The University of Iowa

New federal loan regulations could impact study abroad

April 5th, 2012

By Beth Bratsos, The Daily Iowan

A University of Iowa official said UI students won't likely feel the effects of new federal student-loan regulations that some experts fear are minimizing geographic options for studying abroad.

But other provisions governing summer semesters abroad may decrease the popularity of the programs at the UI.

John Rogers, UI assistant director of Study Abroad, said he has not yet seen UI students affected by the new U.S. Department of Education regulations that may require foreign universities to bar American students relying on financial aid because of costly new U.S. accounting standards.

"Most of the institutions we send our students to either have the capacity to distribute federal financial aid to our students or our students use a U.S.-based program provider," he said. "Most students who go to the United Kingdom go to large, mainstream British universities."

Yet Rogers said students may face problems with another new federal mandate taking effect this year requiring students studying abroad in the summer to be enrolled in at least six semester hours to qualify for financial aid.

"It's fairly common for summer programs to be fewer than six hours," he said. "We haven't seen a huge drop [in enrollment] yet, but it's still early in the game."

Of the 1,347 UI students who studied abroad last year, 36 percent were enrolled in summer programs, 41 percent in semester programs,16 percent in winter-session programs, and 5 percent on academic-year programs.

Rogers said students with significant amounts of financial aid ought to choose a semester program instead of a summer one.

"[Students] can use all of their financial aid and scholarships during the academic year," he said. "If they wait until summer, they won't have all of it to spend."

And even though Rogers said UI students have not been affected by the new standards in reporting, experts worry other universities will feel the cost of the new practices.

The new regulation requires all 330 foreign institutions housing American students to comply with U.S. standards when filing accounting paperwork, among other changes. As universities are required to keep track of records according to their own country's standards, the additional U.S.-approved conditions would likely be too expensive to meet for foreign institutions with lower American student enrollment, said Mark Darby, counselor for education at the Australian Embassy in Washington.

Darby said while some foreign institutions are predicting a $400,000 annual cost to adopt the new U.S. reporting requirements, the effect on schools with few American students is more concerning. In the last year, about one-third of Australian institutions stopped accepting American students who receive US government loans, he said.

"For many smaller institutions … they just don't have resources or resource capacity to do that," he said. "Unless you're a large university with a large number of Americans, it will be too costly to change."

He said that Australian officials had to make immediate decisions because of their unique academic year, but Canada, Spain, the UK, and Israel also have concerns about how to handle the new regulations.

Yet Brian Whalen, president and CEO of the Forum on Education Abroad, said the effect of the federal regulation changes on study abroad are "quite minimal at this point."

"[There has been] change in how aid can be applied for a full degree-seeking student involved in an overseas university," he said. "The biggest impact is being felt [by them]."