Friday, October 31, 2014

The Feds and College Money

It can be very, very hard to figure out where the federal government stands on the myriad of financial issues surrounding post-secondary education, particularly in the area of for-profit vocational colleges. Sometimes to suss these matters out, you have to look at the history.

History tells us that last summer, the Obama administration made good on its threat to clean up scamsters like the Corinthian College Giant Web O' College Flavored Deception. These are schools that appear to view students as receptacles for carrying college loan money from the government and banks to the sort-of-a-college's bank account. This process tends to leave the students themselves holding the debt-filled bag, often without anything remotely resembling a marketable skill. Anyway, the feds were going to put a stop to those shenanigans, so last summer they tracked down the biggest offenders, looked them in the eyes, and said, "Here's another pile of money to keep you from going out of business." To be fair, they also said the bureaucratic equivalent of, "And I've got my eye on you, mister, so don't try any funny business." Which given the circumstances was slightly better than, "Watch out. There's more where that came from."

This is in keeping with the highly mixed messages that are common currency in the college loan world. Even those of who have traveled there are not quite sure of the terrain. Take, for instance, Sallie Mae-- the public is split between people who A) believe it's a government agency, B) don't know what the hell it is and C) think it's a country song title. But it was increasingly clear that maybe they were hosing veterans (and settled a $60 million lawsuit without fessing to anything), and so the government decided to investigate them, or itself, or something, and early peeks at the results indicate that-- ta-dahhh!! --- there's Nothing Bad happening.

This so clearly contradicted what folks had concluded by using their powers of seeing and hearing that the Education Department is now scrambling to investigate the investigation. So we're still doing the rewrite on that slice of history.

It's a sore point because the US Department of Education has been accused before of making a buttload of profit from student loans. They've never really refuted those claims other than to say parents are still getting a deal (whether half-baked or raw was not discussed) and that accounting is, you know, hard. Arne Duncan stated definitively, "We did not." So, you know, that settles it. And yet, when discussing the cost of the college education that the administration wants everyone to get, we never discuss tricks like, say, loaning money to college students at the same miniscule rates used to loan money to banks. So-- touchy issue. The federal government and loans have a history.

This week came a clear statement that the administration recognizes the problem. An announcement on both the White House and Ed Department blogs declared the problem:

Too often, students at career colleges — including thousands of veterans — are charged excessive costs, but don’t get the education they paid for. Instead, students in many of these programs are provided with poor quality training, often for low-wage jobs or in occupations where there are simply no job opportunities. They frequently find themselves with large amounts of debt and, too often, end up in default. In many cases, students are drawn into these programs with confusing or misleading information. 

The new rules, which are somewhat nebulous in the press release, appear to require proof that your program produces actual graduates who have actual skills and get actual jobs (for which they are paid actual money).

To qualify for federal student aid, the law requires that most for-profit programs and certificate programs at private non-profit and public institutions prepare students for “gainful employment in a recognized occupation.” 

So if they turn out to be a big scam, we might cut off the federal aid to students and let those students-- what? Still get a fake education but do it with money they borrowed on their own. I mean, maybe somewhere in this mysterious language are some actual teeth, but it looks like the feds are going to keep not doing much of anything about these folks. Though as I read it, this is for programs that are supposed to be vocationalish. I don't think the feds will start requiring liberal arts majors to prove they're employable. At least, not yet. So maybe we're coming around on that one.

I certainly hope so, because this week also featured yet another initiative to get every single student into the FAFSA database. The first lady has released a FAFSA Completion Challenge video, announcing a competition for schools to get 100% of their students registered with the biggest college loan clearing house in the ever.

Looking at the federal history on this issue, it's hard not to feel a bit queasy about the Challenge. The White House press release touts the vast amount of loan money available-- but it's loan money, and this general cheering about getting every student to go to college, no matter the student, no matter the cost just seems irresponsible-- particularly coming from a governmental body that may not be so much an impartial booster as a potential profiteer from all this youthful indebtedness.

And if you are inclined to be paranoid about our Data Overlords, the FAFSA database certainly makes a tasty gathering bucket for a giant stew of Big Data on every eighteen-year-old potential customer in the country.

College isn't cheap, loans aren't free, and higher education is not automatically the road to prosperity. Don't get me wrong-- I'm a huge believer in continuing education, and I will be paying off loans for a long long time because I decided that my own kids would get there if it was humanly possible for me to do it.

But as the last couple of years have demonstrated, attending college is not risk free, and it can do some nasty long-lasting financial damage without leaving any real benefits. I can't help feeling that if the feds really felt strongly about this, they'd find a way to cut students the same kind of loan deals that they give their corporate buddies. They would get into the scholarship business, instead of the loan brokering business. I would feel a lot better about the federal boosting of the college path if they were more clearly looking out for the interests of students rather than bankers and profiteers. The last time the feds started convincing people to buy things they couldn't afford, we ended up with a massive financial crisis, a bunch of banksters who still managed to end up filthy rich, and a bunch of regular citizens hung out to dry.

I want every child who wants to to go to college, and I support the idea of my government making that happen more easily. I'd like to believe that's mostly what we're doing. I like the optimistic view. But in this matter, history is not on the side of optimism.

1 comment:

  1. What's up with the Obamas and how everything is a competition?

    Had the Feds simply closed down Corinthian, the students who took loans for expensive, meaningless, useless courses would have had the loans expunged - no interest, either. But because Corinthian will "wind down" they have to pay, and the interest goes to the winner and still champion: Arne!