Transcript of Argus Leader Editorial Board interview, held on April 28, with Jack Warner, executive director of the South Dakota Board of Regents:
EDITORIAL BOARD: Hopefully will give you an opportunity to speak to some areas that are of significant interest to us. We were actually just in our regular editorial board meeting and talking about the impact of the Pell Grant and what kind of an enormous impact that would have on college students just in South Dakota, not to mention 49 other states. I mean, it just gives you an idea of the stakes involved in this issue.
JACK WARNER: Well, I come most immediately from the state that Clayborn Pell represented, and I knew him, and I know his widow, and I know the commitment that he made to the program.
That’s certainly been the primary access program for low-income students. I can wax on this one because there’s a lot to how it became unsustainable fiscally in recent years. It’s tied up with these intrusive program integrity rules. I don’t know if you’ve gotten into that piece quite so much, but recently it came to the attention of Congress that there were abusive institutions out there – predatory institutions that were enrolling large numbers of students. They were divesting in their academic programs and
WARNER: For-profit, right. Mainly these were for-profit. That’s were the abuses were taking place. They were very aggressive.
They were taking their money and instead of putting it into the academic programs, they were putting it into marketing and sales and lobbying. So that’s where the money was going. It was a great profit-making business model, but it left very high default rates for students, and that triggered the feds interest in this. So they wanted to curb those abuses.
EB: So that’s where it started. I didn’t realize that.
WARNER: But, it’s related to Pell because the same process that caused – inside of that there were people they were hiring on commission to get students enrolled. And they were very good about sitting down with students and teaching them how to fill out the financial aid form and how to get Pell in addition to the direct lending aid. So that spiked up the Pell obligations at the same time as it was spiking the default rates for the direct lending.