From our blog cousins at FACE Talk, a little help for Mike Petrilli, who's entitled to his own blog, but not his own -- ah, you know.

Posted by John at 02:37 PM | Permalink | Comments (0)

So tomorrow I'm giving a talk at the AFT Higher Ed Conference on the economy and funding for higher ed.  Given that one of the other workshops at the time has this guy, I'm expecting lower than normal attendance.  The only thing saving us from a goose egg will be my co-presenter Bill Zumeta and the fact that Sherman Dorn doesn't present until Saturday. 

Posted by Ed at AFT at 04:08 PM | Permalink | Comments (0)

Is anyone going to be surprised, six months from now, if a news report finds that the U.S. Department of Education (ED) did nothing while student lenders took $1 billion in tax money? The student loan scandal, long on the back burner, may be boiling over again.

In January, the figure was $278 million, and the rationale for ED's inaction was that recovering the money would set a "precendent [that] might require it to pursue other loan companies, too, possibly driving smaller ones out of business and reducing borrowing options."  (Never mind that those smaller companies had received subsidies ED's inspector general has labeled "improper.")

By April, the student loan scandal had cost one ED official and several college officials their jobs.

In May, ED created finally took serious action...by creating a task force.

And now, according to Amit Paley, writing in this weekend's Washington Post, the figure is up to $600 million, and Education Secretary Margaret Spellings acknowledges "the federal government 'had some responsibility' for 'confusion' over subsidy rules."

Is it naive to argue that the federal government also has "some responsibility" to try to get back $600 million of taxpayers' money?

Posted by John at 11:10 AM | Permalink | Comments (0)

How is a student loan recipient like a taxpayer?  When either one falls behind on payments, a collection agency comes knocking.  And in either case the collection agency may be Sallie Mae. 

A House Ways and Means hearing last week about Collection Agencies Gone Wild questioned the tactics and costs of two IRS-contracted collection agencies: CBE Group and Pioneer Credit Recovery, a Sallie Mae subsidiary.

CBE and Pioneer also work for the U.S. Department of Education (ED), tracking down delinquent student loan recipients. ED's 2006 contract with Pioneer is worth $37 million, while ED's contract with CBE Group is a mere $7 million.  (Thanks again to OMB Watch for the Web site about government contracts.)

The kicker is that the IRS has acknowledged that the plan to use private collection agencies "will cost more than hiring additional agents to do the same work."

Posted by John at 10:27 AM | Permalink | Comments (0)

Barmak Nassirian, the associate executive director of the American Association of Collegiate Registrars and Admissions Officers, doesn't think highly of Secretary Spellings or her performance at yesterday's congressional hearing.

Posted by John at 10:22 AM | Permalink | Comments (0)

Here's a staggering admission in Secretary Spellings' written testimony for today's student loan hearing:

"...federal student aid is crying out for reform.  The system is redundant, it's Byzantine, and it has failed to keep up with dramatic changes in higher education.  In many ways, it's also a prime target for those looking to game the sytem." 

These problems aren't new.  The Bush administration had a Republican Congress for six years and enough public support to get reelected in 2004.  Administration officials could have tackled these problems head on, but they didn't.  Until someone got caught with his hand in the cookie jar.

Administration officials' lack of attention to student aid is emblematic of their unwillingness to confront campaign contributors (lenders), their  "see no evil" approach to businesses that profit from government contracts, and their disdain for doing the job they were elected to do -- governing.

UPDATE: Eduwonk, blogging late last night, was all over Spellings' "awkward defense" of the administration's actions over the past six years.

Posted by John at 11:19 AM | Permalink | Comments (0)

From a letter to the editor in today's Washington Post by Kevin Bruns, excecutive director of America's Student Loan Providers.. 

"...federally guaranteed loans are the lowest-cost student loans available. To families struggling to pay for college, choice and competition in student loans are a 'Borrower's Paradise.'" 

That's how lenders say the system is supposed to work, giving students low-interest loans.

But here's how it actually worked, from today's New York Times:

"Pratt Institute, a New York art and design college, had a deal in 2005 with a student loan company: The lender would provide grant money for needy students if Pratt students over all took out $1 million or more in loans.

But last year, Pratt found that the deal was not so good for its student borrowers.

The company, Education Finance Partners of San Francisco, was charging borrowers 15 percent in interest — more than double the 6.8 percent rate on some federal loans and higher than what some credit cards charge."

Paying twice the going rate for student loans is a "borrower's paradise"?  Sounds more like a trip to hell for college students.  But, hey, the lenders could buy a slice of paradise with all those profits.

Posted by John at 11:28 AM | Permalink | Comments (0)

...while lenders burned students and made enormous profits.

"The Bush administration killed a proposal to clamp down on the student loan industry six years ago following allegations that companies sought to shower universities with financial favors to help generate business, according to documents and interviews with government officials," reports Amit Paley in today's Washington Post.

Bush officials stood by while Nelnet rang up $278 million in questionable profits and have taken a fox-henhouse approach to student loan oversight.

But, don't worry, they're getting serious about cracking down on student loan abuses now.  A Department of Education spokesperson quoted in the article notes that Secretary Spellings has created a task force!  Wow!  That'll show 'em. 

Posted by John at 09:31 AM | Permalink | Comments (0)

Statement from AFT president Edward J. McElroy:

WASHINGTON, D.C. – From those of us in the education community, our hearts, thoughts and prayers go out to the Virginia Tech victims, their families and the community at large.  Academic campuses—from preschool to higher education—must be havens for peaceful learning.  Today, we see the painful evidence that this is not always so.

(AFT is the largest higher education union in the country, representing approximately 160,000 higher education faculty, professional staff and graduate employees.)

Posted by John at 11:30 AM | Permalink | Comments (0)

Horrible news out of Virginia Tech University:  A shooting spree on campus today has resulted in the deaths of at least 21 33 people so far, including the suspect, and many injuries.

Posted by John at 01:09 PM | Permalink | Comments (0)

What's the recipe for waste, fraud and abuse in the student loan industry?  Billions of dollars at stake, an administration in bed with business, and a Republican-led Congress (until this year) that often ignored its oversight responsilbiities. 

No surprise then that the student loan world is being rocked by yet another scandal, first uncovered by Stephen Burd, who wrote for the Chronicle of Higher Education before switching to the New America Foundation.  The Washington Post reported this weekend that Matteo Fontana "held more than $100,000 of stock in a student loan company at the same time he helped oversee the lending industry."

The body count, near as I can tell, is 10 so far, with suspensions or leave for Fontana, three employees at the lender, and loan officials at six colleges.

This scandal follows on the heels of Nelnet's loan repackaging scheme ($278 million lost while administration officials looked the other way) and charges of questionable stock sales by a Sallie Mae official just before the release of a Bush administration budget proposal that led to a drop in stock prices.

So what's next? Maybe someone will look into the U.S. Department of Education's relationship with Affiliated Computer Services, a company that received a huge contract shortly after two supporters of President Bush left the administration to work for ACS.

UPDATE:  Anya Kamenetz of Huffington Post writes that Matteo Fontana is "one of the gaggle of Sallie Mae execs who followed their boss Theresa Shaw through the revolving door into much lower-paid Department of Ed gigs after Bush's election."  (Kamenetz links to Theresa Shaw's official bio, which somehow fails to mention her appearance in one of the Ketchum-produced fake TV news stories.)

Posted by John at 12:59 PM | Permalink | Comments (0)

On Monday, Elena Silva at The Quick and Ed wrote about a rally in Maryland to support a bill that would allow undocumented students to pay in-state tuition rates.  Today's Minneapolis-St. Paul Star Tribune reports that a similar bill has passed in the state Senate and has a decent chance of passing in the House.

It's encouraging to see movement at the state level on this issue, as efforts to pass federal legislation, specifically the DREAM Act, have stalled.  The AFT has national policy supporting passage of the DREAM Act, which would allow undocumented students meeting specific criteria to enroll in college and seek conditional residency status. Ed Sector goes one step further in its new Eight for 2008, calling for creation of a fast track to U.S. citizenship for undocumented students who graduate from high school.

As the Latina wannabe I have long since been, I say, Adelante! Or, as they would say in Bolivia, Hacia el Mar!

Posted by Michele at 01:45 PM | Permalink | Comments (0)

Back in September, the inspector general at the U.S. Department of Education (ED) ruled that student loan giant Nelnet had profited from $278 million in improper subsidies.  But on Friday ED announced it is not going to attempt to recover the money.  (It goes without saying that Friday is ED's favorite day of the week for  bad-news dumping.)

The language of the Department's IG report on Nelnet is unambiguous:

Nelnet’s Project 950 did not fund loans from an eligible source in compliance with the HEA, regulations, and other guidance issued by the Department.  Therefore, the increased amount of loans created by Project 950 was ineligible to be billed under the 9.5 percent floor.   

Given the IG's report and the huge amount of money at stake, it's hard to argue with the conclusion of Senator Ted Kennedy, who said, "The administration should have settled for nothing less than the full recovery of Nelnet’s ill-gotten proceeds from these loans."

But, hold on.  Under Secretary of Education Sara Martinez Tucker has an explanation for ED's willingness to give up $278 million in tax dollars.  Here's how the New York Times paraphrased it:  "[T]he department had decided not to recover past payments because such a precedent might require it to pursue other loan companies, too, possibly driving smaller ones out of business and reducing borrowing options."

Think about that for a minute.  It is now the policy of the U.S. government to avoid going after large companies that obtain tax money improperly in order to protect small companies that obtain tax money improperly.  Does that mean we can expect an announcement from the Justice Department that federal prosecutors will no longer investigate drug kingpins because it leads to pain and suffering for small-time dealers and recreational users?

There is a more likely explanation for ED's inaction.  It can be found by considering Nelnet's political contributions, described here by Higher Ed Watch blog, which notes that Nelnet made the "single largest corporate donation" to the National Republican Congressional Committee in 2006.

Posted by John at 06:58 AM | Permalink | Comments (2)

This blog rarely delves into higher ed, but we want to highlight a new report from our friends at Free Exchange.  Faculty Bias Studies: Science or Propaganda looks at the spate of studies claiming that liberal bias in academia is creating a generation of tree-hugging, politically correct college grads.  It turns out the researchers who made that claim repeatedly dropped the ball -- kind of like the New Orleans Saints.

Posted by John at 09:02 PM | Permalink | Comments (1)

We don't really blog on higher ed issues, but I thought we should note the passing of former U.S. Senator Robert Stafford, whose support of low-interest loans for college students led to the renaming of the Federal Guaranteed Student Loan program in his honor.  And, if you want to "do something" about college affordability, consider sending this letter to Congress, asking it to cut the student interest rate for subsidized loans and to raise the maximum Pell Grant award to $5,100.

Posted by Michele at 02:24 PM | Permalink | Comments (0)

Over at This Week in Education, Alexander Russo writes that two-year colleges are poised to receive increased attention from philanthropists.  One role that community colleges can serve is as a pipeline to teacher preparation programs at four-year institutions.  Should community colleges do more in teacher preparation?   Arturo Pacheco, director of the Center for Research on Educational Reform at the University of Texas at El Paso and former dean of the College of Education and Joseph D. McNair, a professor of education at Miami-Dade Community College and a member of the United Faculty of M-DCC/AFT debate the issue in the AFT's On Campus.

Posted by Michele at 10:09 AM | Permalink | Comments (0)

Cross-posted on Free Exchange on Campus, a coalition fighting to protect and promote higher education that includes AFT.

Yesterday, the Republican-controlled House of Representatives was busy proving to their mid-term election base that we are the baddest, toughest country in the word-so tough we are willing to take the very rights this country was founded upon away (read: habeas corpus) from others just to prove it.  Meanwhile, the majority of work that Congress is actually responsible for remains undone.  Congress Daily (subscription) reports that:

"Even if lawmakers act on both the Homeland Security and Defense appropriations bills this week, Congress will have cleared only two of 12 FY07 appropriations bills before recessing for the elections. The rest of the budget, including foreign aid and all domestic programs and agencies, will be funded under a continuing resolution attached to the $447.6 billion Defense measure."

One particular bill Congress just can't seem to get done, as we have reported before, is the Higher Education Act, which was extended again in the House yesterday.  Is this all just more evidence of a "do nothing Congress"?  Well, in this case, one has to wonder whether you want them to do something or not.

First, they already did plenty of damage to higher education when they passed the Deficit Reduction (read: stick it to students and parents) Act of 2005 where they decided a good way to pay for our looming national debt would be to raise student loan rates because really, students aren't carrying enough debt after college now are they?  

Second, both the House and Senate versions of HEA includes a "don't worry it is only a sense-of congress" provision that mimics David Horowitz's so-called "academic bill of rights" representing an unprecedented intervention into college classrooms by the federal government. 

Third, Secretary Spellings is busy running around with a new Commission on Higher Education report, but seems unwilling to talk about giving the neediest students access to higher education although seems really ready to talk about a new database for tracking students and riding colleges about cost controls.  Yes, maintaining databases and a budget are definitely lessons we should learn from this administration!

So, I really am not sure if their record on the do something side makes me hope that they actually start taking up domestic policy issues, or if it wouldn't be better for this Congress to stay content to do nothing!

Posted by Guest at 09:22 AM | Permalink | Comments (0)

The headline above is the tag line for Washington Post radio, and it seems to apply to last week's news story about a contractor error that put the personal information of student loan recipients on a U.S. Department of Education (ED) Web site. ED promised to provide the credit monitoring for all borrowers whose personal information might have been compromised. ED and the contractor probably want the story to fade away, but there may be more to it than we've learned so far.

None of the news reports seems to have looked closely at the contractor, Affiliated Computer Systems (ACS), and the unusual way ACS expanded and renewed a much smaller contract  originally held by another company, which ACS bought. 

Citizens Against Government Waste details the contract's expansion shortly after the Bush administration took office:

In late 2001, the FSA extended a contract it had with Affiliated Computer Services (ACS) through September 2006, with an option for an additional year, without seeking rival bids....But a FFELP provider challenged FSA's effort to provide the extension without going out to bid....FSA relented, conducted a market research study, and stated that at the end of January 2003 it would undertake a competitive bid process to obtain direct loan servicing. In November 2003, FSA announced that it had awarded a $1 billion contract, once again, to ACS to handle services related to its direct student loan program.

So, the contract was first awarded to ACS, then withdrawn after complaints about the process, and then -- no surprise -- awarded again to ACS.  And, given the Bush Administration's fondness for single-source contracting and cronyism, it will surprise no one to learn that ACS has ties to Bush-Cheney fundraising and to the Bush appointee who oversees the billion-dollar contract between the U.S. Department of Education and ACS.  (About $470 million is reported by ED on its current contracts document, which apparently doesn't cover the entire duration of the contract.)

Former Indianapolis mayor Stephen Goldsmith was, according to Forbes, a senior vice president at ACS from 2001 to 2005.  (Another source has him as a senior VP who later became an advisor.)   It seems clear that ACS got the expanded contract during Goldsmith's tenure.  And Goldsmith is well connected.  He has also served as

• Domestic policy advisor to Candidate George W. Bush, special advisor to the President on faith-based initiatives,
• A "pioneer" for the 2000 Bush-Cheney ticket (meaning he raised more than $100,000)
• A "ranger" for the 2004 Bush-Cheney ticket (more than $200,000), and
• A member of a federal commercial activity panel with a congressional mandate "to study the policies and procedures governing the transfer of commercial activities for the federal government from government personnel to a federal contractor."  (Like, say, ACS?)

Goldsmith is also an author.  Government by Network, which he co-wrote, praises a public official who took over a government agency that "outsourc[ed] more than 82 percent of the department's budget--little of it coordinated."  The official "coordinated" the outsourcing by creating a multibillion-dollar umbrella contract managed by a single vendor.

The government agency was ED's Office of Federal Student Aid, the official praised in Goldsmith's book was Teresa Shaw, and the vendor for the new umbrella contract was ACS. 

The unusual circumstances surrounding the use of so much tax money deserve greater transparency and more scrutiny, though it's entirely possible that there's nothing illegal or improper going on here.  A little digging into this contract could either amount to a waste of a reporter's time or a huge scoop. 

But recent history suggests that asking questions about ED's procurement practices can produce real news.  When People For the American Way used the Freedom of Information Act to learn more about ED's contract with Ketchum PR, it led the AP's Ben Feller reported that the documents included not only the predictable fake TV news stories that Ketchum had produced for HHS, but also EDs ridiculous reporter rating system.  USA Today's Greg Toppo then followed up with another FOIA request, which revealed that the Ketchum contract included payments to Armstrong Williams.  And the Ketchum contract was chump change compared to the ACS contract.

Posted by John at 01:50 PM | Permalink | Comments (0)