New Data Confirm Troubling Student Loan Default Problems
Gainful Employment Rulemaking Underway, U.S. House Bill Would Block It
White House College Affordability Plan Includes TICAS Loan Repayment Recommendations
TICAS Welcomes New Communications Director, Research Analyst
New data released last week by the U.S. Department of Education show that more than 600,000 federal student loan borrowers who entered repayment in 2010 defaulted on their loans within three years. For-profit colleges continue to have the highest three-year default rate compared to other schools, though it is lower than last year's. The data, however, may not indicate any real improvement at for-profit colleges given certain documented practices, such as combining data from multiple campuses to hide serious default problems at specific locations. "Some colleges are simply masking default problems until the federal government stops watching," said TICAS vice president Pauline Abernathy. "These kinds of deceptive tactics protect colleges while putting students and taxpayers at even greater risk after the school is off the hook."
Read our press release
View our Cohort Default Rate Resources page
Read coverage from Inside Higher Ed
The U.S. Department of Education held its first negotiating session to develop a new "gainful employment" rule last month, with advocates for students and taxpayers at the table. The rule would enforce the law requiring career education programs at all types of colleges to prepare students for gainful employment in a recognized occupation for the programs to receive federal student aid. The next session is scheduled to start October 21, but could be delayed by the government shutdown.
Meanwhile, the U.S. House of Representatives may vote on legislation (HR 2637) aimed at stopping the rulemaking process and weakening protections for students and taxpayers. The bill would require regulators to turn a blind eye to how billions of dollars in taxpayer-funded student aid are being used, while more than 32 state attorneys general, the Securities and Exchange Commission, and the Consumer Financial Protection Bureau are investigating waste, fraud, and abuse at some for-profit colleges. Despite strong opposition by organizations that work on behalf of students, veterans, consumers, educators, civil rights, and college access and affordability, the bill was voted out of committee in July, and may be considered by the full House this fall. If you have not already contacted your representative to oppose the bill, you can do so here
Read the coalition letter opposing the bill
The college affordability plan announced by the Obama Administration in late August included our recommendations for raising awareness of and improving federal loan repayment options.
As we have long called for, the Department of Education will conduct an outreach campaign to make sure that struggling borrowers know about Income-Based Repayment (IBR ) and other income-driven repayment options. The President also committed to work with Congress to better target the benefits of Pay As You Earn, and to make all borrowers - not just current and future students and recent graduates -- eligible to apply for a plan that discharges any debt remaining after 20 years in repayment. (Currently it's 25 years in IBR and 20 years in Pay As You Earn.) We welcome the President's efforts in this area and urge additional steps, such as streamlining the various income-driven repayment options into one improved and well-targeted plan. In a USA Today op-ed, we explained why income-based repayment is crucial for many students and why outreach is so important.
Read the USA Today op-ed
We're very pleased to announce two great new additions to the TICAS staff! Check out their bios:
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