This article gave me a chuckle.    From Inside Higher Ed, you can read the full article here.  A little research can find all sorts of things…

It’s part of Education Secretary Margaret Spellings’ stock speech on higher education, explaining why she appointed a commission to study what’s wrong with colleges — and why it’s time to change the accreditation system and make other changes to promote more accountability and document student learning, as the panel suggested.

The wording doesn’t change much from speech to speech. Here’s how she expressed it this month to a group of faculty members and deans at a meeting on promoting student success:

“The absence of information means we can’t answer basic questions families have during the college selection process,” Spellings said. “For example, how long will it take to get a degree? Will this institution prepare me for the field I want to work in? And how much is this education really going to cost? When my daughter applied to college two years ago, I found it challenging to get the answers I needed. And I’m the secretary of education!”

That sounds pretty damning. The secretary of education has a tough time finding out how long it would take a student to graduate or how much college costs? Spellings frequently refers to her daughter’s college search when making these points, so we decided to see what Spellings or any parent could find today. Is that information difficult to get? Spellings’ daughter enrolled at Davidson College, a liberal arts institution in North Carolina. According to Davidson, the top “overlap” colleges in applications to Davidson are Duke, Vanderbilt and Wake Forest Universities, and the Universities of North Carolina at Chapel Hill and Virginia.

It turns out that a parent whose child was looking at those institutions could find out how long it would take a student to get a degree and how much college would cost — and a lot of information suggesting whether college prepares students for careers — all in one place, available at no charge: the Education Department’s Web site.

COOL, the acronym for the College Opportunities Online Locator, isn’t the best known Web site. If you type in “college information” or “college search” to Google, you get a bunch of commercial sites first. Even on the Education Department’s Web site, it doesn’t merit inclusion on the home page or the main page for parents. But with a few clicks or a search, parents can find it — as well as answers to most of Spellings’ questions.

Before writing a tuition check to Davidson, for example, she could find out quite a lot. If worried about how many years she would be paying tuition, Spellings could check out the “retention/graduation rates” section, and learn the year-to-year retention rates, the graduation rates after four, five and six years, and breakdowns by gender, race and ethnicity. (Davidson’s rates are impressive, so the odds are in favor of just four years of undergraduate tuition checks for the secretary.)

What about cost? Figures are provided for tuition, books, and room and board. Of course, what colleges charge is only part of the picture, but the Education Department’s Web site (all in this same database — no jumping around into the deep recesses of the education statistics division) will tell a parent what percentage of students at a college receive aid, the percentage receiving various kinds of grants and loans, and the average size of various grants and loans.

The COOL site doesn’t report on whether students are being prepared for their desired careers, although there is definitely information that might help someone concerned about the issue. Degrees by major field are provided, so a parent could see that at Davidson, students are much more likely to graduate with a degree in the social sciences or history than mathematics or the physical sciences. The site also includes information about default rates — and it’s a good guess that Davidson’s new alumni, with only one borrower in default in the last three years, are either employed or in graduate school at very healthy rates.

All of the above data is totally comparable among institutions — so a parent can compare any of these things, with comparable data, courtesy of the Education Department.

There’s never a slow news day it seems, at least in the student loan industry. These two scandals have been brewing for a while, but I held off posting them with all the other crazy news recently.

1) University of Oregon’s student loan programs collapses
2) Arizona governor investigated to being too close (politically) to the overseers of the state student loan program.

1) Audit Blames Failure of U. of Oregon’s Student-Loan Program on Poor Oversight

A student-loan program at the University of Oregon misspent some $1.6-million and was closed this year with nearly $8-million in deadbeat loans, largely because the program was poorly run and checked out potential borrowers with the same inattention that it tracked the use of donor money, according to an Oregon University System audit that was described last week in The Register-Guard, a newspaper in Eugene, Ore. All of the officials responsible for the failed program have retired, so no personnel actions are contemplated. Some of the money in the program, which was separate from the university’s federal student-loan program, may still be collectible, officials said.

2) Governor denies wrongdoing related to student loan group

Gov. Janet Napolitano is denying previous knowledge that two political allies were at the helm of a student loan company established by executive order to handle millions of dollars in college loans.

The Arizona Higher Education Loan Authority was established by a Napolitano executive order in December 2004. The nonprofit provides bonds that finance low-cost, state-backed student loans.

The group’s top officers include United Phoenix Firefighters Association President Billy Shields and former union head Pat Cantelme.

Napolitano spokeswoman Jeanine L’Ecuyer said the governor was not aware until recently that AHELA was headed by the union bosses and that the group was the only one to approach the state offering to provide such loans.

“There’s nothing sinister here,” said L’Ecuyer.

L’Ecuyer said the governor’s office is open to providing state backing and designation for student loan groups similar to AHELA.

In April of 2005, Napolitano vetoed a bill that would have allowed local industrial development bonding authorities to finance and bond for student loans. In her veto letter, the governor said the current system being steered by AHELA is working well and that local bond authorities do not need to get into the college loan arena.

The 2005 bill was sponsored then state Sen. Dean Martin, R-Phoenix, who was elected earlier this month as state treasurer.

L’Ecuyer said the program is overseen by the Arizona Department of Commerce and that agency is looking at the student loan group.

The firefighters union endorsed Napolitano, Democratic Senate challenger Jim Pederson and Democratic congressional contenders Gabby Giffords and Harry Mitchell in the November elections.

Shields was chairman of the state’s 9/11 memorial commission, which was appointed by Napolitano and former Republican Gov. Jane Hull. The 9/11 memorial sparked criticism over some inscriptions that were viewed as anti-American.

Phoenix New Times first reported AHELA’s connection to close political friends of the Democratic governor.

I found this interesting article in the LA Times today – it should be very interesting to see how things shake outonce the Democrats take over control of both houses in January. To summarize the article, student loan companies and banks who lend many students loans have for years lined the pockets of Republicans in Congress. But times, they are a-changeing…

By Janet Hook, Times Staff Writer
November 27, 2006
WASHINGTON — The college student loan industry has been so well-connected in the Republican-controlled Congress that a powerful committee chairman once assured its bankers and other financiers that their interests were in “two trusted hands.”

Now that Democrats are about to take control of Congress, those bankers will have to contend with a lawmaker who has compared them to the usurers Jesus drove from the temple of Jerusalem.

“It’s time to throw the money-changers out of the temple of higher education,” thundered Sen. Edward M. Kennedy (D-Mass.), who is in line to become chairman of the Senate committee that oversees education programs.

Within the student loan industry, the impending transfer of party control is producing anxiety — in part because Democrats have promised that one of their first acts will be to cut interest rates on federally backed student loans from 6.8% to 3.4%.

Having worked hard over the last decade to make Republican friends in high places, nervous bankers are now moving quickly to open wider avenues of communication with ascendant Democrats, such as Rep. George Miller (D-Martinez), incoming chairman of the House Education and Workforce Committee, who got a last-minute postelection invitation to address a student-loan trade meeting this week.

‘Comeuppance is at hand’

Cutting student loan interest rates was part of a six-item agenda that Democrats ran on in the midterm election. The cost to the Treasury would be an estimated $18 billion or more over five years.

The rate cut could be made without touching the subsidies that the government pays to companies for lending money to college students. But some Democratic lawmakers see the subsidies as excessive and may move to slash them.

“Lenders are obviously concerned, because when you say something is going to cost $18 billion, the next question is, ‘How are you going to pay for it?’ ” said John Dean, a lawyer for the Consumer Bankers Assn.

Most borrowers pay 6.8% interest on student loans originated on or after July 1, 2006, but the subsidies usually provide banks a higher return. Lenders are paid allowances equal to the rate of commercial paper — an index set quarterly to estimate banks’ cost of borrowing money — plus about 2.3% of the student loan.

The federal government also guarantees student loans against default, meaning the banks take little risk.

Miller spokesman Thomas Kiley said, “We plan to examine lenders’ profitability to determine whether there are excessive profits that should be put to better use helping students and parents pay for college.”

About 8.5 million college students and parents took out $67 billion last school year in direct federal loans and federally backed private loans. That borrowing was the largest source of federal financial aid for college.

The new pressure on the student loan industry is just one example of how the 2006 election produced winners and losers not just among politicians but among congressional lobbyists.

Most at risk in the transition are industries that have given heavily to and benefited mightily from Republican control of Congress, among them energy interests and pharmaceutical companies, as well as the companies that make student loans.

“Comeuppance is at hand,” said Barmak Nassirian, an official of the American Assn. of Collegiate Registrars and Admissions Officers. “They are in the line of fire, and they are going to take a bullet here.”

A senior House Democratic leadership aide said the interest rate cut would probably be authorized for just a year, whittling its cost to $2.6 billion.

Whatever the cost, the rate bill will be an early test of another Democratic campaign promise: to reinstitute budget rules requiring new spending to be offset by cuts in programs or by revenue increases. Democratic aides say it is not yet clear how the cost of the rate cut would be offset.

Republicans argue that cutting interest rates would not address a more fundamental problem: the rising cost of college.

“The interest rates shouldn’t be the major issue here. Rather, the principal — the amount of money students are forced to borrow because of skyrocketing costs — should be,” said Steve Forde, a spokesman for Republicans on the House education committee. “Unfortunately, House Democrats don’t see it that way and are taking a Band-Aid approach.” Democrats promoted two other education ideas during the campaign — bigger tax breaks for tuition payments and larger direct grants for poor students — but neither directly addresses the rising cost of higher education.

GOP connections

Lenders are facing new political exposure because for years they have invested much more heavily in building relationships with Republicans than they did with Democrats:

• Almost 80% of the money given to House education committee members by advocates for the student loan industry and for-profit colleges went to Republicans in the 2003-04 campaign cycle, according to an analysis by the Chronicle of Higher Education. More than half of the money went to two Republicans: then-Chairman John A. Boehner (R-Ohio) and Howard P. “Buck” McKeon (R-Santa Clarita), chairman of the higher-education subcommittee.

• In the 2005-06 election cycle, the largest single corporate source of donations to the National Republican Congressional Committee was a student loan company, Nelnet, whose employees and political action committee gave $153,000. Of Nelnet’s PAC contributions, 71% went to GOP candidates and 29% to Democrats, according to the nonpartisan Center for Responsive Politics, which monitors fundraising.

• Employees of Sallie Mae, a company that finances student loans, gave more than any other entity to Boehner’s political action committee, according to an analysis by the Center for Responsive Politics early this year. The center calculates that during the 2005-06 election cycle, 62% of Sallie Mae’s PAC contributions went to Republican candidates, 38% to Democrats.

Republicans say their legislative agenda has not been influenced by those contributions. Boehner points out he did not shy from trimming lender subsidies in a 2005 deficit-reduction bill that wrung $13 billion in savings from the student loan program.

Critics say borrowers suffered more than lenders under that measure.

It was while that budget bill was in process that Boehner, at a December 2005 meeting of the Consumer Bankers Assn., reassured lenders, “I have all of you in my two trusted hands,” according to the Chronicle of Higher Education. (Boehner became House majority leader early this year, and will be minority leader in the next Congress.)

“At the end of the day, I believe, you’ll be at least satisfied, or even perhaps even happy” with the final budget bill, he was quoted as saying.

A different message

Kennedy has been sending a different message after this year’s election.

“We will reform the student loan program so it works for students and not just the banks,” he said in describing what his priorities will be as chairman of the Senate Committee on Health, Education, Labor and Pensions. He has introduced a bill, similar to one backed by Miller, that would give students new incentives to borrow directly from the government, a measure strongly opposed by private lenders.

But Dean, of the Consumer Bankers Assn., says the loan industry is not single-mindedly wedded to Republicans, noting many companies have Democrats on their lobbying staff.

The bankers association stepped up its outreach to Democratic staff before election day as it became clearer that Republicans were likely to lose control of Congress. But the group’s invitation to Miller to speak at its conference in Washington this week did not reach Miller until Nov. 20.

His spokesman said Miller would not attend because of a previous commitment in California.

The St. Paul Pionner Press has a great article on scholarship scams that you all should read. I’m copying it below.  I’d recommend visiting StudentScholarshipSearch.com for some great leads – and it’s completely free!   Also, you can download the third edition of their eBook free in PDF format, Student Scholarship Secrets.  It’s jam-packed with lots of tools and hints for how to track down scholarships.

“Scammers line path to college cash. Why pay for scholarship info — it’s plentiful and free
BY MARNI GINTHER
With tuition costs rising, the scholarship hunt has become as ingrained in the college experience as midnight studies over a hearty bowl of Ramen noodles. But as students and parents search for scholarship money, they can end up getting scammed out of their own cash.

That’s why St. Thomas University biology sophomore Michael Blissenbach thought twice about the letter he got in September from a company called USA Scholarship Services. It said he’d been selected to apply for up to $7,500 worth of scholarships “designed specifically for students majoring in biology.”

For $25, the company seems to offer customized scholarships, with a hint that the information can’t be found elsewhere.

So he sent in the money and agreed to let the Watchdog know what happened. In the meantime, she investigated further.

The company had no Web site, and it was difficult to get a real person on the phone. A Google search turned up a warning on the admissions office Web site for Lehigh University in Pennsylvania, cautioning students about USA Scholarship Services and advising them to call the Better Business Bureau.

The Better Business Bureau in Washington, D.C., where the company is located, listed USA Scholarship Services as having an unsatisfactory record. The bureau still has unresolved complaints on file regarding the company, said Edward Johnson, the bureau’s president and CEO. He noted the bureau has received 983 inquiries about the company in the past 12 months.

“We have concerns over their business practices,” Johnson said. “Primarily the advertising.”

College students or their parents typically receive an unsolicited letter indicating the company has specialized scholarship information for certain fields of study. But what arrives in the mail is nothing more than information the student could have found free on the Internet or from a school guidance counselor.

“There are a lot of red flags going up here,” said Barb Grieman, vice president of the local Better Business Bureau. That the company required payment for scholarship information, lacked a Web site and rarely had some available to speak to were warning signs that the company could be a scam, she said.

For Blissenbach, those warning signs proved true. A few weeks after he sent in his application and money, he received an envelope with 24 incomplete, photocopied scholarship offers, many with out-of-date information. Sixteen of them had nothing to do with biology.

Ike Onwo, the company’s owner, said it was Blissenbach’s fault for not reading the letter carefully.

“If you don’t like the services we offer, don’t fill out the application,” he said. “Whoever sent you this letter is just ignorant.” He insisted the original letter that goes out to students urges them to call for their money back if they’re unsatisfied with what they receive.

But the letter states only that you may get your money back if you “fail to qualify” for at least $1,000 in scholarships, and you have to send in proof that you applied for the scholarships and were denied.

Onwo also maintained this scholarship information couldn’t be found anywhere else.

Blissenbach disagrees.

“It was just a stack of photocopied information that looked like it was old — like it was written on a typewriter,” Blissenbach said. He added that he could have gotten better information through his school or from online databases at no charge.

Experts say that’s exactly what you should do.

Financial aid advisers can’t stress it enough — you shouldn’t have to pay for information on scholarships.

“Remember, the whole idea for a scholarship is that you don’t have the money, and you need to find it,” said Carrie Dieveney, who helps Century College students find financial aid.

Advisers at big universities and small community colleges alike said most of the scholarship information students need is available through their college or on the Internet. Any financial aid office could have found more accurate and complete information for Blissenbach, said Dianne Danov, associate director of the University of Minnesota’s Office of Student Finance, when she was shown what he got from USA Scholarship.

As for the company’s promise to find scholarships specific to his major, she said that’s something colleges can do, too.

Talk with an adviser or go to the school’s financial aid Web site, she says.

“Financial aid advisers are here to help students find a way to pay for college,” Danov said. “It’s our job.” “

Looks like we’ll be waiting a while for changes from our governement.

“Republican leaders of the U.S. Senate have decided to postpone voting on all remaining spending bills for the 2007 fiscal year until January, when a new, Democrat-controlled Congress will convene. As a result, any increased financing for student aid and scientific research will be delayed into 2007, complicating planning by university officials who depend on this money. Lawmakers might quickly conclude a postelection, lame-duck session that began last week and was recessed for this week and next.”

You can read the complete Chronicle of Higher Education article on-line, it’s dated November 21, 2006. A paid subscription is required.

The Associated Press is also reporting:

“Republicans vacating the Capitol are dumping a big spring cleaning job on Democrats moving in. GOP leaders have opted to leave behind almost a half-trillion-dollar clutter of unfinished spending bills… The bulging workload that a Republican-led Congress was supposed to complete this year but is instead punting to 2007 promises to consume time and energy that Democrats had hoped to devote to their own agenda upon taking control of Congress in January for the first time in a dozen years…

Driving the decision to quit and go home rather than finish the remaining budget work is a determined effort by a group of conservative Republicans to prevent putting a GOP stamp on spending bills covering 13 Cabinet Departments _ and loaded with thousands of homestate projects derided as “pork” by critics.

Some Republicans on Capitol Hill would rather complete this year’s budget work and have the GOP’s imprint rather than a Democratic one on how federal agencies will be spending their money through next September. However, conservatives such as Sen. Jim DeMint, R-S.C., fear doing that would leave as the GOP’s legacy a foot-tall bill containing thousands of parochial projects. Last week they seized the upper hand by employing delaying tactics to drag the budget process to a halt in the Senate.

“The last thing Republicans need is an end-of-Congress spending spree as our last parting shot as we walk out the door,” said DeMint spokesman Wesley Denton.

Some Republicans also look forward to using unfinished budget work to gum up an early Democratic agenda that includes raising the minimum wage, negotiating lower drug prices for Medicare beneficiaries, cutting interest rates on college loans and repealing some tax breaks for oil companies.” 

Here’s an article that I found in the Roanoke Times that spells out exactly why EVERY student should consolidate BEFORE their grace period ends.  I also need to stress that you need to  shop around.  This is very important.  Your current lender may not have the best rates – in fact, as you’re already their customer, they’re porbably less likely to offer you the best deal compared to other companies.

Also – do the math.  Some discounts sound really great… but don’t actually save you all that much.   Visit this article with an example that shows you why.

“Class of 2006 college graduates, listen up. It’s been almost six months since you left school. During this time, you haven’t had to pay a penny on your student loans.

That, as you know, is about to end.

Graduates typically have a six-month grace period after leaving school before their first student loan payment is due.

Soon the reality of all that debt is coming due.

A consolidation loan allows you (or your parents, if they have a federal PLUS loan) to combine several types of federal student loans with various repayment schedules into one loan with one monthly repayment at a fixed rate. Additionally, your payments can be stretched from the standard 10 years to as long as 30 years, depending on your debt amount.

If you want to consolidate your loans, remember it’s a limited-time offer. You have just 180 calendar days — including holidays and weekends — from your “separation date” to capitalize on the 0.6 percent interest rate reduction given to borrowers who consolidate their loans during the grace term.

What’s your separation date? That is the official date in which someone graduates, leaves school or drops below half-time status. It may be your last day of class or your graduation day, Scherschel said.

If you don’t know your separation date, check first with your lender.

You can also find details of your student loans by going to the National Student Loan Data System. The Web site is www.nslds.ed.gov.

The separation date is important to know because if you consolidate your student loans during your grace period, you get the lower rate, which is based on the grace-period rate and is currently 6.54 percent for Stafford loans issued beginning in July 1, 1998, through June 30 of this year. If you hesitate (or procrastinate), and don’t consolidate before the 180 days, the variable Stafford loan rate jumps to 7.14 percent.

The final rate you end up with can be different than the variable rate because when you consolidate, you lock in the weighted average of all your student loans, rounded up to the nearest eighth of a percentage point. If you consolidate after your grace period, you get a fixed rate of 7.25 percent. Do it before and you can lock in a rate of 6.625 percent.

There’s another plus to consolidating. Many lenders will offer further rate reductions under certain conditions. For example [one company] will drop your rate to 6.375 percent if you elect to have your payments directly taken out of a savings or checking account. If you make your initial 36 payments on time, you can further reduce your rate to 5.375 percent. With those two rate reductions, you can save about $4,400 in interest and reduce the 20-year repayment term by nearly two and half years.

Before you settle on one lender, shop around for the best terms. It used to be that if all your loans were with a single lender, you were stuck with that company if you wanted to consolidate. That is no longer the case.

The single holder rule was abolished this year. Now no one has an excuse not to comparison shop.

Scherschel also said that if you applied for a consolidation loan by June 30 when consolidation rates were even lower — 4.75 percent for those in the grace period — you should check with the lender to see if you still qualify for that rate. “We have the ability to use the rate in effect the day the application was submitted,” Scherschel said.”

CNNMoney.com has a very interesting article on what’s in store for higher education now that Democrats control both houses, and why such changes are needed.

Dems: make student loans student friendly
Companies that make money in education have had good friends in Congress. That may change under the Democrats, says Fortune’s Bethany McLean.

“In the corporate world, there’s a short list of obvious suspects who may face tougher times under a Democratic Congress, including Big Pharma and Big Oil. Then there are the not-so-obvious suspects – like what might be called Big Education.

In fact, the stocks of companies that make their money educating America’s college students have had a turbulent year. Look no further than the granddaddy of student lenders, SLM Corp. (Charts) – more commonly known as Sallie Mae -which fell some 13 percent through Nov. 7 and dropped another 5 percent on Nov. 8, as the news rolled in that the Democrats had captured the House.

In Congress’s last term, Republicans did not fully reauthorize the Higher Education Act, which governs many aspects of education finance, thereby leaving the door open for Democrats to change the laws.

And change is indisputably part of the Democratic agenda. George Miller (D-California), who is likely to become the new chairman of the House Committee on Education and the Workforce, wants to cut interest rates on student loans in half.

Last spring Senator Hillary Clinton (D-New York) introduced a Student Borrower Bill of Rights. Among its tenets are a cap on loan interest as a percentage of a borrower’s income. “A Democratic majority will definitely have an opportunity to change student-loan law,” says Michael Dannenberg, who directs education policy at the New America Foundation, a Washington think tank.

It’s no secret that change is needed. A just-released report commissioned by the Secretary of Education calls for “complete restructuring of the current federal financial aid system.”

Cost is a major culprit. Tuition has grown at double digits for more than a decade, and federal aid has not kept up, resulting in often crippling levels of student debt.

As a blogger using the name “collegedebt4life” writes, “We went into debt to get an education so that we could get good jobs, and we find that we have mortgaged away the rest of our lives by taking out student loans.”

David Hawkins, who heads government relations at the National Association for College Admission Counseling, looks back to the 1960s, when Lyndon Johnson pushed to make higher education affordable by setting up the Federal Family Educational Loan Program, or FFELP, which encourages private companies to lend to students by providing government guarantees, and says, “We’ve reached another fork in the road.”

… The Chronicle of Higher Education has reported extensively on the large donations the lending industry and the for-profit schools have made to Republican leaders like John Boehner, who was the chairman of the House Committee on Education and the Workforce until he became the party’s House majority leader this spring, and Howard “Buck” McKeon, who took Boehner’s place. Both are known as strong supporters of student-loan companies and for-profit colleges.

Cozy relationships

But there are also contributions that have gotten less attention. For instance, in 2006 three of the top six individual contributors to the National Republican Congressional Committee are lender Nelnet’s president and its co-CEOs. Nelnet itself is the committee’s largest corporate donor, according to research done by Dannenberg.

Mike Enzi, the Wyoming Republican who is now the chairman of the Senate Committee on Health, Education, Labor, and Pensions, has a political-action committee called Making Business Excel. Top contributors are the employees of Sallie Mae, who gave $20,000; of Corinthian Colleges, who gave $15,348; and of Nelnet, who gave $10,000.

According to PoliticalMoneyLine, the PAC has paid $121,129 since 2005 to Enzi Strategies, a political consulting firm owned by Danielle Enzi, who is Mike Enzi’s daughter-in-law. (A spokesman for Senator Enzi says about a third of that was reimbursement for expenses, and adds, “Senator Enzi’s actions are driven by what he believes to be the best interests of the people of Wyoming.”)

And there’s the movement of political appointees among the DOE, lobbying firms, and corporations. An incomplete list includes Sally Stroup, who was the chief lobbyist for Apollo Group, which owns the for-profit University of Phoenix, before she was appointed by President Bush to oversee post-secondary education at the DOE. In the spring of 2006 she left to become the deputy staff director at the House Education Committee. Two other former top DOE officials, William Hansen and Jeff Andrade, have ties to FFELP lenders and the for-profit schools.

All that clout may have manifested itself in several ways. Last February, Bush signed the budget-reconciliation bill, which cut $12 billion from student-loan programs – at least in part by raising student-loan interest rates. Lenders complain that they took a big hit too, but Wall Street didn’t seem to think so. Sallie Mae’s stock didn’t fall at that time.

Prudential analyst Charles Gabriel described the legislation as “barely nicking” margins. It was a “huge political victory for the industry,” he wrote in a report. The bill also made life far more difficult for the only competitor to the FFEL program. That’s so-called direct lending, under which the DOE makes loans directly to students, cutting out lenders.

In the past few years studies by the Congressional Budget Office and others have reported that FFELP loans cost taxpayers more than five times as much as direct loans. Yet many Republican members of Congress have been reluctant to support direct lending. Miller, who has advocated unsuccessfully for direct lending over the past few years, chuckles when he’s asked about it today. “I have a great deal of interest in the direct-loan program,” he says.

Other favors have been aimed at the for-profit schools. Just one example: Back in 1992, to protect students, a rule was enacted to prevent colleges from paying admissions officers based on how many students they enrolled. For-profits (and some not-for-profits) complained loudly about this.

During Andrade’s and Hansen’s brief tenures with the DOE, they helped set up 12 safe harbors under which schools could partially get around the rule. Hansen also argued that the DOE could use “discretion” in determining fines for violations. A DOE spokesperson says, “The whole process was conducted in an open and transparent manner.”

For-profit scandal

Even as protections like that one were rolled back, the drumbeat of scandal from the for profit sector got louder. Today chains like Corinthian Colleges and Apollo are facing lawsuits and investigations over allegations ranging from aggressive sales tactics to misleading students about job-placement rates and salaries. Says the Career College Association’s Leftwich: “Investigations, bad news, some wrongdoing – that’s universal across higher education.”

The episode that may say the most about higher education and Washington, though, involves an arcane provision that is known as the 9.5% loophole. It came into existence in the days of high interest rates, when Congress guaranteed a 9.5% return to lenders who made student loans using the proceeds of tax-exempt bonds issued before October 1993. It was supposed to be a short-term incentive.

But in 2003, Oberg, then a DOE researcher, noticed (while digging through SEC filings) that the volume of outstanding loans upon which lenders were collecting 9.5% was actually growing. It turns out that lenders, of which Nelnet is the most prominent, were using a variety of accounting and financial maneuvers to keep qualifying for the subsidy. In some quarters that wasn’t exactly a secret. In fact, in 2003, Nelnet wrote to the DOE, describing its “Project 950″ in detail and asking for approval. Whether Nelnet got approval, as it claims, or not is in dispute, but at best the DOE didn’t object.

The appetite of some in Congress for shutting down the subsidy wasn’t much higher. Until 2005, when rebellious members succeeded in passing an amendment, Boehner supported the lenders. The practice was finally abolished in 2006.

Yet because of the delays and because existing loans that qualify through the loophole will still qualify, the New America Foundation estimates a total cost to taxpayers in excess of $6 billion. That’s $6 billion that could have helped students attend college. A Nelnet spokesperson wouldn’t comment on this issue but said, “The private sector has brought enormous value to the education services industry.”

The story has a final twist. In September the DOE’s inspector general issued an audit of Nelnet that called for it to give up $1.2 billion in 9.5% payments. On the same day, it issued another critical audit, this one of the DOE subsidiary that oversees the FFEL program. Among other criticisms, the IG said that the DOE “emphasized partnership over compliance” in its relationships with the entities it was supposed to monitor.

For students and their parents, the important question is whether politics can be part of the solution. It’s not clear. The only thing that’s certain is that Big Education “will spend what it takes to get themselves some new friends,” says Barmak Nassirian, associate executive director at AACRO, a professional group for college administrators.“

Well, it’s been quite a week for people of every political perspective. Regardless of how you feel about what has transpired, the shakeup in Congress means definite changes for student loans, many of which benefit students:

Nancy Pelosi has pledged that, among other items, the following will be brought to the floor of the House of Representatives within the first few weeks:

• Cut student loan interest rates in half
• Some sort of taxbreak for paying tuition or student loans

So for students, the future looks bright at the moment. When I find more details, I’ll prsent them for you here.

This is an issue that I remember well… the costs of college textbooks. I spent several thousand dollars over the course of four years (and another several hundred in grad school) to buy required textbooks. One notable book, for Probability and Statistics cost $110 each, and if you opened the CD in the back of the book to use it, you could not sell it back to the bookstore. Ironic, eh? Why else buy the book with CD, but to use the CD? Then there were the 8 books for one Anthropology course that cost $8 to $18 dollars each.

I’m sure you all have similar stories!

That’s why the Advisory Committee on Student Financial Assistance is holding a hearing into the cost of textbooks, at Congress’ request. From their press release:

The Advisory Committee on Student Financial Assistance will host a public hearing on Monday, Dec. 18, from approximately 9:00 a.m. to 3:30 p.m. at the University of Illinois at Chicago, Student Service Building, Conference Room A/B, 1200 W. Harrison Street. This will be the first of three field hearings the Committee will hold as a part of its congressionally requested study to make textbooks more affordable for students.

In June 2006, U.S. Representatives Howard P. “Buck” McKeon (R-CA) and David Wu (D-OR) asked the Advisory Committee to conduct a study on the cost of college textbooks. The purpose of the study is three-fold: to investigate further the problem of rising textbook prices; to determine the impact of rising textbook prices on students’ ability to afford a postsecondary education; and, to make recommendations to Congress, the Secretary, and other stakeholders on what can be done to make textbooks more affordable for students.

The field hearings will include testimony from organizations and individuals around the country who are currently working to make textbooks more affordable. Information gathered will be used to inform recommendations in the final report, due to Congress by May 2007. For additional information on this study, please see the fact sheet posted on the Advisory Committee’s Web site at: www.ed.gov/ACSFA.

Anyone interested in attending the meeting must register in advance because space is limited. Please register at this website: http://www.ed.gov/about/bdscomm/list/acsfa/registration/edlite-index.html. Registration closes December 1, 2006. People interested in providing a public comment should include the following information when registering:

1. Name
2. Title, Organization
3. Brief statement characterizing the nature of remarks you plan to provide at the hearing.

Each speaker will be allowed five minutes. Advisory Committee staff will contact speakers before the hearing to confirm the order in which comments will be provided. Written testimony is welcome.