Education Sector in the News

The Chronicle of Higher Education quotes Education Sector's Ben Miller on student loan defaults.

From the article:

"A new law, the Higher Education Opportunity Act (HR 4137), approved last year by Congress, will change that last measure, effective in 2012, to begin counting borrowers who default within three years of their scheduled repayment. Using that three-year window, colleges would be ineligible if their borrower default rate is 30 percent or greater for three consecutive years.

Among more than 5,000 colleges with students receiving federal financial assistance in the 2007 fiscal year, only 36 institutions with at least 30 students in repayment had default rates of 25 percent or greater on the two-year measure, according to the new Education Department data. But 221 colleges had default rates of 30 percent or greater on the three-year measure, the data showed.

No college with the minimum number of borrowers exceeded the 25-percent level for three consecutive years using the two-year measure, said Benjamin Miller, a policy analyst with Education Sector, an independent think tank. As many as 40 colleges, however, may have exceeded the 30-percent level for three years using the three-year measure, Mr. Miller said.

Nationwide, the average rate of default on a federally subsidized student loan was 6.7 percent in 2007, the Education Department announced in September. The new data being released on Monday, however, shows the average default rate for fiscal 2007, when calculated on the three-year measure, was 11.8 percent, Mr. Miller said.

Congress adopted the three-year window after some lawmakers argued that many institutions and their partner lenders, whose eligibility for the federal program is also tied to default rates, were avoiding declaring a borrower in default until just after the two-year measuring period had passed. ..."

Read more from "New Measure of Student-Loan Defaults Could Threaten Hundreds of Colleges."

Inside Higher Ed's Doug Lederman highlights Policy Analyst Ben Miller's analysis of changes to the federal student loan program.

From the article:

"One other story line in the legislation might be called the Incredible Shrinking FIPSE. The Fund for the Improvement of Postsecondary Education, which was once a laboratory for innovation in higher education, has steadily been eroded in recent years as lawmakers have increasingly tapped its comparatively small pool of money to finance pet projects for local institutions. Earlier this year officials at the Education Department had to cancel the program's annual peer-reviewed competition because Congress had essentially earmarked all funds for its own priorities.

At first glance at the table below, it would seem that FIPSE had a good year in 2010, since its total funds grew to $159 million from $134 million in 2009. But as documented by Ben Miller at the think tank Education Sector, there will actually be less money available for the program's competition this year ($28.8 million) than last year ($30.6 million), and several million dollars less than the Obama administration sought. ..."

Read more from the article "Appropriations as an Afterthought."