Financial Aid Updates and New Research

Final Bipartisan Debt Deal Provides $17 Billion for Pell Grants
Critical Choices: How Colleges Can Help Students and Families Make Better Decisions about Private Loans
Department of Education Issues Final Rule for "Gainful Employment"
Still Denied: How Community Colleges Shortchange Students by Not Offering Federal Loans
Same Troubling Picture for Recalculated 3-Year Cohort Default Rates
More than 350,000 Borrowers Enrolled in Income-Based Repayment (IBR)

Final Bipartisan Debt Deal Provides $17 Billion for Pell Grants

More than nine million students depend on Pell Grants to attend and complete college, and the final bipartisan debt ceiling agreement provides $17 billion for the program.  This additional funding recognizes the critical role that Pell Grants play in ensuring college access and a competitive national economy.  However, Pell is not out of the woods yet.  In the coming weeks, Congress may consider Pell Grant program eligibility changes to close the remaining $1.3 billion Pell Grant funding gap in fiscal year 2012.  

The debt ceiling agreement also created a bipartisan Joint Committee charged with proposing by Thanksgiving a plan to reduce the deficit by up to an additional $1.5 trillion.  This Joint Committee may well consider harmful cuts in student grants, loans and tax credits.  We analyzed one such recent proposal, which would effectively shift $43 billion in debt from the federal government to students. 

Read our statement on debt ceiling agreement, our fact sheet on Pell Grants, and our statement on a recent proposal to eliminate the in-school interest subsidy on all federal student loans.

Critical Choices: How Colleges Can Help Students and Families Make Better Decisions about Private Loans

Our new report Critical Choices documents promising practices that a variety of financial aid offices are using to help prospective borrowers avoid unnecessarily risky and costly private student loans. It also identifies problematic practices that bypass key opportunities to inform students' and parents' borrowing decisions.

Read the report

Department of Education Issues Final Rule for "Gainful Employment"

In June, the U.S. Department of Education issued a final "gainful employment" rule to enable enforcement of the federal law requiring any post-secondary career education program receiving federal financial aid to "prepare students for gainful employment in a recognized occupation." The rule is a modest first step, but it did not include the recommendations of a broad coalition of student, civil rights, consumer, higher education and college access organizations to strengthen the draft rule published last July. As a result, the final rule will allow many programs that over-charge and under-deliver to continue to receive federal student aid.

Read our statement on the regulation as well as testimony from TICAS Vice President Pauline Abernathy who spoke before the Senate Health, Education, Labor and Pensions (HELP) Committee at the hearing entitled "Drowning in Debt: Financial Outcomes of Students at For-Profit Colleges."

Still Denied: How Community Colleges Shortchange Students by Not Offering Federal Loans

Almost half of all U.S. undergraduates attend community colleges, and many of those students are denied access to federal student loans, the safest and most affordable way to borrow for college. Our latest issue brief Still Denied: How Community Colleges Shortchange Students by Not Offering Federal Loans found that for more than one million community college students, borrowing federal student loans was simply not an option because their schools chose not to offer them. Our brief also found persistent racial and ethnic disparities, with African-American and Native-American students still the least likely to have access to federal loans.

Read the issue brief

Same Troubling Picture for Recalculated 3-Year Cohort Default Rates

In February, the U.S. Department of Education released "unofficial trial three-year cohort default rates" (CDRs) for colleges around the country based on students who entered repayment on their federal student loans in fiscal year 2008. In April, the Department issued recalculated rates with the same troubling results.  Nearly half of all students who defaulted (47 percent) attended for-profit colleges even though only about 1 in 10 students attends these schools.  Default rates at these proprietary colleges also rose more steeply in the third year of repayment than at other types of schools.

Read our blog post and visit our Cohort Default Rate resource page

More than 350,000 Borrowers Enrolled in Income-Based Repayment (IBR)

As of May 2011, more than 350,000 federal student loan borrowers have successfully enrolled in Income-Based Repayment (IBR).  But IBR could help many more borrowers make their loan payments more affordable. Please take a moment to help spread the word and tell a friend about IBR.  In addition, the Department of Education has indicated that it plans to review the regulations governing IBR this fall with the goal of improving the program.