June 27, 2008

Congress May Require Colleges to Repay Loans for Students Called to Military Service

Washington — While the Senate was preparing to pass a much-heralded GI bill on Thursday, committees in both chambers of Congress were quietly considering a veterans-benefits bill that is far less popular with colleges.

The legislation, which is supported by veterans groups, would require colleges to refund loans and out-of-pocket costs to students who are called to active military duty in the middle of a semester — and to give students the right to sue colleges that fail to do so.

College lobbyists say the requirement would conflict with existing rules and would be difficult to carry out. On Thursday the American Council on Education and several other associations sent a letter voicing concerns about the bill to the Senate Committee on Veterans Affairs. The letter suggests that the federal government discharge the loans, rather than require colleges to repay them.

“It’s kind of outrageous to expect institutions to repay loans” that were taken out by their students, said David S. Baime, vice president for government relations at the American Association of Community Colleges. “If a student took a loan out, it’s their responsibility.”

The groups are also unhappy with a provision that would require colleges to re-enroll veterans at the same academic status they held when they departed. The groups say most institutions already do so, but want to be able to make the decisions themselves, on a case-by-case basis.

Patrick Campbell, legislative director for the Iraq and Afghanistan Veterans of America, said the requirements were a matter of fairness. He said he had heard many horror stories from veterans who struggled to get refunds or to re-enroll at their original status.

“Deploying students are being put in a worse position because of their service,” he said. “When veterans come home and their schools make them jump through hoops, some students will not go back.” —Kelly Field

Comments

1. I am continually amazed at the total lack of economic sense on both sides of the aisle in Congress. Yes, of course, many colleges can afford to pay off a semester’s worth of loans for a student. However, that’s not really the point. The major problem with this legislation is the potential conflict of interest it creates. Just like health insurance companies that also provide your clinical care (e.g., Kaiser), making it so that the institution that authorizes a loan, the college, is the same institution that would be held financially responsible for it creates a perverse set of economic incentives. While I certainly hope colleges wouldn’t disadvantage students due to the potential of active service, in these extremely bad budget times it opens the door for real abuse.

   People need to remember that bills like this sound good on the surface, but when you dig past the primary effect you find serious problems. A better solution would be for the government to repay the loans rather than holding colleges, particularly less wealthy institutions (e.g., community colleges), financially responsible for something outside of their control.

   — Bob S.    Jun 28, 02:15 PM    #

2. This provision has the potential to make it harder for GIs to get into colleges in the first place. If the economy gets much worse, it’s not hard to imagine colleges turning away those students that they might suspect could leave them holding the bag on those loans. As Bob pointed out, all institutions aren’t financially well off — and more are being added to that list every day.

   — Kathy    Jun 30, 08:08 AM    #

3. Hey Congress, I have an idea – how about since YOU voted to start the war that these students are being called to fight in, then YOU repay the loan.

   Students who serve in the military do not, in general, attend Ivy League or other multi-billion dollar endowed schools, they need flexibility and therefore tend to enroll in community colleges and other schools who struggle to balance a bare-bones budget. This will work against military students, as colleges may think twice about letting them borrow or even admitting them.

   Once again, if the opposite of “pro” is “con,” the opposite of “progress” is “Congress.”

   — DS    Jun 30, 08:24 AM    #

4. If you have had any experience with veterans benefits and education I think you would agree it is “red tape” times ten. It seems that the current system has many “loopholes” and requirements and the aid is difficult for students to receive, and who receives the blame: college and universities financial aid staff. Most of what occurs is beyond the control of these schools.

   Requiring these schools to pay off the students debt is not a good idea. There will be far to many ‘rules’ for the student to qualify for the program. Some schools will not be able to.

   Why not use the “kiss” principal (keep it simple stupid). Do away with all the past legislation and say “anyone who serves their country in any capacity in any of the arm forces can receive a free college education at the school of their choice”

   Sounds simple, takes politics out of the picture. All a student has to do is get admitted and present their government voucher for free education, the schools get paid in full by the federal government.

   Don’t worry it is Monday and this is just a dream.

   — Jim    Jun 30, 08:28 AM    #

5. Is there a number for the proposed legislation in either house yet? Which senators or representatives support the proposal? This article lacks important details that would allow readers to follow up on the story.

   — Nicole    Jun 30, 09:21 AM    #

6. I like DS’s solution, #3. Only thing I would add is that they pay it out of their own pockets; not ours.

   — gl    Jun 30, 11:46 AM    #

7. Try this link to NAFSAA for a few more details on the propsed legislation and concerns. http://www.nasfaa.org/publications/2008/gvets062708.html

   Post #3: I don’t know if you ever used the GI Bill or not but while many veterans, reservists and eligible dependents do attend two- year schools many more do attend baccalaureate- and graduate-level schools on par with anything the “Ivy League” schools provide and usually get a better attitude and reception from the staff and faculty at these non-Ivy institutions. By the way many of those two-year students do transfer onto to four-year and graduate school.

   — CitizenShip    Jun 30, 11:53 AM    #

8. Thanks for the link. I performed a Thomas search (thomas.loc.gov) and the companion bill in the house is HR 2910. In the spirit of scholarly reference and prevention of unfounded panic, I very much wish the Chronicle would make it a standing policy to list the bill numbers when discussing legislation. This particular issue seems to be an oversight and can be easily corrected.
   On another note, I don’t think DS was making any prejudicial claim about veteran’s presence in quality four-year or graduate institutions (Note: quality does not equal high cost). I will say though that a lot of 4-year institutions put up unnecessary hurdles to students who transfer, including byzantine departmental graduation requirements and limited services. Colleges and Universities really do need to examine some of the non-financial factors that contribute to attrition of not only veterans (who are more likely to have credits from all over), but also other transfers (CC & 4 year). My first suggestion is, if a waiver is available, let people know about it. Don’t hide the process in the bottom drawer of your filing cabinet under “W”, believe me, there’s not much difference between SOC 405 – Classical Social Theory and SOCIO 407 – Sociology: Classical Theory.

   — JS    Jun 30, 12:15 PM    #

9. Defense contractors and oill companies should repay the student loans; they’re the one’s profiting from this debacle.

   — David    Jun 30, 12:19 PM    #

10. My point in posting #3 was definitely not intended as a reflection on the quality of students who serve in the military, it was about the flexibility they need that is better accommodated by community colleges. I’ve worked at 4-year schools and cc’s and have seen far more servicepersons/veterans at the cc sector. But more importantly, it’s the money…once again Congress sees the Harvards of the world and thinks that all colleges are sitting on mountains of cash. This would be a costly unfunded mandate that essentially punishes colleges for enrolling servicemen or women.

    — DS    Jun 30, 01:28 PM    #

11. As an addendum to my earlier comments, if the called-up student had any living expenses for the semester that were not covered by a Title IV or private loan, they should also be reimbursed. If the government is not willing to do any of these things, then the student should not be called up until his/her current semester is completed.

    — RC    Jun 30, 01:48 PM    #

12. Apparently, my initial comments did not get sent. Therefore, these should be read as if they preceded #10 above.

    It seems to me that if the military wants to take someone out of school, the respective military branch should make the soldier whole for having to forfeit the time and expense for giving up the opportunity to complete the semester and earn the credit. This approach should be applied to Title IV loans and any other loans for attendance at an accredited school. It should also apply to all living expenses incurred.
    Doesn’t Title IV forgive loans for students who have attended a school that goes belly up and for loans taken out for a semester that is cut short by a natural disaster (e.g., Katrina)?

    — RC    Jun 30, 01:56 PM    #

13. Thanks DS for the clarification.

    There is another aspect of this issue that has an effect on veterans/reservists taking out loans to cover expenses that are hasn’t been mentioned:

    How some schools calculate refunds of tuition and other expenses for withdrawn students.

    Many schools have refund policies that really hurt students called up for active duty (which can also be for natural disasters or other non-combat emergencies). Some schools have policies that refund little or no tuition even if classes have not begun. And for other expenses and fees – out of luck. Policies like this may be what initiated this legislation.

    Remember too that it is not only the military that can call a reservist out of school for activation. State governors did it all the time to deal with emergencies.

    — CitizenShip    Jun 30, 02:10 PM    #

14. All this is coming from the GWB Administration and their Congressional toadies isn’t it?
    Besides the Supremes, who among you voted for this smirking sweetheart and who will vote for his successor, our red, white and blue hero, John McCain?

    — AW    Jun 30, 02:37 PM    #

15. If you read the proposed legislation (S 1718 and HR 2910), you will learn that the three sponsoring Senators and Representative are Brown of Ohio, Salazar of Colorado and Davis of California, all Democrats. There are 70 co-sponsors of the Davis legislation who are also Democrats as well as a number of Republicans.

    While student loans are the topic mentioned in the Chronicle story, missing from the article here is the main purpose of the proposal:

    The legislation would amend the Servicemembers Civil Relief Act to require an institution of higher education, whenever a servicemember is called, activated, or ordered to military service and therefore withdraws or takes a leave of absence from such institution, to:

    (1) refund to the servicemember tuition and other fees paid for the portion of the program of education for which the servicemember did not receive academic credit after such withdrawal or leave; and

    (2) provide the servicemember an opportunity to reenroll at the institution with the same educational and academic status that the servicemember had when ordered to military service.

    — CitizenShip    Jun 30, 03:08 PM    #

16. If the government (meaning all of us) will not provide full tuition for members of the armed services (per #4), then the very least they/we should be doing is forgiving any loans forfeited by a call up, whether for Iraq, Katrina or the present overflowing Mississippi.

    I, too, wish The Chronicle would list bill numbers, etc, when discussing possible or pending legislation.

    — Barbara Kozi    Jun 30, 03:13 PM    #

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