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2016 MILLENNIAL MEMO (August 4, 2016): Keeping tabs on higher education debates

2016 MILLENNIAL MEMO (August 4, 2016)

Good Thursday morning! With the Olympic Games set to kick off in Rio this week, the electorate will largely be distracted these next few weeks — focusing their attention on Team USA, not Teams Trump or Clinton. How will the campaigns cut through the clutter to deliver important messages through the end of the month? We shall wait and see. Please share this week’s memo, and encourage your friends and colleagues to stay in the loop by signing up for updates here.

TRUMP TO RELEASE COLLEGE DEBT PLAN: “Trump said he would announce his plan to address college debt in four weeks. During [a] press conference, Trump accused colleges of viewing students simply as a “conduit” for federal loans and went on to say that he would help students even if that idea “doesn’t fit beautifully into the Republican framework.” “The saddest thing I see is these students are leveraged, [with] debt up to their necks,” he said. “They can’t breathe, they’re scared, they’re so scared — they have leveraged their entire life.” It’s hard to know exactly what Trump’s student debt and college affordability plan would look like. “Nothing to add at this time,” campaign spokeswoman Hope Hicks wrote in an email when asked for more details on Trump’s proposal. Most of Trump’s comments related to higher education thus far have been defenses of his real estate seminar program, Trump University, which is facing multiple lawsuits. But a close reading of the tea leaves provides some inklings of what his proposal might look like. Trump accused the government of profiting off student loans during a Twitter chat last year, calling the situation “not fair” and adding “we’re going to make it really good for the student.” Trump’s team has given other hints that he would curtail the government’s role in student lending. Sam Clovis, the national co-chair and policy director for Trump’s campaign, told Inside Higher Ed earlier this year that the campaign is considering requiring colleges to be on the hook in some way for loans made to their students (that idea made it into Clinton’s plan as well) and giving private banks a bigger role in an overhauled federal student loan system.” (MarketWatch, July 27, 2016)

SUMMARY JUDGEMENT DENIED IN TRUMP U CASE: “Late Tuesday afternoon, Federal Judge Gonzalo Curiel denied Donald Trump’s motion for summary judgment in the Trump University case, finding instead that there is enough evidence to move forward with the case.  The class action lawsuit alleges that Trump University defrauded students out of thousands of dollars. Judge Curiel also found that there was a genuine issue of material fact as to whether Trump “knowingly participated” in the “scheme to defraud” and whether he made representations that were “false and misleading.” Trump’s attorney filed a motion to essentially get the case dismissed, stating that Trump was not integrally involved in the running of the organization, and that evidence from depositions showed that there was not enough to proceed with the case. In a separate order, Judge Curiel ruled against media organizations seeking to get Trump’s videotaped deposition released.  Trump sate for two depositions under oath in December and January. Trump’s attorneys argued that releasing the videotapes could taint the jury pool, whereas the media organizations argued it was in the public interest to release the videotapes.” (Law Newz, August 2, 2016)

CLINTON ALIGNS HERSELF WITH SANDERS, TOUCHES ON COLLEGE AFFORDABILITY, IN DNC SPEECH: “If we invest in infrastructure now, we’ll not only create jobs today, but lay the foundation for the jobs of the future. And we will transform the way we prepare our young people for those jobs. Bernie Sanders and I will work together to make college tuition-free for the middle class and debt-free for all!   We will also liberate millions of people who already have student debt. It’s just not right that Donald Trump can ignore his debts, but students and families can’t refinance theirs.” (LA Times, July 28, 2016)

PRIVATE COLLEGE INDUSTRY PUSHES BACK ON CLINTON PLAN: “Clinton’s “plan is facing significant blowback from private, nonprofit colleges, who warn that the tuition help for public schools would reverse decades of federal policy, undercut private institutions and spur an exodus of middle-class students that would turn private schools into bastions of the rich… There are about 1,600 private colleges across the U.S., and they enroll about one in five college students. Private colleges compete directly with public colleges for students and that competition would get a lot harder if public schools are suddenly free… [Responding to criticism of the campaign’s plan,] spokesman Jesse Ferguson stressed that Clinton has a “comprehensive” college plan “that includes support for students at private colleges, as well as public, including lower interest rate loans, the ability to refinance existing loans, support for student-parents, debt forgiveness for AmeriCorps [volunteers], and a year-round Pell grant, to name just some.”” (Politico, August 2, 2016))

CLINTON HIGHER ED ADVISOR CALLS FOR FOCUSING STUDENT DEBT CONVERSATION ON NON-COMPLETERS: “The Urban Institute’s Sandy Baum, who advised Secretary Clinton’s campaign on her higher education plan said: “I think what is most important is for people to understand that the common image of the student loan problem really misses the point… People have an image of a recent bachelor’s degree recipient who went to college for four years and is now 22-23 years old and is working at Starbucks. Those people are very rare. People who earn bachelor’s degrees, by and large, do fine. The problem is that we have a lot of people actually borrowing small amounts of money, going to college, not completing [a degree] or completing credentials that don’t have labor market value. They tend to be older. They tend to come from disadvantaged, middle-income families and they’re struggling. [But] not because they owe a lot of money.” (NPR, July 28, 2016)

THOUSANDS COMMENT ON DEPT. OF ED’S PROPOSED FEDERAL LOAN DISCHARGE RULE: “The U.S. Department of Education has received more than 10,000 comments in response to a proposed rule for federal loan forgiveness for students whose colleges have defrauded them. The deadline for submitting comments was 11:59 p.m. Aug. 1.The department released the new proposed regulations, known as defense to repayment, in June in response to the collapse of Corinthian Colleges. Among the main requirements of the proposed rules: colleges and universities must provide warnings to students about poor loan repayment rates and set aside money for loan forgiveness. Most critically, they lay out a path for the government to forgive students’ debt when they claim they were defrauded by their institution. But a number of groups representing a range of public and private colleges are raising concerns about whether they would be applied too broadly. A primary focus of those groups is the possibility that the definition of misrepresentation in the rules could be interpreted extremely loosely and applied to nearly every college and university in the country. Other groups have been broadly receptive to the proposals and even called for certain measures to be strengthened. The Institute for College Access and Success released a letter with the backing of 56 organizations advocating for students, consumers and other interest groups affected by potential loan regulations that applauded the protections included in the draft proposal. But the letter said loopholes in sections on predispute arbitration and class-action claims would leave some borrowers unprotected.” (Inside Higher Ed, August 2, 2016)

WHAT WOULD FREE COLLEGE COST?: “The Sanders campaign had previously estimated the cost of free college for all at $75 billion, and proposed a tax on Wall Street transactions to pay for it. But when you’re talking about government subsidies for anything, the math isn’t simple. States have relied on large annual tuition increases for decades. Tuition has risen 40 percent in the last 10 years at four-year public colleges and universities, as Hillary Clinton’s campaign notes. To avoid signing a federal blank check that rises each year, Clinton’s platform talks about getting buy-in from colleges and states to rein in costs. The Department of Education might use accreditation or eligibility for federal financial aid as carrots or sticks to encourage states to keep tuition low. Eliminating four-year college tuition would inevitably mean handing free money to some families that can afford to pay. On the other hand, the current means-tested financial aid program requires low-income students to jump through lots of hoops, like dealing with the daunting FAFSA form, to prove their status and maximize their aid. Many can’t navigate the system and fall out along the way.” (WBEZ, July 28, 2016)

MAJORITY OF STUDENT BORROWERS BEWILDERED BY REPAYMENT PROCESS: “The latest [National Financial Capability Study (NFCS)] data find that about one-in-five loan holders do not know the terms of their student loans. For example, they can’t say whether their monthly payments are determined by their income. And the majority (54%) of borrowers did not calculate their monthly payments when they took out their most recent loan. The new data also show that 48% of loan holders fear they will be unable to pay off that debt. If they could go back in time, a whopping 53% of student-loan holders say they would do it differently. Financial-literacy education, starting as early as elementary school, won’t help current loan holders but it will prepare the next generations of students. For example, one new question tucked into the survey was designed to measure knowledge of interest compounding in the context of debt. What it reveals could explain why people are ending up with such surprising amounts of debt: Only 33% of respondents know that it takes less than five years for debt to double if one borrows at a 20% interest rate. When it comes to financial capability, the field is wide open to help people and, in particular, the young get savvy about their personal finances. Financial education is key to repairing our economy’s weak link.” (MarketWatch, July 31, 2016)

DEPT. OF ED SHUTS DOWN THREE FOR-PROFIT MEDTECH CAMPUSES: “The U.S. Department of Education [cut] off federal student financial aid for three MedTech College campuses…because MedTech officials allegedly lied about job placement rates at the three schools. The three MedTech campuses, which enroll a total of about 750 students, received about $16 million in Pell Grants and federal student loans for the 2014–15 award year, according to the U.S. Department of Education. MedTech made “numerous misrepresentations” to its accreditor, the department, and to the public regarding the career outcomes of its graduates.” (Diverse Education, July 26, 2016)