Roundup: Week of February 18 – February 22

Career Education Corp. Settles With Pennsylvania A.G.

Private Giving to Colleges Up in 2007

Stanford, Wash U to Increase Financial Aid

Widening Education Gap Hinders Economic Mobility

Career Education Corp. Settles With Pennsylvania A.G.

Pennsylvania Attorney General Tom Corbett announced on Tuesday that he has reached a $200,000 settlement with Career Education Corporation, one of the country’s largest chains of for-profit trade schools, over allegations that one of its schools had duped students into taking high-interest private loans, exaggerated career opportunities, and misrepresented options for credit transfer. The allegations against Lehigh Valley College were central to a lawsuit filed by the school’s former students in 2005. That lawsuit accused the school of misleading students into thinking that the loans they were receiving “were low-interest, government-guaranteed student loans, when in reality the loans were not government-backed loans and included interest rates in excess of 15%.” As part of the settlement, Career Education has promised full disclosure of student aid practices and agreed to pay $50,000 on top of $150,000 to fund a consumer financial awareness campaign. However, as noted by The Morning Call, the Allentown newspaper that first reported on the schools’ practices, the settlement will not provide any money to the school’s former students who “were misled” and left “with overwhelming debt.”

Private Giving to Colleges Up in 2007

Private donations to colleges and universities hit a record level in 2007, but most of the money is going the wealthiest institutions, according to a survey released this week by the Center for Aid to Education. The report found that colleges raised an estimated $29.7 billion in 2007, 6.3 percent more than the year before. Despite the increase, the report found that a substantial share of the money is going to a handful of elite colleges, such as Stanford, which raised $832 million in 2007 alone. All told, the top 20 colleges that received donations — representing about 2 percent of the more than 1,000 institutions surveyed — pulled in more than a quarter of all contributions. While donations have increased substantially, the report noted that alumni giving has decreased.

Stanford, Wash U to Increase Financial Aid

Stanford University became the latest elite institution to join the affordability race, with an announcement Wednesday that it will eliminate tuition for students whose families make under $100,000 a year, and significantly increase aid for all other students. Washington University in St. Louis, meanwhile, announced this week that it will eliminate fees for students from families that make under $60,000. The two universities join Harvard, Yale, Dartmouth and others that have spearheaded massive aid expansions in the past few months, though not always for low and middle-incomes students.

Widening Education Gap Hinders Economic Mobility

Economic mobility has been largely stagnant for the last 30 years and could actually decrease due to minority educational attainment gaps, according to a study released this week. The Brookings Institution report, “Getting Ahead or Losing Ground: Economic Mobility in America,” found that a poor student who goes to college has a 19 percent chance of moving into the top fifth of the country’s earners, compared to a 5 percent chance if they don’t pursue a higher education. African American students in particular have fallen behind their Asian and white peers in attaining college degrees over the past half-century. The study found that family background still plays a significant role in determining income levels. Students from families in the top fifth of the income bracket have a 54 percent chance of staying at the top if they get a college degree and a 23 percent chance if they don’t.