APSCU Urges Education Department to Fix Flaws in Student Loan Tracking and Management, Prevent Unnecessary Defaults

APSCU, in its effort to aid students in managing their Federal loan payments upon completion of their education, recently urged the U.S. Department of Education (ED) to address flaws in the federally guaranteed loan tracking system. The system has been complicated by major Federal loan changes the past few years.

APSCU has recently been alerted by numerous member schools that the ED is providing mistaken or delayed information to schools and students, contributing to the problem of students unknowingly going into default on their loans, and limiting institutions from assisting students.

In a letter to Mr. William Taggart, Chief Operating Officer of ED’s Office of Federal Student Aid (FSA), Harris Miller, president and CEO of APSCU, asked for a meeting to address these issues and find solutions for students and schools.

“I am extremely concerned by the calls and emails I have received from member colleges and universities across the country, describing miscommunications and delays in notifying students that they have defaulted on their loans,” said Miller. “Student loan defaults, already a challenge for lower income students regardless of the type of institution they attend, are increasing because of processing problems associated with PUT loans, which moved loan handling from private lenders to the government and to their contracted servicers.”

Miller continued, “The inability of students and schools to receive timely and accurate information about the status of student loans inexorably leads to more defaults, harming students’ financial histories and artificially increasing institutional loan default rates.”

APSCU member institutions depend on timely, accurate information from loan servicers so they can monitor repayment status and support their students and graduates. In many instances, the servicer is ED, via the servicers under Federal contract.

APSCU hosts an annual Default Prevention Initiative, a meeting of institutional representatives and third-party servicers, along with ED, who share best practices and assist each other in providing proactive default management solutions. APSCU members, particularly those who are part of its Default Prevention Initiative committee, primarily have shared concerns about loans that were “PUT” with and managed by ED and its contracted servicers. Examples of such miscommunications and other problems experienced by APSCU member schools include:

Receiving conflicting information from the National Student Loan Data System (NSLDS) and Direct School Services (DSS), with NSLDS stating that loans are in default after 270 days and DSS stating that loans are in default after 360 days—a gap that results in some students being unaware that they have defaulted on their loans until after the fact.

Servicers claiming that during the 30-45 day period it takes to transfer a loan from one direct loan servicer to another, they cannot take any action on the loan—including receiving payments, resulting in students becoming delinquent on or unnecessarily defaulting on loans.

Servicers with both PUT and non-PUT loans being unable to provide information or action on both types of loans, creating confusion for students and institutions and causing students to become delinquent or default on their loans.

“We share with ED an interest in supporting students as they repay their student loans,” Miller concluded. “I am hopeful we can work with Mr. Taggart and his FSA colleagues to assist students and institutions that have already been harmed and to minimize any problems going forward as the student loan system completes its transition to all federally owned and managed.”

A copy of the letter can be found here.

Reports: Short Sellers Pushed Campaigns Against For-Profit Colleges

While some dismissed the criticism as a wild-eyed conspiracy, the truth was always out there. Now it's being reported.

In today's Wall Street Journal, there's a massive story on Steve Eisman and the integral role he played in helping to orchestrate criticism of for-profit colleges, all for financial gain: Here's one example:

"Hello, my name is Steven Eisman," began an email to an Education Department official in May. "I wanted to bring to your attention many of the unsaid or unknown aspects of this industry." Mr. Eisman runs a hedge fund called FrontPoint Financial Services, whose hugely profitable 2007 bet that housing would collapse was chronicled in the book "The Big Short."

In the past year, Mr. Eisman has sold short the stocks of for-profit education companies. He and some other investors betting on these stocks to fall have sought meetings with Education Department officials, and in some cases gotten a hearing. In emails and presentations, the investors have painted the for-profit industry in a highly critical light.

The process of writing laws and regulations has long attracted intense lobbying from companies whose prospects are at stake. Much less common is for investors such as hedge funds to do so. But some have moved to beef up their presence in Washington, especially since the financial crisis led the government more deeply into the private sector.

And here's another:

A series of exchanges ensued. On April 20, Mr. Eisman sent Mr. Bergeron a paper about a lawsuit that was accusing one for-profit company of practices such as inflating grades and altering attendance records to retain access to federal student aid. "For your reading pleasure," he wrote. Mr. Eisman's colleague Mr. Leahy sent Education Department officials some "new analyses that I thought you may find interesting."

Mr. Eisman broadened his outreach. Through a P.R. representative he communicated with Susan Lehr, a lobbyist for a Florida nonprofit community college who is also part of a group the Education Department assembled to advise it on the regulation of higher education. Ms. Lehr emailed a fellow activist saying she was "so excited about Steve Eiseman [sic] perhaps weighing in on our side."

Incredibly, there's even more of this detailed in a Bloomberg/BusinessWeek article.

APSCU Files Suit Against U.S. Dept. of Education to Stop Unlawful Regulations

The Association of Private Sector Colleges and Universities (APSCU), on behalf of its more than 1,500 member institutions, today filed a lawsuit in the federal District Court in Washington, DC seeking to block portions of the Department of Education’s October 29, 2010 final regulations, 75 Fed. Reg. 66,832, which impose unlawful and unfair limitations on access to higher education.

“APSCU members believe in fair regulatory oversight to protect students, institutions and taxpayers,” said Harris Miller, president and CEO of APSCU. “But these regulations as written are not fair, lawful or workable. We’ve filed this lawsuit to halt the implementation of three specific regulations only after careful consideration and only after our good faith efforts to work with the Department of Education to craft clear, workable rules through the negotiated rulemaking process and the public comment period failed.”

“President Obama signed an executive order this week seeking greater stakeholder input and placing heightened reliance on consumer disclosures over government controls. In this case, we have a set of regulations that constitute a classic case of bureaucratic overreach. The President expressed concern about rules that have gotten out of balance, place unreasonable burdens on organizations and could have a chilling effect. If these vague and poorly written regulations are implemented,” Miller said, “they will have a chilling effect on job creation and innovation, forcing our schools to waste resources defending themselves against frivolous lawsuits at the expense of investment in students, faculty, facilities and technology.”

APSCU has filed this suit to protect the more than three million students across America currently investing in their futures by enrolling in private sector colleges and universities. These are typically “nontraditional” students - whether they are working adults, single parents, returning veterans, low-income, minority, first-generation college attendees or other underserved student populations - who are unable to spend several years at a traditional college.

As explained below, the new Department of Education regulations challenged in APSCU’s lawsuit go far beyond lawful regulatory efforts in three areas within the Title IV federal student aid program—state authorization to conduct educational activities within state borders (34 C.F.R. §§ 600.4(a)(3), 600.5(a)(4), 600.6(a)(3), 600.9, and 668.43(b)), employee compensation (34 C.F.R. § 668.14(b)), and misrepresentations to the public (34 C.F.R. §§ 668.71-668.75):

· The State Authorization regulations force states to adopt particular regulatory regimes rather than adopt their own oversight structures. Notably, these regulations impede innovation and make it significantly more difficult for schools to provide students with online and other distance education programs since they require the authorization of every state where any student may be located, rather than relying on the review of the state in which the school is actually located.

· The Compensation regulations contradict the will of Congress, which in 1992 did not prohibit the payment of merit-based salaries. The new regulations eliminate almost 20 years of interpretive guidance on this issue, captured in 12 clarifying regulations in place since 2002. Completely eliminating those regulations introduces substantial confusion and forecloses practices that clearly benefit students, such as tying employee compensation to student graduation rates. This blanket prohibition will lead to a loss of quality employees and curtailed outreach, diminishing the ability of schools to attract those students most likely to succeed.

· APSCU agrees that statements made to intentionally mislead students are unacceptable. The new Misrepresentation regulations permit the Department to impose severe penalties on schools for inadvertent, insignificant, or innocent statements—including such statements made by third party advertising and marketing partners. Such statements need not be material or cause actual damage. Moreover, penalties can be imposed without due process. As a result of these regulations, schools will be forced to provide less information to prospective students out of fear of being held liable for any mistakes that are made.

APSCU believes that in adopting these regulations, the Department has violated the Constitution, the Higher Education Act, and the Administrative Procedure Act. Miller said that if left in place, these regulations will do irreparable harm to students and schools.

A copy of APSCU’s complaint is available here.

APSCU Releases White Paper on PSCUs in Health Care, Responding to CAP Report

APSCU recognized the Center for American Progress (CAP) yesterday for the fairness and balance taken in a study on the role of private sector colleges and universities in educating the healthcare workforce, and released its own report with more comprehensive data.

APSCU released a white paper to clarify certain statements in the CAP Report, to address points on which it disagrees, and to provide information not included in the CAP study that is important to the public’s understanding of PSCUs in healthcare workforce education.

Among the facts included in the APSCU white paper:

· PSCUs are playing an important role in educating healthcare workers today. PSCUs award 32 percent of the graduate, undergraduate and certificate degrees in the federal government’s health professions and clinical services categories;
· PSCUs are growing to meet future healthcare workforce demands. From 2001-2009, the growth in PSCU awards in nursing training grew from four percent to 11 percent of the national total, while nursing awards from public institutions shrank from 78 to 70 percent;
· PSCU healthcare programs have expanded despite numerous structural impediments that slow the creation of new healthcare programs and additions to existing programs. These barriers include ceilings placed by licensing boards, a lack of clinical training opportunities, certification programs that disallow PSCU graduates from sitting for tests, arbitrary refusal by traditional colleges and universities to accept transfer of credit and other factors;
· PSCU healthcare programs match market requirements and student capabilities. Many high school graduates lack a strong foundation in science, technology, engineering and math. PSCU students gain STEM learning and know-how not delivered in high school and go on to build important STEM related careers;
· PSCU healthcare students find jobs in high numbers. Nationally accredited PSCUs must meet graduation and career placement rates to remain eligible for Title IV student aid program participation. Student performance on state licensing tests is an additional indication of education quality. Data in the CAP report show that PSCU nursing students in four selected states pass nursing exams at rates substantially similar to their traditional school counterparts.

A copy of the APSCU white paper is available here.

For-Profit Colleges Experiencing Growth

Inside Higher Ed reports on the tremendous growth of the for-profit college sector:

A new iteration of "Carnegie Classifications" arrives today -- reflecting many of the ways higher education is changing.

Of the 483 institutions classified for the first time (including a handful that moved categories), 77 percent are for-profit institutions, compared to only 4 percent that are public and 19 percent that are independent nonprofit institutions. Other changes in the classifications reflect the growth of pre-professional and career-oriented programs in all sectors of higher education and an increase in the number of community colleges (also a sector with many job-related programs) offering four-year degrees. The classifications suggest shrinkage for liberal arts-focused institutions.

The Carnegie Classifications of Institutions of Higher Education are produced by the Carnegie Foundation for the Advancement of Teaching and are somewhat unusual in that they are influential, but also are widely misunderstood as rankings or reflecting long-since-replaced methodologies. Many people still talk about institutions that aspire to be "Research I" institutions, referring to a Carnegie category that hasn't been used in more than a decade. The new classifications follow largely the same methodology as the 2005 version (the most recent) and aim to enable researchers, granting agencies and foundations to group together similar institutions.

Chun-Mei Zhao, who directs the classifications project, said that Carnegie made a "deliberate decision" to keep the methodology consistent with the 2005 version. Since major changes were made for that version, "we wanted stability to allow for comparisons" over time, she said.

Are For-Profit Colleges Being Treated Fairly by the GAO?

In The American Spectator, Mark Hyman is looking at the assault on for-profit colleges and finds the evidence them by the GAO to be lacking:

The GAO delivered the report to the Senate Health, Education Labor and Pensions Committee during an August 2010 hearing. The report formulated the basis of critical testimony that leveled very serious charges regarding career college recruiting practices.

I found numerous inconsistencies in the GAO report and had countless questions regarding assertions made in the report. I believed some of the claims in the GAO report raised serious questions about the agency's methodology and its interpretation of conversations between college officials and undercover GAO operatives.

I put several questions to the GAO. The agency appeared to fully answer some of questions and offered only vague responses to others. In a matter of weeks after I submitted my questions the GAO quietly released a revised version of the original report. After being questioned over the revisions a GAO spokesman stated, "Ultimately nothing has changed with the overall message of the report, and nothing has changed with any of our findings."

Nothing could be further from the truth. The revised findings significantly changed the report. In addition, they were significant enough to call into question either the competence or the integrity of the GAO.

You have to read the entire piece to get a full grasp of all of the inconsistencies.

Are For-Profit Colleges the Future of Higher Education?

Here's the description about this video from the owner:

Two university presidents present two quite different views of the future of learning. William J. Pepicello, president of the University of Phoenix, and Christpher B. Nelson, president of St. John's College in Annapolis, Maryland, discuss their contrasting conceptions of higher education. The University of Phoenix, the country's largest private university, intensively promotes distance education and a for-profit university model, while St. Johns is the canonical example of a great books, liberal arts, residential college.

 The question is to what extent online education continues to spread in both public and private postsecondary institutions. Will they borrow the for-profit college model? Will they become for-profit entities themselves? Does that really fit with traditional conceptions of education? Or those traditional conceptions sustainable? This is a really great debate and worth watching the entire piece.

Unfair Attacks on For-Profit Colleges Continue at Bloomberg BusinessWeek

Why does Bloomberg/Businessweek continue to intentionally make misleading comparisons between private sector college and university students versus traditional college and university students, and, more generally, between postsecondary schools that accept large numbers of students with risk factors and those that are highly selective? Comparing institutions with dramatically different student bodies in ways that disparage PSCU students is simplistic at best and disingenuous at worst.

 For instance, using the graduation rates of “first time, full time students” students at PSCUs with those at traditional colleges is an apples and oranges comparison. Most traditional college students come into academia from the college track in high school. They are academically, socially and economically prepared to succeed in the postsecondary setting, even though a significant percentage do not graduate. First time, full time students at PSCUs represent a small fraction of the student body, often lack adequate academic preparation, and are juggling real world requirements such as jobs and families with their educational programs. Many come from the school of hard knocks, whether that means being financially independent from parents, a single mom, a caregiver to an elderly parent, a servicemember or veteran, or a career re-inventor returning to school later in life. That these individuals do not graduate at the same rate as their luckier-in-life peers? What a surprise. Examine the graduation rates of similarly situated students, however, and the results dramatically change, with students at PSCUs generally having more success at earning their sheepskins. That should be the story, because those are the facts.

APSCU Statement on Village Voice Retracting Fabricated Story, “For-Profit Blues”

Harris Miller, President of the Association of Private Sector Colleges and Universities (APSCU), released the following statement today about the Village Voice retracting its story, “For-Profit Blues,” after learning that key facts and sources, including an imaginary student, had been entirely fabricated:

“The news that a reporter for the Village Voice made up a story, including creating a fake person, in an effort to attack private sector colleges and universities presents yet another example of how our critics are promoting false, inaccurate, and biased information in an attempt to limit educational opportunities provided to non-traditional students.

Today’s exposure of the fake story raises real questions about whether a coordinated smear campaign is under way against schools that give opportunity to 3.2 million hard working -- and entirely real -- students. Rather than telling a story of how imaginary students are supposedly singing the blues, this “journalist” should be red-faced with embarrassment for being caught in misstatements and outright lies.”

Wall Street short-sellers have long engaged in a campaign to discredit private sector colleges and universities. Last summer, a letter signed by homeless shelter managers was later shown to be instigated by an investment firm seeking to foment negative media coverage of the sector. A report on PSCUs issued by the Government Accountability Office recently also contained several misrepresentations. The report was later revised.

Miller continued: “Though frustrated by another erroneous story, our institutions are keeping their focus on serving the students who are seeking job skills, career advancement and a better life by attending private sector colleges and universities. And we are continuing our ongoing efforts to work with the Administration and the new Congress to ensure that our schools can operate in an environment that’s fair to all higher education institutions, and can continue to be part of our country’s comprehensive approach to increasing access to higher education and career advancement for students from all backgrounds who want choices in their postsecondary approach.”

Village Voice Story Attacking For-Profit Colleges Includes Fabricated Sources

This is truly unbelievable:

Voice editor Tony Ortega says freelancer Rob Sgobbo made up a character, “Tamicka Bourges,” who claimed she’d amassed a large debt at Berkeley College without obtaining a degree. Also, the GAO told the Voice that there’s no spokesperson there named “Matt Fraser,” whom the story quoted. (An earlier version of this summary said Sgobbo is a Columbia journalism student. He graduated last year, a dean tells Romenesko.)

Medialite has more:

In his piece on for-profit colleges, “For-Profit Blues“, Sgobo quoted a woman named “Tamicka Bourges,” whom, he said, had accumulated massive debt while attending Berkeley College, without obtaining a degree.

Berkeley College reached out to the Village Voice, informing the paper that its spokesperson had never spoken to Sgobbo, and that it had no record of a student named Tamicka Bourges. Additionally, the U.S. Government Accountability Office informed the paper that “Matt Fraser,” quoted in the article as the organization’s spokesperson, did not, in fact, exist.

The paper has since apologized for the incorrect and misleading information.

Gawker adds the following:

Etc. Ortega writes that Sgobbo also lied about speaking to a Berkeley spokesperson, and totally invented a spokesperson for the GAO. A source at the NYDN—where Sgobbo has more than 70 bylines—says of him, "He seemed like one of the brighter interns."

Guess not. No word yet on Sgobbo's career future, though it can't be bright. The Village Voice fired one of its most respected writers earlier this week; some former Voice staffers are already calling this "karma." Anyone who knows more about this, email me.

UPDATE: NYDN spokesperson Jennifer Mauer sent us this statement: "The Daily News has terminated its relationship with freelancer Rob Sgobbo. He has assured us he never fabricated anything that appeared in the Daily News; however, we are reviewing his stories for any inconsistencies."

Between this and the Huffington Post story, is there anyone out there that cares about the truth of PSCU students succeeding? What is going on here?

APSCU Responds to Huffington Post Story on For-Profit College Student Success

In a media era of lazy generalizations and sensationalist editorials, the usually somewhat balanced Huffington Post’s grab for simple narratives to attack private sector colleges and universities (PSCUs) represents a disappointing low. In a recent post, the site asks readers who believe they have been wronged at PSCUs to share their stories. The premise of the request is deeply flawed.

Rather than trying to portray the fastest growing sector of higher education fairly, HuffPost instead has chosen to key in on occasional shortcomings of successful higher education institutions for a cheap pageview grab.

Asking such a biased question usually yields a predictable outcome—a confirmation of the initial bias. If the Huffington Post is interested in trying to inventory negative postsecondary experiences, then why not ask about disappointing experiences at all types of higher education institutions? Many traditional schools have graduation rates that are much lower than those at PSCUs. Many students complete traditional schools with mounds of loan debt that they find difficult to repay, even though they attended a heavily taxpayer subsidized institution (both direct subsidies and tax free status). Many students are finding their broadly based liberal arts degrees, while adding to their overall life satisfaction, are proving of questionable value in the labor market. Why not ask graduates of state universities, community colleges, and private not-for-profit institutions to detail their negative experiences?


What’s truly noteworthy about the Huffington Post’s ploy is that it backfired. In the comments published asking for negative student experiences, both students and graduates who have had positive experiences at PSCUs made their voices heard. PSCU students who responded to the question expressed a side of career higher education that the Huffington Post seems unwilling to acknowledge. That is the truest indictment of the site’s biased pursuit: despite trying to precook the answer, the experiences of those who have used PSCUs to change their lives and succeed still managed to break through the wall. What cheap shot critics of our schools have not yet fully grasped is that when bashing our institutions, they are really bashing the students and graduates who work so hard to earn their advanced education. Unlike many traditional students whose biggest challenge is whether to vacation in Europe or Asia, the non-traditional students who represent such a large portion of our enrollees have multiple every day challenges to face—more than three-fourths are independent, without the benefit of financial support from parents, nearly one-third work full time, almost half have dependent children. They are balancing life and educational challenges that few traditional students face, and yet are amazingly successful.

I wish every student had an optimal experience at PSCUs. Some do not, just as many do not at traditional schools. But anecdotes do not prove the rule.

Because the Huffington Post seems so deeply uninterested in providing balance—yet got some, in spite of itself--we can help round out the perspective. Our website LetsPutStudentsFirst.org and Graduate Spotlight shows a wide array of PSCU students with positive experiences and graduates with successful outcomes. Visitors will find real life stories of nurses, veterans, single-mothers, adult learners and multiple others who have succeeded at PSCUs.

The truth is PSCUs 1) contribute to America’s economic competitiveness by preparing students with skills for the 21st century workforce, 2) provide a viable alternative to traditional higher education to over 3.2 million students, and 3) are offering positive models for change to traditional higher education. PSCUs have been successful in educating an increasingly larger share of students, moving from low single digits only a decade ago to 12% of higher education because of their flexible scheduling, market-driven curriculum and ability to add capacity to match job demand. As proof of this development, more traditional schools are taking measures to incorporate these innovations into their education offerings.

So the next time Huffington Post asks a question related to PSCUs, how about this one? “Why are so many students choosing to attend and succeeding at PSCUs, even with the challenges these individuals must overcome?”

Sullivan University Graduate Challenges Senator Harkin on For-Profit Colleges

Over at Elephants in the Bluegrass, a Sullivan University graduate by the name of Brent Casey (who also is President of Student Veterans of America-Chapter 227), penned a guest post defending his alma mater and challenging the attacks on PSCUs by Sen. Tom Harkin. We encourage you to read the entire piece, but here's an excellent excerpt that gets a) to the heart of why he went to Sullivan and b) why that particular PSCU worked for him:

When I concluded my service in the military, a career school provided me the opportunity and flexibility I needed to get an education and transition successfully. I was suffering from severe PTSD and could not bear to think about being in a classroom of 100-150 students, nor did I have the patience to study biology in a path to a Masters degree in business. I would not have been able to get a diploma at a four-year school or even community college, while simultaneously keeping a job and attending to my family. Had it not been for a career college/university such as Sullivan University, I would not have been able to enjoy the flexibility with regard to scheduling, small classes and dealing with my personal PTSD issues on my terms.

As a result, today, with thanks to Sullivan University, I have graduated with an associate’s degree in business, a bachelor’s degree in business and management, and a Master’s degree in business, all with honors. I am currently a doctoral candidate studying strategic management and I am co-founder and president of Student Veterans of America-Chapter 227 at Sullivan University.

If Senator Harkin pursues what he calls “remedial actions,” I worry that others who leave the military will be unable to achieve their goals. It all starts with real options concerning educational opportunities, and while well-intentioned, any efforts to limit choices hurt not help.

In today’s economy, the government should not limit opportunities in education, instead expand them. Career colleges and universities play a critical role in making sure our veterans are able to transition into the civilian workforce.

My advice as someone who has served is for Senator Harkin to reconsider his words and actions, which will only end up hurting veterans as opposed to helping them. I believe a man who is good enough to serve his country should be good enough to make his own decision about where he wants to attend college. Our veterans have earned that right and Congress should not be limiting our options.

Harris Miller Defends For-Profit Colleges in the Mercury News

The APSCU President and CEO sets it straight:

We would like to see tighter controls on costs covered by federal student loans and grants. But student debt is an issue for all types of institutions, not just private-sector colleges and universities. While this proposed rule may be well-intentioned, the unintended consequences -- closing thousands of programs and cutting off access for more than 2 million students by the end of this decade -- will fall hardest on the very people it aims to protect.

This trend not only moves our county's graduation numbers backward, but it also has very real consequences for individual students. The median salary for an associate degree earner is $31,906, compared with $26,140 for a high school graduate. Although private colleges enroll only 12 percent of all postsecondary students, our institutions award more than 18 percent of all associate degrees. Over the past few years, our percentage of graduates has risen faster than our overall growth.

Private colleges and universities award 11 percent of all nursing and 58 percent of all allied health care degrees and certificates in this country. Their graduates keep doctors' and dentists' offices running smoothly and perform critical hospital functions like medical billing and coding, radiology and surgical technology.

With health care programs at community colleges running at capacity and the health care delivery system struggling to keep up in many communities, our schools provide a key source of skilled, job-ready professionals. The Education Department should withdraw its proposal and work on preventing excessive debt for all of higher education.