A careful eye is kept upon the clock. Many managers are—without desire, yet by circumstance required—on the lookout for those certain
employees who like to keep an eye upon the clock; those always ready to bound for the door as soon as the clock’s hands get in right alignment. But, of course, in the world of financial aid, there is another key aspect of clock watching that is critical to a successfully run financial aid operation. That comes in the sphere of clock-to-credit hour conversions. This concept has been around for years, being one of several other pivotal aspects of the now famous October 29, 2010 Program Integrity regulations. But, it has gained a new place of prominence as if the very idea of clock-to-credit hour conversions was to be on display like the legendary Big Ben. While it is true that the majority of such schools affected by this are in the private, proprietary sector
January 23, 2014
In June of 2013, the Supreme Court of the United States (SCOTUS) ruled on the Defense of Marriage Act (DOMA) in the case of United States v. Windsor commonly referred to as the Windsor case. Specifically, the Court’s decision invalidated Section 3 of the DOMA. That section of the DOMA prohibited federal agencies from recognizing same-sex marriages for purposes of federal programs, including the Title IV Federal Student Aid (FSA) programs. Since that section of the law was rendered invalid, there have been significant implications regarding the application for FSA programs, as well as related processing effects.
The U.S. Department of Education (ED) recently released its official guidance on the impact of the SCOTUS decision in the
October 14, 2013
Have you been seeing anything “red” lately? One piece of regulation that affects many schools that may often time be overlooked is a little thing called the “Red Flags Rule”. This piece of regulation is applicable to all schools that participate in the Federal Perkins Loan program, and may apply to many institutions that offer an extension of credit to their students, e.g., granting institutional loans or allowing students to make installment payments.
The definition that most likely is applicable to educational institutions that makes the “Red Flag Rules” pertinent is the part that refers to “any other account that the financial institution or creditor offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risks.” If an account is subject to a reasonably foreseeable risk to consumers (students) or to the institution from identity theft, it may be considered a “covered account” to which the “Red Flag Rules” apply. Thus, it is possible that an educational instit
October 14, 2013
As fine art brings varying interpretations of the meaning of what is seen, over time it would seem that student loan interest rates are perceived similarly. Across the decades, we have observed that at one point interest rates for student loans are thought to be best when set at a fixed rate. At other times we have seen the rates to be determined based upon a variable rate that is tied to other instruments such as the Treasury bills that change annually. Of note is that after the “dot-com bubble” episode in our nation’s economic history, viewers of the artful interest rate calculations began seeing it through a different lens and felt that such a calculated rate was no longer a thing of beauty, but rather an atrocity. So, the canvas for the fixed rate calculation was placed on the easel. In 2002, after much artful critique by student interest groups and the public at large, the gallery owners felt it was time to rotate to a new display, thereby bringing to light the Higher Education Act Amendments of 2002 that painted the fixed rate structure that became effective with the season of the 2006-2007 award year. Then, with further rearrangement of the displayed artwor
August 9, 2013
As reported in this week's FAME Inside Report, and prior August 1 FAME "Did You Know?," Congress had finally reached agreement on the student loan interest rate debate. Congress passed the Senate-amended version of the House Bill, HR 1911, on July 31 which creates a new interest rate structure that lowers all 2013-2014 undergraduate Direct Loans to 3.86%. All that remained was for President Obama to sign the bill.
Friday, August 9, 2013, the president signed the Senate-amended HR1911 (now known as the Bipartisan Student Loan Certainty Act) into law. The new student loan interest rate structure discussed previously in the FAME Inside Report and "Did You Know?" is now in effect. (No
August 6, 2013
The requirement for entrance and exit counseling for student borrowers has been around for decades now. Some may recall the days when it was more common to hear of these events as entrance and exit interviews. Perhaps that terminology was used due to the fact that in an era gone by students actually had to have an in-person interview. This interview hearkens all the way back to the olden days of the Federally Insured Student Loan (FISL) program, which was the precursor to the Guaranteed Student Loan (GSL) program that became the Federal Family Education Loan Program (FFELP), and which was, in turn, finally replaced by the Federal Direct Loan Program (DL). In those early days, students actually had to schedule an appointment with a private lender—there were no DL options back then—and go to the bank or credit union to have the terms of the loan explained to the borrower. That is, the student’s responsibilities, rights, and other terms of the loan were explained in person, in detail, before the loan was made. Thus, it was more like an “interview” to gauge the borrower’s understanding of the loan terms, etc., before the loan was made. Likewise,
August 1, 2013
This news flash is making the headlines across the country. After months of political back and forth, both houses of Congress have come to a resolution on the student loan interest rate debate. Late yesterday the House passed the Senate-amended version of House Bill, HR 1911. It now awaits the president's signature, which is anticipated to happen without delay. The new interest rate structure will be applied retroactively to all Federal Direct Loans with a first disbursement on or after July 1, 2013.
The current version of the bill awaiting signature of the president puts the interest rate structure to be set using the following formulas:
Undergraduate Stafford loans (subsidized and unsubsidized): 10-year Treasury Note plus 2.05 percent, capped at 8.25 percent.
Graduate Stafford loans: 10-year Treasury Note plus 3.6 percent, capped at 9.5 percent
PLUS loans (graduate and parent): 10-year Treasury Note plus 4.6 percent, capped at 10.5 percent.
April 26, 2013
Gainful employment. This has developed into one of the most debated topics in modern Title IV regulatory history. Ever since before their publication in the Federal Register, the October 29, 2010 Final Rules (also known as the Program Integrity Regulations), have been a hot topic. The 10/29/2010 regulations, along with the June 13, 2011 Final Rule on the Gainful Employment – Debt Measures, have provided plenty of fodder for ongoing dialog and debate in the higher education industry.
But, of course, the dialog and debate did not just remain in the realm of the higher education industry. It has wound its course into the legal system as well. After an early suit in July 2011 filed by the Association of Private Sector Colleges and Universities (APSCU) not long after the last of the GE regulations were published, the results of the suit have been decisions from the Courts and appeals by the U.S. Department of Education (ED). Last June the U.S. District Court for the District of Columbia reached a decision regarding APSCU's challenge to the Department of Education's GE regulations wherein the Court vacated (made legally null and void)
April 25, 2013
Almost a year ago on July 6, 2012, President Obama signed into law the bill (P.L. 112-141) Congress passed that kept the interest rate on Federal Direct Subsidized Loans at 3.4% while a student is in school.
However, just as importantly in that bill was a new provision on a different matter—a limitation on the duration of eligibility for Direct Subsidized Loans. This bill, as several others in the last couple of years, was promulgated with the purpose of chasing the money. That is, Congress is trying to come up with additional ways to address budgetary shortfalls. However, this bill was also seen as an incentive to see students graduate more quickly. To do so, it causes the students to chase the money. Or, in other words, from a student’s perspective: “If I want to get the best