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The Department of Education released a lot of new information today pertaining to its July 26 proposal to define “gainful employment.”

The data is extensive and eye-opening. One thing that jumped out at us right away was the difference in student loan “repayment rates” by type of college. At public colleges, 54% of borrowers were paying down the principal on their loans, compared to 56% of those from private non-profit colleges. But at for-profit colleges, only 36% were paying down their student loans – which means that almost two-thirds of them couldn’t. At the University of Phoenix alone, that amounts to almost $2.8 billion in federal student loan debt that isn’t being paid down.

Read the data and analysis 

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The U.S. Department of Education posted average net price data for thousands of individual colleges to its College Navigator web site last week. This is the first time such data have been publicly available and comparable at the college level. Meanwhile, colleges are working to meet a new federal requirement for “net price calculators” to give students individualized estimates of college costs and aid. This increased focus on net price should help students and families make more informed choices, but only if the new information helps them understand what they will actually have to pay, now or in the future.

Discussions of college costs often focus on the “sticker price” of tuition and fees. However, the full cost of attendance includes other expenses such as books, transportation, and room and board (or basic living expenses). The “bottom line cost” for students and their families is the part they will have to cover from work, savings, and loans: in other words, the full cost of attendance minus any grants or scholarships.

In the Higher Education Opportunity Act of 2008, Congress adopted this bottom-line definition of “net price” and mandated disclosures through College Navigator (campus averages) and “net price calculators” (individualized estimates) on all college websites. While the calculators will not be mandatory until October 2011, many colleges are already developing or using them.

At the recent National Association of Student Financial Aid Administrators (NASFAA) conference, there was considerable discussion of these calculators among aid administrators, as well as companies and organizations hoping to help colleges set up their calculators. StudentAid.com, the Voluntary System of Accountability (VSA), the College Board, Noel-Levitz and the U.S. Department of Education are all developing tools to help colleges implement calculators that comply with the new requirements. Those discussions and an early look at some of the some of the calculators already out there raise a few concerns about how helpful they will be to students and families.

We believe that for these calculators to be effective, they must:

  • be easy to find and use
  • highlight the “bottom line cost”
  • provide reasonably comparable results across colleges

However, federal requirements allow colleges a great deal of flexibility in both the content and location of these calculators It would be a shame if colleges undermine the spirit of the law by burying the calculators deep on their websites, or by obscuring the “bottom line cost” figure required by Congress and highlighting other figures instead. For example, some calculators highlight the cost of attendance minus student work-study earnings and loans and parent loans as well as grants, so that the highlighted price comes out to zero for every student! CCC Graph

Work-study and loans are important resources for covering college expenses, but they do have a cost. Work-study wages must be earned, and loans must be repaid with interest. Highlighting a low “out of pocket cost” distracts from the very real – if delayed – costs of these forms of financial aid. Obscuring the distinction between aid that doesn’t have to be paid back, and aid that must be earned or repaid, does students and families a real disservice.

We look forward to analyzing the net price data in greater detail and participating in the ongoing discussion about the best ways to ensure that consumers have the information they need to make informed college choices.

-Matt Reed, Program Director and Diane Cheng, Research Associate The Institute for College Access & Success

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After_the_FAFSA Last week, we released After the FAFSA: How Red Tape Can Prevent Eligible Students from Receiving Financial Aid. While past reports have discussed ways that the Free Application for Federal Student Aid (FAFSA) can be simplified and improved, After the FAFSA looks at how the complicated process after students submit their application can keep them from getting grants for which they would otherwise qualify. Analyzing the data of 13 participating California community colleges, we found that one out of three likely Pell Grant-eligible applicants didn’t receive a grant. The 13 colleges together spent between $1.7 and $2.5 million attempting to verify student information, yet very few verified applicants became ineligible for Pell Grants.

The colleges we studied are in California, but this is a national issue at all types of schools. Since releasing the report, we’ve heard from others outside California with similar concerns about this issue. One college even disclosed an internal report they did on verification at their school, which they agreed to let us share, stripped of identifying information. As we documented in After the FAFSA, this college also found that the vast majority of its verification activity had relatively little effect on student aid eligibility.

Both reports raise important questions about the federal aid application process, including the unintended consequences of federal verification regulations and the way schools implement them. We cited both reports in our recent comments to the Department about its proposed new verification regulations, which could increase administrative burdens for some colleges and students without necessarily improving safeguards for taxpayers. Instead, the Department could reduce both application errors and student obstacles by enabling all applicants to transfer their IRS information (data from 1040 tax forms, or W2 forms for those with very low incomes who do not have to file) directly to their FAFSA.

Read After the FAFSA 

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On July 1, 2010, the U.S. Department of Education implemented two fixes to the Income-Based Repayment program which make borrower's student loan payments more affordable: Married Borrowers: When married couples both have federal student loans, they will no longer face higher IBR payments than their unmarried peers. For married borrowers who file their taxes jointly, lenders will factor in the couple's total federal student loan debt, as well as their total income, to calculate payments. Originally, IBR did not recognize that joint income has to cover both spouses' federal loan payments, resulting in payment requirements up to twice what two equivalent single people would have to pay. Baseline Debt: IBR eligibility will be based on either the balance when the loan first entered repayment or on the current loan amount, whichever is greater. This will allow borrowers whose loan balances have increased (often due to accrued interest during periods of deferment or forbearance) to qualify based on what they actually owe.

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Trophy U.S. News & World Report has chosen two of the Institute for College Access & Success' projects College InSight and the Project on Student Debt for their top ten list of the best college websites!

See the entire list here

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"After repeated attempts to eliminate the competitive Cal Grants, we are pleased that the Governor has recognized their importance and today proposed to preserve all Cal Grants in 2010-11. These grants help high-achieving, low-income students enroll in college, earn certificates and degrees, and help meet the state’s need for an educated workforce.” Debbie Frankle Cochrane Program Director The Institute for College Access & Success

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Bucks Blog The Institute for College Access & Success' president Lauren Asher was a week-long guest columnist for the New York Times "Bucks" blog, answering questions from Times readers about student debt and loan repayment.

Answers About Student Loans: Part 1

Answers About Student Loans: Part 2

Answers About Student Loans: Part 3

Answers About Student Loans: Part 4

Answers About Student Loans: Part 5

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In College, Inc., correspondent Martin Smith investigates the promise and explosive growth of the for-profit higher education industry. Through interviews with school executives, government officials, admissions counselors, former students and industry observers, this film explores the tension between the industry --which says it's helping an underserved student population obtain a quality education and marketable job skills -- and critics who charge the for-profits with churning out worthless degrees that leave students with a mountain of debt.

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A recently released report from the National Center for Education Statistics (NCES) presents the most up-to-date data from the U.S. Department of Education on student financial aid, graduation rates, enrollment, and finances at postsecondary institutions.

We at the Project on Student Debt will continue to analyze these data in detail in the coming months, but one fact from the NCES report jumped out at me - graduation rates for first-time full-time students at for-profit four-year schools fell by 35% while the graduation rates at other four-year schools stayed level.1 Only 22% of bachelor’s or equivalent degree-seekers who entered for-profit four-year schools in 2002 obtained their degree within 6 years (150% of normal time), compared to 34% of bachelor’s degree seekers entering for-profit four-year schools in 2000. The for-profit school graduation rate was already dramatically lower than the public and private non-profit graduation rates, but now it is less than half the rate at either of the other types of four-year colleges. See the table below for detailed figures:


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1. U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System (IPEDS), Graduation Rates component, Spring 2009. Tables 6 and 7 in “Enrollment in Postsecondary Institutions, Fall 2008; Graduation Rates, 2002 and 2005 Cohorts; and Financial Statistics, Fiscal Year 2008.” Note that these graduation rates do not include transfers-out. This table has been updated to reflect NCES revisions to Table 7. Diane Cheng Research Associate

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