Well, more regulations on student loans.  This time the issue touches Parent PLUS loans.  To read more about the article, please click here.  When parents’ ability to borrow money is reduced, it will certainly affect demand for higher education services.  Meaning, students have to take more loans or colleges have to award more scholarships or financial aids so that the students are able to finish their program.  Consequently, any new regulations on student loans which may affect the amount of loans that borrowers can take may put more pressures on students’ ability to enroll for classes.  It then will decrease colleges’ ability to survive, especially for tuition-dependent colleges such as small private Liberal Arts Colleges or other for-profit institutions.

Please let us know what do you guy think?

We are pleased to see how the US public and people around the world responded to the Association of American Education Analytics’ new ideas to manage higher education more efficiently.  In its first anniversary, there are over 50K visitors to the AAEA’s website.  The Association is encouraged by the number of viewers and will continue conducting unbiased research and disseminate the information to the public.  This is the commitment that the AAEA has and the reason why the Association is established.  If we may reiterate, there are three main purposes why AAEA was established (1). To share our research to the general population, school decision makers such that college cost can be minimized and to serve the communities (2). To introduce new IRI paradigms, mindsets and tools as alternatives to what have been used and applied in the past in managing US colleges and (3). To raise money to help talented, but economically disadvantaged student to reach their dreams through education (please visit www.ghth.org to make a donation).

Thank you for your support!!

Given the massive amount of student loans accumulation in the US (more than $1.2 trillion), one can only predict that the regulator will do something about it.  As reported by the media, CFPB (Consumer Financial Protection Bureau) has conducted due diligence on student loans and on February 26, 2014, the Bureau filed a lawsuit against a for-profit institution.

The court rulling will have significant consequences not only for-profit institutions, but also for its sister institutions (not-for-profit).  Moreover, If the court finds any inapproprite policies, the questions would be what kind of consequences, either jail-time or monetary fines will be imposed to the institution or both?.  If it is jail-time, who will stay in the big house?  Would it be the School’s Board members, the management (what level, president and its cabinet members?) or both or all?

The Bureau also stated that its action serves as a warning to other for-profit institutions.  As the Association has said in many occasions, the root of the problem has something to do with college efficiency.  If the lawsuit has been filed against a for-profit entity, then it is also likely that on-going investigations on not-for-profit higher institutions are happening right now.  AAEA has tried to convey the message to the industry to control their spending and not to pass the inefficiency to the students by increasing the tuition.  If this business model and “old” paradigm worked in the past, it will not work in the new economy.  If colleges ignore the new reality, one only can expect that they, the colleges have to deal with more regulations in the future. 

Please let us know what do you guys think?

The Association has mentioned in many occasions that US colleges need to have data scientists to help navigating both the “new world of competition” and “the new world of regulation”.  However, there are only limited human resources with research and computer programming skills, the right background in statistics, econometrics, competitive strategies, managerial finance, accounting, education policy, managerial economics and knowledge of data integrity who can carry out these important tasks efficiently, timely and effectively.  Right at this moment there are over 100 open positions as can be seen at HigherEdJob.com.  Almost every day we heard the US media mentions, discusses and talks about unemployment.  This may not be true for folks that have the IRI-education analytics expertise and data scientist with education background.  AAEA is ready to help passing the knowledge to those who are serious about looking for new possibilities, new adventure, those who are so ready to embrace the changes.

Rarely did the American press openly admit how the regulator’s assessment on student loans are correct.  Part of the most recent article can be read here.  The AAEA has mentioned in many articles written based on statistical analyses that the national ecionomy may negatively get affected by the student loans.  The bottom line of the problems rest on colleges’ inefficiently in their operation.  In the past several months the Association has mentioned the source of such problems.  However, for whatever reasons, there are no real interest of US colleges to make self correction. Or perhaps, most of them assume that government will help, if bad thing happens.  The problem witll not get better in the future because some of them do not even know how to get out of the traps that they have set in the past.  Therefore, the US public just needs to wait until the buble occurs which may bring even worse consequences to the national economy compared to those of 2008 housing and financial crises.  For example, how many of the administrators are willing to get pay cut to make the tuiton more affordable?  Make things worse, most of the investment are directed toward fix assets (building …etc) and unbreakable labor contract (tanure system).

Please write us what do you guys think?

The Us public has seen again and again how higher education institutions’ administrators manage their respective institution. The following article from Newsobserver.com is another example that shows the interest of college administrators does not necessary in line with students’ interest. Rather on her or his own agenda. This is another reason, why the regulator needs to put more regulations to control such behaviors, especially policy and practices which mismanage public money.

More regulations are coming in 2014 and beyond which will make higher education in the US as one of the most regulated industries.  This regulation is a clear answer and is the response to public outcry of reckless college administrators’ pricing/tuition policies.  AAEA has published many research results which pointed to the need of putting the brakes on these try-and-error practices as well as from colleges’ spending sprees, operational inefficiency and reckless decisions.

Karen Weise of BloombergBusinessWeek reported on her January 2, 2014 article that “On Dec. 19, Senators Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.), and Dick Durbin (D-Ill.) introduced the Protect Student Borrowers Act of 2013, which puts colleges on the hook when students can’t keep up with their loans”.

Our most recent CAR published book shows and discusses the source of college inefficiencies and how these source can be minimized.

Dear AAEA members, friends and other interested parties:  The Association has finally completed and published the CAR book.  Please click here to read the table of contents.  The Association will mail the book for free (retail price almost $40.00) to the first ten members that request the book.  What you need to do is (1) Be a member and (2). Write an email request to harry.djunaidi@IRIntelligence.org.