Donald Trump is the President-elect of the United States. Now what? Well, one thing people keep questioning: “What does this mean for education?” Those who have followed the debates know Trump has been vague over what his major actions might be, but plans to mention his intentions in the near future. Answering most of the questions, his co-chair, Sam Clovis has taken over information regarding higher education, college costs, student loans, and accountability.
Student loans remain a major concern with many Americans. Trump believes local banks should be lending to local students. Therefore, he wants to move the government out of lending and restore that role to private banks. He wants colleges to play a role in determining loan worthiness on factors beyond family income, ensuring that colleges and universities have “skin in the game” when it comes to student loan default. For example, under this plan colleges should not be admitting students without confidence they will graduate in a reasonable time frame and find jobs.
One question that keeps arising: “How can borrowers save under Trump’s student loan repayment plan?” If campaign promises are upheld, some borrowers who took out federal student loans and use an income-based repayment plan may come out on top. No plan is ever perfect; the administration’s proposal comes with trade-offs. Additionally, borrowers will have higher monthly payments under the new repayment plan, but would have their student loan debt forgiven sooner. Here are some of the details:
- Borrowers contribute 12.5 percent of their income if they chose a repayment plan instead of 10 percent required under current repayment plans.
- After 15 years in a repayment plan, borrowers could have their debt forgiven.
- Currently, borrowers in repayment plans have to wait 20 years or 25 years to have their loans forgiven
Now, this plan may sound like an amazing idea, but how will he be able to succeed? Trump can do this without Congress. When it comes to creating a new repayment plan for federal student loans, this doesn’t require Congress to act. The Department of Education created new repayment plans under the Obama administration, Ex. Revised Pay As You Earn (REPAYE). “This could be implemented entirely through the regulatory process,” said Mark Kantrowitz, publisher and vice president of strategy at Cappex.com, which connects students with colleges and scholarships.
Trump’s campaign plan is to encourage colleges to focus on serving students who can succeed, but there are always risks. He has noted student loans must be significant enough for the lenders changing the way colleges decide whether to admit students and what programs they offer. This is what Trump’s co-chair had to say on the situation: “If you are going to study 16th-century French art, more power to you,” Clovis said. “I support the arts. But you are not going to get a job.”
The President-elect’s plan comes in to help higher education. The Republican platform calls for new systems of learning, including technical institutions, online universities, lifelong learning, and work-based learning in the private sector. Although Trump has been vague when it comes to this topic, there is a plan and his plan is to succeed.
We’ve seen them popping up all over the Internet and we’re definitely not happy about it. Sites are promising students with college loan debt, loan forgiveness and complete debt relief. This all sounds great to a student who may be thousands of dollars in debt. However, what these sites are not telling students is that they are charging them hundreds of dollars to fill out government forms that the students can complete for free. Often times it is paperwork to lower monthly payments or to consolidate loans that will lower the student’s monthly payments—not to forgive student loan debt.
These sites have been using Social Media, such as Facebook, Instagram and Twitter, to drive traffic to their pages. They use the name of schools in their post to get users to click to their site.
In March, the Consumer Financial Protection Bureau (CFPB) put in a request to have a federal district court make a final judgement that would shut down a student debt relief scheme. With a ruling in place, this will set a precedent for other similar sites who are operating under the same process.
Here are a few actions you can take to ensure your students and alumni don’t get targeted:
- Make sure students are familiar with any loans they are taking out for their education.
- Create documents to inform students of their options when it comes to loan repayment.
- Create an e-mail account where students can ask questions about loan forgiveness, debt relief, loan repayment and consolidation.
- Utilize Social Media
- Post helpful tips for students and alumni to be able to identify sites that may be scamming them.
- Post links to legitimate resources for students to get the information and help they need.
Resources for students and alumni:
Student Loan Repayment – https://studentaid.ed.gov/sa/repay-loans
Student Loan Consolidation – https://studentaid.ed.gov/sa/repay-loans/consolidation
Student Loan Forgiveness Programs – https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service
The CFPB has identified student loan servicing as one of its priorities over the next two years. Don’t wait to put a plan in place that monitors your online marketing and ensure your institution is not being misrepresented by unauthorized marketers. Additionally, by being proactive and educating your students you can help minimize the impact of these “debt relief” scams.
Institutions are under strict scrutiny surrounding their online advertising efforts. But, it’s also imperative for the institution’s website to be in compliance with the standards and regulations set forth by the Department of Education (DOE), Federal Trade Commission (FTC), Federal Communications Commission (FCC), your accrediting body and industry standards. Below is a checklist of points to consider when reviewing the information provided on your website.
Compliant Website Checklist:
- Visibility of accreditation statement
- Representation of accreditation – full and complete accreditation information – acronyms and banned terms omitted
- Easily navigable – at least within one click of the homepage
- Provide all required criteria expected to be completed prior to enrollment
- Include all educational requirements
- Contact information provided for prospective students
- Detailed and clear explanation of offerings that the Career Services department provides
- No job placement guarantees
- Omission of banned terms, such as “career placement”
Gainful Employment Disclosures
- Clear presence of disclosure information
- Disclosure information is in the required Gainful Employment Disclosure Template developed by the DOE
- Qualification rules
- How applicants can learn about qualifying
- Financial aid eligibility disclaimer present
- Timeframe for completion listed correctly
- Program length disclaimer
- Listings are accurate and approved by the DOE
- Acceptable states for admissions
- Citations provided for statistics listed on the page
- Consent language present on lead form
- Language must include all components within the FCC definition
- Must be actual statements
- Some accreditors do not allow institutions to use testimonials from current students on their website
Stay tuned for our next webinar where we’ll cover this topic in more depth! Get early access to webinar information. (opens in a new window)
October 30th marked the release of the final version of The Education Department’s “Gainful Employment” rule. The long awaited ruling has been a topic of much discussion and is still being contested by the Association of Private Sector College and Universities (APSCU).
While the debate ensues, here are some takeaways from the ruling:
1. Career programs are no longer accountable for their cohort default rates. The cohort default rate represents the percentage of borrowers defaulting on their student loans.
2. Instead, career programs will be weighed only for their graduates’ debt-to-earnings ratios. The debt-to-earnings ratio measures the ability of a borrower to manage payments and repay debts based on their income.
3. The Education Department expects nearly 1,400 programs to fail the rule in the first year. Programs that fail the test on multiple reviews will not be able to award federal aid to students.
The For-Profit college sector has already taken action against the Education Department. APSCU officially filed suit against the Department’s Gainful Employment ruling last week. The suit asks that the United States District Court declare the regulation unlawful and set aside the regulation.
A briefing schedule is expected to be set in the next few months.
In the higher education field, we all know that distance learning is the way of the future. Online learning has provided many people with the access to receive a quality education when, in the past, they have not had this opportunity. However, taking away the face-to-face aspect of education has allowed some individuals to abuse this opportunity. With the increase in the amount of people utilizing online learning, we also see a significant increase in the amount of financial aid fraud that is happening. Groups of people are starting financial aid fraud rings and making off with hundreds of thousands of dollars in Department of Education financial aid funds.
How do they do it?
These groups, which can consist of any number of individuals, submit multiple financial aid applications to schools. Typically, these schools are focused on online learning and have a low tuition cost. The individuals do the bare minimum in the courses they have elected to take to make sure they meet the participation requirements. Once they have received the excess of their financial aid funds, they disappear.
How can you detect this activity?
There are a couple different things you can look for:
- Multiple FAFSA applications submitted using the same IP address.
- Multiple FAFSA applications submitted using the same address, phone number, e-mail address etc.
- Multiple FAFSA applications submitted from the same area with similar household situations (i.e. single parent households with one or more children).
- Offenders typically pester the financial aid staff for information on when they will receive their funds. They can become aggressive and will threaten to report the person or the school to their congressman or the Department of Education.
How do you handle these situations?
- Delay the financial aid process for these individuals as much as possible. Select for verification or require participation in online orientations or other lengthy processes.
- If possible, set up a team of a few people from different departments to specifically identify and handle such cases.
- Delay the posting of financial aid funds on suspicious students.
- Report any suspicious activity to the Office of the Inspector General.