The battle to make college more affordable has come down to a critical few weeks in the Senate. The banks and student loan companies already have spent millions of dollars on lobbying, PR firms, and advertisements in their attempt to stop reform and hang on to $87 billion in subsidies that could be going to help students.
Now Campus Progress is taking action. We’ve raised money to put this :30 second spot on cable TV and on Hulu in key states across the country:
We don’t have the kind of money student loan companies have, so we’re going to need your help spreading the ad on Facebook, Twitter, and email if we’re going to get the word out. Click here to help us spread the word.
The Apollo Group (the parent company of the University of Phoenix) revealed in its annual disclosure report to investors that the Security and Exchange Commission’s (SEC) Enforcement Division is looking into its “revenue recognition practices.”
It looks like this has something to do with the way that the company counts financial aid dollars as revenue. Since they have to reimburse the federal government when a student receiving aid drops out, the company could be in some real trouble if SEC finds that they have not been subtracting the reimbursements properly when reporting their “revenue.”
This comes at the same time as a lawsuit against the company for questionable marketing practices. The suit, filed under the False Claims Act, alleges that the company owes the government billions of dollars for compensating recruiters based on the number of students that they enroll. This practice is illegal under US education law, and an important protection for students, who could be pressured into expensive programs that will not ultimately help them, and taxpayers, who often have to foot the bill. The University of Phoenix is the largest recipient of federal student loan dollars in the US.
The company now has 443,000 students, which makes it bigger than the entire California State University System.
Last week I wrote about a new campaign by loan companies called “Protect Student Choice.” The campaign is being run by Qorvis Communications, a controversial PR firm.
Thanks to YouTube’s “studentloanreform,” we can now see that the firm has had a desire to astroturf on this issue since at least 2007. Mr. or Ms. Studentloanreform posted a presentation by the company to the 2007 Legislative Conference of the National Council of Higher Education Loan Programs, a student loan industry association.
Check it out:
My favorite part: the fact that they photoshopped Hillary Clinton’s head onto George Bush’s body.
Earlier this month, I wrote about the lack of any student opposition to the Student Aid and Fiscal Responsibility Act (SAFRA), which would cut wasteful government subsidies to student loan companies, and use the $87 billion in savings to raise Pell grants, invest in community colleges and minority serving institutions, expand the Perkins loan program, and more.
As it turns out, I may have spoken too soon. There is now one student who, through a lender run campaign, has spoken out against SAFRA. A freshman at Vanderbilt University has signed up with “Protect Student Choice/Protect Local Jobs,” which is apparently being run by Qorvis Communications. The student would not say whether he has any student loans.
While industry has found one student in its campaign to protect “student choice,” Campus Progress and its coalition partners have been more successful. More than 10,000 students signed a petition either online or on their campus to support student loan reform on the National Wall of Debt Day of Action on September 16th, and more than 40,000 people have signed petitions on Facebook supporting reform.
There have been some great pieces to come out this week about the political debate about Student Aid and Fiscal Responsibility Act (SAFRA) on that vast series of tubes we call the worldwide web. SAFRA would eliminate a government program (Federal Family Education Loan Program – FFELP) that involves large, wasteful federal subsidies to student loan companies, and use the $87 billion in savings to raise Pell grants, improve access and completion rates, invest in minority serving institutions and historically black colleges and universities, and more.
It should come as no surprise that when Student Loan Analytics explored the topic of student opinion on SAFRA, they found many student newspapers in support of the legislation, and none opposed to it. In fact, when they searched Google for “students who support FFELP,” they got a very familiar message:
No results found for ”students who support FFELP”
And why should students support FFELP? As the same blog has pointed out before, FFELP offers students little to nothing in terms of choice, despite lender claims to the contrary. Billions in additional need-based grant funding for low and middle income students seems, obviously, more valuable to both students and taxpayers than preserving subsidies for lenders. (more…)
If that sounds a bit boring, then you haven’t been paying attention. Private student loans, which contain few borrower protections and high interest rates, became nearly impossible to discharge under bankruptcy because of legislation passed in 2005. This has made private student loans more dangerous for students and more lucrative banks.
The bottom line: students have been singled out for less protection. What does this say about our country’s priorities?
One of the arguments often made by student loan industry lobbyists and their friends is that, by providing loan companies with huge, wasteful subsidies, students get something very valuable: a choice of lender.
Check out this table of the “choice” students have when selecting a lender for the Federal Stafford Loans, which was compiled by the Student Lending Analytics Blog:
The Education Department’s (ED) Inspector General (IG) released a report on Monday claiming that Nellie Mae, a subsidiary of loan giant Sallie Mae, improperly received $22.3 million in taxpayer subsidies from ED between 2003 and 2006. The report is the latest episode in what has come to be known as the “9.5% scandal,” in which student loan companies continually refinanced certain loans which were eligible for additional federal subsidies.
The IG recommended, among other things, that ED force SLM to pay back the ill-gotten subsidies. So far, only NelNet has been forced to return these kinds of improper payments, and even this company was allowed to keep nearly three hundred million dollars in improper payments.
I hope that Obama’s ED does not follow in the foot steps of the Department under President Bush. They should make sure that no one can raid the American treasury and keep the booty.
Unfortunately, Sallie Mae and other student loan companies are also getting rich from wasteful—but totally legal—government subsidies. Luckily there is now a plan in Congress, originally proposed by President Obama, to eliminate all wasteful subsidies to student loan companies and use the $87 billion in savings to make college more affordable and accessible. The loan companies have already spent millions lobbying against it, so it is really important that Congress hears from you.
Funding our Future is a campaign to pass a progressive federal budget for 2010 and ensure that our nation.s key economic choices invest in our education, spark reform of our health care system, and address climate change through cap and trade and clean energy investments. Click here for more info.
The Apollo Group (the parent company of the University of Phoenix) revealed in its 
Earlier this month, I wrote about the 
The Education Department’s (ED) Inspector General (IG)