December 16, 2008
An open letter to Congress appearing in The New York Times and The Washington Post yesterday joined what is quickly becoming a chorus of voices asking for financial aid for higher education institutions. The letter, which was put together by the Carnegie Foundation, was signed by over 40 higher education officials, including leaders of several state university systems. The letter requests that Congress devote 5 percent of the next stimulus package to improving higher education infrastructure, namely state colleges.
Leaders argue that the infusion of cash into state university systems will help keep America competitive on a global scale, noting that for the first time ever, the segment of the population between 25 and 34 years of age is not as well-educated than the previous generation. The letter argues that construction and renovation projects are an important first step for colleges and universities that want to remain competitive, and that these projects would immediately generate jobs for displaced workers. While the signers recommend applying the money towards infrastructure, they suggest that it be given to states in the form of block grants that would supplement state education budgets, leaving open the possibility of other forms of spending.
This follows two other proposals for higher education's inclusion in stimulus packages. Both other proposals called specifically for increases in student financial aid. While this proposal doesn't do that, it may help prevent some tuition increases and discourage state budget cuts that would negatively impact the ability of public college students to pay for school.
January 7, 2009
Barack Obama became known for his web presence during his Presidential campaign. He and his transition team have kept up this reputation through YouTube addresses and websites such as Change.gov, the official transitional website. Now the Obama transition team is asking for public comments--or at least blog comments--on issues related to paying for school. A post on the Change.gov blog is currently soliciting feedback about college affordability. While there's no guarantee that the President-elect himself will read your post, if you would like to weigh in on educational policy at least in a small way, you can view and comment on the January 5 Change.gov blog post "Keeping College Affordable."
The blog post, along with many other recent discussions of college costs, makes a nod to former Rhode Island senator Clairborne Pell, who passed away on January 1. Pell was instrumental in shaping the current federal student financial aid system by helping create the Federal Pell Grant, which was named after him. Pell Grants continue to make up an important part of the financial aid packages of many students, covering up to the full cost of tuition at some state and community colleges.
However, as tuition costs rise, Pell Grants and other sources of federal aid are not enough to make college affordable for an increasingly large number of students. During his campaign, Obama proposed a few substantial changes to the way college financial aid is structured, and hopefully his administration will do more to seek out and act upon feedback from those who are struggling with the costs associated with higher education. However, if you're skeptical, or just looking for more immediate ways to make college affordable, there are resources available. Start with a free college scholarship search on Scholarships.com. Many scholarship application deadlines are approaching in the coming months, but there is still abundant scholarship money for those who take the time to apply.
December 14, 2009
As Congress continues to puzzle out questions of student loans and consumer protection, new information released today suggests that young adults attempting to repay their student loans may be having even more trouble than previously thought.
As a condition of the Higher Education Opportunity Act, the US Department of Education has started tracking three-year instead of two-year default rates for federal student loans. The first set of data was released today and the numbers are pretty shocking: the three-year cohort default rates are nearly twice as high as the two-year rates overall--11.8 percent compared to 6.7 percent.
Default is defined as failure to make payments on a student loan according to the terms of the master promissory note the borrower signed, and federal student loans are considered in default only after nine months of missed payments. This means that 12 percent of students who started repaying their loans in 2006 had stopped making payments for 270 days or more by September 2009.
The difference between two-year and three-year default rates was most dramatic at for-profit colleges, rising from 11% to 21.2%. For-profit colleges have the highest default rates in both two-year and three-year measures, and also make up the largest proportion of institutions that may lose the ability to distribute federal student financial aid in 2014, when the rule changes associated with the new three-year default rate calculations go into place.
Colleges will become ineligible to participate in federal student aid programs if their cohort default rates are above 30 percent (currently 25 percent) for three consecutive years, or if they go over 40 percent any one year. Inside Higher Ed has published a list of institutions whose three-year cohort default rate is over 30 percent this year-in addition to a number of for-profit colleges, several community colleges have also made the list.
In addition to this information's implications for colleges, it also means that default on federal student loans is even more common than previously assumed. More than 1 in 10 students currently default on a loan within three years, and it's possible that a significant percentage of students may default on their loans after more time has passed. If you're planning to borrow to pay for college, do so wisely. You may want to make sure that you only take out an amount that you can pay back in a worst-case employment scenario. It's not too late to start your scholarship search for next year (or even this year) to help cut down on the amount you have to borrow, as well.
December 15, 2009
Students who are interested in applying for private loans may soon see the process changing. The House of Representatives passed consumer protection legislation last week that would further regulate private student loans, ensuring that students interested in borrowing them are aware of rates, federal alternatives, and borrowing limits at their school.
The bill moves to further regulate Wall Street in the wake of the credit crisis and ensuing economic recession, and also creates a consumer financial protection agency that's responsible for overseeing consumer credit such as credit cards, mortgages, and other bank loans. An amendment introduced by Democratic Representative Jared Polis of Colorado ensures that private loans to students are also included under this umbrella, and sets up additional rules that lenders and colleges must follow in issuing and certifying private loans.
Under this legislation, all private loans will have to be certified by a student's college, verifying the student's enrollment and the amount he or she can borrow. Before a school can certify a private loan, it must also inform the borrower of the availability of federal student financial aid. This builds on rules that will go into effect in February that state that students must be informed of interest rates and repayment terms up front by banks, and must certify that they have been informed of federal student loan options.
Effectively, it puts an end to direct-to-student private loans, which students can borrow without even informing the financial aid office, and which can be taken out for more than the student's cost of attendance for the academic year. With rising student loan default rates, risky loans like these have increasingly come under fire. These loans can be a quick way for students to find themselves in excess debt, as they make it easy for students to borrow more than they need to pay for school without having to investigate alternatives first.
The bill still needs to pass the Senate and be signed by the President before it can be enacted. Whether the Senate introduces language similar to the Polis Amendment remains to be seen, as it's unlikely financial legislation will be debate until after they finish with healthcare.
December 3, 2009
Federal student loans aren't the only form of student borrowing that may soon undergo a legislative makeover. As Congress debates the creation of a Consumer Financial Protection Agency, advocacy groups are continuing to push for inclusion of rules that would give the agency more oversight of student loans.
The Consumer Financial Protection Agency would already oversee other kinds of lending, such as credit cards and student loans. However, there's growing debate over how extensive the agency's student loan oversight should be, specifically regarding loans that some colleges make directly to their students. A House amendment to specifically include these loans under the agency's purview was rejected by the Financial Services Committee, but is expected to be revisited as the House prepares to take up a floor vote on the bill. The Senate version of the bill, meanwhile, does authorize the agency to supervise loans made by colleges to their students.
The House version initially excluded loans schools make to their students because many colleges make small, short-term, "emergency" loans to their students to help them pay bills while they secure other forms of funding. Career colleges, on the other hand, have begun lending large sums to their students, often with terms that are less favorable than many private loans. These loans typically have a high default rate and can burden students with difficult payments, as interest rates can easily reach 18 percent and the schools may have less forgiving repayment processes than traditional lenders. This has student advocates concerned, especially in light of recent economic events.
Colleges have been increasingly encouraged to act as lenders to their students in the face of the economic recession and the preceding credit crunch. As it became harder for students to obtain sufficient student loans from banks and other traditional lenders, schools began to step in to close the gap. This included for-profit career colleges lending significant portions of the cost of tuition to their students. The latter category of loan is increasingly widespread, with many of the largest career colleges reporting plans to lend out tens of millions of dollars directly to their students next year.
In addition to being a way to enroll students who wouldn't otherwise be able to secure funding, these direct-to-student loans are also ways for for-profit colleges to get around the "90/10" rule that states that no more than 90 percent of a for-profit college's revenue can come from federal student financial aid. By charging more in tuition but giving more in loans, colleges can get around this requirement, even as more of their students qualify for federal aid.
This isn't the only career college practice that's receiving criticism at the federal level. The Department of Education has been investigating recruiting practices at for-profit colleges and recently issued several proposed rules in its negotiated rule-making process with career colleges. The proposed changes would do more to ensure that colleges aren't giving incentive pay to recruiters and that students who are being enrolled are able to adequately benefit from a degree.
November 12, 2009
As the wrangling over proposed healthcare legislation drags on in the Senate, progress on other bills has stalled, including a piece of legislation that would impact federal student financial aid programs. The Student Aid and Fiscal Responsibility Act, passed by the House of Representatives in September, has yet to see its counterpart taken up for debate in the Senate. Yet the debate over student loan reform is heating up again as the Department of Education and lenders both attempt to press their agendas forward.
Student loan reform has been a topic of contention since President Obama announced his 2010 budget proposal at the beginning of the year. Among them was doing away with the Federal Family Education Loan Program, which subsidizes private banks to make and service federal student loans, such as Stafford Loans and PLUS Loans. Students would borrow directly from the Department of Education through the Direct Loans Program. The money saved from the subsidies would then be channeled into Pell Grants and Perkins Loans, among other education funding priorities. The proposed changes would go into effect on July 1, 2010 necessitating a quick switchover to direct lending for all colleges still participating in FFELP.
After the bill passed the House, the Department of Education began urging schools to voluntarily make the change to Direct Loans, which concerned some financial aid administrators and most lending agencies. Concerns have been expressed over the efficiency of direct lending, the loss of choice in eliminating FFEL, the feasibility of making the switch, and the continuation of services such as financial aid counseling that some lenders currently provide. Many of these were aired at a recent meeting of a panel of financial aid experts in Washington. Representatives of student lenders were also there to champion an alternate plan that would bring some of the savings proposed by SAFRA, but would maintain a role for banks in student lending.
It's widely expected that the Senate will ultimately pass a version of the bill similar to what was passed by the House, but when that will happen remains uncertain. Procedural regulations and concerns over support are currently preventing the bill from progressing until the issue of healthcare is settled. In the meantime, it appears debate, analysis, and lobbying will continue on both sides of the issue.
February 13, 2013
Community colleges across the country have seen a steep decline in enrollments this year for a few reasons. A recovering economy steering students toward jobs and budget cuts that have led to fee increases have played key roles but changes to federal Pell grant eligibility are most notable. According to a new study, community colleges in the Deep South have been hit hardest by the changes that took effect last year.
The study, by Education Policy Center at the University of Alabama director Stephen Katsinas, argues that community college enrollments in Alabama, Arkansas and Mississippi are highly sensitive to changes in the federal grant program. Enrollment in 47 of the 62 two-year colleges across the three states declined this past fall and more than 5,000 students lost Pell grants – a change that the report's authors say can be directly attributed to the changes in eligibility. Students are now limited to just six years of Pell grants, fewer students automatically qualify for the maximum grant because of a lower income cap for receiving an “automatic zero” expected family contribution and students without a high school diploma or GED are no longer eligible.
While many states have started to see their economies improve, that’s not the case for the three states included in the study. In fact, not only have their economies not recovered but state-supported student aid programs are much smaller, so colleges have fewer resources for low-income students who no longer qualify for Pell grants. Both Pell grants and community colleges are "vital to enhancing college degree completion in the Deep South, for it is the community colleges where economically disadvantaged students begin higher education," the study noted. The enrollment numbers were based on surveys of community college officials. All of the two-year colleges in the three-state region responded. However, the national enrollment data for 2012 hasn't been compiled yet, said David Thomas, a spokesman for the U.S. Department of Education.
September 3, 2013
With the number of single-sex colleges in the nation dwindling, it can be rare to hear someone say that they attend a college for women but for me, it is something that I say with pride. Although some people have perceptions that single-sex institutions take away from one’s college experience, I personally believe that it has made mine unforgettable.
I had always visited my family in Pittsburgh during the summers as a teenager. As we would drive around the city looking at universities that I may want to attend, I always immediately dismissed Chatham University. However, I began to wonder how much a single-sex institution could really benefit me and over time, the idea actually became appealing. I looked into it and learned some interesting statistics, such as the fact that only 2 percent of female college graduates attend women’s institutions, yet they make up 20 percent of women in Congress.
I ultimately decided to apply to Chatham, which is most famous for alumni Rachel Carson, the marine biologist and conservationist who wrote Silent Spring. Making the choice to come here once accepted was definitely the best one I have ever made: Since we are all women, we can relate to each other well and are free to act as silly and comfortable as we would like. Close bonds are formed that I believe are found much less often at traditional universities. We don’t have sororities because essentially, we are one big sorority.
If you are exploring your college options, I encourage you to add single-sex institutions to your list. The experience is enriching and anybody who gets to attend college in this form should consider himself or herself to be lucky. Traditional colleges definitely have their great qualities but I personally wouldn’t trade my time at Chatham for anything in the world.
Melissa Garrett is a sophomore at Chatham University majoring in creative writing with minors in music and business. She works as a resident assistant and is currently in the process of self-publishing several of her books. She also serves as the president of Chatham’s LGBT organization and enjoys political activism. Melissa’s ultimate goal is to become a college professor herself.
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