Higher Edvice

By Christian Haggerty, guest blogger from Quinnipiac University  

In the web based world in which we now live, internet fraud has become an unfortunate reality.  This brand of criminal has become more prevalent in federal Financial Aid scams since 2005, due to change in legislation meant to adapt to increasing online studentship.  Since this time, there have been 215 individual convictions from 42 different fraud rings that have been order to pay $7.5 million dollars in fines and restitutions.

These numbers represent a small percentage of the problem however, and authorities are having a hard time investigating the booming number of cases.  A report prepared by The Department of Education’s Office of the Inspection General explains, “Because of the sheer volume of referrals, finite resources and other external limitations, we cannot investigate all of the referrals we receive concerning distance-education fraud rings.”

The Department of Education is encouraging individual colleges to take safety measures to avoid such cases.  Precautions include identifying groups of students who live outside the school’s normal area of coverage, as well as withholding financial aid disbursements for a longer period of time to ensure student validity can decrease fraud opportunities.   

Secretary of Education Arne Duncan has committed to work with Congress in order to, “…ensure we have all the tools we need to prevent criminal elements from defrauding federal student-aid dollars.”

The need for such security has increased in general, ranging from higher education institutions to companies and organizations.  Opportunities in cyber-security employment are expected to increase through 2018.  

Considering the overwhelmed state of the federal government in terms of investigating such cases, perhaps one of the ways  to combat this breed of fraud is education.  A large amount of awareness for cyber-security has already surfaced with the rise of the internet. 

For example, University of Virginia, Quinnipiac University, Ithaca College, University of North Carolina, and Georgetown are just some of the schools and varying organizations involved with the National Cyber Security Awareness Month.  This annual program runs every year in October and is sponsored by the National Cyber Security Alliance, and is designed to educate and promote awareness in the field of cyber-security. 

Additionally, New York University Polytechnic Institute has sponsored their Annual Cyber Awareness Week for eight years.  This includes a competition amongst students from numerous countries in varying fields of cyber-security.  Schools such as Carnegie Mellon University, Columbia University, MIT, and Stanford University were represented this past year.  These talented students took part in challenges that tested their knowledge of the subject and ability to be innovative.

Additionally, companies in the higher education industry, such as Higher One, sometimes work with authorities “behind the scenes” to assist in their investigations pertaining to fraud. Programs such as these combined with the efforts of government and individual institutions are crucial in deterring future escalations in online fraud and ensuring internet security.

We value all opportunities to listen, share, and collaborate together with you. Earlier this month, we held the Higher One Users Group conference (HUG) and the experience and time spent with clients was invaluable. At the conference, a few of you mentioned that it seems impossible not to notice the significant changes in the financial services industry.  A lively discussion followed and some of you suggested you would appreciate more information on this topic and so I would like to share some thoughts.

Recently, the news media has been reporting on the rising costs of consumer banking, as the nation’s largest banks boldly and unapologetically raise fees on checking accounts and related services. While many of these banks point to recent regulatory changes as the cause of new fees, I believe this is an over-simplified explanation of much deeper change.

For many years-decades in fact, customers of traditional banks got used to the idea of “free checking.”  While it was not costless for traditional banks to provide checking account services, most traditional banks were content to subsidize the checking account with revenues they earned from other services like credit cards and installment loans.

Over the last few years, changes in the economic and regulatory environments have limited the revenues traditional banks may earn on credit cards and other loan products. Yet, little has materially changed in the way these banks provide deposit services for consumers. Most notably, these same banks are saddled with massive branch networks and the associated cost structure.

The CEO of one of the largest banks in America noted publicly that his organization spends more than $300 per year to support each basic consumer checking account. And, in reaction to some of the regulatory changes, this same CEO was famously quoted in The New York Times saying, “If you’re a restaurant and you can’t charge for the soda, you’re going to charge more for the burger.”

Today, as we have for the last ten years, we’re taking a different approach at Higher One. We are enabling basic banking services in nontraditional ways for millions of college students. I can proudly say that since our founding, we have offered students a straightforward, no-nonsense banking experience. We power a full-featured optional checking account through our bank partner that millions of students find accessible, relevant and valuable; many students in fact use our services for free.

We can do this because, at Higher One, everyone is focused on efficiency. For us, it’s not enough that we have eliminated the costs of sprawling branch networks, massive marketing budgets and the bureaucracies of traditional banks. We’re always looking for new, less expensive ways to deliver quality services for you and your students. 

Most importantly, through our bank partner, we continue to offer the OneAccount checking account with no monthly fee and no minimum balance requirement and we remain committed to offering the OneAccount as an option for any college student, regardless of credit or financial history.

We also know that students value transparency and choice and that they often have enough real-world experience to make smart decisions when given proper information. We have built our service around this reality with great success. The open communication surrounding our checking account’s fee schedule for optional services (anyone can access it in one click on several websites) can invite scrutiny. It even makes some uncomfortable, as people are not accustomed to financial institutions being so open on the subject of fees. Our goal is for our customers to understand the choices and make the one that’s best for them.

We are passionate about serving you with High Touch Service®. Our OneDisburse® Refund Management® funds disbursement service is cost-free for all students and is predicated on choice. For those students that choose the OneAccount, it’s a great option and we appreciate how important it is for us to continually offer a significant value for students.

Thank you for your continued support.
 

Dean Hatton
President & CEO

Discussions surrounding the 2012 budget are creating a stir within the higher education community, as the White House and the House debate the fate of the Pell Grant Program.  Pell Grants are need-based grants, which have  become significantly more popular since 2008 when factors such as increased college enrollment and the economic downturn caused more students to seek federal financial assistance.  

The House has proposed reducing the maximum amount of the Pell Grant from $5,550 to $4,705, cutting billions from agencies that support academic research and ending funding for several student aid programs including AmeriCorps, a successful program created by Bill Clinton in 1993. The President has outlined  cuts that will end a three-year experiment allowing students to qualify for two Pell Grants in a calendar year, allowing for college attendance year-round and a maximum receipt of $11,000 annually. 

According to a recent article in Inside Higher Ed, “Maximum Pell, at All Costs”, Education Secretary Arne Duncan states that there has been no evidence to support that “two Pells” a year (to cover summer studies) “accelerate college completion time.”  In addition, Duncan notes that the program has been ten times costlier than anticipated and is therefore “unsustainable”.   California Community College officials counter by pointing to data that supports the “two Pell” program:  “about 23,000 students at the system’s 112 colleges had received a second Pell Grant in the 2009-10 academic year,…these students—more than half of whom are Hispanic, black, or Asian—had higher grade point averages and number of earned credits than did other full-time students who did not receive Pell Grants.”

In addition to the undergraduate students who receive Pell Grants, graduate students will also lose the benefit of having the federal government pay the interest on student loans while they are in graduate school.  Jason Delisle, a budget analyst at the New America Foundation, notes that, “The President’s proposal would end this benefit for graduate students arguing that it does not encourage students to attend graduate school, is not well-targeted to borrowers who need extra repayment help, and is unnecessary because of other loan repayment and forgiveness benefits…are the policy’s weaknesses only applicable to graduate students?”

Ultimately, difficult decisions and reductions in spending on Pell Grants and other federal education programming are being proposed on both sides of the aisle.  What is the buzz on your campus?

As tuitions rise at public and private four year colleges and increased unemployment creates an influx of non-traditional students returning to the workforce, community colleges nationwide are experiencing growth and gaining national attention. Currently community colleges serve almost half of US undergrads. 

In the fall of 2008, community colleges enrolled 44% of all undergrads (7.3 million) according to a recent article in Inside Higher Ed, “Community Colleges Push Back”.  Community colleges have become important hubs of community life as they offer noncredit programs that build on life skills and general interests.  Additionally, there is increased engagement of high school students in dual enrollment programs where students gain valuable preparation for college at courses offered through their community college.

With the national education climate shifting, community college systems have been the focus of increased media attention and government initiatives.   This means that more of the people we interact with are community college students and the school administrators who understand their unique challenges and perspectives.

In addition to funding, community colleges are more than ever getting the lion’s share of federal attention. This Fall marked the first ever White House Summit on Community Colleges, where three new initiatives designed to bolster efforts nationally were announced.   President Obama’s goal of graduating more than five million students from community colleges over the next 10 years will be achieved with support from the following three areas:

   *An initiative to promote industry partnerships with community colleges called Skills for America’s Future;

   *A $34.8 million grant from the Bill and Melinda Gates Foundation earmarked for community colleges; and

   *A $1 million Aspen Institute prize (annually) for the community college that demonstrates excellence in higher education.

This means that we must become ever more aware of how to develop best practices that are appropriate for community college students and systems, particularly as they continue to evolve in the national debate about higher education.

How will the evolving focus on community colleges affect you and your school?

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We are excited to expand our discussion to the social networking world and want you to join in! If you’re a college or university administrator, or share an interest in higher education, we hope this will provide another channel for you to participate in an ongoing dialogue about student customer service, financial literacy and efficiency. Follow us at @HigherEdvice, or click the link below: