Comment Federal Student Loans (Score 1) 541
There appears to be at least two inaccuracies in this article.
1) Defaulting on Federal Stafford loans do affect the school for a period of time. Schools who participate in Federal Student Aid (FSA) are beholding to a concept of the "Cohort Default Rate". The basic premise is this: The U.S. Department of Education (ED) monitors the number of loans that a school has in default relative to the total number of loans made to the school for a rolling three year period. If this ratio passes a certain point, ED begins applying an ever increasing set of penalties on the school. If the cohort default rate passes a certain point, the school loses its ability to issue FSA. Also, Federal Perkins Loans are subject to this as well, on top of the fact that schools partially fund Perkins loans with their own money.
More information can be gleaned here: http://ifap.ed.gov/DefaultManagement/CDRGuideMaster.html
2) There has been argument for at least the 13 years I worked as a contractor to ED that transcripts are school property. Mark Kantrowitz, noted FSA researcher and commentator, has posted an excellent article on his website describing the subject here: http://www.finaid.org/educators/withholdingtranscripts.phtml
If you read the Federal Education Rights and Privacy Act of 1974 (FERPA), there is one section of the regulations that may be useful as leverage in dealing with a case of withholding transcripts. Mark deals with this section in his article. If you are experiencing this issue, I highly suggest you read the article, as well as the reg itself and make your argument from there. I have semi-successfully made the argument on behalf of clients previously during my time as a contractor, so please note your mileage may vary. The larger schools may offer a compromise (which the reg allows) while the smaller schools may cave in due to how much it'll cost them to offer the compromise.
Good luck.
1) Defaulting on Federal Stafford loans do affect the school for a period of time. Schools who participate in Federal Student Aid (FSA) are beholding to a concept of the "Cohort Default Rate". The basic premise is this: The U.S. Department of Education (ED) monitors the number of loans that a school has in default relative to the total number of loans made to the school for a rolling three year period. If this ratio passes a certain point, ED begins applying an ever increasing set of penalties on the school. If the cohort default rate passes a certain point, the school loses its ability to issue FSA. Also, Federal Perkins Loans are subject to this as well, on top of the fact that schools partially fund Perkins loans with their own money.
More information can be gleaned here: http://ifap.ed.gov/DefaultManagement/CDRGuideMaster.html
2) There has been argument for at least the 13 years I worked as a contractor to ED that transcripts are school property. Mark Kantrowitz, noted FSA researcher and commentator, has posted an excellent article on his website describing the subject here: http://www.finaid.org/educators/withholdingtranscripts.phtml
If you read the Federal Education Rights and Privacy Act of 1974 (FERPA), there is one section of the regulations that may be useful as leverage in dealing with a case of withholding transcripts. Mark deals with this section in his article. If you are experiencing this issue, I highly suggest you read the article, as well as the reg itself and make your argument from there. I have semi-successfully made the argument on behalf of clients previously during my time as a contractor, so please note your mileage may vary. The larger schools may offer a compromise (which the reg allows) while the smaller schools may cave in due to how much it'll cost them to offer the compromise.
Good luck.