GOVERNMENT & POLITICS
http://chronicle.com/government
Despite a Settlement, Sallie Mae Still Plays Host to College Student-Aid Sites
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LVhi 6eg^a! as part of a $2-million settlement with New York’s attorney general, the nation’s largest student-loan
company, Sallie Mae, agreed to stop providing staff members for colleges’ financial-aid
offices and call centers at no cost to the institutions.
But one year later, Sallie Mae still plays host
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New York Attorney General
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POLITICAL NOTEBOOK
Lawsuit Says U. of Texas
Considered Race Illegally
A federal lawsuit filed last week accuses
the University of Texas at Austin of improperly considering an applicant’s race when
more-effective, race-neutral ways of achieving diversity were available.
The plaintiff, a white, 18-year-old applicant from Richmond, Tex., who was rejected
by the university, filed the suit with the backing of the Project on Fair Representation, a
Washington-based legal-defense fund that
opposes affirmative action.
Edward J. Blum, the group’s director, said
the student, Abigail Noel Fisher, was discriminated against because she is white. The lawsuit seeks to force the university to re-evalu-ate her application using race-neutral criteria
and to stop considering race and ethnicity in
undergraduate admissions decisions.
Since 1997, Texas law has guaranteed instate applicants who are in the top 10 percent
of their high school’s graduating class admission to any public university in the state. For
several years before that, universities in Texas were banned from considering race in admissions under a federal appeals-court ruling
known as Hopwood v. Texas.
That decision was superseded by the U.S.
Supreme Court’s 2003 ruling in Grutter v.
Bollinger, which gave colleges nationwide a
green light to resume using race in admissions decisions but attached some conditions.
One caveat held that colleges must first consider whether they could achieve the same results using race-neutral policies.
That is what Ms. Fisher’s lawsuit alleges
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that the University of Texas neglected to do
in 2005, when it resumed using race-con-scious admissions criteria, in addition to the
top-10-percent formula.
Patricia C. Ohlendorf, the university’s vice
president for legal affairs, said her office was
reviewing the complaint. “We believe that
our undergraduate admissions policies are
well administered and in compliance with
Supreme Court precedent and all other applicable law,” she said in a written statement.
—Katherine Mangan
Colleges Report Money Available
for Perkins Loans Is Shrinking
Across the country, colleges are reporting significant declines in the amount of
federal Perkins Loan money that they have
available to lend to students. The drop,
which is due to cuts in federal support and
a decline in the consolidation of student
loans, is expected to result in thousands of
students receiving smaller Perkins Loans—
or no loan at all—this year as compared
to last.
For college students, the timing could not
be worse, advocates of the Perkins program
say. The cuts come amid a credit crunch that
could make private student loans and home-equity loans harder to obtain this fall, particularly for borrowers with poor credit. Low-income students who lose out on a Perkins
Loan could struggle to make up the money
elsewhere, the advocates warn.
Created by Congress in 1958, the Perkins
Loan program provides low-interest loans
to financially needy students through a risk-
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sharing agreement between the federal government and colleges.
Iowa State University serves as an example
of how colleges are having to cut back. Last
year it gave its neediest students more than
$6-million in Perkins Loans. Next year it expects to award only half that, just over $3-
million. —Kelly Field
Credit Unions Want Benefit
for Offering Student Loans
As more and more private lenders stop
offering government-backed student loans,
credit unions—a previously quiet segment of
the banking industry—are stepping forward
to help out. In return, they would like some
help from Congress.
Although credit unions are nonprofit
banks, the institutions were forgotten last
September when Congress cut the subsidies
on federally guaranteed student loans and established one rate for for-profit lenders and a
more favorable rate for state-chartered nonprofit agencies.
A group of credit unions serving college
students in California, Texas, and Wisconsin
is seeking consideration, and their representatives were making plans for a Capitol Hill
lobbying trip this month to press for a change
that would make credit unions eligible for the
nonprofit rate.
“We’re trying to make some noise,” said
Michael K. Kim, vice president for student
services at the University of Southern California Credit Union, which last year provided
about 30 percent of all federally guaranteed
student loans at USC. —Paul Basken
