October 8, 2008

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

Career College Association Testifies at HEA Field Hearing

Seeks Surgical Precision and Exceptional Care on 90-10, Cohort Default Rate Rule Changes

Washington, DC – The Career College Association (CCA) today told the Department of Education that the credit market crisis has placed an additional burden on low income and working class students and urged the Department to craft Higher Education Act regulations in areas concerning the 90-10 threshold and cohort default rate calculation with exceptional care.

“For many students coming from working class and lower income backgrounds, often independent, working adults, access to private loans to pay for college has been hampered, even blocked by more stringent lending criteria,” said CCA President and CEO Harris N. Miller.

Miller continued,“The loss of these private loan sources has placed great pressure on the ability of many institutions to serve both less affluent populations and to meet the federal government’s 90-10 tuition funding threshold.  Congress wisely realized the impact of the credit crisis on America’s working students, and lawmakers crafted changes to 90-10 that serve as a temporary relief valve to release some of the pressure on the lending system. Now we need to get the implementing regulations right.”

Among its recommendations, CCA asked the Department to develop 90-10 rules that:

• not only allow revenue from non-Title IV programs that have been approved by the state or an accrediting agency, but also are considered part of an overall institutional accreditation or do not otherwise require specific state approvals on a program by program basis; 
• allow revenues generated by an “industry-recognized” credential, avoiding disputes between competing certification bodies and accepting any credential recognized by some segment of a given industry;
• recognizes that career colleges initiate multiple class starts throughout the year and allows institutions to provide a single loan at the beginning of the student’s academic year with the loan itself spread out over the institution’s fiscal year.  Should institutions allow payment deferments until after graduation, such deferments should likewise be allowed;
• with respect to the $2,000 FFEL program loan increase, allows this extra amount to be attributed to each payment period in proportion to the total loan as originally packaged. 

Miller also called for caution in approaching HEA mandated changes to the cohort default rate calculation:

“Career colleges serve a population that is largely underserved by traditional higher education.  Our students tend to be the first in their families to pursue higher education, more likely to be economically independent, more likely to be older, and more likely to be juggling the conflicting realities of job, children and school.  Little surprise, therefore, that they are also more likely than their more affluent traditional college student counterparts to default on their student loans.  On the contrary, parity in default rates for those starting life at the lowest rungs of the economic ladder would be nothing short of astonishing,” Miller said.

“The career education sector understands the need to minimize cohort default rates to the greatest extent possible, and the Career College Association is committed to working with its member institutions toward this end.  At the same time, however, we ask that the Department of Education understand the root cause of student loan defaults and how a less affluent student population, with fewer resources to repay student loans at the outset, is likely to be buffeted by a weak economy going forward.  We urge the Department to adopt a policy of wide latitude and reasonable forbearance in imposing sanctions on schools exceeding the CDR threshold.  Any other policy is apt to foreclose access to higher education for those most dependent on career education for upward mobility,” he added.

Miller made his comments at a Department of Education field hearing in Washington, D.C.  The Department is holding several such hearings around the country.

The CCA testimony is available on the web.

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..