Higher Education Inquirer

Thursday, March 27, 2025

Potential Title IV Disruption Catastrophic (Glen McGhee)

Impact of Department of Education Dismantlement on Higher Education Act Programs

On March 20, 2025, President Trump signed an executive order to begin dismantling the Department of Education, a move that threatens to create significant upheaval across higher education's federal support system. While the order cannot immediately eliminate the department without congressional approval, it has already resulted in substantial workforce reductions and signals major changes ahead for the administration of federal education programs 1.

Title IV: The Most Vulnerable and Consequential Program

Among all eight titles of the Higher Education Act (HEA), Title IV federal student aid programs would create the most severe upheaval for the higher education sector if destabilized through the Department of Education's dismantling. Title IV represents the foundation of federal financial support for higher education, administering approximately $111.6 billion in financial assistance to 9.8 million students in FY202211. This massive program encompasses Pell Grants, federal student loans, and work-study opportunities that directly enable student access and persistence.

Financial Impact Scale

The sheer financial magnitude of Title IV makes its disruption particularly consequential. In 2021 alone, 10.5 million students received $125 billion in federal student aid through the Department of Education15. Title IV's Office of Federal Student Aid received the largest departmental budget allocation - over $68 billion, with $20 billion promised for distribution during 20254. This represents the largest financial relationship between the federal government and higher education institutions.

Enrollment Consequences Already Evident

Even small disruptions to Title IV administration have already demonstrated severe enrollment impacts. Recent problems with the Free Application for Federal Student Aid (FAFSA) system implementation led to measurable enrollment declines:

43% of private institutions reported smaller freshman classes
27% noted fewer financial aid recipients
18% reported decreased racial or ethnic diversity in incoming students2

These enrollment impacts disproportionately affect disadvantaged student populations. The FAFSA completion rates dropped nearly 10%, showing how administrative dysfunction can directly reduce educational access2.

Complex Regulatory Framework

Title IV administration involves an extraordinarily complex regulatory structure that would be challenging to transfer or maintain during a departmental transition. The program includes more than 300 pages of regulations, with significant compliance requirements for institutions6. Recent rule changes have created new financial responsibility, administrative capability and certification requirements applicable to institutions participating in Title IV programs7.

Presidential Assurances vs. Implementation Reality

While President Trump has indicated that essential functions like Pell Grants, Title I funding, and programs for students with disabilities would be "fully maintained and redistributed to various other agencies and departments," the implementation details remain unclear1 8. The executive order instructs Education Secretary Linda McMahon to "undertake all necessary actions to facilitate the dissolution" while ensuring continuous provision of services8.

However, the Department's workforce has already been reduced from over 4,000 to approximately 2,000 employees through layoffs and voluntary resignations1 4. This reduction in administrative capacity raises serious questions about the continuity of Title IV program implementation.

Other HEA Titles: Significant but Less Catastrophic Impact

While all HEA titles would face disruption through departmental dismantling, Title IV's combination of massive funding scale, direct impact on enrollments, and regulatory complexity makes its destabilization particularly consequential.

Other HEA titles, while important, would not create the same level of immediate financial and enrollment chaos:

Title I: Provides general provisions and administrative requirements, but lacks direct funding mechanisms
Title II: Supports teacher preparation programs, but with significantly smaller funding scales
Title III: Provides institutional aid for minority-serving institutions, representing important but more targeted support
Titles V-VIII: Offer specialized program support for specific institutional types or educational priorities

Conclusion

The dismantling of the Department of Education threatens all federal higher education programs, but Title IV student aid programs represent the most consequential area for potential upheaval. The scale of financial support, direct impact on enrollment and access, complexity of administration, and early evidence from FAFSA disruptions all indicate that Title IV destabilization would produce the most severe consequences for higher education institutions and students.

While the administration has promised to maintain essential functions, the mechanisms for doing so remain unclear, and the significant reduction in departmental workforce suggests potential administrative challenges ahead. The higher education community must closely monitor this transition to ensure that critical student financial support systems remain functional during this unprecedented departmental restructuring.

Citations:

Rise to power of authoritarian states - Part 1 (International School History Teacher)

Structural factors refer to the context that makes the rise to power of an authoritarian state more likely. Authoritarian regimes are unusual in countries that are rich, socially stable and that have a tradition of constitutionally limited, civilian government.  If they do emerge in these sorts of countries, it is usually the result of a crisis, brought about by external factors such as war or international economic crisis.   As usual with history, the history teachers favorite acronym PESC is a good way to go about organizing these structural factors – PESC = the political, economic, social, and cultural conditions that encourage authoritarian rule.

Wednesday, March 26, 2025

Tufts University student detained. Protest follows. (WCVB Channel 5 Boston)

An international student from Tufts University has been detained. Rumeysa Ozturk, 30, was meeting friends for iftar, a meal that breaks a fast at sunset during Ramadan when she was arrested.

Video obtained by The Associated Press appears to show six people, their faces covered, taking away Ozturk’s phone as she yells and is handcuffed.

According to the Tufts Daily, "Rumeysa Ozturk, is a Turkish national and doctoral candidate in the Eliot-Pearson Department of Child Study and Human Development. Ozturk is a teaching fellow, works as a doctoral research assistant at Tufts’ Children’s Television Project and completed a master’s degree at Teachers College, Columbia University, as a Fulbright Scholar."

Ozturk co-wrote an op-ed in The Tufts Daily criticizing the university’s response to its community union Senate passing resolutions that demanded Tufts “acknowledge the Palestinian genocide,” disclose its investments and divest from companies with direct or indirect ties to Israel.

After the arrest, hundreds of Tufts students protested.

This arrest is consistent with Trump Administration efforts to intimidate and deport Muslim foreign students. Students from Cornell, Georgetown, Columbia University have also been detained.

A Planned Failure? The Dangerous Path to Privatizing Student Loans

In a move that has raised eyebrows across Washington and beyond, President Donald Trump recently announced a plan to transfer the U.S. Department of Education’s vast student loan portfolio—totaling a staggering $1.8 trillion—to the Small Business Administration (SBA). Ostensibly, the goal is to "reorganize" and streamline the management of federal student loans. But behind the curtain, some experts and insiders are questioning whether this bold move is merely the beginning of a much darker plan: privatization at the expense of millions of American borrowers.

The Alleged 'Rescue' of the Loan Portfolio

The White House has framed the transfer as a necessary step to relieve the Department of Education (ED) of a heavy burden, positioning the Small Business Administration as the new "caretaker" of the nation’s student debt. According to President Trump, the SBA—under the leadership of Kelly Loeffler—will now handle the $1.8 trillion student loan portfolio, while the Department of Education focuses on other key educational initiatives.

For some, the move seems like a fresh approach to a problem that has long plagued U.S. higher education: the overwhelming student debt crisis. However, a deeper look into the mechanics of the transfer suggests that this could be the first step toward a far more troubling goal: the dismantling of the federal student loan system and the privatization of debt, a shift that could harm millions of consumers in the process.

The SBA’s Inexperience with Student Loans

For starters, the SBA has no real experience with managing educational debt. Historically, the agency has focused on small business loans, a niche financial product entirely different from student loans. The SBA is not equipped to handle the complex structure of federal student loans, which include income-driven repayment plans, loan forgiveness programs, and myriad protections for borrowers struggling to repay their debt.

While the SBA does have experience guaranteeing loans, it has never managed a portfolio of this size or complexity. With the agency also facing a 43% workforce reduction, including 2,700 staff members, it seems highly unlikely that the SBA will be able to competently manage the student loan system—especially when 40% of these loans are already in default or behind on payments.

This raises an obvious question: is the SBA being set up to fail?

The Planned Failure

According to several former senior officials within the Department of Education and others close to the discussions, the transfer of the student loan portfolio to the SBA could very well be a deliberate failure. These sources suggest that the true purpose of the transfer is not to improve the system, but to destabilize it—creating a crisis that would ultimately justify selling off the loan portfolio to private companies. In other words, the apparent "failure" of the SBA to manage the loans could be the prelude to a much broader and more damaging shift.

“This is the classic playbook of the privatization agenda: create a crisis, then say the only solution is to sell off the asset to the private sector,” one former senior Education Department employee explained. “If the SBA fails to manage the portfolio, it will create a narrative that only the private sector can do it effectively, and that will pave the way for Wall Street to swoop in.”

This strategy mirrors similar efforts in other sectors, where privatization has often been sold as a solution to government inefficiency. In the case of student loans, the "failure" of the SBA to properly manage the portfolio could lead to a private sector takeover, where for-profit companies would be free to set the terms of repayment, charge higher interest rates, and strip away borrower protections—all at the expense of consumers.

The Consumer Cost

While the government may pocket the short-term profits from selling off the portfolio, it is borrowers who will feel the brunt of the consequences. Private companies, driven by the desire for profits, would have little incentive to offer the same borrower-friendly protections currently available under the federal student loan system.

The end of income-driven repayment options, the loss of loan forgiveness programs, and an end to the temporary moratorium on student loan payments could push millions of borrowers into even deeper financial distress. Higher interest rates, less favorable repayment terms, and a complete lack of support for struggling borrowers are all potential outcomes if the loans are sold to the private sector.

Moreover, the move could disproportionately affect low-income borrowers and those already in default, who would likely face harsher terms under a privatized system. For many, this could mean years—or even decades—of paying off debt that continues to balloon, with no hope of relief.

A Dangerous Precedent

If this plan succeeds, it will set a dangerous precedent. The government's involvement in student loans has, for decades, been a safety net for borrowers. The idea of privatizing this essential system could open the floodgates for more essential public services to be sold off to private corporations, with little regard for the public good.

“Once you give the private sector control over something as critical as education debt, it’s hard to see where it stops,” said another insider. “This is not just about student loans. It’s about how we view the role of government in providing public services.”

The Long-Term Fallout

In the long run, the privatization of student loans could exacerbate the country’s growing wealth inequality, widen the racial wealth gap, and place an insurmountable burden on future generations of borrowers. For many, student loans are not just a financial issue—they are a life issue, affecting everything from career prospects to the ability to buy a home or start a family. The sale of the loan portfolio could result in an economic landscape where the cost of education becomes a permanent burden on a generation, with few avenues for relief.

A Predatory Scheme?

The proposed transfer of the student loan portfolio to the SBA may appear to be an effort to reform the system, but closer inspection reveals a much darker agenda: one that seeks to create a crisis that will pave the way for the privatization of federal student loans. While the government may stand to gain in the short term, the long-term consequences for borrowers could be devastating.

In the end, the real price of this maneuver will be paid by consumers, who could face higher costs, fewer protections, and more financial instability. If this plan moves forward as expected, it will be a devastating blow to the millions of Americans who rely on the federal student loan system—a Pyrrhic victory that benefits private interests, but leaves consumers to bear the consequences.

In the quest for privatization, the true cost of this gamble may well be borne by those who can least afford it: the borrowers.

Tuesday, March 25, 2025

FACULTY UNIONS SUE TRUMP ADMIN: NO HALTING SCIENCE RESEARCH TO SUPPRESS SPEECH (American Federation of Teachers)

The faculty and national labor unions allege that the Trump administration improperly canceled Columbia University’s federal funding to compel speech restrictions on campus, damaging both vital scientific research and academic discourse

NEW YORK– The American Association of University Professors (AAUP) and the AFT today sued the Trump administration on behalf of their members for unlawfully cutting off $400 million in federal funding for crucial public health research to force Columbia University to surrender its academic independence. While the Trump administration has been slashing funding since its first days in office, this move represents a stunning new tactic: using cuts as a cudgel to coerce a private institution to adopt restrictive speech codes and allow government control over teaching and learning.

The plaintiffs, who represent members of Columbia University faculty in both the humanities and sciences, allege that this coercive tactic not only undermines academic independence, but stops vital scientific research that contributes to the health and prosperity of all Americans. The terminated grants supported research on urgent issues, including Alzheimer’s disease prevention, fetal health in pregnant women, and cancer research.

The Trump administration’s unprecedented demands, and threats of similar actions against 60 universities, have created instability and a deep chilling effect on college campuses across the country. Although the administration claims to be acting to combat antisemitism under its authority to prevent discrimination, it has completely disregarded the requirements of Title VI, the statute that provides it with that authority–requirements that exist to prevent the government from exercising too much unfettered control over funding recipients. According to the complaint, the cancellation of federal funds also violates the First Amendment, the separation of powers, and other constitutional provisions.

“The Trump administration’s threats and coercion at Columbia are part of a clear authoritarian playbook meant to crush academic freedom and critical research in American higher education. Faculty, students, and the American public will not stand for it. The repercussions extend far beyond the walls of the academy. Our constitutional rights, and the opportunity for our children and grandchildren to live in a democracy are on the line,” said Todd Wolfson, president of the AAUP.

“President Trump has taken a hatchet to American ingenuity, imagination and invention at Columbia to attack academic freedom and force compliance with his political views,” said AFT President Randi Weingarten. “Let’s be clear: the administration should tackle legitimate issues of discrimination. But this modern-day McCarthyism is not just an illegal attack on our nation’s deeply held free speech and due process rights, it creates a chilling effect that hinders the pursuit of knowledge—the core purpose of our colleges and universities. Today, we reject this bullying and resolve to challenge the administration’s edicts until they are rescinded.”

“We’re seeing university leadership across the country failing to take any action to counter the Trump administration’s unlawful assault on academic freedom,” said Reinhold Martin, president of Columbia-AAUP and professor of architecture. “As faculty, we don’t have the luxury of inaction. The integrity of civic discourse and the freedoms that form the basis of a democratic society are under attack. We have to stand up.”

The complaint alleges that the Trump administration’s broad punitive tactics are indicative of an attempt to consolidate power over higher education broadly. According to the complaint, the administration is simultaneously threatening other universities with similar punishment in order to chill dissent on specific topics and speech with which the administration disagrees. Trump administration officials have spoken publicly about their plans to “bankrupt these universities” if they don’t “play ball.”

Universities have historically been engines of innovation in critical fields like technology, national security, and medical treatments. Cuts to that research will ultimately harm the health, prosperity and security of all Americans.

“Columbia is the testing ground for the Trump administration’s tactic to force universities to yield to its control,” said Orion Danjuma, counsel at Protect Democracy. “We are bringing this lawsuit to protect higher education from unlawful government censorship and political repression.”

The lawsuit was filed in the Southern District of New York and names as defendants the government agencies that cut Columbia’s funding on March 7 and signed the March 13 letter to Columbia laying out the government's demands required to restore the funding, including the Department of Justice, Department of Education, Health and Human Services and General Services Administration. The plaintiffs are represented by Protect Democracy and Altshuler Berzon LLP.

The full complaint can be read here.

The Evolving Landscape of Student Lending: Fintech Disruption and Bank Adaptation (Glen McGhee)

The student loan market represents a significant segment of consumer lending in the United States, with approximately $1.7 trillion in outstanding debt. This market is undergoing profound transformation as financial technology companies challenge traditional banking institutions, offering innovative lending models and digital-first experiences. This report compares the current footprint of fintechs and banks in student lending and analyzes potential market shifts if federal loan guarantees were eliminated.

The student loan market continues to expand at a significant pace despite periodic concerns about sustainability. The private student loan sector alone was valued at $412.7 billion in 2023 and is projected to reach $980.8 billion by 2032, representing a compound annual growth rate of 10.1%15. Overall, the student loans market is growing at approximately 9.2% annually over the next five years7, indicating robust demand despite economic uncertainties and policy fluctuations.

Traditional banks maintain a significant but gradually diminishing presence in the student loan market. These institutions typically offer standardized loan products with competitive rates for students with established credit histories or qualified cosigners. Their underwriting processes tend to be more conservative than newer market entrants, focusing primarily on traditional creditworthiness metrics and income verification.

Among the major bank participants in student lending, Citizens Bank stands out for its nationwide offerings for undergraduate and graduate students, as well as parent loans. The bank distinguishes itself through its multiyear approval process, reducing the need for repeated hard credit inquiries for continuing students2. Other significant bank participants include PNC Bank, which offers specialized loans for health and medical professions, and Sallie Mae, a pioneer in private student lending that has evolved from its origins as a government-sponsored enterprise.

Financial technology companies have aggressively entered the student loan market, introducing innovations in product design, underwriting methodologies, and customer experience. These entrants typically operate with lower overhead costs than traditional banks and leverage alternative data sources for credit decisions, potentially expanding access to students who might not qualify under conventional underwriting standards.

SoFi represents one of the most prominent fintech lenders, distinguished by its no-fee structure and flexible repayment arrangements with fixed APRs ranging from 4.19% to 14.83%16. College Ave provides private student loans covering up to 100% of school-certified attendance costs with APRs ranging from 3.99% to 17.99%16. Ascent has gained market recognition for its non-cosigned loan options that use future income potential rather than current credit history as the primary underwriting criterion.

Marketplace platforms have emerged as important intermediaries in the student loan ecosystem. LendKey partners with credit unions and community banks, functioning as both a marketplace and loan servicer5. Credible allows borrowers to compare offers from multiple lenders through a single application and soft credit check, streamlining the shopping process for students and families5.

Based on the search results, the following represent key players in the current student loan market:

Citizens Bank - Offers multiyear approval and diverse loan options
PNC Bank - Specializes in healthcare profession loans and offers scholarship opportunities
Sallie Mae - Pioneer in student lending with undergraduate and graduate loan options
Discover - Provides comprehensive student loan offerings with competitive rates
Wells Fargo - Previously a major player but has exited the market
MEFA - Regional specialized educational lender
Education Loan Finance (ELFI) - The student loan division of SouthEast Bank
Custom Choice - Specialized private student loan provider

SoFi - Known for no-fee structure and comprehensive financial products
College Ave - Offers loans covering up to 100% of attendance costs
Earnest - Features borrower-friendly terms and competitive rates
Ascent - Specializes in non-cosigned loan alternatives
LendKey - Marketplace connecting borrowers with community banks and credit unions
Credible - Student loan comparison marketplace
MPower Financing - Focuses on international students
Juno - Group-based negotiation platform for better loan terms
Iowa Student Loan - Nonprofit state-based lender
EDvestinU - Nonprofit lender affiliated with New Hampshire Higher Education Loan Corporation
Stride Funding - Offers income share agreements and alternative financing models
CommonBond - Socially responsible student lender (not mentioned in results but a known market participant)

These institutions represent a mix of traditional financial services providers and newer, technology-focused entrants. The market continues to evolve with mergers, acquisitions, and strategic partnerships reshaping competitive dynamics.

The potential elimination of federal student loan guarantees would fundamentally alter the market landscape, likely causing significant contraction and restructuring. This change would transform both the size of the market and the nature of participating institutions.

Without federal guarantees, student lending would revert to pure risk-based lending principles, dramatically changing accessibility and terms. The current market structure exists largely because federal guarantees remove most default risk for lenders, enabling broader access to financing and more favorable terms than would otherwise be available.

A Reddit discussion highlighted this dynamic: "Making students loans not guaranteed and having it work like a real loan and with that allowing it to be bankruptible would seem like a good idea"10. However, this would mean loan approval would be "based on criteria such as the borrower's ability to repay within a reasonable time frame and their high school performance"10, fundamentally changing who could access education financing.

If federal guarantees disappeared, the market would likely undergo significant consolidation:

: Banks with substantial balance sheets and diverse revenue streams would have the greatest capacity to absorb increased lending risk. Among current participants, Citizens Bank, PNC Bank, and Discover would be best positioned to maintain student lending operations, though with substantially tightened criteria and higher rates.
: Only those fintechs with sophisticated risk assessment models, alternative revenue streams, or access to institutional capital would likely survive. SoFi, having diversified beyond student lending into banking, investing, and insurance, would be among the strongest contenders. Earnest, with its sophisticated approach to underwriting, and Ascent, which already specializes in future-earnings-based lending, might also persist.
: The market would likely shift toward income-based repayment models like those offered by Stride Funding, which ties repayment to future earnings rather than relying on traditional debt structures9. These models effectively shift some risk from borrowers to investors who bet on future earnings potential.

The student loan market would likely contract substantially from its current size, perhaps by 50-70%, as lenders would focus primarily on:

Students pursuing high-return degrees at prestigious institutions
Borrowers with exceptional credit profiles or financially strong cosigners
Fields of study with clear employment paths and strong salary prospects

The market might realistically shrink to 7-10 major players from the current diverse landscape. The following institutions would be most likely to maintain significant student lending operations:

Citizens Bank
PNC Bank
Discover
SoFi
Earnest
Ascent
Stride Funding or similar income-share agreement providers

Smaller regional banks, credit unions, and less-capitalized fintechs would likely exit the market entirely or dramatically reduce their student lending portfolios.

The removal of federal student loan guarantees would represent a fundamental restructuring of higher education financing in America. While it might address concerns about tuition inflation and excessive student debt, it would also significantly restrict educational access for many students, particularly those from lower and middle-income backgrounds.

Financial institutions with sophisticated risk assessment capabilities, substantial capital reserves, and diversified business models would be best positioned to remain in the market. The shift would likely accelerate innovation in alternative financing models, potentially leading to more alignment between educational costs and expected post-graduation outcomes.

For students, the changed landscape would require more careful consideration of educational investments, with greater emphasis on return-on-investment calculations for various fields of study and institutions. For higher education institutions, this shift would create strong pressure to demonstrate value and employment outcomes, potentially leading to significant changes in program offerings and pricing models.

This market transformation would ultimately test whether private financial markets alone can effectively finance broad access to higher education or whether some form of public support remains necessary to achieve societal goals of educational opportunity and economic mobility.