Roundup: News You Need to Know, Wed., Feb. 21st

Minority Admissions Rate Plummets at University of Michigan

Minority admissions to the University of Michigan dropped significantly after Proposition 2, the states ban on affirmative action, went into effect in early January. According to admissions data released by the University, 76 percent of underrepresented minority applicants were accepted before the University stopped considering race or ethnicity in the admissions process. Since the University began complying with the ban, only 33 percent of underrepresented minority applicants have been admitted, a 57 percent drop (43 percentage points). Part of this decrease is the result of a rolling admissions cycle, as admissions rates typically decline as the cycle progresses. However, the admissions rate of non-minority students did not decline at nearly the same rate, falling only 37 percent over the same period of time.

Preferred Student Lender Arrangements Continue to Draw Scrutiny

Business Week recently published an article highlighting conflicts of interests that can arise when colleges select student lenders for their preferred lender lists. The article discusses arrangements with preferred lenders that give colleges payments based on the amount that students borrow in the private market. Colleges are profiting from increased private loan borrowing, creating perverse incentives. Some schools even discourage students from borrowing from lenders not on their preferred lists, despite the fact those lenders lenders might offer students a better deal. The article mentions the efforts of MyRichUncle, a student loan company that has attacked these arrangements and offers lower interest rates than most other lenders.

Key Backer of MOHELA Deal Withdraws Support

One of the few Democrats in Missouri to back Governor Matt Blunts plan to sell the assets of the Missouri Higher Education Loan Agency (MOHELA) has withdrawn his support. House Minority Leader Jeff Harris reversed his position after a recent report by an independent financial analyst questioned whether MOHELA would be able to sustain its financial health, credit rating, current borrower benefits, and loan-forgiveness programs after selling $350 million in assets. Harris is worried that the plan could jeopardize the state loan agencys ability to provide low-interest loans to students. He sent a letter to Gov. Blunt recommending that the state finance the planned building construction with state surplus funds instead.