As Default Rates Fall, HBCUs Face No Sanctions
WASHINGTON — The nation’s student loan default rate has fallen to its lowest level since the federal government began collecting data in 1987.The 8.8 percent default rate for 1997 was down nearly a 1 percent from the previous year, and it represents the seventh consecutive decline from a high of 22.4 percent in 1990. U.S. Sec. of Education Richard W. Riley hailed the decrease, citing the department’s vigilance in combating the problem. For the second straight year, default rates declined among every major sector in higher education, including public and private two- and four-year institutions as well as for-profit trade schools.Historically Black colleges and universities also fared well in the report, Education Department officials reported. Some had voiced concern that HBCUs could face default sanctions following this year’s end of a federal policy that automatically exempted HBCUs from default penalties.Instead of blanket protection, Education Department officials said they would review the default progress of Black colleges and tribal colleges on a case-by-case basis.Only “a fraction” of the more than 100 HBCUs had default rates that could place them at risk of sanctions, department officials.However, the institutions had submitted acceptable default management plans and took other steps to show that they did not warrant penalties, department officials reported.Schools could lose the right to participate in financial aid programs for three-year default rates above 25 percent or a one-year rate of 40 percent or more.
Children’s Defense Fund Says Youths Still At Risk
WASHINGTON — The economy is booming and the federal government is reporting progress in reducing welfare, but many U.S. children remain at risk — even if their parents hold down full-time jobs.That is the theme of a new Children’s Defense Fund report that contrasts the booming U.S. economy with the plight of low-income children at future educational risk. “If we do not help those most vulnerable in our society now, while the economy is good, when will we?” asks Marian Wright Edelman, the fund’s president. Overall, 13.5 million children lived in poverty during 1998 — including 3.2 million who lived in families where at least one parent held a full-time job. The poverty rate among working families is the highest in 24 years the government has collected such data, the fund says.Welfare rolls also are down since enactment of a 1996 reform law that encouraged work. But, as the fund’s analysis notes, many of these working families do not earn enough to escape poverty — defined as earnings of less than $13,000 a year for a three-person family.“With such prosperity, it is disgraceful that this nation is not doing more to leave no child behind and end child poverty for all of America’s children,” Edelman says.The report recommends a higher minimum wage plus more help for families to find affordable childcare, education and job training and transportation assistance.
Students Warned to Beware of Paying for Financial Aid Assistance
WASHINGTON — Scam artists are ripping off students by offering them guaranteed college scholarships for a fee and then failing to deliver, school administrators and government officials testified at a Senate hearing earlier this month. “Scholarship fraud is out there, it is rapidly evolving with new, innovative scams, and it is scaring off students and legitimate services,” Susan O’Flaherty, director of financial aid at Western Michigan University, recently told the U.S. Senate Judiciary Committee. “The need for action on this issue cannot be understated.” The typical scam artists promises students they will be matched up with scholarships to help pay tuition if the students send payment — anywhere from $10 to $400 — covering application or processing fees, government officials say.The sales pitch usually includes a false guarantee of money back if the students do not receive a scholarship. The ploy also includes a pledge to do all the work necessary to obtain the scholarships, leaving student applicants with the impression they have to do nothing to receive such scholarships.The messages often are delivered through mass postal mailings, 800 telephone numbers, e-mail messages and the Internet. “A growing number of profiteering con-artists are taking advantage of students’ financial vulnerabilities,” says Sen. Spencer Abraham, R-Mich., who held the hearing. Abraham and Sen. Russ Feingold, D-Wis., introduced legislation this year that would toughen criminal penalties in such fraud cases by adding 10 more years of imprisonment and heavier fines.The bill also would enhance the authority of the Federal Trade Commission to get compensation for victims by excluding such fraudulent gains from bankruptcy protection. Sheila Anthony, a commissioner for the tradec commission, testified that in eight cases of scholarship scams prosecuted between 1996 and 1999, some 175,000 consumers were bilked of about $22 million. And, Anthony warned, “As education costs continue to rise, fraudulent operators will always have an interested audience and an enticing sales pitch. “Tough penalties are needed for these scam artists,” she suggested.
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