s Young Voices Podcast features Sergio Monreal and YV Advocate Stephanie Downey discussing federal plans to alleviate student debt by allowing students to sue institutions if they feel they’ve been mislead by the institution, regarding job placement, average salary, etc.

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Costly loan forgiveness amendment will burden universities

The Department of Education is pushing a loan forgiveness amendment to federal student loan policy that would relieve students of their debt if they could make the case that the school “substantially misrepresented” the education received. This new policy would have vast financial implications, is poorly thought-out, and is unlikely to be adjudicated properly.

Under the current policy, there are two main situations in which a student can apply for loan forgiveness: when the borrower succeeds in legal action against the school or when the school fails to meet contractual obligations.

This policy change would add a third component, stating that when the school makes substantial misrepresentations toward the borrower, the borrower can be eligible for loan forgiveness.

At first glance, this amendment looks as though it is protecting the small guy against big, powerful universities. However, the wording of this amendment, “substantial misrepresentation,” goes well beyond the legal definitions of fraud, making it easier for borrowers to make expansive and unreasonable claims. “Substantial misrepresentation,” as defined here, could take the form of a university advertising salary expectations or job prospects which the borrower did not find themselves able to achieve. Or, it could mean the university providing a school ranking institution with any flawed or misleading statistics — a common practice.

While universities should provide honest and detailed statistics to college ranking outlets, the famed U.S. News and World Report rankings are well-known to be fraught with problems; metrics are played around with every year, changed in small ways. Universities must report their acceptance rates, so some have been known to artificially inflate their applicant pool numbers.

A large element of the ranking is subjective, based on reputation or intangible factors like faculty dedication to teaching. It should be no surprise that rankings are far from a precise science. Yet with this new Department of Education ruling, these flimsy metrics could be used to dole out costly loan forgiveness. This amendment is unlikely to bring about greater accountability in college advertising and ranking reporting. Rather, it will simply create an avenue for individuals to drag universities through mountains of paperwork in attempts to get vengeful claims. According to the proposed rule, these claims could cost taxpayers anywhere between $2 and $42 billion.

Continue reading at the Richmond Times-Dispatch.

Pell Grants For Dual Enrollment? Let Students Decide

The Obama Administration’s Education Department recently announced a major change to Pell Grants. It released a lineup of 44 colleges that will be eligible next year for its pilot program to give Pell Grants to high school students in dual enrollment programs. The institutions, mostly community colleges, will receive $20 million, and the program is expected to reach approximately 10,000 high school students.

Dual enrollment, in which high school students take courses at a local college to gain college credit, is popular. According to estimates from 2010 (latest available), about 1.2 million high school students took part in a dual enrollment program, representing about 8% of total high school enrollment at the time. Some 46% of colleges, including 96% of two-year public colleges, taught high school students through dual enrollment programs.

The Administration’s initiative is only a pilot program, and does not expand Pell Grants to all 1.2 million students in dual enrollment programs. But should it? There are two economic questions to be answered here.

First, does dual enrollment meaningfully increase student achievement? In other words, does taking a college class while in high school increase your chance of going on to college, getting higher marks, and graduating? This question is difficult to study, because students who decide to use dual enrollment might be significantly different from those who do not. Even comparisons that try to control for various student characteristics (such as family income, race and school district) likely miss factors such as individual motivation or parental engagement that researchers simply cannot quantify.

Read the full article at Forbes.