Federal Student Aid Rules Rollout

On June 16, the US Department of Education issues a Notice of Proposed Rule Making (NPRM) dealing with higher education. Thirteen of fourteen issues under consideration were announced, with the fourteenth being taken under advisement. These proposals are shaped by testimony and subject to public comment. Here’s a round-up of the proposed reforms:

Student Eligibility for Federal Funding

• In the face of an increasing number of high school “diploma mills” (organizations that grant diplomas that do not represent the legitimate of a legitimate secondary school course of study) Institutions of Higher Education (IHEs) and postsecondary vocational schools must find a way to validate diplomas that are in doubt.

• Students without a (valid) high school diploma would become eligible for federal student aid if and when they complete 6 credits of college credit.

• IHEs and postsecondary vocational schools must implement “satisfactory academic progress policies” (the policies that determine if—by the institution’s standards, students are eligible for financial aid; moreover, they must abide by them.

• The process for verification of information reported by students (and parents) on the Free Application for Federal Student Aid (FAFSA) will be streamlined, reducing—for some students—the amount of additional information they will have to supply.

Consumer Protection

• The USDOE’s authority to act against IHE’s and postsecondary vocational schools that deceive students in advertising, sales, and/or marketing is strengthened.

• Changes to the rules about admissions recruiters compensations intended to help discourage recruiting practices in which students were pushed towards programs were a bad fit for them, either because the financing was beyond their likely means to repay, they were not qualified for the program, or they were unlikely to succeed in it.

• States—some of which have not satisfactorily establish an approval and monitoring process for IHE’s and postsecondary vocational schools—must now do so.

Course Eligibility for Federal Funding

• A new definition of a credit hour, which has here-to-fore not been standardized, and new procedures for accrediting agencies to determine if IHEs and postsecondary vocational schools are using the assignment of credit hours appropriately.

• New regulations on the amount of a program in one IHE or postsecondary vocational schools that can be delivered by another institution, and eligibility requirements for all bodies involved.

• New rules for counting repeated coursework towards eligibility for full-time standing.

• Closing loopholes in the student withdrawal from studies process so that unused funds are properly returned to the USDOE.

• Changes in disbursement to rectify the situation in which students who need their federal funding before the start of school (e.g., to purchase books) will receive it earlier.

For Profits

• In the proposal that is being held, the USDOE is considering requiring for-profit IHEs and postsecondary vocational schools

a) to disclose the program’s graduation rate and job placement rate to prospective students;

b) to disclose information so that the USDOE can calculate student debt and income after completing programs.

The Wall Street Journal reports that the for-profit schools were very pleased that the final NPRM was held for reconsideration because according to industry lobbyists, it could have a profoundly negative effect on the for-profit schools

More Information

You can find more information about the process here.

You can find a Microsoft Word version of the complete NPRM in the small “Related Resources” section to the right of the first paragraph of the press release here.

Sources

www.ed.gov/news/student-aid-rules-protect-borrowers-and-taxpayers
online.wsj.com/article/BT-CO-20100616-708604.html?mod=rss_Hot_Stocks