September 2, 2004

• New Vice Provost for Inclusion and Cross-Cultural Effectiveness Position Created for The University of Texas at Austin
• New Report Claims Student Loan Companies Have Profited From Program Congress Intended To End In 1993

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New Vice Provost for Inclusion and Cross-Cultural Effectiveness Position Created for The University of Texas at Austin

A new vice provost position at The University of Texas at Austin with the responsibility "to oversee and to improve progress in the development of a more diverse university" has been created by Dr. Larry R. Faulkner, president of the university.

Faulkner said the position of vice provost for inclusion and cross-cultural effectiveness would report to Provost Sheldon Ekland-Olson, who will begin a search for qualified candidates. The president's decision to create the new position was announced late Friday (Aug. 27) in a letter to members of the University Leadership Council, Faculty Council Executive Committee and Presidential Student Advisory Committee.

Faulkner said he is prepared to assign $500,000 toward incentive programs that the new vice provost will oversee in 2004-2005.

The appointment follows Faulkner's response to the Task Force on Racial Respect and Fairness last May in which he noted the need for a campus-level leadership position to develop a more diverse university.

The task force had recommended the creation of a vice presidential position. Faulkner acknowledged the need for "a structure that can provide for more consistent attention" to the initiative. He proposed the appointment of a "central officer" who would lead the efforts and suggested it could be a vice president, a vice provost or an associate to the president. Faulkner also noted in May that he would decide among the alternatives on the basis of further discussions during the summer.

"During the weeks since my response to the report of the Task Force on Racial Respect and Fairness, my belief that we need full-time leadership has been confirmed," Faulkner said in his letter. "I am very pleased to be taking these steps toward realizing it."

Faulkner's letter said he decided this officer should be a vice provost because this position "provides the best proximity to the areas where action can most benefit the university — in the recruitment of students, in the recruitment and development of faculty, and in curriculum."

The president said the new vice provost clearly must be a "hands-on" facilitator, actively involved with the individual officers and units who carry on the day-to-day business of the university, so proximity to the most critical business is important.

"While the largest part of that business lies within the provost's portfolio, other important activities, especially related to the recruitment and development of staff, lie in other vice presidential portfolios," Faulkner said. "Consequently, the new vice provost will chair the University Council on Inclusion and Cross-Cultural Effectiveness, whose members will be designees of the vice presidents. In my earlier response, I addressed the responsibilities of the council, which will provide a forum for the new vice provost to benefit relevant activities across the campus."

Faulkner said the new vice provost would have "ready access" to the president, the provost and the vice presidents and deans. This officer also would have resources available to sponsor beneficial new programs across the university and would report annually on progress to the leadership of the university and to the public. "The new vice provost position will allow us to pursue more aggressively our broad-based search for the best and brightest talent available among students, faculty and staff," said Ekland-Olson. "It will also help us further strengthen academic programs across campus. Taken together, these efforts better ensure that UT students will develop the skills, perspectives and experiences necessary to assume leadership roles in the world they will enter."

For more information contact: Robert D. Meckel, Office of Public Affairs, (512) 475-7847.

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New Report Claims Student Loan Companies Have Profited From Program Congress Intended To End In 1993

A provision in the federal Higher Education Act (HEA) that allows holders of student loans made through the Federal Family Education Loan Program (FFELP) that finance their loans through the issuance of tax-exempt bonds issued before 1993 to earn a guaranteed minimum interest rate of 9.5 percent has come under attack in a recently released report by The Institute for College Access and Success (www.TICAS.org). The report states that the provision added to the HEA as a part of the 1976 Tax Reform Act to encourage states to issue tax-exempt student loan bonds through nonprofit student loan authorities, which, in turn, use the proceeds to purchase student loans from private lenders, and, thereby encourage banks to make new loans to new students has, inadvertently, cost the federal government in excess of $6 billion in special allowance subsidy payments to these holders.

According to the report, using the provision (Section 438(b)(2)of the Higher Education Act), student loan secondary markets charge the federal government for additional payments beyond the interest that borrowers already pay them. U.S. taxpayers pick up the tab for as much as 6.13 percent interest on loans, giving the holders a total return of the guaranteed floor interest rate of 9.5 percent that is much higher than any other type of investment in today's economy (Treasury bills currently earn less than 2 percent). When the provision was added to the HEA, the extra interest was to be paid only on loans made with limited-issue tax-exempt bonds. But the Education Department has let companies grow those portfolios by serially refinancing those pre-1993 tax exempt bond issues rather than ending them as Congress intended in 1993.

"The regulators are holding the door open while these companies raid the U.S. Treasury," says Robert Shireman, director of TICAS. "The Secretary of Education had the authority to end this exploitation of taxpayers two years ago, and he has the authority today. We are calling on him to take immediate action, and to seek the return of the funds already paid."

"The Department of Education is spending money for nothing," says James Kvaal, a TICAS research scholar and coauthor of the study released by the group. "Millions of families are struggling with higher and higher tuition bills. Meanwhile, taxpayers are paying student loan companies a whopping, no-risk return of 9.5 percent. It's an outrage."

The secondary markets have stated on several occasions that they have, individually and through their national association, the Education Finance Council (EFC), brought this situation to the attention of the Education Department as far back as 1993 when the Administration and the Department attempted to "fix" the problem through an amendment to the 1993 Omnibus Budget Reconciliation Act that was intended to repeal the formula, but grandfather in pre-1993 tax-exempt bond issues. They maintain that they argued that the proposed language was too vague and would be used to increase profits, but their warnings went, and have gone, unheeded.

To view the full report go to www.ticas.org.

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For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100