Truth in Educational Lending

Education Corporation of America is a private educational establishment that is required to receive no more than ten percent of its income from Title IV funds (Pell grant, subsidized loan, unsubsidized loan, etc.) This is because recently the United States House of Representatives Committee on Education and the Workforce created what is referred to as the “90/10 rule.” It was intended to make sure that expensive private colleges weren’t relying entirely on taxpayer dollars to fund their students. This in itself is a great step in the right direction, but this legislation has created its own set of problems.

The “ten money” that is not considered Title IV can come from only a few sources like non-Title IV loans, outside scholarships, and student payments. This has resulted in students being uninformed or misinformed about their Title IV requirements. According to federal regulation, a student must sit 60.01% of the total class before withdrawal in order to receive 100% funding. In addition, if a Pell grant is requested but not received before a withdrawal is complete then the school is required to send it back. Many students are not ardently informed of these policies, but instead expected to “read the fine print.” If a student withdraws after tuition is charged, but before funding has been fully earned, then they are responsible for the remaining balance.

This misrepresentation has resulted in overwhelming balances for many students who have had to withdraw early for personal reasons. This is money that they are required to pay “out of pocket” i.e. “ten money.” For students trying to better themselves by getting an education so they can find gainful employment, this can be a particular burden. This is especially unfortunate as attaining gainful employment is a primary reason to attend college in the first place. It has become clear that while the “90/10” regulation is a great stride forward, it cannot stand on its own because has encouraged deceptive lending practices.

The Credit Card Act and Truth in Lending Act were important legislation that required credit card companies and lenders to have higher standards and meet specific requirements. This helped to eliminate many of the unfair and deceptive practices that were destroying the lives and credit of so many Americans. Now we need to stand together and encourage higher education institutions like Education Corporation of America to set in motion a system of accountability that would require its financial planning officers to be transparent with every student about their funding, expected loan payments after graduation, and credit transferability.

Please sign my petition today asking Education Corporation of America to require each financial planner to explain, and each student sign a clearly written “plain English” document with these details before they are enrolled or charged tuition.