Just days after the Department of Education released Gainful Employment Informational Debt Measures and Gainful Employment Informational Loan Medians to institutions, GE is Dead!
On Saturday, United States District Judge Rudolph Contreras struck down Gainful Employment rules in a suit that the Association of Private Colleges and Universities brought against the Department of Education and Secretary Arne Duncan to challenge Gainful Employment rules.
Check out the full text of the legal decision here:
2011 10 06 - 1237 - Washington DC - Occupy DC (Photo credit: thisisbossi)
April is National Financial Literacy Month and on campuses across the country, students, faculty and staff are getting engaged as schools integrate default aversion strategies into everyday campus life in an effort to lower default rates and promote financial health through education. Financial literacy campaigns have become a prime strategy for preventing student loan defaults. Unfortunately, many schools still view financial literacy as an isolated function of the Financial Aid office but, it takes the combined effort and understanding of everyone on campus to create a culture capable of promoting financial literacy. Want to know how to get your school’s head in the game? Read on.
First things first. Let’s assume that very few people outside of the financial aid office ever think about financial literacy. It’s probably also safe to assume that few people within the financial aid office ever think about student retention, persistence and success. Where these two conversations converge is where the magic happens.
It’s just as important for everyone on campus to know how student success is determined and to be able to identify barriers to student persistence as it is for everyone on campus to know what tools and resources are available to students to overcome them. Barriers come in all shapes and sizes and they’re not always financial either. Social and academic integration, parental support, family background, and even cultural values can create barriers to student success. And the student’s most at risk of defaulting on their student loans are the ones who leave school before attaining either degree. By cultivating an understanding of the characteristics and risk factors that contribute to default, schools can proactively engage the students who need assistance academically as well as financially.
Clueless about starting that dialogue on campus? Don’t worry, you’re not alone. Many schools contract with third party services to provide financial literacy to their students. With the old FFEL lenders, servicers and guarantors, looking for a way to stay in the student lending game, many have shifted their entire focus to default aversion planning and financial literacy. There’s a lot of choices out there so call a few and choose the one that fits for your campus.
Okay – this is a “Financial Aid” blog, so what can you do in the Financial Aid office to help educate your students and families? Here are a few suggestions:
Conduct entrance and exit counseling. Already doing it? Great! Ever try to get 100% of your departing students to complete exit counseling? Raise the bar. Go for it.
Make sure mom and dad are part of the financial aid process. As independent as today’s dependent students may seem, the FSA program is predicated on the student’s parents being the first source of financial aid, before the Pell Grant and Direct Loans even come into play. Remember, mom and dad can use a co-borrower to take out that PLUS loan too.
Advise students to borrow Federal Student Loans before exploring other, more costly options. Private, credit-based loans can carry significantly higher interest rates than Direct Loans.
Contract with a third party default management company. Unlike a collection agency, a third party default management company can help you maintain contact with students after they leave school. The best ones build a long-term relationship with each student and will contact students throughout repayment of their federal loans to help keep them on track.
Use loan calculators! Loan calculators are great for demonstrating the cost of borrowing in real terms. Most online loan calculators show not only principal and interest over the term of the loan, but many allow you to compare rates and repayment terms too.
Encourage students to make interest only payments on their loans. This reduces capitalization and makes repayment more affordable in the long run.
Encourage students to borrow conscientiously and whenever possible reduce their reliance on federal student aid.
Promote scholarships. Free money is always better than something that has to be repaid. Send an email blast or a tweet whenever you hear about a new scholarship that your student could benefit from.
Just days after NASFAA released it’s overly complicated version of an IRS Tax Return Transcript Matrix exclusively to NASFAA members, David Bergeron and the good folks at FSA made good on their promise to release one to the FSA community. In a simple to use, one page Excel document, the Ed version, compares the seven ISIR information items that may need to be verified for a student or parent who filed or will file a 2011 Federal Income Tax return to the item name reported on the IRS Tax Return Transcript as well as the corresponding line item numbers from the three 2011 IRS tax returns.
The February 24th, 2012 Electronic Announcement offers some guidance on interpreting the transcript as well – so aid administrators, pay attention:
…for some items the transcript may report two or three values. This is because the IRS calculates or recalculates the amount reported by the tax filer for some items. If only one value is reported on the transcript that value must be used for verification. If more than one value is reported on the transcript, the value associated with the item name that includes the words “Per Computer” must be used for verification. The “Per Computer” line should be used for verification even if it is different than what was reported by the tax filer.