The Department of Education continued its commitment to postsecondary schools and students today with an announcement that it is providing institutions with guidance on tuition-free trial periods, which give students the chance to see if a program is right for them before they commit financially. In addition, the Department is also announcing plans to establish and conduct a pilot program on lower loan limits.
“Our letter to institutions offers helpful information as they develop courses for these short trial periods,” Secretary of Education Arne Duncan said. “We think trial periods provide an excellent opportunity for students to try out a program before they become fully invested, and we want to make sure students clearly understand their financial obligations before they continue the program as a regular student.”
Last week, the Department released its final gainful employment regulations with the goal of improving occupational programs, many of which are offered at for-profit institutions. The regulations are expected to help students ensure the value of their educational investment at thousands of programs across the country. Today’s steps will give these schools new tools to help them raise their performance to better serve students.
Free Trial Periods
Some schools are offering, or wish to offer, opportunities for a student to attend a program for a short period of time without being charged tuition or fees – unless and until that student wishes to continue the program beyond that initial trial period. This allows the student the chance to try a course before making a financial commitment by fully enrolling in the program.
To help institutions create these programs in ways that comply with the federal student aid rules, and to ensure students receive fair and consistent treatment, the Department is issuing a letter to schools to describe trial periods and explain how federal student aid eligibility will work. If a student continues a program beyond the trial period, he or she would become responsible for program charges, including charges that were incurred during the trial period. At that point, the student would, if otherwise eligible, also be able to receive federal student aid. Because the charges incurred during the trial period would count toward the overall program cost, a student could receive Title IV federal student aid funds for the trial period, once the student decided to continue in the program. However, a student who chose not to continue past the trial period end date would not be responsible for any institutional charges and would not be eligible to receive federal student aid.
Institutions are expected to provide clear information to students about the trial period and ensure that students are aware they are not eligible for Title IV program funds unless and until the institution admits the student as a regular student after the trial period. The institution must also make certain that students have the necessary books and other materials they need to succeed during the trial period, and it is expected that schools will only charge a nominal fee, such as an application fee, for students to participate.
For a copy of the letter offering guidance on trial programs, please visit: http://www.ifap.ed.gov/dpcletters/GEN1112.html.
Pilot Project to Reduce Debt Burdens
The Department is also announcing that within the next few weeks it plans to post a notice inviting postsecondary institutions to participate in new experiments, which are authorized under the Higher Education Act. These pilot programs will allow selected schools to test alternative methods of administering federal student aid by providing waivers for specific student aid requirements that are required by law. The Department’s goal is to learn ways to both improve services to students as well as to free institutions and students from administrative burdens while maintaining or increasing the integrity of federal student aid programs.
Each pilot program will focus on a different statutory or regulatory provision that is required for an institution to participate in Title IV federal student aid programs. Documented and sustained improvements as a result of the experiment would provide a rationale for policymakers to consider changing the statutory or regulatory requirement.
One experiment is intended to help participating schools reduce their students’ debt burden. It would allow participating institutions to develop and implement policies that would allow them to award a category of students less than the students’ allowed Direct Loan eligibility. Generally, all students are eligible to borrow up to the federal loan limit. Current law allows institutions to reduce loan amounts for individual students on a case-by-case basis but prohibits reductions for a group of students. Some argue this restriction results in unnecessary borrowing by students, especially students attending low-cost institutions like community colleges who have few expenses outside of school. Those in the for-profit sector argue that current loan limits force them to raise tuition and fees in order to meet their 90-10 ratio, which requires for-profit schools to receive at least 10 percent of their revenue from sources outside of Title IV aid. The Department will look at outcomes from this pilot program, including access, diversity, completion and affordability, to determine the appropriateness of giving institutions more discretion over the amount their students borrow.
More information about the experimental projects will be released soon.