DC Shuttle: Eye on Funding in Capital

Budget deal changes loan-collection policies. Two changes involving the collection of federal student loan debt would contribute about $5 billion in savings to the broad budget deal announced last week. The compromise worked out by Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) would reduce the compensation that companies receive for rehabilitating defaulted student loans made under a now-defunct federal loan program and would eliminate a special carve-out for nonprofit student loan servicers. The first change would apply to the Federal Family Education Loan (FFEL) program and would save $2 billion over 10 years, according to a Senate Budget Committee summary of the deal. The FFEL program was eliminated in 2010 when Congress created the new direct lending program but many loans issued under the FFEL program remain outstanding and, under current law, guaranty agencies that rehabilitate loans that are in default may retain up to 18.5% of the insurance payment that the federal government gives to those agencies to cover student loan defaults. The legislation would require guaranty agencies to return all of that payment on rehabilitated loans and would lower the amount that they may charge borrowers for rehabilitating loans. The changes would make compensation earned by guaranty agencies comparable to that earned by U.S. Education Department private-sector contractors that rehabilitate defaulted student loans and would reduce the fees that borrowers pay to rehabilitate loans, the Budget Committee said in a statement on the bill. The budget deal also would eliminate a special mandatory funding carve-out for nonprofit student loan servicers, which work with borrowers on loan consolidation, repayment plans and other issues. When Congress eliminated the FFEL program in 2010, it guaranteed a minimum of 100,000 borrower loan accounts to the nonprofit companies that previously served the program and set aside mandatory funding to do so. The budget deal would require the nonprofit servicers to be paid with the same discretionary funds as the private companies that now service the Education Department’s direct loans, saving $3.1 billion, according to the Budget Committee.

Gainful employment changes. The U.S. Department of Education released changes to its proposed gainful employment regulations. The department also released an analysis of how institutions would fare under the rules which showed that 13% of programs would fail under the standards.

Student debt survey. College students from middle-income families are more likely to end up with student loan debt than their peers from both lower and higher socioeconomic backgrounds, according to a new study. The study found that students from families earning between $40,000 and $59,000 per year racked up 60% more debt than lower-income students and 280% more than their peers whose families earned between $100,000 and $149,000 per year.

Enrollment decreases. A new study by the National Student Clearinghouse estimated that overall enrollment in higher education fell by 1.5% in fall 2013. It found that in fall 2013, enrollments decreased among four-year for-profit institutions and two-year public institutions but increased slightly at four-year public institutions and four-year private nonprofit institutions.

New England universities call for reliable funding. A coalition of New England universities sent a letter to the New England Congressional delegation urging continued support of science and education funding. Read more on the NEC blog.

We publish the DC Shuttle each week featuring higher ed news from Washington collected by the New England Council, of which NEBHE is a member. This edition is drawn from the Higher Education Update in the Council’s Weekly Washington Report of Dec. 16, 2013.

Founded in 1925, the New England Council is a nonpartisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region. The Council’s mission is to identify and support federal public policies and articulate the voice of its membership regionally and nationally on important issues facing New England. For more information, please visit: www.newenglandcouncil.com.


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