Higher Ed Watch in the News

APM's Marketplace | Student Loans Are Getting Whacked

Bank of America and a unit of Citigroup have joined a growing list of lenders cutting back on student loan programs. At the same time, the House passed an emergency bill that would enable lenders to have more cash to keep making loans. John Dimsdale reports.

TESS VIGELAND: OK, here's another side-effect of the credit crunch: Student loans are getting whacked. Today Bank of America and a unit of Citigroup joined a… more

Look Twice at Loan Advice (U.S. News & World Report)

. . . Stephen Burd, a senior research fellow at the New America Foundation, says many colleges are affordable without the help of private loans at all. Plus, Burd adds, federal loans also are due only after graduation, and the subsidized ones don't accrue interest while students are still in school, as most private loans do—a fact not mentioned in the ads. . .

In Student Loan Market, A Direct Approach (CQ Weekly)

. . . But private lenders who need help face a dilemma. "Lenders are sort of putting themselves in this weird spot, where on the one hand they're raising huge alarms on the viability of their program, and on the other hand are trying to make sure they don't scare schools into the direct loan program," said Steven Burd, a senior research fellow at the New America Foundation. more

If you've watched any of the televised men's college basketball tournament this year, you've been bombarded by NCAA commercials that declare: "There are 380,000 NCAA student athletes... and just about every one of them will go pro in something other than sports."

It's an uplifting tagline, but there's a catch. In order to "go pro in something other than sports," that athlete needs a college degree. And far too many male athletes in top-tier Division I basketball programs never graduate.

The teams… more

It's not news that the cost of a college degree has risen significantly over the last couple of decades.

Since 1990, tuition and fees have risen by nearly 225 percent at four-year public colleges and by 154 percent at private four-year colleges. The real story is that tuition growth rates often fluctuate wildly from year to year -- which makes it hard for families to plan ahead and budget enough to cover the costs.

Last year, students at Villanova faced an unexpected… more

Cleveland Plain Dealer | Washington Group Ranks NCAA Teams by Players' Graduation Rates

Forget wins and losses. Disregard the strength of schedule. Pay no attention to margins of victory.

Call it March madness, but what if the teams in this year's NCAA men's basketball tournament were ranked by diplomas rather than dunks?

That's a rite the Washington, D.C.-based New America Foundation celebrates each spring. Earlier this week, the nonprofit public policy institute released its own tournament bracket that has to do… more

WTOP Radio in DC | Top B-Ball Shools Have Poor Grad Rates

New America Foundation Education Policy Analyst Lindsey Luebchow discussed the Annual Academic Sweet Sixteen bracket results with WTOP Radio in DC. Also, Luebchow's comments on the NCAA teams' academic ranking appeared on CBS Radio's nationally broadcast morning show (3/27/08). Following these hits, the Los Angeles Times published Luebchow's op-ed "Academic March Madness."

Lindsey Luebchow writes for New America's Ed Money Watch and… more

Hedging Bets on Student Loan Availability (Inside Higher Ed)

. . . “I think he’s doing the right thing in seeking to calm fears of parents or financial aid officers scared by newspaper headlines, and by demonstrating that Congress is ready to act should there be widespread problems for students themselves, as opposed to some lenders,” said Michael Dannenberg, director of the Education Policy Program at the New America Foundation. Dannenberg said that Kennedy’s plan should be viewed not… more

A Student Loan Credit Crunch — But for Whom? (Inside Higher Ed)

. . . “Students with poor credit ratings, particularly those at trade schools whose graduates have poor repayment track records, might be unable to find a willing private student loan provider,” the New America Foundation’s Education Policy Program wrote on its blog this month. “All students, however, who apply for a private student loan with a creditworthy co-signer should be able to obtain a loan and obtain it at a lower… more

Student Loan Field Takes Defense (University Wire)

. . . Michael Dannenberg, director of the education policy program for the New America Foundation, a nonpartisan think tank investigating the student loan crunch, said the media had merged private student loans and federal student loans' susceptibility to the housing crisis, noting federal loan recipients won't be affected. He scolded the press for creating a sense of fear. "The bigger danger is that the fear, if not panic, could… more

Higher Ed Watch.Org's staff writer and a lead investigator on the 2007 student loan scandals, Stephen Burd, is the winner of a 2007 National Award for Education Reporting, the Education Writers Association announced on Monday. Burd is a Senior Research Fellow with New America Foundation's Education Policy Program and a former Senior Writer at The Chronicle of Higher Education more

Students Pinched by Credit Markets (Minneapolis Star Tribune)

..."There is zero danger that federal Stafford loans will not be available in the foreseeable future. Zero danger," said Michael Dannenberg, director of education policy at the New America Foundation in Washington.

Only about 10 percent of all college loans come from private lenders, he said. Many of those students could turn to federally backed loans if other sources of cash dry up, in Dannenberg's view.

As Lending Tightens, Education Could Suffer (New York Times)

...Not everyone believes that retrenchment in commercial education would be bad. “High-risk borrowers with low academic achievement who are pursuing post-secondary training should not go to expensive, low-quality proprietary schools,” said Michael Dannenberg, director for education policy at the New America Foundation in Washington. “They would be better off going to community colleges, which are lower cost and open enrollment, for the most part.”

President Bush: A Friend of Higher Education After All? (The Chronicle of Higher Education, subcription only) ... Mr. Bush has, however, given researchers, and their colleagues throughout higher education, something else of value: money. The president has been "highly successful" in winning increases for higher education from Congress, according to an analysis published last month by the New America Foundation, a Washington-based research and advocacy group that is often critical of the Bush administration. more

House Democrats to Vote on Cutting Student Loans (Cox News Service)

...Michael Dannenberg, director of the Education Policy Program at the New America Foundation, said the federal government has wasted "billions of dollars" each year on excess lender subsidies. "Financial aid should be helping students, not banks," he said.

Market Doubts Hit Private Student Loans (Pittsburg Post-Gazette) ...Sallie Mae and others are experiencing a growing default rate. The sub-prime mortgage crunch has spilled over into the student loan area, too, with investors less willing to buy loans of different kinds, said Stephen Burd, senior research fellow at New America Foundation, a nonprofit think tank. "It's just a question of securitization right now," Mr. Burd said. ...

Student loans feeling credit crunch, too (St. Louis Post-Dispatch)

Those students, though, paid interest rates of up to 20 percent to finance their educational dreams. Stephen Burd, senior research fellow at the New America Foundation who blogs about higher education, says the lending practices got out of hand. "We actually think that this is a positive development that subprime lending in for-profit education is being curtailed, because we don't think students should have been stuck with these high-interest, high-cost… more

What An Outrage! The Money That Got Away (AARP Bulletin)

Nelnet denies it broke any laws. Still, "for a good number of years, Nelnet had a river of dirty money flowing through it," says Michael Dannenberg, director of the education policy program at the New America Foundation in Washington.

U.S. Ignores Finding on Student Lender (The New York Times)

Michael Dannenberg, director of the education policy program at the New America Foundation in Washington, sharply criticized the department’s decision to seek less than the amount identified in the audit.

“The department’s going after less than half of a fraction of the larger amount of improper billing that the Pennsylvania lending agency engaged in,” Mr. Dannenberg said. “The Department of Education’s failure to aggressively police the student loan… more

Student Aid: Will many low-income students be left out? (available for purchase from CQ Researcher online)

...The idea that having more lenders in the program improves customer service through competition doesn't make sense, says Jason Delisle, research director for education policy at the New America Foundation. The Loans are an identical commodity offered under government rules, so lenders have little room to customize loans or services, he says. In addition, lenders generally hold the loans on their own book for… more

Elite Ivy League students can expect a break on tuition. What about everybody else? (editorial, The Washington Post)

No doubt places such as Yale, with an endowment of $22.5 billion, and Harvard, with an endowment of $35 billion, have the ability to do more to help families with the cost of education. Harvard's endowment grew by $6 billion last year alone, and its new policy will cost $22 million. That, as the New America Foundation pointed out in… more

The Assosciated Press published a review of the surge in loan elimination in private schools for middle- to upper-class income students, and quoted Michael Dannenberg, Education Program Director with the New America Foundation.

... Michael Dannenberg, a scholar at the New America Foundation, notes that's also approximately the figure Congress spent this year to cut student loan interest rates from 6.8 percent to 3.4 percent -- for the whole country. ...

Ultimately, however, other factors will play a much bigger role… more

As the college football season nears its final showdown between Ohio State and LSU, the media-stoked frenzy over which teams were selected for the Bowl Championship Series has reached a fever pitch.

Penn State is in the Alamo Bowl, with less money and media attention. But if team academic performance were considered by the BCS, Penn State would have fared much better.

Over all, the academic performance of big-time college football is dismal. Only 56 percent of Division I-A… more

Spend Unused NCLB's Tutoring Funds on PreK, Mead Says

Yesterday at the New America Foundation, Sara Mead released a list of 10 ways NCLB could be tweaked to bolster prekindergarten programs. In a panel discussion, which I moderated, she highlighted three items:

Require districts to use their unspent money for tutoring and choice on preK in schools that are in need of improvement;Allow schools required to restructure to transform into "early education academies" serving preK-3; and more

...Since coming into existence in 1906, the NCAA has struggled with its basic charter -- identifying and maintaining the correct balance between athletics and academics.In recent years, the NCAA has established the Academic Progress Rate (APR), which creates a baseline measurement of retention and graduation rates its member schools must meet or risk the forfeiture of scholarships.One might question the logic of taking away scholarships from underachieving athletic programs, but that's another matter.And obviously,… more

After New America's Higher Ed Watch.Org and ESPN released the Academic Bowl Championship Series (ABCS), the Education Program’s Lindsey Luebchow was interviewed by WTOP radio. Please check out the attachment for the mp3 recording of the interview.

In a few days, hooded figures manipulating mysterious computer formulas will announce the final BCS standings and the lineup for college football's prestigious bowl games. Records, opponents, conference affiliations, polls and, it always seems, the phases of the moons of Saturn will be taken into account. But what if academics were factored in, too? What if there were an A/BCS -- an Academics-Included Bowl Championship Series?

I put that question to Lindsey Luebchow, a policy analyst of the New America Foundation… more

Student loans are often categorized as good debt, because a college education is considered a sensible long-term investment. ...

But it's important to understand that not all student loans are alike. Federally guaranteed student loans, known as Stafford loans, have fixed interest rates, now 6.8%, and flexible repayment terms. Any full-time college student, regardless of family income, can take out a Stafford loan.

Private student loans, which are often offered by the same lenders that provide federal loans, are more… more

One month after President Bush reluctantly signed legislation requiring the government to auction the rights to make student loans, the Education Department is calling the new program unworkable and inflexible. Even some proponents of auctions agree, while the loan industry says that the plan will hurt borrowers by narrowing their lender choices.

The auction program is included in the College Cost Reduction and Access Act that Bush signed on September 27 despite a veto threat. The bidding requirement attracted little… more

The student lender Sallie Mae, after trying to force colleges in at least three states to provide it with contact information for potential student borrowers, is backing down.

The company, which is the nation's largest student-loan provider, described the shift in strategy after a Washington-based policy group revealed this month that the lender had filed a New York Freedom of Information Law request asking community colleges in the State University of New York system to provide it with student names,… more

Taking up an issue that could resonate with young voters, Sen. Chris Dodd’s (D-Conn.) presidential campaign blasted the Education Department for allowing student loan recipients to over-pay the loans and not get the money back. In a sharply worded statement Monday, Dodd pounced on a Washington Post article from Saturday in which Secretary of Education Margaret Spellings admitted that her department "had some responsibility" for "confusion" over regulations that allowed the excess payments to occur.

"At a time when it's clear… more

Colleges and universities raked in money by the billions last year. But their investing success now has a price a movement in Congress to force the wealthiest schools to spend more of their money to keep down tuition.

In recent weeks, a string of colleges and universities have announced enviable investment results. Leading the way was Yale, which earned 28 percent over the year ending June 30, increasing the school's endowment to $22.5 billion overall. …

Private foundations are required by… more

University of Miami officials have confirmed they sent students' private data to lender Sallie Mae last summer, even though students said they never applied for a federal loan from the company.

In the school's view, students did apply for a loan when they filled out the standard form all students submit to establish eligibility, financial aid director James Bauer said.

But national experts scoffed at that interpretation of federal privacy and lending laws, saying receipt of the Free Application for Federal… more

Sara Mead and Andrew J. Rotherham, two of my favorite educational researchers, have inspired me to save the charter school movement with five brilliant if perhaps too far-sighted suggestions for reform.

***

Here are my suggestions for fixing that situation, based largely on what I learned from Mead and Rotherham:

1. Stop letting local school boards authorize charters. Mead, a senior research fellow at the New America Foundation, and Rotherham, co-director of Education Sector and a member of the… more

Congress approved a $20.2 billion boost in financial aid for college students yesterday, a package that backers said would be the single largest increase in federal tuition funding since World War II.

The bill, which President Bush is expected to sign, raises the maximum Pell grant for low-income students from $4,050 to $5,400, and temporarily slashes interest rates on student loans by half.

It also establishes debt-forgiveness programs for graduates who enter certain poorly paid fields such as law… more

A state agency broke federal regulations when it received millions of dollars in improper payments from companies that make student loans and offered colleges enticements to promote those lenders, according to a national report released yesterday.

Amid the massive student loan scandal, U.S. Sen. Edward Kennedy made public a committee report criticizing a deal between two lenders, Sallie Mae and Nelnet, and the New Jersey Higher Education Student Assistance Authority. The report also unveiled more marketing misconduct among colleges, lenders… more

The office of Sen. Edward M. Kennedy (D-Mass.) released a report Tuesday [September 5, 2007] that scrutinizes a batch of practices and policies that in many cases, the senator alleges, violate federal laws and regulations governing dealings between colleges and lenders. Many of the findings build on accusations and revelations that have emerged in previous months...

***

“We followed the rules in place at the time, and we did so in a way that… more

...In a statement, First Marblehead confirmed that it had received a subpoena related to its role in the student lending industry. ''We plan to cooperate fully with the attorney general's information requests,'' the company said.

While Mr. Meyers said he was unaware of any specific investigation, he defended First Marblehead's practices, including the expanding trade in so-called direct-to-consumer, or D.T.C., loans that are made over the Internet. ''Any implication that the company… more

Sara Mead and Michael Dannenberg are quoted in a Washington Monthly article by Ben Adler, the editor of CampusProgress.org, at the Center for American Progress. Adler examines the actions of higher ed lobby organizations and how they impact policy reform.

To read this article, please visit Washington Monthly's web site.

Nebraska’s attorney general, Jon Bruning, attacked his counterpart in New York on Tuesday over his investigation of Nelnet, a student-loan company based in Lincoln, Neb.

In an interview with the Omaha World-Herald, Mr. Bruning called the New York attorney general Andrew M. Cuomo’s investigation of Nelnet and other student-loan companies “ridiculous” and “political.” Mr. Cuomo expanded his investigation last week to include alleged improper ties between lenders and 40 athletics departments.

Mr. Bruning has himself come under fire in connection with Nelnet.… more

LINCOLN — The offers clogged Keith Hester's mailbox, promises of the cheapest way to consolidate his student loans mixed in with the usual magazine subscriptions and electric bills.Hester looked at many of them, searching for the best company with which to pay off the $42,000 he borrowed before graduating from the University of Nebraska-Lincoln in 2006.He came to an unexpected conclusion: It didn't really matter which lender he chose."None really beat the federal government,"… more

The federal Department of Education, after months of criticism for lax oversight of the student loan program, still has no system to detect and uncover misconduct by lenders and protect student borrowers, a new government report said yesterday.The report, by the Government Accountability Office and released by Congressional Democrats, found that the department had “no oversight tools” to see whether lenders were giving improper incentives to colleges to steer student borrowers their way, and, that since 1989, the… more

Crocodile tears are streaming down K Street and up Capitol Hill from bankers crying about the student loan subsidy rates Congress is poised to cut.But think tanks, the Congressional Budget Office and lawmakers such as Rep. Tom Petri (R-Wis.) say lenders' complaints are a diversion to keep Congress from truly cutting into the profits of the $85 billion student-lending industry.The federal government guarantees banks, private lenders and Sallie Mae a profit on every student loan originated… more

Congress is considering a plan that would require banks and other lenders to compete for the right to make federally guaranteed student loans. The proposal, which has bipartisan support, would set up government-run "auctions" in which lenders would bid on loans based on the size of the government subsidy they would be willing to accept. Those lenders that agreed to the lowest subsidy rate would "win," earning the right to lend to students in a particular state, region,… more

House Democrats pushed through legislation yesterday that would boost government-subsidized student loans and other college financial aid by $18 billion over the next five years, despite strong opposition from Republican lawmakers and a White House veto threat.The legislation, passed in a 273 to 149 vote, would cut interest rates on federally backed student loans in half and increase Pell grants for low-income students. It would pay for the measures by slashing subsidies to lending companies by about $19… more

WASHINGTON, July 11 — The House on Wednesday approved far-reaching changes in student aid programs, voting to cut $19 billion in federal subsidies to student lenders over five years, while increasing grants for needy students and halving interest rates on federally backed loans with the savings...As well as cutting lender subsidies, the bill reduces the share the government would guarantee in the event of student default. It halves the interest rate on federally backed loans gradually over the… more

For months, leaders at the U.S. Education Department have battled the impression, fostered by Democratic members of Congress and New York Attorney General Andrew M. Cuomo, that the Bush administration did far too little to regulate the behavior of lenders and colleges until its hand was forced by the burgeoning scandal in the student loan industry...

Jeff Baker, who directs the policy liaison and implementation staff in the Education Department’s Federal Student Aid office, said at Monday’s session at the… more

WASHINGTON -- In their most aggressive action yet in response to problems in the student loan industry, U.S. Department of Education officials said Monday that they have sent warning letters to more than 900 colleges and universities reminding them not to limit student choice in picking a lender.The letter was sent to campuses where 80 percent or more of the federal student loan volume in 2006-2007 was handled by one lender.Jeff Baker, policy liaison at the… more

To the average student or parent, the college-loan fiasco that has unfolded over the past few months is as about as easy to understand as the federal tax code. Far clearer is the severity of the problem.Students pay interest rates of anywhere from 6.8% to 18% for college loans. The higher end of that range borders on usury. Repaying the average loan — $20,000 — over 10 years at the top rate costs more than twice that amount. more

Morning Edition, June 26, 2007 · A bill before Congress would cut billions in federal subsidies for the student loan industry and increase the amount of money available for needy students – with funding coming from the pockets of lenders. The industry is under assault after reports of unethical financial relationships between universities and private lenders.Loan industry defenders say the bill would favor lenders who don't have students' best interests in mind. Student advocates say money that now… more

Student loan banks and their allies are trying to spin away the public’s outrage over the discovery that private lenders have been bribing college aid officials to steer student business their way. The banks want to change the subject by criticizing the government’s separate direct loan program instead of looking at where all that bribe money comes from: You.

The government spends billions each year on unnecessary subsidies to banks that make student loans. It’s these excess taxpayer subsidies to private… more

The investigation of New York State's attorney general, Andrew M. Cuomo, into the questionable practices of lenders in federal student-loan programs has helped raise public awareness of one of the greatest scams in our government: The Federal Family Education Loan program, otherwise known as the guaranteed-student-loan program, is unnecessarily expensive, structurally broken, and rife with corruption. It is increasingly clear that our convoluted federal student-loan delivery system, through which private lenders provide government-backed loans to students, cannot be fixed by… more

Senate Democrats introduced a bill on Tuesday that would slash government subsidies to student-loan companies and use the savings to pay down a portion of the federal deficit and create two new grant programs aimed at helping low-income students attend college. The bill-- a "budget reconciliation" measure that will be considered by the Senate education committee today, along with legislation introduced on Monday that would reauthorize the Higher Education Act -- would also cap the amount of money… more

“Thank you for considering signing on to the attached group letter, which encourages Congress to continue making higher education accessible and affordable using the widest range of government- and private-sector loan programs and partnerships,” the handwritten letter begins.Written on joint Nelnet and Consumer Bankers Association letterhead, messages like this one have been faxed to local chapters of the American Federation of Teachers, AFL-CIO and other unions over the past couple of months, setting off a backlash over what… more

THE Department of Education’s proposed new standards for overseeing student loans — a response to the growing scandal involving kickbacks from lending institutions to university student-aid officials — are a step in the right direction. But the department and the Bush administration could go further in making student loans cheaper, less cumbersome and, most important, not susceptible to corruption.

In fact, the method for achieving this is already on the books: the William D. Ford Federal Direct Loan Program, which… more

Secretary of Education Margaret Spellings sounded like a reformer when she testified on Capitol Hill earlier this month over recent revelations of waste, fraud and bribery in the $85 billion-a-year student loan industry."Federal student aid is crying out for reform," said Spellings, speaking before the House Committee on Education and Labor. "The system is redundant, it's Byzantine, and it's broken..."Between 2001 and 2006 a handful of companies that issue federally guaranteed student loans had what one… more

In response to scandals rocking the student loan industry, the House has quickly passed reform legislation to require more disclosure from lenders as well as university codes of conduct, and Senate action is expected. But the larger issues of rising college costs and students' increasing dependence on private loans have, for the moment at least, taken a back seat. Yet that doesn't mean they've gone away. College costs have risen far faster than inflation and also outpaced the… more

The financial aid directors at Columbia and Johns Hopkins Universities have lost their jobs, the second and third casualties of the student loan controversy that has battered higher education.In a terse statement e-mailed to reporters late Monday afternoon, Columbia announced that it had dismissed David Charlow, its executive director of financial aid and senior associate dean of student affairs, six weeks after it suspended him amid charges that he had owned stock in Student Loan Xpress, a loan… more

There were historic breakthroughs, such as the selection of Harvard's first woman president, and there was tragedy - the horrific shooting spree at Virginia Tech.But if the academic year now winding down had a theme, it was a more subtle one: dishonesty.Consider:- Nine MBA students at Duke University's Fuqua School of Business faced expulsion, and 25 others lesser punishments, for their roles in an exam-cheating scandal - the most high-profile of several this year. more

The head of the U.S. Education Department's student loan office announced her resignation yesterday amid mounting criticism of the agency's oversight of the loan industry.Theresa S. Shaw's exit as chief operating officer of the Office of Federal Student Aid comes as the New York state attorney general, congressional Democrats and the department's inspector general are investigating the loan industry and the web of personal and financial ties linking some key players in lending companies, universities and the government. more

An executive running the Education Department's Federal Student Aid office took home more than $250,000 in performance bonuses over the last four years, a period in which the office's oversight capabilities have been called into question.Theresa Shaw, who is stepping down in June as chief operating officer of the office, received the bonuses under a 1998 law aimed at modernizing the organization's management. For fiscal 2003, Shaw took home a $71,250 bonus. She received a $60,000 bonus for… more

On the eve of a congressional hearing on student loan practices, the House passed a bipartisan bill Wednesday that would bar lenders from giving gifts to colleges or school officials to win business, and would require schools to disclose any financial ties to lenders.The passage of the bill, pushed by House education committee chair George Miller, D-Calif., comes a day before Education Secretary Margaret Spellings is to testify at the hearing. Spellings is expected to be grilled about… more

The markers of a mushrooming student loan scandal are identical to so many of the rest: The Bush administration, determined to turn the federal government into a favor bank for its corporate cronies, ignored every indicator that the $85 billion-a-year student loan industry was rife with corruption...Never mind, the Bush people said. The lenders could police themselves.So the lenders voluntarily heaped ever more lavish perks on colleges and financial aid officers, including "revenue sharing" arrangements under… more

New America Senior Research Fellow Stephen Burd appeared on the April 24 edition of NPR's "All Things Considered." To listen to the full interview, please visit the NPR website.

The Bankruptcy Abuse Prevention and Consumer Protection Act was enacted in 2005 to include private student loans as one of the 10 debts that can't be forgiven.Robert Siegel talks with Stephen Burd, senior research fellow in the Education Policy Program at the New America Foundation,… more

New America Senior Research Fellow Stephen Burd appeared on the April 24 edition of CNN's "Lou Dobbs Tonight." A partial transcript is available below; for the full story please visit the CNN website.

ANNOUNCER: This is LOU DOBBS TONIGHT, news, debate and opinion for Tuesday, April 24th.Live from New York, Lou Dobbs.DOBBS: Good evening, everybody... DOBBS: The rapidly rising cost of a college education in this country creating an almost unmanageable… more

WASHINGTON — SLM Corp., the nation's largest student lender that is soon to become a private company, said Tuesday its first-quarter profit shrank 24 percent as more students missed payments on loans.The earnings decline at SLM, commonly known as Sallie Mae, reflects the higher risk of student loans not guaranteed by the federal government. Those private loans, which constitute about 16 percent of Sallie Mae's nearly $150 billion portfolio, do not have their interest rates capped as many… more

Colleges and college aid officials have been funneling their students to big banks like Sallie Mae and Citibank in exchange for cash, gifts and in-kind benefits, according to a series of recent public investigations, the most energetic of which is being led by New York State Attorney General Andrew Cuomo.

Thus far, the investigations have resulted in the suspension of 10 higher education officials, including Columbia University's director of financial aid, the issuance of almost 100 subpoenas nationwide, and… more

NEW YORK (Reuters) - The widening U.S. student lender scandal is putting new scrutiny on the ties between private loan companies like Sallie Mae and the government agencies that oversee federal loan programs.

A number of top U.S. Department of Education officials in President George W. Bush's administration previously had worked for student lenders or related groups. Critics say these links have led to weak monitoring of federal loan programs and contributed to the turmoil surrounding the $85 billion student loan… more

In the past two weeks, New York Attorney General Andrew M. Cuomo (D) has roiled the $85 billion student loan industry with a sweeping conflict-of-interest probe, extracted settlements from major financial institutions, and set the agenda for lawmakers and regulators in Washington.It is a bold -- and, some analysts say, unexpected -- approach to a politician's first 100 days in office as he strives to fill the shadow of predecessor Eliot L. Spitzer (D), who defined the role… more

The proposed $25 billion sale of student lending giant Sallie Mae yesterday to a group including two private-equity firms, Bank of America Corp. and JPMorgan Chase & Co., caps a period of upheaval in the $85 billion college-loan market...Sallie Mae's shares had fallen this year as it faced growing competition, a settlement with the New York attorney general over its practices, and a proposed reduction of the federal subsidies that threatens its core business model. Here's how the… more

It is not often that one’s research topic is the lead story in the national media, but the topic of financial aid has been in the forefront of the American consciousness from San Diego (home of Student Loan Xpress) to Albany, N.Y., (home to New York Attorney General Andrew M. Cuomo) and points in between.The stories of scandals, kickbacks, influence peddling, and fleecing — to highlight just a few of the phrases used by politicians and reporters —… more

A Department of Education official who oversaw the student-loan industry and owned at least $100,000 worth of stock in a student-loan company has been placed on leave, a department spokeswoman said this month. Matteo Fontana, who keeps an eye on lenders and loan guarantors that participate in the Federal Family Education Loan Program, was placed on leave with pay April 6, a day after his ownership of stock in Education Lending Group Inc. was disclosed by Higher Ed… more

Students with loans typically receive a barrage of solicitations for loan consolidations and other services in their mailboxes, and they often wonder how the advertisers got their names and addresses. Recent reports suggest they may have come from the U.S. Education Department itself.As first reported in the Washington Post, lenders have been improperly using the department's National Student Loan Data System to gain access to student loan information, including names and loan balances. Congress authorized the creation of… more

Sallie Mae, the nation's largest student lender, will become a private company owned by Bank of America, JPMorgan Chase and two private equity firms under a $25 billion deal announced Monday.The buyout comes as student lenders grapple with federal funding cuts and a widening investigation into deceptive college lending practices. Last week, Sallie Mae agreed to pay $2 million and alter its lending practices as part of a settlement with New York's attorney general...Some critics questioned… more

For parents who struggle like Sisyphus to overcome mountainous college expenses, only to be frustrated by the system, a bit of relief may be in sight.

No, college costs aren't coming down. Not even close-private schools are projected to raise tuition and fees about 5 1/2percent for the coming academic year, says the National Association of Independent Colleges and Universities...

But while the cost of an education keeps growing at a significantly faster clip than inflation, the tools parents can use to… more

As families wade through college financial aid options this month, they will find the path to a degree is paved with perilous debt. With rising tuition and fees, students have increasingly turned to government and private loans over the past decade, with graduates owing an average of $20,000. The borrowing frenzy has helped fuel deceptive practices among private lenders and colleges that put students and parents at risk of making poor financial choices, say law enforcement… more

Education Policy Program Directory Michael Dannenberg was the featured guest for CNBC's recent report on the student loan scandals, which aired as part of "The Wall Street Journal Report with Maria Bartiromo." A partial transcript and video clip are available here; for the complete piece, please visit the CNBC website.

Mr. ANDREW CUOMO (New York Attorney General: (Wednesday) Our position is very simple. Loan decisions should be made in the best interest of the students and not… more

Get rich with no risk. The classic business pitch is usually too good to be true – unless you're talking about the student loan business. Student loans, which banks and other lenders avoided in decades past, have become a creditor's dream...This month, New York Attorney General Andrew Cuomo disclosed that the financial aid directors of three universities had held stock in Student Loan Xpress. Earlier, five other universities agreed to pay a $3.2 million settlement after… more

Every day at colleges across the country, financial aid administrators help students navigate the complicated maze of grants and loans they need to finance their educations.So many took exception when New York Attorney General Andrew Cuomo started a probe of the field's practices...Cuomo's office, with separate research from the Washington-based New America Foundation, have uncovered troubling ties between student loan companies and college financial aid officers, who are supposed to give students unbiased advice on borrowing. more

WASHINGTON (AP) - An Education Department official placed on leave over a potential conflict of interest in his management of the government's student loan program filed disclosure forms that raise questions about the department's oversight of its own employees.The forms, released by the department late Thursday, show the official, Matteo Fontana, listed ownership in 2002 of stock in two companies that manage student loans: Direct III Marketing Inc. and Education Lending Group. In fact, the companies are the… more

With the scandal over conflicts of interest in student loans continuing to grow, Education Secretary Margaret Spellings is pledging tougher enforcement of ethics rules, as the Education Department released more information about sale of stock in a lender by an official who works on student loan issues.And in a sign of just how volatile the loan industry is today (and how lucrative it remains), reports emerged Friday morning that Sallie Mae, the industry giant, is in talks to… more

A recent Washington Post editorial criticized Georgetown for the low graduation rates of its men’s basketball team, stirring discussion about how the Univeristy educates its most famous athletes.The graduation rate for the basketball team was 47 percent for the freshmen class that entered in 1996 and graduated in 1999, according to the NCAA. By contrast, Georgetown’s overall graduate rates excel compared to other universities: 93 percent for non-athletes, and 91 percent for all student-athletes...Georgetown’s… more

Sallie Mae, the nation’s largest lender to college students, agreed yesterday to pay $2 million to settle an investigation by the New York attorney general’s office and said it would close down student call centers it has run for college financial aid offices. The loan company, which manages student loans for nearly 10 million borrowers at more than 5,600 colleges, also agreed to adopt a code of conduct prepared by the office of the New York attorney general,… more

Chicago State University steers students who need loans to a bank led by a university trustee and in which university President Elnora Daniel is a director and shareholder, a Tribune investigation has found...Chicago State's financial aid Web site admonishes students to "choose your lender carefully," then recommends five companies, including Seaway.Daniel owns stock in the private, South Side bank and was appointed to its board of directors in 2004, according to state records. Since then, the… more

WASHINGTON, DC (April 11, 2007) – New York Attorney General Andrew Cuomo today announced that Sallie Mae has agreed to pay a $2 million dollar settlement and adopt a new code of conduct in response to ongoing investigations into the relationship between lending institutions and universities. In addition to this announced settlement, Cuomo’s office continues to investigate apparent improprieties involving lenders such as Student Loan Xpress, financial aid administrators, and a number of high profile universities. 

New America’s Higher Ed… more

After 15 years, of reporting on the student-loan industry, I didn’t think much could surprise me. But even I was shocked last week when I discovered Securities and Exchange Commission documents revealing that financial aid directors at three prominent universities -- as well as a senior official at the U.S. Education Department -- each had significant personal investments in a private student-loan company

What possibly could have motivated these officials to take tens of thousands of dollars in stock options from… more

KAI RYSSDAL: It's not a Wall Street scandal, but it's got the hallmarks of one. Kickbacks in return for market access. Shady dealings between marketers and banks. And no real regulations covering most of what's been going on.Investigations into the student loan industry continue to widen. Schools and lenders are putting people on paid leave while everybody sorts things out. Today, New York Attorney General Andrew Cuomo compared his probe to the peeling of an onion. He said… more

In light of ongoing financial aid scandals at institutions of higher learning around the country, University officials say students need not worry about similar corruption at Brown's Office of Financial Aid.Three senior university financial aid officers - David Charlow of Columbia University, Lawrence Burt of the University of Texas at Austin and Catherine Thomas of the University of Southern California - sit on the advisory board for Student Loan Xpress, a company owned by the Education Lending Group,… more

A top financial aid administrator at the Johns Hopkins University was put on paid leave yesterday while the university investigates her ties to a student loan company that is at the center of a national probe by New York's attorney general, Hopkins officials said.University officials were informed yesterday by the lender's parent company that Ellen Frishberg, director of student financial services, received about $65,000 in consulting fees since 2002 from Student Loan Xpress. The loan company is one… more