January 23, 2008

For more information: Bob Cohen                           Luke Thomas
                                 202-336-6836                      202-336-6803
                                 bobc@career.org                  luket@career.org

Career College Association Calls for Action on Student Financing

Washington, DC – The Career College Association (CCA) today said a combination of factors, including the crisis in the subprime lending market, the substantial reduction of student lender subsidies enacted in the College Cost Reduction and Access Act, and reforms in student lending processes that followed allegations of misconduct last year, is placing college financing for working class and economically disadvantaged students at risk. If left unaddressed, CCA said the situation could foreclose access to higher education for thousands of borrowers.  CCA called on stakeholders in Congress, the Administration, the financial community, student groups and academia to work together to craft solutions that assure adequate funding availability.
 
“Access to private lending sources is absolutely critical for many working adults to be able to bridge the gap between federal grant and loan program limits and actual tuition costs,” said CCA President Harris N. Miller.  “Our member institutions tell us that many lenders have stopped subprime private lending and may stop private lending altogether.  Their retreat may leave many students unable to finance the balance of their educations.”
 
From an overall economic perspective, Miller said the decision by the subprime lenders could not come at a worse time.  “As the national economy slows, many workers will want to return to school to obtain valuable skills and improve their employment prospects.  With many states facing budget deficits and squeezing their spending on public education, career education becomes an even more important alternative for skills attainment.  It will be tragic that during a period when educational opportunities are needed most, this ‘perfect storm’ of factors stands to block the path for students and their families,” Miller said. 
 
A recent survey of CCA member institutions found over one-third of respondents indicating that lenders have stopped offering private loans to students at their schools and two-thirds indicated concern about the ability of students to obtain loans, whether FFEL, Direct, or private.  The CCA web-based survey results, conducted this month, reflect responses from over 60 education corporations and institutions educating tens of thousands of students.
 
With foreclosure signs popping up in front of homes all across the country, Miller said a similar scenario could play out for those seeking to finance a college education.  “We are not at the crisis stage yet,” Miller said, “but bold action is needed to keep the lenders’ retreat from turning into a rout and taking with it the last, best chance of many students to earn a college degree.”
 
Miller said several steps should be considered, including:
• An immediate gathering of stakeholders to identify effective cures and craft solutions with broad support;
• Immediate increases in Pell Grants and Federally subsidized student lending limits;
• A relaxation of 90-10 rules to allow a greater percentage of federal higher education financing and reducing the requirement for financing from alternative sources;
• A waiver on rules that bar lenders from cross-subsidizing high risk loans;
• The development of an "Independent Student Loan program" similar to PLUS that will encourage working adults to seek postsecondary education;
• A Congressional review and possible reinstatement of specific types of lender subsidies.

“CCA does not have a perfect solution,” Miller concluded.  “But it would be unfortunate if finger pointing and a lack of creative collaboration kept students from obtaining the education they need and deserve.”
 
The Career College Association (CCA) is a voluntary membership organization of accredited, private postsecondary schools, institutes, colleges and universities that provide career-specific educational programs. CCA has more than 1,400 members that educate and support over one million students each year for employment in over 200 occupational fields. CCA member institutions provide the full range of higher education programs: masters and doctoral degree programs, two- and four-year associate and baccalaureate degree programs, and short-term certificate and diploma programs. Visit CCA at www.career.org.