Forthcoming rules aimed at curbing student-loan defaults will not include a provision automatically disqualifying institutions with poor student-repayment records from participation in the program, Secretary of Education Lauro F. Cavazos said last week.
Testifying at two separate Congressional hearings on the federal education budget, Mr. Cavazos also voiced opposition to a proposal to tie student aid to participation in a national youth-service program.
Both ideas could hurt the disadvantaged, Mr. Cavazos warned.
It would be better for the department to “work with” institutions to determine why they have default problems and help solve them, he said, than to establish a mandatory cutoff, which could penalize schools serving low-income students.
Mr. Cavazos also said the Education Department was likely to propose sharing some of the financial risk of defaults with lenders, in order to encourage collection efforts.
The department last year withdrew controversial regulations proposed by Mr. Cavazos’ predecessor, William J. Bennett, that would have excluded institutions with student4default rates of more than 20 percent.
In doing so, ed officials asked for public comment on the issue. They are currently sifting through about 1,200 comments, and will publish revised regulations in the spring, the Secretary said.
Mr. Cavazos also made clear his reservations about the idea of requiring young people to complete a period of military or community service to qualify for federal student aid. But he stressed that he was not taking a “hard stand” against a plan put forward by Senator Sam Nunn, Democrat of Georgia, that would scrap current aid programs in favor of a service-based program.
“I think we all ought to serve our country, but tying that service to the education program causes me some concern about equity,” Mr. Cavazos said. He argued that only students whose parents could not afford to pay for college would have to serve.
“You could hit the very group you’re trying to help,” he said. Even students who intended to go on to college might lose their “momentum” after serving, he predicted, and decide to exercise the other option offered by Mr. Nunn’s proposal--buying a house with their service vouchers.
