European Stars and Stripes (Newspaper) - May 29, 1989, Darmstadt, Hesse                                Monday May 29, 1989 the stars and stripes Page 9 education news . To get Tough on schools loan defaults Washington a with student loan defaults approaching $2 billion the education department is ready to tighten the screws on schools turning out More than their share of delinquent borrowers. New regulations due by month s end. Target what Many consider to be the Crux of the problem profit making vocational schools that survive primarily on student financial Aid and have a loan default rate three times the National average of 12 percent. These private schools train people in everything from cosmetology and truck driving to business and commercial Art. Although their students receive Only about a Quarter of All federally guaranteed Loans such schools account for 40 percent of All defaulted loan  regulations from education Secretary Lauro Cavazos will prescribe a series of increasingly Tough actions against schools showing unacceptable default Rales with those above 35 or 40 percent in line for the most stringent treatment. Former education Secretary William Bennett favored a tougher plan for automatic proceedings to limit suspend or terminate participation by schools with default rates above 20 percent. Some 2,354 institutions More than half of them profit making vocational schools fall into that category. Education department officials citing administrative problems with the Bennett plan said the graduated Cavazos approach is actually stronger Medicine. I can assure you that More of the shoddy schools with default problems will feel More pain sooner under what Lauro Cavazos is doing than they would have under the Bennett proposal said Deputy undersecretary Charles Kolb. Stories of student exploitation and loan abuse by unscrupulous Trade school operators have been ram Pant for years with students routinely depicted As Vic Tims of Shady recruiting techniques and shoddy Educa Tion. Witnesses at congressional hearings have described students As incapable of doing the course work. Low is illiteracy or Little knowledge of English were cited As problems. Those capable of learning sometimes receive Little training in the skills they signed up to study. Students often drop out of a program with nothing to show for their efforts except a debt of $2,500 or More. Even graduates have found they Lack the skills they need to compete in the Job Market. Proprietary school associations protest that their members arc being unjustly tainted by a few bad apples. However they Are moving to tighten accreditation procedures upgrade admissions standards and promote loan default management plans. Department officials have contended that High de fault rates arc a sign of bad school management. Ca reer school executives responding to the charge said the rates reflect that Many of their institutions serve poor Urban academically risky students As Well As a Lack of Diligence on the part of outside loan collectors. You can have a High default rate and a Superb school said Stephen Blair president of the National association of Trade and technical schools and a for Mer loan program official at the education depart ment. Another proprietary group the association of inde pendent colleges and schools argued that if just one at risk student succeeded because of a guaranteed Stu Dent loan the Long term savings to society would cover the Cost of 65 defaults. Some 4.4 million students borrowed nearly $12 Bil lion in guaranteed Loans last year to pursue Post secon Dary education at colleges universities and private Ca reer schools. Defaults last year totalled $1.6 billion nearly half the annual Federal Cost of the program. The default figure is expected to reach $1.8 billion this year and Rise even higher after that. Taxpayers Are not the Only ones shelling out to cover defaults lenders arc becoming vulnerable As Well. The most expensive foul up occurred earlier this year in California when Federal guarantees on loan Worth $1.4 billion were voided by a loan servicing company s failure to follow proper collection proce dures. Nine major . And foreign Banks sued last month in an attempt to make the loan trustee the Bank of America take responsibility for their losses which could reach $650 million. In addition to tougher measures on schools with soaring default rates officials said the department combination of new rules administrative actions and legislative proposals May include pro rata refunds to victimized students. Disclosure of the track records of vocational schools including completion and Job placement rates to inform prospective students promote Competition and Alert the department to problem schools. Mandatory loan counselling for All first time Stu Dent borrowers. More stringent requirements to determine if Stu dents without High school diplomas or their equivalent who Are permitted to borrow Money for some programs can truly Benefit from the course work. Some Way to curb unethical recruitment practices. B  Davo  Tony Quintana 16, a Sophomore at Lajes High school in the azores brushes a protective coating on a slum Board which is a Type of mini surf Board. He and other students designed and built it during their Industrial arts class. Tony is the son of senior master ski. Bill and Delia Quintana. Ruling could mean housing benefits for All Transfer teachers by William j. Bartma Washington Bureau Washington an arbitrator s ruling has raised Hopes among Union officials that All teachers who Transfer with in the military s overseas school system will soon receive housing and travel benefits. The decision by arbitrator Peter Flo Rey comes just weeks after department of defense dependent schools officials and representatives from the overseas education association worked out an agreement giving locally hired teachers housing and travel benefits if they trans Fer to another school in the system begin Ning next year. But the overseas federation of teach ers a competing Union that had criticized the sea agreement As a sellout to teachers who already have transferred pursued litigation on behalf of two locally hired teachers who were denied the benefits. In a decision dated May 3, Florey ruled that the two Keith Groetch and Maria Gonzalez were entitled to the allowances retroactive to their transfers last year. Growl he and Gonzales work in Italy having transferred from England and Japan. School system officials argued that the two elementary schoolteachers were ineligible for the allowances be cause they transferred voluntarily. Florey in his opinion cited the Poten tial abuse of the Transfer system by management. He especially noted the exis tence of involuntary transfers calling them bayonets lurking in the shadows of the Overall Transfer system. Paul Wolf the school system s chief of employee relations said school system officials remain undecided whether to Appeal the ruling to the Federal labor relations authority. The school system has until june 2 to decide. Under the agreement Between the school system and the sea locally hired teachers who Transfer receive transportation to the United states every two years and a housing allowance beginning with the 1990-91 school year. Oft european director Ernie sch Mann said Florey s decision pretty Well voids that  Lehmann said 23 teachers including Gro the and Gonzales would have been deprived of travel and housing allow ances until 1990 at the earliest if his Union had not pursued the allowances Issue. Wolf said the agreement with the sea remains in effect. But sea president Jack Rollins said his Union needs to re search the ramifications of the Florey  the ruling opens the door for Al teachers who Transfer to claim the allow ances which Range from about $8,000 Toas much As $25,000 in High Cost areas. In the growl he and Gonzales decision Florey noted that it is reasonable to As sume that the expense of the allowances in years of a declining Dollar must have skyrocketed and that the two cases reflect the concern of Dodds about the budgetary Impact of its Transfer  since 1971, teachers hired overseas Many of them spouses of Servic Mcm Bers or government employees did not receive living quarters allowances and temporary living allowances. Gro the a music teacher who was hired in England in 1975 and was As signed to Vicenza elementary in 1988, initially was assured he would receive the allowances upon Transfer. Gonzales a second Grade teacher in Japan where she was hired in 1980 when her husband was serving with the Navy was assured by her superiors that she would also receive the allowances. On the strength of this guarantee she participated in the Transfer Florey said