Category Archives: Consumer protection

Consumer protection

The Bureaucratic Nightmare of Hospital Billing

by James A. Bacon

It’s not easy going through life with Parkinson’s Disease, afflicted by tremors, stiffness, fumbling hands, and difficulty walking. Carrying on becomes a real challenge when you add debilitating rounds of chemotherapy. That’s the predicament my old friend Lisbeth finds herself in these days: fighting off two terrible diseases at once.

As you can imagine, the last thing Lisbeth needs as she’s trying to keep it all together is to get into a billing quarrel with her hospital. Most people in her condition would be too exhausted to study their hospital bills and spot the errors, much less to contend with an unresponsive hospital bureaucracy to get her money back. Most people would just let it slide. But Lisbeth isn’t like most people. She’s a crusader at heart, and her maladies have not conquered her spirit.

Lisbeth knows I blog about health care from time to time, and she approached me to tell her story. She laid copies of bills, correspondence and her  contemporaneous notes before me and walked me through her healthcare hell. Compared to tales of medical malpractice like amputating the wrong foot or contracting fatal infections in the hospital, this was tame stuff. What struck me, however, was that her complaints, though banal, are likely endemic in the healthcare system. Continue reading

How No Regulation Toasted Vaping

By Peter Galuszka

There’s a mighty disconnect between being innovative in developing new products and putting the buying public in danger. We are often lectured about the benefits brought by industrial creativity unfettered by regulation on this blog and elsewhere but that isn’t always the case.

In fact, doing so without meaningful regulation can spell big disaster for both the public and corporations. The case in point: vaping.

About a decade ago, tinkerers in Asia came up with a pipe-like, vapor device that could give the user an addictive kick of nicotine mixed in a soup of vegetable glycerin, propylene glycol and any number of hundreds of flavors.

In a few short years, vaping grew with mostly-Asian-made devices to head-shop-like outlets typically located in chic-chic shopping districts or strip malls, some with the motif of 50-year-old head shops with lots of the art of psychedelic or the heavy metal era.

Obviously aimed at young vapers, flavors galore were added. Here’s one of them pitched by a vaping shop I visited for a news story:

“If you gaze at the stars long enough, you might get a glimpse of the proverbial “pie in the sky.” Reward yourself here on Earth, instead, by trying this incredibly delicious toasted coconut cream flavor. The buttery baked piecrust and the sweet vanilla with coconut filling are enough to make you feel like you’ve tasted heaven!”

Continue reading

Die, Robocallers, Die!

Attorney General Mark R. Herring has filed suit against two Roanoke-based telemarketing companies, charging them with illegal robocalling and deceptive sales practices. The complaint alleges that Roanoker Bryant Cass and his companies, Aventis, Inc., and Skyline Metrics, LLC, made 586,870 unsolicited robocalls nationwide between 2014 and 2017, pitching car-selling services to people who listed cars for sale on Craiglist, Autotrader.com and other sites.

“While robocalls are extremely annoying, they can also be dangerous and could potentially scam Virginians out of hundreds if not thousands of dollars,” said Herring in a press release. “My team and I will continue to do everything we can to protect consumers and shut illegal robocall operations like this one down.”

Bacon’s bottom line: I’m not a fan of Herring, but he’s got my full support on this one. As punishment, $500-per-call fines are inadequate. Cass should be confined to a cell and forced to endure his 586,870 robocall sales pitches through the rest of his natural life. And if there were a way to pump the robocalls into hell, I’d be for that, too.

Long-Term Care: A Great Bet If Made Long Ago

It is just like your econ professor told you – insurance is nothing but a bet.  It is a bet you often don’t want to win, but in one field you had a great chance of winning simply by hanging around and continuing to breathe.  That field is (or at least was) long-term care coverage.

Two top executives from major insurers told the State Corporation Commission last week just how badly their companies calculated the risk on long-term care decades ago.  They were seeking to explain the major premium increases their companies are seeking here in Virginia and all around the country in a proceeding previewed (here) in March on Bacon’s RebellionContinue reading

Cuccinelli to North Carolina on Electricity Regulation – Avoid Virginia’s Mistakes

The Cooch is back. Former Virginia Attorney General Ken Cuccinelli penned an op-ed for the Wilmington, North Carolina based Star News opposing Duke Energy’s proposed changes to electrical regulation.  The title of the opinion piece is, “N.C. should block this Duke Energy power grab”.  Cuccinelli’s biggest issue with the pending regulation is extending the period of time between utility rate cases.  The editorial board of the Star News agrees. Cuccinelli writes:

“Key provisions to extend the period of time between utility company rate cases are embedded within N.C. Senate Bill 559, being debated at the N.C. General Assembly. Similar provisions hurt Virginia customers, and will hurt North Carolina customers, too.”

Continue reading

Promoting Financial Literacy

Here’s a government initiative I like. The City of Richmond’s Treasurer’s Office is holding its first Financial Literacy Fair this Friday. States the press release:

The purpose of this fair is to empower the citizens of Richmond to take more control of their finances and begin the initial steps needed to build personal wealth. The mission of the Richmond City Treasurer’s Office is to inspire, encourage and pursue the high possibilities of potential in others through the elimination of financial barriers by taking “Small Steps for Big Change.” This literacy fair is one step toward big change in the lives of our Richmond residents.

The fair will hold workshops such as Banking 101, Budgeting and Saving, Balling with Budget and Credit. Financial counselors will be onsite.

Bacon’s bottom line: One reason — I’m not saying it’s the main reason, but it’s a contributing factor — that people fall into the poverty trap is that they often make poor financial decisions. The literacy affair addresses a root cause of poverty. Let’s hope it gets great attendance!

JLARC Report on Licensing: Useful, But a Missed Opportunity

As the old saying goes, you find what you look for. And in its examination of occupational licensing in Virginia the Joint Legislative Audit and Review Commission (JLARC) largely found what it was looking for — inefficiencies and overcharges. Conducting the review was worthwhile, but the exercise was small ball — it missed the opportunity to examine much bigger issues.

In 2017, JLARC instructed its staff to study the Department of Professional and Occupational Regulation (DPOR) staffing and organization, its processing of occupational licenses, and its enforcement of occupational rules. Staff also assessed the affordability of fees and the processes for adjusting fees.

Here’s what JLARC did not study: To what extent does licensing create barriers to entry into the regulated occupations and professions? To what extent do regulated professions use regulations to protect their occupational turf and boost their earnings? To what extent does the public suffer from these legalized labor monopolies?

To its credit, given the limited scope of its inquiry, JLARC did come up with some interesting findings in “Operations and Performance of the Department of Professional and Occupational Regulation“:

  • No legal justification for regulating 11 occupations. Eleven occupations regulated by DPOR appear not to meet the criteria for regulation established in the state code. These include community managers, opticians, residential energy analysts, soil scientists, landscape architects, waste management facility operators and others. Regulation of these occupations does nothing to advance the public health, safety and welfare of the public.
  • Excess fees. DPOR is funded by the fees it charges to applicants. DPOR’s method for calculating fees has over-projected agency expenses leading to unnecessarily high fees in the past. Fees have been reduced since, but the balance still has grown $27.2 million — up from $15 million ten years ago, and far more than needed.
  • Many complaints go unexamined. Staff closed 71% of the disciplinary cases it opened in FY17. Staff do not investigate all potential violations.
  • Poor use of IT. DPOR does review and approve licensing requests in a timely manner, but it would make the process more user friendly by making it more accessible online and by automating key processes.

These are all useful findings, and the report makes some 36 recommendations on how to improve the system. While the goal of improving administrative productivity is laudatory, however, making a flawed system work more efficiently doesn’t do much to build a more prosperous, equitable Commonwealth.

Conservatives have long targeted occupational licensing for creating barriers to upward mobility. Do the state’s 73,000 barbers and cosmetologists really need regulating? Do they really need formal education and credentialing? Is the public health and safety truly harmed if someone gets a bad haircut or cracked fingernail? The crafts of hair cutting, cosmetology and hair-braiding, which provide an avenue of occupational mobility for lower-income Virginians, could be taught perfectly adequately in informal apprenticeships. Why burden people with educational costs and licensing fees?

Of greater concern is the regulation of the medical professions. In theory, the system is designed to protect the public from frauds, charlatans and malpractice. The system does do that, so some form of licensing is necessary. But the system also carves out occupational turf, protecting doctors from competition from nurse practitioners, and nurse practitioners from registered nurses, and registered nurses from licensed practical nurses, and so on down the line. That may not be a big problem in major metro areas, but it is a huge problem in large swathes of rural Virginia that have trouble recruiting medical professionals.

Indeed, it is fair to say that the crisis of access and affordability in rural health care is largely the result of rigid occupational licensing rules that prevent nurses from performing a high percentage of the routine procedures, and dental hygienists from cleaning teeth and filling simple cavities. No health care, it appears, is better than health care not delivered by doctors and dentists.

I would love to think that the General Assembly might get serious about tackling these issues. But I don’t see it ever happening. As the Richmond Times-Dispatch editorial page observes today, only one in twenty jobs required government certification a half century ago. Today, one in four does. It should come as no surprise that highly compensated professions, intent upon maintaining their occupational monopolies, have become major campaign contributors. According to the Virginia Public Access Project, physicians have donated $347,000 to political campaigns so far in 2018-19, dentists $223,000, optometrists $114,000. Nurses? Only $33,000. Don’t expect rural healthcare reform unless it involves paying doctors and dentists more money.

The Real Reason Why Amazon Is the Future

I’ve finally figured out what people can do when robots and AI wipe out half the occupations in the economy — they can get jobs fixing all the #$*& that doesn’t work!

The last couple of months have been a succession of extraordinarily frustrating experiences in the Bacon family — from trying to find tradesmen to complete a gutter job at my mother’s house that the original contractor left unfinished for three months… to badgering our home-warranty company to get our broken microwave repaired, and, after waiting two months for useless parts from China to arrive, to get it replaced… to calling back Comcast technicians three times to get our Internet-cable-telephone service to function properly… to complaining about a two-week-old Microsoft Surface Go tablet whose network adapter stopped working. It’s just astonishing.

If other people are having the same kinds of experiences, our consumer economy is going straight down the toilet no matter what the GDP figures say. I’ll wager that the lost productivity of 340 million Americans navigating phone trees and waiting on hold is a bigger drag on the economy than climate change, hurricanes, cyber sabotage, and telephone marketers rolled into one!

I’ll spare you the gory details but I’m spending more time than ever before dealing with problems created by other peoples’ screw-ups and crappy products. I’m normally a fairly even-tempered guy but I’ve found myself hurling profanities at the wall on one more than one occasion. Other members of my family have been reduced to literal tears.

Some people believe that the progress of AI and robotics is rushing upon us so rapidly that it will obliterate half the jobs in the economy in the next 20 years. I’ll believe it when I see it. Sure, AI might be getting smarter, but everything is getting more complex — IT systems interacting with other systems, nested within yet other systems. Lines of code are multiplying exponentially, far faster than the ability of AI to keep up. Conflicts and failures crop up with increasing frequency. Who’s winning the race — AI or complexity? Right now, I’d say complexity is sprinting ahead of the pack like Usain Bolt.

While the systems are getting more complex, people aren’t getting any smarter. Indeed, given the quality of our educational system, I suspect people are getting stupider. Either that or more people are on drugs. And in a full-employment economy, even stupid, addle-minded people can get jobs. They are wreaking havoc on our lives!

Some people say that Amazon is taking over the world. I, for one, welcome my new corporate overlord. When I bought an inexpensive glare-free Kindle e-reader, the darn thing crashed about one week after the year-long warranty expired. I left a nasty comment on Amazon’s website. A week later, someone from Amazon contacted me and wound up sending me a free replacement.

I now see Amazon as the new model for the U.S. economy. Sure, its products fall apart just like everybody else’s, but its customer follow-up is amazing. Amazon hires people whose job is to clean up other peoples’ messes. The way things are heading, we’ll all be working for Amazon in twenty years.

Protestants, Progressives and Paternalism

If you’re a freedom lover, high scores are good. If you like telling people how to live their lives, low scores are good. Virginia ranks 39th. Source: Mercatus Center.

To put Steve Haner’s recent post about the Virginia lottery in broader perspective, I have displayed the “freedom from paternalism” ranking of the 50 states published this year by George Mason University’s Mercatus Center. Virginia ranks 39th in freedom from paternalism. The flip side of that finding is that the Old Dominion ranks as the 12th most paternalistic state in the country.

By “paternalistic,” Mercatus researchers Russell S. Sobel and Joshua C. Hall, professors at the Citadel and West Virginia University respectively, mean state policies that the political class has decided are for your own damn good.

If you don’t like a busybody government, then New York is the state from hell, with a ranking in a class all by itself. Vermont, Washington, and California are other hard-core busybody states. If you’re a freedom junky, head to Wyoming, the least meddlesome state in the country. Arizona, Nevada and Kansas also are among the least intrusive.

The Mercatus ranking breaks down paternalism into three buckets of policies — selective taxes, “saint subsidies,” and miscellaneous bans and regulations. Virginia scores pretty darned meddlesome across the board. On the less paternalistic side, Virginia has no soda tax and a low cigarette tax but it has a killer tax on distilled spirits.

The ranking encompasses such policies as plastic bag bans, happy hour restrictions, mandatory motorcycle helmets, fireworks restrictions, blood tests, social gambling and Internet gambling. To the point of Steve’s post about the state lottery, Mercatus does not include the presence of state lotteries, horse race betting, or casino gambling.

Why is Virginia so paternalistic? It is often observed that Virginia is either the southernmost Northern state or the northernmost Southern state. I’d hypothesize that we have incorporated the most meddlesome traits of both North and South — Bible Belt blue laws inherited from our Protestant past and the Northern progressives’ instinct for economic regulation on environmental, consumer and other grounds. One way or the other, if you’re a libertarian, you live in enemy occupied territory.

Would an Eviction-Diversion Program Help or Hurt?

Renters-rights defenders and landlord advocates may be reaching common ground on how to reduce the rate of evictions in Richmond: Create an eviction diversion program. Reports Ned Oliver in the inaugural edition of the Virginia Mercury:

Planning is still in its early stages, said [Martin Wegbreit, director of litigation at the Central Virginia Legal Aid Society], but it would likely be modeled on similar efforts in other states, like Michigan, where Kalamazoo County established a program in 2007 as part of an initiative to reduce homelessness. In the Richmond area, more than 30 percent of homeless residents surveyed last year said they had been served with an eviction lawsuit, according to a recent survey by Homeward, a nonprofit that coordinates services for homeless people. …

The one-time program is geared toward low-income families and individuals who can afford their rent but fell behind after an unexpected financial emergency such as a car crash or medical problem. To qualify, they must demonstrate that they are no more than three months behind in rent and show that they will be able to afford their rent once the assistance ends.

Renters-rights proponents like the idea because it reduces the number of renters evicted from their apartments. The program in Kalamazoo assisted 412 households last year, providing $138,000 in rental assistance, an average of $300 to $350 per family.

Landlords like the idea because it provides funding to ensure that they get paid rent on time.

A big question, unaddressed in the article, is where money would come from for an eviction diversion program. NAlso, n one pretends that such a program would settle all the issues between renters and landlords.

Bacon’s bottom line: The eviction-reduction movement is no more than a palliative for underlying social and economic problems: (1) the tightening shortage of affordable housing in the Richmond region, (2) the inability of poor people to find and sustain living-wage employment, and (3) the inability of some people to manage their personal finances responsibly. Until we address the underlying issues, the problem of evictions will always be with us.

Still, I’m a big believer in conducting small-scale experiments, which, if successful, can be replicated and scaled, and, if unsuccessful, can be shut down. The key in an eviction-diversion program is not to measure the number of families assisted but to measure the number of evictions. If a program creates a moral hazard in which renters, knowing that assistance is available, become more lax about husbanding their money, it would be counterproductive. If experience shows that moral hazard turns out not to be an issue, and if the number of evictions demonstrably decline, then the program could prove its worth.

More Evidence that Virginia’s Healthcare System Is Broken

Surprise bills for medical care that Virginians expected insurance to cover are on the rise, a General Assembly healthcare panel was told yesterday. (The Daily News has the story here.)

Typically, the unexpected charges occur when patients are billed from outside their insurance company’s network. A person might go to a doctor who orders a test from a lab that has no agreement with the insurance company. Or a someone might go to an emergency room and get a bill from an anesthesiologist or pathologist outside the network. Or an emergency-room patient might wind up spending the night at an out-of-network hospital.

Another problem is the absurdly inflated prices attached to services for which insurance companies negotiate steep discounts. If a patient goes out-of-network, they get stuck with the inflated price. In one example cited in the hearing a Blue Cross Blue Shield member on the Virginia Peninsula was charged $3,687 for urinalysis tests over three months that allegedly could have done at Rite Aid for $50.

“There’s no excuse for these kinds of charges for something somebody else is making money with at $50. Basically, it’s fraud,” snapped state Sen. Frank Wagner, R-Virginia Beach.

Bacon’s bottom line: Well, labeling the charges “fraud” is unhelpful hyperbole — although I can understand the sentiment. Providers aren’t acting out of some nefarious desire to stick it to their patients. They are trapped in a fundamentally flawed system with two core components.

First, providers charge prices for services that bear no relationship to the cost of providing the services; they do so as part of their annual dance with insurers, which negotiate discounts as part of their value proposition to members. Over the years, the prices have become untethered from reality. Anyone stuck paying the list prices is totally and utterly hosed.

Second, insurers have found that they can negotiate steeper discounts by creating exclusive provider networks. Hospitals, doctors and others are willing to offer steeper discounts for policies that steer patients to them. In a marketplace with multiple insurers and multiple providers, the relationships can get very complex and confusing. Checking to see who is in-network and out-of-network can be problematic if the need for treatment is urgent, as it typically is in an emergency room.

The danger I see is that the General Assembly might create some arbitrary consumer protection that generates unintended consequences in which the new set of problems is even worse than the original set. Before taking hasty, ill-considered action, legislators need to attack the root of the problem — the insane disparity between list prices and negotiated prices. That’s where the system has broken down, and that’s what needs to be fixed.

Revisiting Virginia’s Public Accommodation Laws

Virginia is for lovers haters. A sad scene unfolded in Lexington, Va., last Friday evening. Sarah Huckabee Sanders, President Trump’s press secretary, tried to enjoy a meal with her family at the Red Hen restaurant. The owner, a New York transplant named Stephanie Wilkinson, asked the Sanders party to leave the restaurant after starting their appetizers. Wilkinson claims that she spoke with the staff at her restaurant and they jointly decided to ask the Sanders party to leave. This was done because of Ms. Sanders employment by the Trump Administration.

However, Ms. Wilkinson’s account of the event is at odds with what really happened. In an interview with the Washington Post Wilkinson said, “I am not a huge fan of confrontation,” in an effort to justify her confrontation with the Sanders party. However, subsequent to her Mahatma Gandhi impersonation it has come out that Wilkinson’s confrontation of the Sanders party didn’t stop at the Red Hen restaurant. During a talk radio interview Sanders’ father, former Governor Huckabee, related the rest of the story. After being tossed out of the Red Hen Sarah Sanders and her husband left their group. As the remainder of the group went to another restaurant Wilkinson followed them somehow arranging for people to continue the harassment at the new restaurant. It seems that Ms. Wilkinson is not only a huge fan of confrontation but a huge fan of the liberal art of lying through her teeth as well. I have looked and found no refutation of Sen Huckabee’s account of the story by Ms. Wilkinson. Following a group of people from restaurant to restaurant is certainly confrontational but is it stalking? Stalking is a crime in Virginia. The applicable code can be found here.

Let’s add knucklehead to the list. The original party at the Red Hen consisted of Ms Sanders, her husband and some of her in-laws. Her in-laws are described as liberals who do not support the Trump Administration. Therefore, the people Wilkinson followed and harassed were a bunch of anti-Trump liberals. So, at the second restaurant, a group of Trump-opposing liberals were harassing a group of Trump-opposing liberals. It seems we can safely add knucklehead to the list of adjectives describing Ms. Wilkinson.

The other Red Hen. In the City of Washington, D.C., there is another Red Hen restaurant with no affiliation to the Red Hen restaurant in Lexington, Va. People, presumably conservatives, who wanted to counter-protest the actions of Wilkinson managed to become knuckleheads themselves. The D.C.-based Red Hen restaurant has been “tarred and feathered” by people trying to protest Ms Sanders’ treatment at a wholly different restaurant located 200 miles away.  Interestingly, Ms. Sanders would not have been turned away from the Red Hen in Washington, D.C., since that city forbids discrimination in a public accommodation based on political affiliation. You can find the code here. The city of Seattle and the U.S. Virgin Islands have similar bans on discrimination based on political affiliation.

Has anybody seen my governor? If Ralph Northam maintained any lower of a profile his face would start appearing on milk cartons trying to locate our lost governor. The Red Hen incident happened in Virginia. Where is Virginia’s governor with his take on this? A web search of “Ralph Northam” and “Red Hen” produces no relevant results. Is this incident at the Red Hen restaurant how Virginia wants to be seen? Does public harassment help our “Virginia is for Lovers” image? I think not. Should Virginia broaden its public accommodation law to be more like D.C., Seattle and the USVI? I think so. While I’d hope that proper Virginians wouldn’t bring shame to the Commonwealth by refusing service to somebody based on their political affiliation, I have to recognize that carpetbagging asshats like Stephanie Wilkinson will do just that. Time to squelch this now.

— Don Rippert

Use the Tenant’s Money to Cure the Tenant’s Rent Shortfall

by Martin Wegbreit

Recently, Virginia drew national attention for reportedly high eviction rates, especially in central Virginia and Hampton Roads. This has inspired many efforts to address the issue. These include a Campaign to Reduce Evictions, an evictions workgroup at the Virginia Housing Commission, and a possible Eviction Diversion Program in Richmond and elsewhere. These initiatives may result in changes that decrease the number of evictions and benefit both tenants and landlords.

One partial solution requires no change at all: Use the tenant’s money to cure the tenant’s rent shortfall. The Sunday April 8, 2018, New York Times article about evictions reported that the median amount owed in a non-payment of rent eviction in Richmond was $686. By contrast, a Virginia landlord may hold a security deposit of up to two months’ rent. With an average monthly rent in Richmond of $1,269, a typical landlord may hold around $2,000 of the tenant’s money.

And the security deposit is the tenant’s money. It is not the landlord’s money. The landlord is a fiduciary, or a trustee, holding the tenant’s money and using it only for a permissible purpose.

In most cases, the tenant’s security deposit is not an issue until the tenant has moved and been gone for 45 days. During that time, the landlord either must refund the security deposit or provide a written accounting for how the funds were used, or some combination of the two.

A Virginia landlord also may use the security deposit during the tenancy for any permissible purpose. This includes payment of rent owed. The law, part of Code of Virginia §55-248.15:1, is clear: “The landlord shall notify the tenant in writing of any deductions provided by this subsection to be made from the tenant’s security deposit during the course of the tenancy. Such notification shall be made within 30 days of the date of the determination of the deduction and shall itemize the reasons.”

In 38 years of legal aid practice in Virginia, I never have seen or heard of a landlord deducting a rent shortfall from the security deposit, and seeking a repayment plan to replenish the funds, rather than undergo the time and expense of filing a non-payment of rent eviction. Unquestionably, tenants who intentionally or habitually fail to pay their rent deserve an eviction lawsuit, a judgment of possession, and eviction by the sheriff. But true hardship cases ought to be treated more humanely. Use the tenant’s money to cure the tenant’s rent shortfall.

A tenant’s non-payment of rent should not be subject to a “one size fits all” solution of an eviction lawsuit. Landlords have in their own hands a partial solution to lower eviction rates. Treat tenants like customers, not like a commodity to be disposed of whenever a problem arises.

Martin Wegbreit is director of litigation for the Virginia Legal Aid Society.

Transparency Coming for College Financial Aid

Last week I blogged about the confusion engendered by many colleges and universities when they send students details of their financial aid packages along with their acceptance letters. The terms and conditions spelled out are often opaque and sometimes deceptive. “If Congress doesn’t act,” I suggested, “the Commonwealth of Virginia could require a standardized letter for all state institutions.”

It turns out that Virginia is moving in that very direction. Beverly Covington, SCHEV’s legislative liaison, informs me that the General Assembly has instructed SCHEV in its budget language to review their financial-aid award letters.

“During this review,” reads the budget, “the Council shall identify opportunities for improvement as well as best practices for … clarity and completeness of the information provided on gift aid as well as students’ responsibility regarding student loans or work study.” 

SCHEV will develop policies to make the following information  available to the student: (1) a breakdown of the components of the institution’s cost of attendance, designating billable charges; (2) a clear identification of each award, indicating the type of aid; (3) the use of standardized terminology consistent with the National Association of Student Financial Aid Administrators; and (4) whether awards are condition and what the criteria are for renewal.

The Council shall report findings to the House Appropriations and Senate Finance Committees by Dec. 1, 2018.

Also, notes Covington, the General Assembly authorized SCHEV to create an office of the student loan ombudsman. The Council is currently working to fill the position.

Bacon’s bottom line: Needless to say, this is all very positive. Higher-ed institutions need to provide students the information they need to make informed choices. I’m delighted to see Virginia taking the lead in consumer transparency.

The cost of attendance at Virginia institutions of higher education is still way too high, and there is no substitute for bringing soaring tuition, fees, room, and board under control. But at least students will have a clearer idea now of the financial commitments they are making. We should see fewer young people finding themselves over their heads financially, dropping out, and floundering in thousands of dollars in debt they can never repay.

Where Are the Consumer Rights Advocates When You Really Need Them?

Consumer rights advocates work themselves into a wrathful froth over the misdeeds of banks, payday lenders, credit card companies, and mortgage lenders. But what about the truth-in-lending abuses perpetrated by institutions of higher education? We don’t hear so much.

With the cost of attendance of a four-year degree routinely exceeding $100,000, selecting a college can be one of the biggest financial decisions that Americans can make — probably the biggest decision for low-income families that never purchased a house. But the financial terms and conditions provided in acceptance letters are notoriously opaque, finds a study by the New America think tank and financial-counseling firm uAspire.

The two outfits published a study last week based upon an examination of 11,000 award letters sent in 2016 by more than 900 colleges. Summarizes NewAmerica’s Kevin Carey in the Wall Street Journal: “It found most of them use obscure terminology, omit vital information, or present financial calculations that appear deliberately deceptive. Many letters are confusing in their own unique ways, making it difficult for students to compare colleges.”

Of the 515 colleges that awarded them via nonstandard letters, more than a third provided no information about how much attending school would cost. The letters highlighted grants and scholarships as a way of convincing students to enroll, but without listing tuition or explaining how much money students would owe. …

The letters that did disclose costs were inconsistent. Some listed only tuition. Others included room and board. Others added books and estimated living expenses. … Seventy percent of colleges with nonstandard letters created further confusion by lumping together grants and loans, as if both were freebies.

Carey cited a letter sent by the University of Arizona that told a student that the cost of attendance was $48,200 a year, then subtracted $5,815 in grants, $5,500 in work-study opportunities, and $26,885 in loans. “Net Costs After All Aid” were “$0.00.”

A used car dealer who delivered a pitch like that would be slammed with a fine and driven out of business.

Many (not all) public colleges and universities engage in practices that would make a payday lender blush. It all makes sense when you understand that higher-ed institutions are, beneath the lofty rhetoric about justice and equality, mechanisms for the extraction of wealth from students and taxpayers, the pursuit of status and prestige within the academic community, and the remuneration of elite faculty and administrators.

Feeding the system requires inducing as many students as possible to enroll, which is becoming increasingly difficult as the cost of attendance continues to outpace incomes and financial aid.

How can lower-income Americans be protected from the higher-ed racket? New America recommends requiring colleges to use a standardized award letter that explains expenses, grants and loans clearly so recipients can easily compare offers by competing institutions. The Department of Veterans Affairs already mandates this kind of transparency for students benefiting from the GI Bill. Congress should require a standardized letter for all institutions receiving federal money.

And if Congress doesn’t act, I would suggest, the Commonwealth of Virginia could require a standardized letter for all state institutions — or, at the very least, for institutions offering state-funded financial aid. Colleges and universities should be free to determine the substance of their own financial aid packages, but there should be full transparency in how those packages are presented to students and their families.