Monday, March 16, 2009

A Loan Sticking Point Clarified and Accentuated

Recently, Mark Kantrowitz, Founder, Finaid Pages, documented solutions in the loan market for post secondary education.

Mary Lyn Hammer, CEO, Champion College Solutions, wrote into point out a detail in Mr. Kantrowitz's presentation:

During a session at last week’s IIR conference in Phoenix, a statement was made that schools could voluntarily withdraw from the Federal Student Loan Programs and remain in the Pell Grant and other Title IV Programs. This statement was inaccurate. The following is documentation for your review.

Voluntary Withdrawal from Loan Program and Retain Pell Eligibility

In the 1998 Higher Education Amendments, Title IV, Part A, Sec. 401 (f) (2) it states, “This subsection shall not apply to an institution that was not participating in the loan program authorized under part B or D on the date of enactment of the Higher Education Amendments of 1998, unless the institution subsequently participates in the loan programs.”

This is further defined in the Official Cohort Default Rate Guide as, “A school will not be subject to loss of Federal Pell Grant Program eligibility if a school officially withdrew (in writing) from the FFEL Program and/or Direct Loan Program on or before October 7, 1998 OR lost its eligibility to participate in the FFEL Program and/or Direct Loan Program on or before October 7, 1998 OR did not certify any FFEL Program and/or Direct Loan Program loans on or after July 7, 1998.”

Summary:

The voluntary withdrawal option was statutory and only available if the school made no loans on or after July 7, 1998 and voluntarily withdrew from the Federal Student Loan Programs on or before October 7, 1998.


Mr. Kantrowitz responds:

As I said at the conference, if a school is close to the limits but not over, they can preserve Pell Grant eligibility by withdrawing from the federally(sp) loan programs. The voluntary withdrawal program was regardless of whether the school was over the cohort default rate limit. What I was discussing is schools that are close to but not over the limit, but so close that they are concerned that they might lose eligibility.

An example might help illustrate. Let's suppose that a college is at 14% now and will be at 28% after the change. Right now they don't have any problems vis a vis the 25% threshold, but after the change to a 3 year window they may be very close to the 30% threshold. If they were concerned that they might go over the limit in the future, they could choose to stop offering federal education loans. So long as they were under the 30% threshold for one of the next three years, they wouldn't be subject to sanctions and so could continue to offer the Pell Grant. I am assuming that the number of loans entering repayment would rapidly drop below the 30 loan minimum.

Or consider a school that is at 20% now. They know that they will be over the 30% threshold and have no way of getting under it. If they opt out now, by the time the threshold goes into effect they will no longer have enough loans entering repayment to affect eligibility.

So while there is no formal voluntary withdrawal program now, schools can still manipulate the cohort default rate definition to opt out to preserve Pell Grant eligibility.


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Wednesday, March 11, 2009

Ahmed Abdulwahab, CEO, inetoo

Ahmed Abdulwahab tells the Education Industry Investment Forum that he hopes that inetoo, an online collaborative study tool, can be taken up by more students across the country.




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NT, CEO and Founder, Tabula Digita

NT went from a young man armed with an idea, to a young man building a success story in the gaming and electronic learning space. Listen to how he describes to The Education Industry Investment Forum the philosophy that kept his goals in sight and helped him build a business out of conviction.

You can visit NT's site and vision at Tabula Digita.




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Randy Speck, CEO, mySamson

Randy Speck, CEO of mySamson, came to the FuturEd Symposium portion of the 11th Annual Education Industry Investment Forum to meet investors and other business owners who would teach him new things about building scale and solving distribution challenges in the industry. He believes he will be taking away ideas and contacts that will boost his efforts in the industry.



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Tuesday, March 10, 2009

Jordan Goldman, CEO and Founder, Unigo.com

The youngest entrepreneur at the Education Industry Investment Forum, Jordan Goldman discusses "filters of perception" and how a social networking site called Unigo, run primarily by students, will change the way colleges and universities sell themselves to the next generation of students.

In essence, students will decide how students will be marketed to, in the post secondary space and you can see how they are doing it at at Unigo's web site.




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Rita Ferrandino, Managing Director, ARC Capital Development

NCLB is on the mind of Rita Ferrandino of ARC Capital Development as she discusses what she came to the forum to learn and what she eventually will take back to her company. She believes the industry will see an NCLB Reauthorization in 2010.

You can visit ARC Capital Development here.




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Malgosia Green, CEO, LearnHub

Malgosia Green, one half of the duo that runs LearnHub, a distance learning platform for Indian students learning in English, explains how she went from being a top engineering student in Canada to working as one of the top businesswomen in the start-up genre of the online education industry.

You can visit LearnHub right here.




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Howard Block, Knowledge Investment Partners

I talked with Howard Block after his speech at the Education Industry Investment Forum in Phoenix. Mr. Block is always good for a direct and dramatic commentary.

You can visit Knowledge Investment Partners here



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Thursday, March 5, 2009

The Movement Toward The Affect In K-12 Education

Steve Weigler, CEO, of ScholarCentric and speaker at next week’s Education Industry Investment Forum recently forwarded us his latest white paper, The Movement Toward The Affect In K-12 Education. In this paper Steve explores the following:
  • The Change in Educational Landscape Spurred by a Dropout Crisis
  • Financial Opportunities/Analysis
  • ScholarCentric’s Approach to The Emerging Affective Market
Take a couple of minutes to read through the whitepaper, as we are all trying to make sense of things to come with Obama’s new focus on education. Enjoy!

Read the white paper


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Tuesday, March 3, 2009

Entrepreneurs' Roundtable Helmed By Keith Oelrich, Insight Schools

With only one week to go before the opening day of the 11th Annual Education Industry Investment Forum, the final tallies are in and the new entrepreneurs have been chosen. We also have a moderator. and here they are.

9:40 Wednesday, March 11, 2009
Biltmore Resort & Spa

The Entrepreneur’s Panel – Five Companies that May Change the Education Industry

Keith Oelrich,Founder and CEO of Insight Schools, will moderate a panel of five well-chosen entrepreneurs, who will present their conceptions and strategies for navigating the education industry in today's economy.

Mr. Oelrich, who once helmed Speedyclick.com, will take these five entrepreneurs through a course of questions:

Brian Boubek, CEO, CEA Global Education
Louis Piconi, CEO, Apangea Learning
Jeff Shelstad, CEO, Flat World Knowledge
Steve Weigler, CEO, ScholarCentric
Randy Speck, CEO, MySamson

Sign up now to listen to this conversation at the FuturEd Symposium, by visiting our registration page at registration page. You only have six more days!

You can also join our LinkedIn Group and speak with over 170 for-profit education professionals in American and abroad.


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Monday, March 2, 2009

Mayor's Schools Fail the Pass Test

Two schools created as part of the Bloomberg administration’s effort to replace large, failing high schools with collections of small ones have been added to the state’s list of failing schools.


But for the grace of Mayor Bloomberg there go I.


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