TICAS president Lauren Asher testified before the Senate Committee on Health, Education, Labor, and Pensions (HELP) on September 30, 2010, at a hearing titled "The Federal Investment in For-Profit Education: Are Students Succeeding?". Our testimony focused on how much more pervasive and risky student loan debt is at for-profit colleges than at other types of schools. Other invited witnesses included Arnold Mitchem, president of the Council for Opportunity in Education, as well as a student and an employee from the for-profit sector. At the hearing Chairman Harkin issued a new report, The Return on the Federal Investment in For-Profit Education: Debt Without a Diploma, based on enrollment and financial data provided by major for-profit college companies.
Some financial aid applicants can now electronically transfer income information from their own tax forms into their 2010-11 FAFSA! Early this year the U.S. Department of Education launched an innovative pilot program based on a TICAS proposal to let financial aid applicants pre-populate the FAFSA with their own tax data. The first phase of the pilot was only for students using the 2009-10 FAFSA between late January and the end of June. The second phase is starting earlier in the academic year for 2010-11 aid applicants, which is an important step forward.
However, as noted in our recent report, After the FAFSA, this pilot only helps students and parents who filed an IRS 1040 form. Since most Pell Grant recipients have incomes too low to owe federal income taxes, expanding the pilot to include earnings data from W2 and 1099 forms would help simplify the aid process for those with the greatest need.
On September 24, the U.S. Department of Education announced that it would issue final regulations on gainful employment in early 2011, rather than by November 1, 2010. The Department made clear that this timing change will not delay the planned implementation of the regulations in 2012. This new timeline for issuing final regulations gives the Department more time to consider the comments it received on the draft regulations and to host meetings and public hearings in the coming weeks. TICAS has urged the Administration to put additional provisions in place next year to warn students away from the career education programs most likely to leave students with debts they can't repay. The final regulations on 13 other issues, including incentive compensation, are still expected to be issued by November 1 and go into effect next July.
On October, 13, the White House announced that the American Opportunity Tax Credit (AOTC) helped more than 8 million students and families cover college costs last year, and called on Congress to permanently extend this tax credit. We agree that the AOTC should be made permanent, but it also needs to be improved. Because of the way it is currently structured, an estimated one million low- and moderate-income students are not eligible despite having financial need. Most of these students attend community colleges. See our latest blog post [link] on the need to better coordinate the AOTC and Pell Grants so more students struggling to pay for college can benefit from both.