U.S. Attorney General Loretta Lynch announced on Monday that the Department of Justice (DOJ) has reached a settlement in its false claims case against the Education Management Corporation (EDMC), an operator of for-profit colleges and universities. The $95.5 million settlement is the largest ever in a higher education false claims case. EDMC will also forgive a total of $102.8 million in loans to over 80,000 students who attended its schools, which include Argosy University, the Art Institutes, Brown Mackie College, and South University, between 2006 and 2014.
The lawsuit was originally filed in 2007 by whistle-blowers within EDMC, who alleged that the organization was offering extra incentives to their admissions officers based on the number of students they enroll, a violation of the Incentive Compensation Ban in the Higher Education Act. Said Attorney General Lynch in her statement, “EDMC’s actions were not only a betrayal of their students’ trust; they were a violation of federal law.”
Reactions to the settlement have been mixed. While it is encouraging to see the DOJ take action against illegal and unethical practices at for-profit institutions, many student and consumer advocates have criticized the settlement for providing too little relief for students who accrued thousands of dollars of federal student loan debt at EDMC institutions.
Secretary of Education Arne Duncan has indicated that his Department is willing to listen to claims from students who believe that EDMC mislead them when if offered loans, but critics of the deal say listening is not enough. “I am disappointed that the department’s only plan for EDMC students is to hear their complaints,” said Robyn Smith, a lawyer at the National Consumer Law Center, who was quoted in The Chronicle.
Others have criticized the language of the settlement, which did not force EDMC to admit wrongdoing for its actions. Stephen Burd, a senior policy analyst at New America, laments the continued lack of accountability of for-profit institutions.
“Too many of these cases are settled without finding fault,” he said in the same Chronicle article, “and the for-profit industry has been able to say, ‘Oh, nothing is proven.’”
Despite its issues, this settlement is another step in the Federal Government’s continuing efforts to rein in the questionable behavior of for-profit colleges and universities. Last year, the Department of Education formed an interagency task force to more rigorously oversee for-profit institutions of higher learning. The Department of Defense also suspended all tuition assistance to the University of Phoenix, which targets veterans in its recruiting efforts.
A recent story in the LA Times, “UC seeks to boost Californians’ enrollment by 10,000 by 2018,” outlined the University of California’s plan to expand resident undergraduate enrollment at their nine undergraduate campuses. Like many U.S. public universities that have faced significant state divestment during the recession, the UC system has enrolled more nonresident students in recent years to help cover funding cuts and keep resident tuition increases to a minimum. To adjust this trend, the California Legislature recently increased its investment in the UC system by $25 million to partially fund the enrollment of 5,000 additional resident undergraduate students by no later than 2016-17. To pay for an additional 5,000 enrollments proposed by UC, system President Janet Napolitano plans to phase out aid for low-income non-resident students and request additional funding from the California Legislature. Napolitano was quoted as assuming the legislature would “continue to support access for California students.”
According to the article, UC officials are now “working through the logistics of housing, laboratory availability, and classroom sizes.” The increase in undergraduate students will also necessitate enrolling 600 more graduate students for instruction and lab support.
The University of Washington has faced similar financial pressures as a result of the recession, but remains committed to providing Washington students with affordable, quality higher education.
- The UW continues to fully fund Husky Promise, which covers, at minimum, tuition and fees for resident undergraduate students who qualify for the Pell Grant or State Need Grant.
- Since 2009-10, the UW has increased incoming enrollment of resident undergraduates by more than 1000 students at its three campuses.
- During the recession, the UW increased its contribution to institutional financial aid in order to maintain access for students with the most financial need.
- The percentage of Pell-eligible students at the UW rose from less than 20 percent in 2007-08 to 29 percent in 2014-15.
With over 188,000 undergraduate students in the UC system, the plan would increase their undergraduate enrollment by over 5 percent. To achieve a similar overall increase, the UW would need to add approximately 2000 students and would face significant barriers in doing so. Unlike the UC system, UW does not provide need-based aid for non-resident undergraduate students, and thus would not be able to cut that non-resident aid funding to pay for additional resident enrollment. Additionally, all three campuses are nearly at capacity without significant capital investment.
Greetings, my name is Jed Bradley and I recently joined the Office of Planning & Budgeting as a higher education policy analyst. I earned a BA in political science from the University of Washington and am currently pursuing a Master’s degree in higher education from the UW College of Education. I will be contributing to the OPBlog with posts about budget and policy proposals from Olympia, local UW initiatives, and other U.S. higher education news.
Please send me an email if you have any questions or feedback. Thanks for reading!
Undergraduates who graduated with student loan debt from four-year colleges in 2014 owed an average of $28,950, according to a recently released report by The Institute for College Access and Success (TICAS). 69 percent of graduates have loan debt, the same figure as last year and slightly higher than it was in 2004 (65 percent). The average amount of debt per borrower is up 56 percent from 2004 – more than double the inflation rate over the same period – but only up 2 percent from 2013.
A number of factors have contributed to the rising student debt load over the past decade. States have decreased their investment in public higher education over the last ten years, causing students at public institutions to bear a higher percentage of the funding burden. Since 2004, the share of public higher education funding provided by states has dropped (from 62 percent to 51 percent) and the share paid by students and their families (in the form of tuition) has increased (from 32 percent to 43 percent).
In addition, the growth of Pell Grants has not kept up with rising costs. The TICAS report shows that between 2004 and 2012—the last year in which data is available—recipients of Pell Grants at public four-year colleges saw average cost of attendance rise by $7,400 and grant aid rise by just $2,900. At private, non-profit colleges the gap is even wider; costs rose by $14,400 and grants increased by $8,700.
Washington state is performing well with regard to student loans: only 58 percent of Washington bachelor’s degree recipients who graduated in 2014 had loans, and those who did had an average of $24,804, more than $4,000 below the national average. The University of Washington also looks good by these metrics: thanks in large part to the University’s commitment to institutional aid through programs such as Husky Promise, less than half of all UW undergraduates who graduated in 2014 had student debt and the average debt burden was $21,558, well below the state and national averages.
While Washington’s performance relative to its peers is laudable, student debt is still a major issue for many students. The TICAS report offers a series of proposals to mitigate the student debt load, among them doubling the size of Pell Grants, simplifying income-driven repayment plans, and improving student loan servicing to make it easier for students to pay back their loans. It is important that policymakers remain focused on reducing the student debt burden and continue working with institutions to make higher education accessible and affordable for all students during and after graduation.
 It’s important to note that borrowing rates and debt levels vary widely by state, college and sector.
 Because the federal government does not require colleges to report debt levels for their graduates, data in the TICAS report is based on voluntary reporting by institutions. Hardly any for-profit colleges voluntarily report their graduates’ average debt, so this year’s debt figures are for public and nonprofit colleges only.
The Department of Education recently released their annual report detailing the 3-year cohort default rate (CDR)—a metric that measures what percentage of postsecondary students default on their loan payments within the first three years of entering repayment—and the data are encouraging: the 3-year CDR for FY 2012 is 11.8 percent, almost two percent lower than the previous year and three percent lower than FY 2010.
While reasons for the drop are uncertain, administration officials have credited the increased enrollment in income-based repayment plans as partially responsible. Secretary of Education Arne Duncan has cheered the lower default rate but cautions that there is more work to do. “There’s no real reason why we can’t significantly reduce default rates even further,” he told reporters in a statement reported by Inside Higher Ed. “We’re going to keep working to hold schools accountable.”
The report also breaks down the CDR by school, state, and institution type. Below is a breakdown of the most salient statistics.
- Public four year institutions saw their 3-year CDR drop to 7.6 percent, down from 8.9 percent last year.
- Private non-profit four year institutions’ default rate also dropped, to 6.3 percent from 7 percent.
- Private for-profit four year institutions’ CDR dropped to 14.7 percent, down from 18.6 percent last year.
- Schools in Washington state have an average 3-year default rate of 10.1 percent, slightly below the national average.
- The University of Washington performed exceptionally well by this measure: the 3-year CDR for UW dropped to 2.7 percent, almost 5 percent lower than the national average for public four year universities and down from 4.3 percent last year.
As previously stated, the declining CDR average nationwide is a hopeful sign for the future of student loan repayment. Nevertheless, loans remain a massive strain on millions of college students and graduates and more must be done to alleviate the student debt burden. The CDR itself has come under fire as a flawed metric; it only measures those students who default on payments and does not take into account the almost one in three borrowers who make payments but cannot make any progress on paying down their debt or the share of students at a given institution who borrow. Some in the education policy world have called for using loan repayment rates, rather than default rates, as the primary metric for gauging an institution’s ability to prepare its students for repayment.
My name is Andrew Orlebeke and I am the Legislative Analysis Intern for the Office of Planning and Budgeting and a Master in Public Administration student at the Evans School of Public Policy and Governance. I’ll be updating this blog periodically with posts on all things higher education, from federal and state legislative issues to the release of higher education reports to UW-specific policy initiatives. Feedback is more than welcome and thank you so much for reading!
Reuters recently ranked the UW as the fourth most innovative university in the world among public and private institutions, surpassed only by Stanford, MIT and Harvard. When looking at public institutions alone, however, the UW topped the list.
As the Seattle Times noted, “The ranking takes into account academic papers, which indicate basic research performed at a university, and patent filings and successes, which point to an institution’s interest in protecting and commercializing its discoveries.”
In addition to the innovation ranking, Washington Monthly recently ranked UW Seattle as the #1 “Best Bang for the Buck” among Western institutions. Institutions are scored on “’Net’ (not sticker) price, how well they do graduating the students they admit, and whether those students go on to earn at least enough to pay off their loans.” For more information about the “Best Bang for the Buck” rankings, please see the companion article.
UW Profiles – a set of dynamic, web-based data dashboards – recently received The Data Warehousing Institute (TDWI) Best Practices Award. This award is widely considered to be the business intelligence industry’s most prestigious honor.
OPB’s Institutional Analysis team developed UW Profiles, in collaboration with UW IT’s Enterprise Data & Analytics team, and formally launched the site in fall 2013. UW Profiles allows users to explore core UW data through 21 visual dashboards that display summary, comparison and trend data.
Campus Technology Innovators also honored UW Profiles, calling it “an intuitive, user-friendly portal that provides a single point of access to data and visualizations for faculty and staff.”
Congratulations to Institutional Analysis and to all those who worked hard to make UW Profiles a reality!
Under the “Briefs” tab of the OPB website, you will find the 2015 Bill Summary, which provides a list of all the bills we tracked during the 2015 legislative session that passed into law. Links to veto messages are displayed for any bills that were partially vetoed by the Governor.
Of the 538 bills that OPB tracked during the 2015 session, 74 passed into law.
As a reminder, any bill that did not pass into law during the regular session will be reintroduced at the beginning of the supplemental session, next year.
Leadership in both House and Senate passed a compromise operating budget in the form of Engrossed Substitute Senate Bill 6052.
All of higher education including financial aid would receive $3.5 billion of Near General Fund (NGF) for the biennium which is 9.2 percent of the overall NGF appropriation of $38.2 billion.
The compromise budget adopts the provisions in Second Engrossed Substitute Senate Bill 5954, which reduces the operating fee portion of resident undergrad tuition at all public higher education institutions. In 2015-16, resident undergraduate operating fees at all public institutions are to be 5 percent below the 2014-15 rates. In 2016-17, resident undergraduate operating fees at the state universities (the UW and WSU) are to be 15 percent below the 2014-15 rates; at the regional universities, they are to be 20 percent below the 2014-15 rates; and at the community and technical colleges, they are to be held at 5 percent of the 2014-15 rates.
This budget provides $27 million to partially fund compensation increases of 3% in FY16 and 1.8% in FY17. This budget also partially funds collective bargaining agreements with WFSE and SEIU.
Listed below are some of the Key funding’s provided by this budget:
Computer Science – $6 million over the biennium to increase bachelor’s degrees awarded in Computer Science.
WWAMI – $9 million over the biennium to continue operations in Spokane.
Family Practice Medicine Residency Network – $8 million over the biennium to fund additional medical residencies.
O&M Funding – $1.76 million over the biennium to cover maintenance costs for UW Bothell’s Discovery Hall.
The legislature also passed the final capital budget. For more details on the operating and capital budgets, please refer our OPB Brief.
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