Reauthorization of the Higher Education Act of 1965
Ms. Tammy Zimmer, Regulatory Analyst - Career College Association
Archived Information

Thank you for allowing the Career College Association this opportunity to provide the Department of Education our views on amending the Higher Education Act during the upcoming reauthorization. CCA has already submitted written comments to the Department and Congress outlining our reauthorization priorities and suggestions. I would like to take this time to highlight just a few of the issues of importance to our membership.

Transfer of Credit
Congress and the Department of Education must address the discrimination that students encounter when they seek to transfer credits from institutions that are nationally accredited to colleges and universities that are regionally accredited. The barriers students encounter when transferring from one institution to another increase the cost in time and money to students who seek to continue their education. Studies conducted by the National Center for Education Statistics show that more than half of all students are attending more than one institution before completing their education. As demonstrated by a research study prepared by the Institute for Higher Education Policy for the Career Training Foundation, students are often forced to retake classes simply because the institution from which they are transferring is nationally rather than regionally accredited. That study showed that 97 percent of regionally accredited institutions have their credits generally accepted, with an additional one percent having their credits provisionally accepted. In sharp contrast, only 18 percent of nationally accredited institutions have their credits generally accepted by regionally accredited institutions, with an additional 27 percent having credits provisionally accepted. A full 44 percent of nationally accredited institutions do not ordinarily have their credits accepted by regionally accredited institutions solely because of their national accreditation. Denials and deterrents to credit transfers are unfair to students, inhibit student completion, and drive up the cost of postsecondary education by forcing students to take and pay for the same course twice. Accrediting agencies should be required to adopt and enforce standards or policies that require institutions to presume the academic quality of credits earned at an institution that is accredited by an agency recognized by the Secretary. This would not require institutions to accept all proffered credits; institutions would still be free to assess the comparability of the course, as well as the student's level of mastery. In furtherance of this goal, CCA also recommends adding a required condition to the program participation agreement signed by institutions participating in Title IV student aid programs that would require institutions to presume the academic quality of credits earned at an institution that is accredited by an agency recognized by the Secretary. As noted above, institutions should be left the discretion to decide credit transfers on a case-by-case basis on issues such as course content and student mastery.

Return of Federal Funds
Return of federal funds is an issue that has created burdens for both students and institutions. CCA commissioned a major research project to determine the extent of the negative impact. The study demonstrates that students and institutions are indeed bearing significantly increased costs. On average, the return of federal funds provisions reduce the amount of federal financial assistance students can use to pay their educational costs by almost 15%. Institutions have also been adversely affected, particularly those with programs over two years. Institutions with programs of less than two years have seen an average increase of almost 10% in the amount of federal funds they must return when a student withdraws. For programs of two years or more, that figure jumps to over 30%.

CCA urges that 50% of a student's grant award be insulated from the return of federal funds calculation. This provides a benefit to more students than the current provision, which applies the "grant protection" at the end only as a subtraction from the overpayment obligation of the student. The Department's regulation disproportionately benefits those students who attend low cost institutions, as students at moderate or higher cost institutions will rarely have a repayment obligation. If the 50% "grant protection" is moved to the beginning of the return of federal funds calculation so that it is netted out of the calculation altogether, it allows those students who have larger institutional charges to use the grant money to pay those charges, instead of using loan funds or personal funds.

The law should also explicitly allow colleges the flexibility to determine whether a particular student actually needs the insulated 50% of his or her grant funds to pay legitimate educational expenses. Institutions are concerned that a small number of students might try to "game" the system by enrolling simply to withdraw early and walk away with grant funds. This would be an optional step for the institution; the institution should have the ability to set a policy that works best for its students.

Finally, because of the complexity of the process, it would be an improvement to establish a $200 de-minimis amount so that neither a student nor an institution would be required to return federal funds if the return amount would be less than $200. This would decrease the number of students who have a repayment obligation by about 13%.

90-10 Rule
The 90-10 rule states, simply, that a for-profit institution of higher education may not receive more than 90% of its revenue from federal Title IV grants and loans. This rule was established as a way of measuring the "quality" of an institution. The theory behind it is that if a college is deriving no more than 90% of its revenue from Title IV, it is a quality institution that is able to attract students willing to invest some portion of their own funds in the institution and the education it provides. The single largest barrier to compliance is the Department's nearly unrebuttable presumption in the current regulation that Title IV funds are used toward institutional charges. The current regulations include only a small number of narrowly defined types of revenue to be counted toward the 10% non-Title IV funds. For example, the regulations do not allow an institution to demonstrate the fact that a student has used some non-Title IV funds, such as proceeds from ??529 tax-favored state tuition savings plans, to pay any portion of institutional charges.

Modification of the 90-10 rule to make it a matter of administrative capability rather than institutional eligibility would reduce some of the burden on both institutions and students. Instead of jeopardizing institutional eligibility to participate in Title IV aid programs, failure to meet the rule should be a cause for fine or liability, thus ensuring institutions will still have compelling incentives to remain in compliance. CCA has recently commissioned an independent study that will provide data showing the costs students and institutions incur to meet the current rule. Once this study is complete, we will forward additional recommendations for change to the Department and Congress.

Once again, thank you for this opportunity to comment on the upcoming reauthorization of the Higher Education Act. I would be happy to answer any questions you may have, or to provide additional information at your request.


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Last Modified: 02/05/2009