September 22, 2014
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
(submitted via regulations.gov)
Re: CFPB-2014-0016, Request for Comment on Disclosure of Consumer Complaint
Dear Ms. Jackson:
Young Invincibles is a national non-profit, non-partisan organization that amplifies the
voices of young adults ages 18 to 34 to expand economic opportunity for our generation. We commend the Consumer Financial Protection Bureau (Bureau or CFPB) for bringing attention to challenges facing consumers. In particular, the Bureau occupies a critical role in addressing poor student loan servicing. We have found that harmful servicing practices by both government and private servicers affects millions of borrowers across the country. CFPB has done a great job providing a space for consumers to log complaints, processing those complaints, and disseminating them through semi-annual reports. As a result, we have encouraged many individuals to file complaints with the Bureau. Borrowers feel a sense of relief when they know that they have a place to turn.
We thank you for the opportunity to comment on the decision to allow borrowers to make their complaints regarding private student loan servicers public. We believe this choice will spotlight poor loan servicing practices to the public ultimately leading to improved servicing quality. The Bureau should expand disclosure to include unstructured consumer complaint narrative data (‘‘narratives’’) for the following reasons:
1) Publically monitoring these complaints improve student loan servicing.
2) Public narratives are integral to the work of consumer advocates.
3) Borrowers themselves have a lot to gain from reading public narratives.
Decades ago, a young person could graduate from high school, join a company, and receive all the training on the job that she or he needed for a successful career. Today, the world is different. A young man with only a high school diploma now earns 75 cents on the inflation-adjusted dollar his father made in 1980. Even worse, a brutal recession and sluggish recovery has young people confronting double-digit unemployment rates. Fierce competition for entry-level positions requires our generation to not only acquire post-secondary education, but also gain on-the-job experience and skills. Approximately 79 percent of employers expect real-world experience from college graduates when they evaluate potential hires. Unfortunately, our higher education system is not built to meet this need, particularly for low-income students.
An updated Federal Work Study (FWS) program could help a great deal. Congress created FWS in 1964 as a part of the Economic Opportunity Act to allow low-income students to defer college costs by working while enrolled. In 2011-2012, the Department of Education allocated $972 million to over 3,000 schools, serving slightly more than 700,000 students. However, FWS could be more effective at serving those in need of financial support. Only 16 percent of institutions awarded Federal Work Study to every eligible student. During 2011-2012, only 16.4 percent of dependent students whose families make less than $20,000 received FWS aid, while 8.2 percent of dependent students with family incomes over $100,000 received FWS aid.
This report recommends reforming Federal Work Study to better serve low-income students working their way through school, and providing them with experience and skills for today’s economy.
NEW REPORT: Young Invincibles Finds that Tax-Exempt Bonds Issued by Postsecondary Institutions Result in Excess Government Spending, Calls on Congress to Support Cost-efficient Alternative and Reinvest Savings in Pell Grants
For far too long, the federal government has done the right thing in the wrong way. The federal government spends billions of dollars in forgone revenue each year to support the construction and renovation of dormitories, athletic facilities, and other capital projects that many colleges and universities fund using tax-exempt bonds. Unfortunately, this practice is inefficient, costing the government more than the amount postsecondary institutions save by using tax-exempt bonds. The design of tax-exempt bonds also makes it difficult to ensure that one hundred percent of the federal subsidy goes to support students and schools meeting basic quality standards. We propose the policy solutions below as a way to make bonds work better for schools, students, and the federal government. Please contact Jennifer Wang, our Policy and Advocacy Manger, at email@example.com as we would love to discuss our findings with you in more detail.
Our findings …
- Tax-exempt bonds issued by postsecondary institutions could cost the federal government nearly $18.2 billion between 2013 and 2017.
- Tax-exempt borrowing is poorly targeted. Only about 80% of the federal government’s expenditure on tax-exempt bonds benefits state and local governments. High marginal-tax rate investors capture the remaining 20%.
- Under current policy, postsecondary institutions can issue tax-exempt bonds regardless of how well they are preparing their students for academic and professional success.
- Redesigned tax credit bonds could deliver the same benefit to schools at a lower cost to the federal government than using tax-exempt bonds.
Redesign and improve the way the government helps schools borrow. The federal government should replace tax-exempt bonds for postsecondary institutions with redesigned direct pay tax credit bonds. These redesigned bonds will allow the government greater control over who benefits from federally subsidized borrowing. Tax-credit bonds will make the government’s cost equal to, but not greater than, the savings enjoyed by schools. This change will save the government and taxpayers money.
Eliminate subsidies entirely to extremely low performing institutions.
Schools that do not meet basic quality assurance standards in the areas of Pell freshmen enrollment, graduation rates, and student loan default rates should not have access to federally subsidized borrowing until they do the work to get better.
Invest Savings into the Federal Pell Grant Program.
Studies show that grants increase a student’s likelihood of completing college more than loans. A student’s level of unmet financial need also impacts college completion rates. As a program that addresses both of these issues, the Pell Grant Program is an ideal destination for government savings and a strong driver of educational advancement.
U.S. Department of Education
Attention: Ashley Higgins
1990 K Street NW
Washington, DC 20006-8502
Filed via regulations.gov on May 27, 2014
Re: Comments on the Proposed Rule on Program Integrity: Gainful Employment
[Docket ID ED–2014–OPE–0039]
To whom it may concern:
Young Invincibles is a non-profit, non-partisan organization that works to expand
economic opportunity for young people ages 18 to 34. We thank you for the opportunity to comment on the Notice of Proposed Rulemaking regarding the gainful employment (GE) regulation (NPRM).
Young Invincibles represented students throughout the gainful employment negotiated rulemaking process. Though we appreciate the years of effort that the Department of Education (the Department) has put into crafting a GE rule to protect students from predatory schools, the draft rule is too weak to achieve this goal. Many programs that leave students with enormous amounts of debt and few job prospects will continue to receive federal financial aid under the proposed language.
We were further disappointed when the Department issued a weakened draft regulation that made several adjustments proposed by the for-profit college industry at the expense of students and taxpayers. Worse, the draft rule appears to lack any of the recommendations called for by a coalition of more than 50 organizations that work on behalf of students and college access, veterans, consumers, and civil rights. The
Department now has a rare opportunity to learn from the experiences of actual students who have been through these programs and ensure that taxpayer dollars do not continue to benefit failing schools. For these reasons, Young Invincibles urges the Department of Education to protect students who attend gainful employment programs and taxpayers who pay for them by promulgating a strong rule. The rule should:
1. Provide relief for students in programs that lose eligibility
2. Strengthen core accountability standards and close loopholes
3. Fix the glaring problem with the certification requirement
4. Limit enrollment in poorly performing programs until they improve
5. Strengthen consumer information and disclosures