Financial Aid

In Kansas Governor Kathleen Sebelius's Democratic response to President Bush’s final State of the Union Speech Monday night, she touted a new law to “reduce the costs of college loans” as one of the major accomplishments of the new Democratic Majority in Congress. She was referring to enactment of the College Cost Reduction and Access Act of 2007, which among other things reduces interest rates on federally subsidized student loans. It was a big pat on the back for Congressional Democrats, who made cutting student loan interest rates in half a central part of their 2006 campaign. But Democrats should be careful not to oversell their achievement, as very few borrowers will get the full interest rate cut promised.

To be fair, under the new law, borrowers will also benefit from increased loan forgiveness for work in public service, substantially increased Pell Grant aid, and a decreased financial aid penalty associated with student work and savings. Indeed, the new law represents a significant increase in federal student aid. Higher Ed Watch has lauded it in the past.

Economic Woes Hit Sallie Mae, Nelnet

Tightening credit markets and the slowing economy appear to be spreading into the student loan industry, as two major lenders announced recently that they will be cutting jobs and shying away from riskier loans. Last Friday, Virginia-based Sallie Mae said it would be trimming 350 jobs across the country, roughly 3 percent of its workforce. Nelnet, located in Nebraska, announced it would cut 300 jobs, about 10 percent of its workforce — its second round of major layoffs since September. Both companies also announced changes to the loan services they would be offering. Sallie Mae said it would be more selective about offering private loans to students with low credit scores and those enrolled at schools with low graduation rates. Nelnet, meanwhile, announced it would stop offering loan consolidation services and would be more selective with the loans it offered.

Last month, opinion leaders in Pennsylvania took aim at big bonuses doled out to the top executives of the Pennsylvania Higher Education Assistance Agency (PHEAA). First, Governor Rendell questioned why the bonuses should be so large - over $400,000 in one case alone - when PHEAA funds ought to be…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The Education Department's Inspector General has called on student loan giant, Nelnet, to return more than $278 million in taxpayer subsidy payments and halt billing the U.S. Treasury an additional $882 million. That's almost $1.2 billion in taxpayer subsidies that could go to students instead of Nelnet. It's now up to Education Secretary Margaret Spellings…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Education Department audit accuses guaranteed-student-loan program of inadequate oversight

The U. S. Education Department's Office of Inspector General issued an audit last Friday charging the division that oversees the guaranteed student loan program with inadequate oversight of…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The Department of Education's Inspector General (IG) has called on Nelnet to return $278 million in taxpayer subsidy payments for a controversial student loan accounting practice and halt billing the Department of Education more than $882 million in future taxpayer subsidy payments. The breathtaking audit is sure to…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The Department of Education's Inspector General (IG) has called on Nelnet to return $278 million in taxpayer subsidy payments for a controversial student loan accounting practice and halt billing the Department of Education more than $882 million in future taxpayer subsidy payments. The breathtaking audit is sure…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

House Passes New Restriction on Eligible Lender TrusteesThe U.S. House of Representatives passed a third short-term extension bill for the Higher Education Act on Thursday that includes a provision placing new restrictions on college-bank partnerships. In January… Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The United States Students Association filed a complaint with the Federal Trade Commission last week against Loan to Learn and its parent company, EduCap, Inc., claiming false advertising. The complaint tracks an…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Are there new risks to investors of student loan giant, Nelnet? The for-profit lender filed an updated statement with the Securities and Exchange Commission (SEC) on Thursday, September 20th -- two days after a New America Foundation event focused on Nelnet's manipulation of the federal student loan system.

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.