September 11, 2008
Seven student loan lending agencies agreed to a settlement with New York Attorney General Andrew Cuomo Tuesday, following an investigation by Cuomo's office into potentially deceptive lending practices. This is the latest group of lenders to settle in an inquiry that's been going on for nearly a year, after accusations first came to public attention last October.
The seven lenders were Nelnet Inc., Campus Door Inc., GMAC Bank, NextStudent Inc., Xanthus Financial Services Inc., EduCap Inc. and Graduate Loan Associates LLC. The lenders agreed to abide by a code of conduct drafted by Cuomo's office, and also jointly donated $1.4 million to a fund established to educate students about financial aid processes.
A number of lenders were being investigated for deceptive marketing practices that included sending out mailings that looked like they came from the federal government or a student's current lender, offering gifts such as iPods or gift cards to entice students to sign up for their loan, and advertising loan rates for which the majority of borrowers would not qualify. Lenders agreed to cease deceptive lending practices and to include a disclaimer in all loan offers that will encourage students to exhaust all other options for federal student financial aid before borrowing a private loan.
September 10, 2008
Despite the student loan credit crunch that has been repeatedly making headlines this year, students and parents in several New England states had little to no trouble finding money for college this fall, according to a survey conducted by the New England Board of Higher Education.
The survey asked financial aid administrators at 214 colleges and universities to assess the level of difficulty students faced finding financial aid, as well as the effectiveness of the Ensuring Continued Access to Student Loans Act passed by Congress earlier this year to ensure continued availability of Federal Family Education Loan Program (FFELP) funds.
The survey found an increase in students borrowing unsubsidized Stafford Loans, as well as no major concerns over the availabilty of those funds through FFELP lenders. It also showed that more families have borrowed Federal PLUS Loans this year, possibly due to recent changes that allow families to defer payments until after students graduate. These changes seem to have mostly made up for the decreased availability of private student loans. However, some financial aid administrators are still concerned over continued availability of student loans, and caution that families may face difficulties making tuition payments in future semesters.
Based on this information, it appears there's little reason to put your college plans on hold, but you might still want to devote an increased amount of time to finding scholarships. While it looks like students are still able to pay for school, changes in the student loan landscape may still leave some students without a plan B for covering college costs if their initial plans fall through.
Really, though, financial aid advice hasn't changed much. Now, as always, planning ahead is key. As always, a good college financing strategy involves doing the following: conduct a scholarship search, take time to complete the FAFSA, learn about and take advantage of all possible federal student financial aid, apply for university scholarships and campus-based aid, and only then consider applying for a private student loan.
September 9, 2008
In a hearing yesterday, Senator Charles Grassley of Iowa suggested that he would back off from his proposal of mandating that colleges and universities spend five percent of their endowments on financial aid, provided schools continue to voluntarily increase grant and scholarship awards to students as many have been doing this year.
This is the latest development in a series of events that began unfolding when Congress began looking into the endowment spending of several of the country's wealthiest universities earlier this year. Legislation to mandate increased endowment spending has since been proposed and withdrawn, as several schools with large endowments began offering significantly larger financial aid packages to their students.
The panel, which was made up of representatives of several universities and the Senate Finance Committee also discussed the rising cost of college education, what schools and lawmakers can and should do in the face of the issue, and the importance of flexibility in endowment spending. Lawmakers and educators are both concerned about the increasing burden of student loan debt on American students, but colleges are also concerned about being forced to spend more than they can afford to assist students with their tuition payments.
Primary among their concerns, though, was an increase in transparency of university endowments and spending habits. Colleges were more willing to agree to making information about their endowments and spending available to the public, as opposed to accepting a mandate for how much they are required to spend on student financial aid each year. Grassley also introduced a plan to make colleges fill out a Form 990, the tax form all nonprofits file, using a version of the form similar to the one designed for hospitals.
While the Senate Finance Committee has moved away from requiring colleges to devote a substantial portion of endowment spending to helping students pay for school, Sen. Grassley's words seem to suggest that if schools don't keep up their efforts to make attending college more affordable for their students, Congress may yet decide to intervene.
Hopefully, what this will mean for students is a continued increase in campus-based aid programs, such as scholarship opportunities and grants and fellowships. At the very least, it looks like it may be getting even easier to compare information about spending habits of various schools in your college search, being able to ultimately arrive at a better determination of which schools are most likely to want to help you afford to attend.
Inside Higher Ed has more complete coverage of the hearing available here.
September 8, 2008
As a means of promoting diversity and developing talent, Scholarships.com has created a new set of scholarship awards for high school students and undergraduate students. The Scholarships.com “Fund Your Future” Area of Study College Scholarship consists of thirteen $1,000 prizes to be granted to students who pursue a postsecondary education in one of thirteen designated fields and 185 related majors.
Among them is the Scholarships.com College English Scholarship, an award for students who are pursuing or planning to pursue a degree in English or Literature. To ensure that current and future English majors receive the funds they need to afford a quality education, we have created a scholarship opportunity especially for them.
If you’re interested in applying for the Scholarships.com College English Scholarship, write a 250 to 350 word scholarship application essay in response to the following question (entries that fall outside of this word range will be disqualified): “What has influenced your decision to pursue a career in English?”
Deadline: October 31, 2008
Required Material: A 250 to 350 word response to the following question: “What has influenced your decision to pursue a career in English?”
Further details about the application process can be found by conducting a free college scholarship search. Once the search is completed, students eligible for the award will find it in their scholarship list.
September 5, 2008
New York Attorney General Andrew Cuomo is preparing a lawsuit against Goal Financial, the student loan company that also runs the website eStudentLoan.com. According to the New York Times, Goal Financial stands accused of misleading consumers about loans, and offering them gifts such as iPods to influence their choice in lenders. While other lenders accused of dishonest practices have repented and agreed to follow a code of conduct outlined by Cuomo, Goal Financial has not, hence the pending lawsuit.
Goal is accused of misrepresenting loan terms to promote private loans over low-interest federal Stafford loans, as well as failing to disclose their ownership of eStudentLoan on the latter's website. The company also allegedly failed to disclose that all lenders listed on the eStudentLoan loan rate comparison feature were companies that had paid a commission to Goal Financial.
While Cuomo's investigation of the student lending industry has undoubtedly made borrowing less risky, students should still proceed with caution and carefully vet the quality of the lender they choose to use. If you need to take out student loans to help fund your education, be sure to do your research. First and foremost, explore all federal student financial aid opportunities. Start by completing the FAFSA on the Web and visiting with your school's financial aid office. It would also be beneficial to conduct an extensive scholarship search at this point, as well, since you never know where you might find money for college.
If you do find you need to borrow a private loan, research several lenders, and if your college's financial aid office maintains a preferred lender list (which should consist of lenders that are actually preferable thanks to Cuomo's earlier investigations) take a copy. Begin evaluating your options, but be wary of anything that sounds gimmicky or too good to be true. Carefully research any loan before you apply.
Find out which banks have the best rates and repayment options, and whether you'll need a cosigner to get approved. Apply to one loan at a time and give yourself plenty of time for processing, since many student loans need to be approved by the bank and certified by your college before funds can be disbursed. Many lenders will let you know within a day or two whether your has been pre-approved or rejected so that you can move on to the next application if necessary.
September 4, 2008
For many students, the college experience can be a financial minefield. Even if they manage to avoid the lure of blowing their financial aid check on a plasma TV or a brand new car, there are thousands of other potential pitfalls. These include the credit card companies lining the main drag of campus offering free college t-shirts to anyone who signs up for their card; your first dorm or apartment to outfit and decorate; and then all of the opportunities for shopping, dining, and entertainment that a college town provides. And we haven't even gotten to the actual act of paying tuition yet! Even if your scholarship search was fruitful and you were able to find money for college, there's still the chance of overspending and winding up turning to less wise solutions to make it to the end of the term.
So how are students supposed to survive college without unnecessary credit card or student loan debt? Many schools are offering money management courses and one-on-one financial counseling services to help students be more judicious with their college funds. I can certainly think of some lessons I could've used as an undergrad, like "3 AM is not dinner time," its corollary, "espresso is not an adequate substitute for sleep," and of course, "you don't have to buy it just because it's on sale." Being forced to budget out just how much that 10-block drive to class (plus the 15 minutes of circling the "good" parking lot for a spot) actually cost me that last year of school would've also been helpful.
Now students at numerous colleges in several states can choose to educate themselves and avoid learning similar life lessons the hard way. Unfortunately, many of these programs go under-publicized and under-utilized, as budgeting honestly isn't fun, and many students may be afraid that setting a budget means giving up their college lifestyle, staying at home, and having to go on a budget diet. However, the Chronicle of Higher Education suggests that students can benefit immensely from financial literacy courses, and anecdotal evidence suggests these students take on less debt and have an easier time transitioning into the "real world" after graduation. Courses are often offered to incoming freshmen or graduating seniors, with counseling services typically being made available to any students currently attending college. If you're interested in finding out about how to stretch your college fund, student loans, or scholarship money further, check with your college to see if they offer any of these services.
September 3, 2008
Don't forget about spending money when planning for college costs. This advice comes from Alabama's Birmingham News, which spoke with some students, parents, and financial aid administrators in the state about dealing with expenses that fall outside of paying tuition and room and board. However, Alabama students and families are by no means the only ones not sure how to deal with how much living at college will cost.
Financial aid offices typically figure a few thousand dollars into a student's cost of attendance estimate to cover such expenses as gas, car maintenance, toiletries, clothes, entertainment, and food and drinks not from the dining center, but actual experiences vary widely among students. Some college students certainly choose the spartan lifestyle of staying in the dorm, using their meal plan, and biking around campus to attend free school-sponsored activities. Others fail to resist the urge to splurge, doing their studying at the all night diner just a short drive from campus or swinging by the mall for some retail therapy and a movie after a particularly grueling week of class. I was certainly in the latter category, despite my best intentions of being thrifty and only spending what I earned working at my work-study job (work-study, for those unfamiliar, is a campus-based aid program that is more easily used to cover living expenses than tuition).
But don't assume the worst and rush out to borrow an extra $10,000 to cover unforseen expenses. Instead, practice some basic money management. Take an honest look at your spending habits and how much you'll realistically want to scale them back to save money. Then look at how much you can earn while in school without getting off-track for graduation, and start figuring out how to make up any differences between the two. A summer job or an extra scholarship award or two could give you enough money to survive the next 9 months without having to resort to student loans to fix your car, get you home for Christmas, or feed you until you land a new job. As a recent grad who looked to borrowing as the easy way out of tight financial situations, believe me, those little loan amounts add up.
September 2, 2008
Aspiring artists, break out your pens for this week's Scholarship of the Week, the Christophers' Poster Contest for High School Students. The art scholarship competition, which carries a grand prize of $1000, encourages high school students to create an original poster featuring the text "you can make a difference." Just by using your artistic talent in two-dimensional or computer-generated art to create a poster, you could be $1000 closer to funding your education, without having to worry about GPA, test score, or financial need requirements.
The Christophers is a non-profit organization founded in 1945 for the purpose of using media to encourage people to make positive changes in their community. 2008-2009 is the 19th year they've helped students pay for school through this poster competition.
Prize: 1st prize is $1000, 2nd prize is $500, 3rd prize is $250, and five honorable mentions receive $100 each.
Eligibility: High school students currently enrolled in grades 9-12.
Deadline: January 19, 2009.
Required Materials: One 15" by 20" poster and a completed application form, which is available on The Christophers' website. Posters must include the words "you can make a difference" and be the original work of one student.
Further details about the application process can be found by conducting a free college scholarship search on Scholarships.com. Once the search is completed, students eligible for this scholarship award will find it in their search results.
August 29, 2008
An article that appeared yesterday in the UK's Times Higher Education carries an important reminder for students attending college on both sides of the pond: don't trust spell check to always suggest the right word. The publication's recently revived contest for the best college exam bloopers asked professors to submit anonymous examples of some of their students' worst for-credit writing. Most of the entries highlighted in the article are a case of students accidentally using a different word than what they meant.
If you're not the best speller, you may want to take these examples to heart and remember to use the dictionary to look up the meanings and spellings of words you're not sure of, rather than simply relying on a spell checker or guessing. For example, "academic" and "epidemic" may sound similar, but they carry very different meanings. And don't think these mistakes are something that only the stereotypical stuffy tweed-clad British professor will notice--anyone in the business of evaluating writing is likely to pick up on errors of meaning in essay writing.
This advice applies not only to essays you'll write for introductory college courses, but also to college applications and scholarship application essays, as well. Many students run their entries for scholarship essay contests through a spellchecker of some sort (though some don't even do that), but a surprising number of students fail to take the next step and make sure that the words they're using mean what they think they mean. Over-reliance on the thesaurus can produce a similar effect. While the denotative meanings of two words may appear to be closely related, their connotations could be worlds apart.
August 27, 2008
The city of Akron, Ohio plans to introduce a scholarship fund to encourage its high school graduates to stay in the city for college. Akron's plan follows in the footsteps of other cities with similar programs, such as Kalamazoo, Michigan, which gained national attention with the launch of the Kalamazoo Promise scholarship in 2005. An anonymous donor contributes to the Kalamazoo Promise fund, which offers free tuition to graduates of Kalamazoo high school attending college at local schools, such as Western Michigan University. At least 19 cities have followed suit in the last three years, according to the Associated Press, with many relying on private donors to provide scholarship awards.
But no donors have come forth in Akron, so the city is trying something new: leasing its sewage system to a private company, then using the money to establish a scholarship fund. The measure, which has earned the somewhat derisive nickname "stools for schools," is up for a vote in November. While any additional scholarships for high school students are welcome, this measure does come with some drawbacks. Up to 100 city employees in Akron may find themselves without jobs in an already tough economic climate and many residents have issues with the city choosing to privatize public works.
Additionally, students may not be interested in the scholarship anyway. Presently, only 600 Akron high school graduates attend the University of Akron, and the proposed tuition plan will only subsidize what's left of tuition after students' other scholarships are taken out, leaving them with the guaranteed responsibility of room and board. The scholarship committee is also throwing around the idea of attaching a thirty-year residency requirement to the scholarship money, converting the scholarships to student loans for all students who choose to leave Akron before retirement.
While local scholarships are usually a great idea for students, they can stop being appealing if too many requirements are attached. My guess is that few students will want to have their entire lives planned out for them in high school, especially if a change in plans carries a financial penalty of tens of thousands of dollars. Whether or not this measure passes in November, many students from Akron will undoubtedly want to continue their scholarship search. And Scholarships.com is a great place to start, with our database of 2.7 million college scholarships and grants worth over $19 billion, without a 30-year residency requirement in sight.
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