Higher Ed Roundup: Week of November 17 – November 21

Bush Administration Announces More Relief for FFEL Lenders

Opposition to Private Student Loan Bailout Mounts

Department of Ed Data Project Sparks Controversy

High Costs Keep Thousands of Qualified Students Out of College, Survey Finds

Bush Administration Announces More Relief for FFEL Lenders

Using authority granted by Congress to the Department of Education last May, the Bush administration announced Thursday another avenue of financial support to lenders in the Federal Family Loan (FFEL) Program who are struggling to meet their commitments for the current academic year. Under the new program, lenders will be able to sell up to $500 million a week of loan debt issued in the 2007-08 academic year directly to the government. The government will pay lenders 97 percent of the original value of the loan. The new loan purchase program will run until February 28, 2009, serving as a temporary bridge until the Department’s other recently announced plan to provide liquidity conduits to FFEL loans issued between October 1, 2003 and July 1, 2009 goes into effect.

Opposition to Private Student Loan Bailout Mounts

Groups representing students, consumers, and some colleges this week urged U.S. Treasury Secretary Henry Paulson to reconsider plans to bailout private student loan providers. In a letter to Paulson, these groups wrote that it would be counterproductive for the government to ensure that lenders and colleges can continue to load students up with high-cost private student loan debt. “A bailout for the providers of usurious private student loans will not solve the college affordability crisis caused by the failing economy, and would actually be detrimental to many students and consumers,” the groups wrote. The letter, which was spearheaded by the Project on Student Debt, was intended in part to rebut an earlier letter sent by the National Association of Student Financial Aid Administrators that encouraged the Treasury Secretary to use a portion of the $700 billion bailout package to provide liquidity to companies that make private student loans. [Disclosure: Higher Ed Watch is supported in part by Institute for College Access and Success, the sponsor of the Project on Student Debt, with funds provided by the Pew Charitable Trusts.]

Department of Ed Data Project Sparks Controversy

The nation’s leading higher education associations are up in arms about a proposal by the U.S. Department of Education’s Inspector General (IG) to create a massive federal database that would include personally identifiable information of individuals who have applied for grants, loans, or contracts from the agency. The IG says the plan would simply consolidate information the Department already collects in nine different databases in order to better detect fraud and abuse in the agency’s programs. The college groups, however, objected to “the scale and the scope of data collection proposed,” and said the IG is seeking waivers to the federal privacy act that would allow it to unilaterally share information contained in the database with third parties. While applauding the IG’s efforts to crack down on fraud and abuse, the associations said Congress never intended “to allow the creation of a Big Brother-like surveillance system by any IG, or to permit any IG to set itself up as a data mart of information on U.S. citizens.”

High Costs Keep Thousands of Qualified Students Out of College, Survey Finds

Thousands of students who are qualified for college do not pursue a higher education because they do not believe they can afford it, are unaware of financial-aid opportunities, and fail to take steps necessary to apply for college, according to a new report by the Institute of Higher Education Policy and the Education Resources Institute (TERI). The report is based on a survey of 1,800 college-qualified students — 1,000 of which did not go to college — and 600 high school guidance counselors. The researchers found that students who chose not to enroll were more likely to come from low-income families, be of minority background, and have parents with lower educational attainment. Of the college-qualified students surveyed, 80 percent said the availability or lack of grants of scholarships played a key role in their decision of whether or not to enroll. Meanwhile, 63 percent said the price of college was an “extremely” or “very” important consideration in their decision-making process. The report’s authors recommend that the federal government and states invest in programs that make early financial aid commitments to high school students who meet “certain standards of college readiness.”