Submitted by roger (not verified) on June 13, 2008 - 3:34pm.
Higher Ed Watch has picked some examples that need further explanation to the casual reader. It is obvious that they are proponents of Direct Lending. When the program was first introduced, there was an offer of $10 per student processed for a Direct Loan if the University would add Direct Lending to their Program Participation Agreement. This quickly dropped to $5 per student processed and shortly thereafter, the offer disappeared and was not included in further discussions. Certainly an inducement was offered.
The STAR plan, introduced twice by Sen. Kennedy, was an inducement to schools to switch to the Direct Lending Program. At the time it was introduced, the FFELP was healthy and competition was driving the commercial lenders to offer a broad spectrum of benefits to the students. The job of the financial aid office is to get the best blend of benefits and service to the students. With this in mind, few supported the STAR plan. When I read the language in the Bill, it appeared that if a school had included the DLP on the PPA, they were already in DLP and would not benefit from the STAR plan which was focused on new converts.
The term “illegal” presumes that there is a law that specifically prohibits the behavior that is under question. While there were several isolated egregious cases of a loss of common sense and perhaps infractions of state ethics codes, there were, at the time, few, if any, acts that were illegal. Thus the term illegal inducement is out of place in this discussion. In general, the lending industry assisted schools to better serve students.
Finally, the difference in PLUS Loan interest rates of 7.9 vs 8.5 was first portrayed as a technical error that would be fixed in the next HEA Reauthorization. When the HEA was slow to be reauthorized, schools and associations did attempt to bring this to Congress’ attention. It then became abundantly clear that this was just the first shot at the FFELP program which became an all-out assault in the CCRAA.
While I will concede that I was surprised to see the number of lender in positions of responsibility in many state associations, it is possible to remedy that by some relatively simple by-law changes.
Tell the Whole Story
Higher Ed Watch has picked some examples that need further explanation to the casual reader. It is obvious that they are proponents of Direct Lending. When the program was first introduced, there was an offer of $10 per student processed for a Direct Loan if the University would add Direct Lending to their Program Participation Agreement. This quickly dropped to $5 per student processed and shortly thereafter, the offer disappeared and was not included in further discussions. Certainly an inducement was offered.
The STAR plan, introduced twice by Sen. Kennedy, was an inducement to schools to switch to the Direct Lending Program. At the time it was introduced, the FFELP was healthy and competition was driving the commercial lenders to offer a broad spectrum of benefits to the students. The job of the financial aid office is to get the best blend of benefits and service to the students. With this in mind, few supported the STAR plan. When I read the language in the Bill, it appeared that if a school had included the DLP on the PPA, they were already in DLP and would not benefit from the STAR plan which was focused on new converts.
The term “illegal” presumes that there is a law that specifically prohibits the behavior that is under question. While there were several isolated egregious cases of a loss of common sense and perhaps infractions of state ethics codes, there were, at the time, few, if any, acts that were illegal. Thus the term illegal inducement is out of place in this discussion. In general, the lending industry assisted schools to better serve students.
Finally, the difference in PLUS Loan interest rates of 7.9 vs 8.5 was first portrayed as a technical error that would be fixed in the next HEA Reauthorization. When the HEA was slow to be reauthorized, schools and associations did attempt to bring this to Congress’ attention. It then became abundantly clear that this was just the first shot at the FFELP program which became an all-out assault in the CCRAA.
While I will concede that I was surprised to see the number of lender in positions of responsibility in many state associations, it is possible to remedy that by some relatively simple by-law changes.