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by Agnes Jasinski

Pittsburgh has dropped a proposal to enact a tax on college students as a way to raise revenue for the city following several weeks of criticism from not only students but the higher education community. Mayor Luke Ravenstahl announced yesterday that the city would instead focus on a "leap of faith," urging local colleges, nonprofits, and the business community to increase voluntary donations.

At a press conference Monday, the University of Pittsburgh and Carnegie Mellon University both pledged to offer larger donations to the city than they had in previous years. Local insurer Highmark also pledged support. About 100 tax-exempt organizations gave a total of $14 million to the city between 2005 and 2007. The 1 percent tuition tax, described as the “Post Secondary Education Privilege Tax” or Fair Share Tax,” would have raised $16 million for the city to cover things like city employees’ pension funds and costs associated with the public library system until the city is able to get a handle on its budget problems. This "voluntary" agreement with the city's institutions only covers the upcoming fiscal year, however, so whether the city would ever revisit a student tax is unclear. The mayor also failed to say how much money would be offered voluntarily, as those deals have not yet been finalized.

The mayor also said he would target the state for more funding to solve the city's budget problems. A new group, the New Pittsburgh Collaborative, will come up with a list of things to ask the state for when the time comes, according to an article today in the Pittsburgh Post-Gazette. Previous talks have focused on raising taxes for those who in the city and expanding a tax on currently tax-exempt employees' payrolls, two proposals that would also not be met without resistance.

The fallout from the proposal was immediate. About 100 students came to a Pittsburgh City Council meeting recently to protest the measure, calling the idea "Taxation Without Representation" and a double tax on those students already paying taxes on things like sales items and property. An article in Inside Higher Ed today suggests other institutions of higher education were anticipating the outcome of the student tax to determine whether this could be an option in their cities. Some municipalities without strong support from outside organizations and voluntary contributions from their local colleges and universities may look to pass similar measures anyway, especially if those local economies fail to improve.


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by Agnes Jasinski

What if those worried about whether they can handle the rigors of college had an option to ease their worries about whether they were making a good investment? Would "failure insurance" get more of these hesitant students onto college campuses? How would students pay into such a program if they're already struggling to come up with the funds to cover college costs?

An academic paper called Insuring College Failure Risk put together by Satyajit Chatterjee, an economist at the Federal Reserve Bank of Philadelphia, and A. Felicia Ionescu, an assistant professor of economics at Colgate University, looked at the benefits of failure insurance, or policies that would reimburse students or offer forgiveness of some of their student loans if they flunked out of school. The paper concluded that the policies would be most useful to students from low-income backgrounds, a population that has been found to have higher college drop-out rates than other groups of students.

So how would it all work? The authors put forward a series of mathematical models that looked at both students' decisions to go to college and their decisions to drop out, finding that most any decision students make about college is a financial one. An insurance policy that offered students an amount that was high enough to make sense for them to continue taking classes, and often taking on more debt, but not so high that it would be an easy decision to drop out for the financial incentive, would be most successful. Students would be eligible for some loan forgiveness if they met the criteria for failing grades. Because students would still bear some of their student loan burden, that total would go toward something of a deductible, and could potentially work to keep more students in school so that they can avoid paying those fees to whatever insurance carriers would be offering these policies. Students would only have one shot at such an insurance policy, meaning they'd be on their own if they returned to school later in life after having flunked out.

Obviously something needs to be done to address high college dropout rates and the number of former students out there saddled with student loan debts but no degrees to speak of. According to the Federal Reserve Bank’s Survey of Consumer Finances, on average about 47 percent of those not in school with student loans to repay report that they don’t have two- or four-year college degrees. An article this week in The Chronicle of Higher Education suggests there's no way to tell whether the academic paper has any legs outside of academic circles, and also points to other researchers' suggestions that offer students an incentive to stay in school - lowering tuition and fees and increasing access to and amounts of financial aid assistance, as examples.


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by Emily

To make up for budget cuts and other difficulties caused by the recession, many state colleges, including some prestigious research universities, have begun admitting more out-of-state students, who typically pay more in tuition than in-state students. While this could make getting into a top school in your own state more challenging, this shift does present some unique opportunities. If you're starting your college search, you may want to consider applying to state colleges in neighboring states. You can get a bargain on tuition compared to private colleges, and there may even be tuition discounts and scholarship opportunities to further help you further bring down costs.

University systems and state higher education agencies offer tuition discounts for certain out-of-state students, bringing down your tuition costs to anywhere from 100% to 150% of in-state tuition: as much as a 50-75% discount on the regular out-of-state rate. High-achieving students, children of alumni, and residents of neighboring towns or states may qualify for programs at specific universities or for certain state scholarships.

If you have specific schools in mind, look to see if they offer discounts for students in your situation. Many large public universities will have some program in place to offset costs for out-of-state students. State colleges and universities near borders may also offer a discounted rate to students living just across a state line.

State-wide tuition discounts also exist. Students in Minnesota, North Dakota, South Dakota, and Wisconsin can take advantage of a wide-ranging tuition reciprocity agreement: Minnesota's public colleges and universities charge in-state tuition for students from the Dakotas and Wisconsin, and schools in those states return the favor for Minnesota residents. Minnesota also has similar agreements with Manitoba and some community colleges in Iowa.

The Southern Regional Educational Board offers the Academic Common Market for students in the southeastern United States pursuing specialized degrees at schools out-of-state. Students who qualify to participate in ACM are able to pay in-state tuition at the school they attend, provided their degree program is not offered by any colleges in their home state.

Other regional tuition exchange programs offer students a chance to go to school out-of-state at a special discounted rate. The two largest of these programs are the Western Undergraduate Exchange and the Midwest Student Exchange Program. Both allow students to attend participating state colleges for 150% of in-state tuition, and MSEP also allows students to receive a 10% discount on tuition at participating private colleges.

If you want to attend school out-of-state, you may also be able to qualify for in-state tuition by becoming a resident of the state. Check the residency requirements of the state and the school where you want to attend college--while some will not allow college students to apply for resident tuition, others happily grant residency to students. A recent article by Kim Clark in U.S. News gives some other tips for how to get in-state tuition at out-of-state schools.


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by Emily

It’s no secret that the last couple years have been hard for higher education. The recession took a toll on colleges and students from a number of directions, and now a new study is analyzing the impact of state budget woes on public colleges and universities. The figures released this week in Grapevine, a publication focusing on state higher education support, show a continued decline in state funding for higher education and an accompany analysis suggests the funding cuts could have serious negative consequences for students at state colleges.

Overall, state higher education funding has declined 1.1 percent in 2009-2010, following a 1.7 percent decline in 2008-2009, down to $79.4 billion from a high of $80.7 billion in 2008. The declines represent a sharp reverse from the previous three years, which saw a 24 percent increase in state support for higher education. Without federal stimulus funding, a substantial part of which went to higher education, budget cuts would have been even more severe, with a 6.8 percent decline in funding over the course of two years.

Despite the stimulus, some states still made substantial cuts to higher education. While higher education funding reductions in California, Michigan, and Illinois have received the most press, these states were not alone in substantially reducing money spent on colleges. Even after the stimulus, 11 states still posted a decline of more than 5 percent in higher education funding in the last year, with Vermont seeing the steepest drop at 16.4 percent. Overall, 28 states experienced declines in funding after the stimulus, with 37 states reducing funding before stimulus dollars are factored in. Nine states also have shown a reduction in education spending that's severe or sustained enough to register as a decline over the last 5 years.

Other states have managed to increase higher education funding, however. Montana and North Dakota boasted the highest increases at 23.3 and 18.5 percent respectively, with revenue from energy helping to spare them from the dire budget situations most other states faced this year. Similarly, Texas increased education funding by 12.5 percent, even with a much larger population and overall budget.  North Dakota also registered the highest 5-year increase in education spending at 49.3%.

States’ higher education funding choices can have long-term consequences. A report issued last year by the State Higher Education Executive Officers (who also co-sponsored this study) shows that state cuts to higher education made during recessions tend to become permanent. So, while state university systems have more or less managed to weather this year’s cuts, they may not do so well in the future as a lack of adequate funding persists. The study published this week underscores this risk, giving three reasons the current budget trends could potentially reach what the authors term “crisis proportions.”

First, more than 5 percent of the current year’s state appropriations are from stimulus funds, which are exhausted after this year. Second, state revenues have fallen at an unprecedented rate and states are unlikely to quickly make up the difference in the coming years. Finally, the analysis casts doubt on whether schools are able to fully meet student demand, with enrollment caps, course cancellations, and higher tuition all serving as budget-driven barriers to enrollment. In short, state colleges may already be in danger of failing at their mission of educating their state’s students, and the situation is likely to only get worse in the coming years.

While these statistics are a bit dry and may at first seem like primarily a cause for concern among college administrators, they can have a direct effect on your college experience. If you choose to enroll at a state university, the state’s higher education spending has a direct impact on your tuition, your financial aid, and the quality of your college experience. Continued state budget troubles may make currently attractive universities less of a bargain, while increased state spending might help schools in out-of-the-way places like North Dakota flourish and provide better service to their students.


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by Agnes Jasinski

Everyone knows institutions of higher education have been impacted by the economic downturn. Students have been affected too, in the worst case scenarios paying more for their college degrees or facing financial aid shortages. A survey released today further defined just how worried college freshmen are about money, the cost of college, and finding a well-paying job once they graduate.

The annual survey by the Higher Education Research Institute (HERI) at the University of California at Los Angeles polled nearly 220,000 first-time, full-time students at 297 four-year institutions. It showed that more students are relying on student loans to fund their educations and looking at schools that offer more financial aid opportunities. But there was also a mental shift. More students are concerned about getting good jobs after graduation, and how they're going to cover college costs in the first place. The survey also showed that fewer freshmen are majoring in business these days, with those numbers at their lowest since the 1970s. The recession could be to blame. Majoring in business may not seem as enticing as it once did as banks face folding or bailouts and the economy has yet to return to prosperous levels.

According to the survey:

  • 41.6 percent reported that cost was a "very important" factor in choosing which college to attend.
  • those reporting that an offer of financial aid was important in their college choice increased to 44.7 percent, up from 43.0 percent in 2008 and 39.4 percent in 2007.
  • 56.5 percent reported they were more likely to place high importance on choosing a college where graduates get good jobs, the highest level since the question was introduced in 1983.
  • 53.3 percent reported taking out loans, the highest percentage in nine years.
  • 4.5 percent reported having an unemployed father, more than at any other time in the history of the survey. Nearly 8 percent of students also reported that their mothers were unemployed, the highest percentage since 1979.

The respondents to the survey also seemed to have a feeling of social responsibility, perhaps due to not only the recession, but changes in the White House, or more simply, the idea that community service and volunteerism could make them better candidates on the job market:

  • 30.8 percent indicated that there was a "very good chance" that they would take part in civic engagement.
  • 56.9 percent who volunteered "frequently" as high school seniors indicated that there was a "very good chance" they would do so in college.

It's not a bad thing to worry about how you're going to pay for college. Often, tough decisions need to be made based on the financial aid available to you. Should you stay in-state, rather than pursue a degree at a private institution on the opposite coast? Should you consider community college to save money on those first two years? Finding money for college may seem daunting, but you do have options, whether that's being flexible in the college search or applying for as many scholarship and grant opportunities as you can.


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by Agnes Jasinski

As a response to "operating in unsettled and ... unsettling times," Williams College has decided to stop offering its no-loan student-aid program and to reintroduce modest student loans to students' financial aid packages.

In an open letter to the Williams community released over the weekend, the school's Interim President Bill Wagner said the change would not affect current students, but beginning with the class that enters in the fall of 2011. Families below a certain income will still not be expected to borrow at all, and other students will be offered loans on a sliding scale up to a maximum size that the school says will still be among the lowest in the country.

Student loans were eliminated at Williams in the 2008-2009 academic year, joining more than 30 private colleges that had adopted similar policies, such as Amherst and Claremont McKenna colleges. (There have already been rumors that Amherst College may join Williams in amending its own policy.) The decision to cut loans out of students' financial aid packages came at a time when the school's endowment had grown so large that there were demands to spend more. But at the same time, more students were applying for and qualifying for financial aid.

Williams isn't the only college to renege on a promise to students, nor is it the first. Lafayette College raised the loan limit it pledged to students from $2,500 a year to $3,500 a year if they had family incomes of between $50,000 and $100,000. Dartmouth College has been requiring loans again for those at certain levels now exempt from borrowing. Endowments across the country have plummeted, suffering their worst losses since the Great Depression. According to an article in The Chronicle for Higher Education published last week, the value of college endowments declined by an average of 23 percent from 2008 to 2009. An endowment student sponsored by the National Association of College and University Business Officers found that of the 654 institutions that reported carrying long-term debt, the average debt load grew from $109.1 million to $167.8 million.

Are "no loans" policies feasible at all? Some critics explain that there are students currently exempt from taking out loans who could easily be able to pay them off once they graduate. Students with family incomes of more than $120,000 have the resources to borrow less than other students, critics say, and the focus instead should be on helping low-income students keep their loan debts at a minimum. Williams hasn't been clear as to what the family income cutoff would be for its new policy, but it will undoubtedly hit the middle class hard.


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by Agnes Jasinski

Whether you're an independent filing your own taxes, or a dependent whose parents or guardians are covering a good portion of your tuition, it's a good idea to be aware of the tax credits and tax benefits you and your family members could be eligible for this filing season.

The federal government has estimated that up to 2 million tuition-paying Americans will receive as much as $2,500 back on their taxes when they file in both 2010 and 2011 by taking advantage of the American Opportunity Tax Credit. That credit was established through the American Recovery and Reinvestment Act. The American Opportunity Tax Credit, which can be claimed for tuition and certain fees you pay for higher education in 2009 and 2010, is targeted at low- and middle-income families, and isn't available to single filers earning more than $90,000 a year or couples earning more than $180,000. Even those who owe no taxes due to how little they make may receive refunds of up to $1,000.

The American Opportunity Tax Credit expanded (and renamed) the already existing Hope Credit. How did the two compare? 

  • The Hope Credit applied only to the first two years of college. The American Opportunity Tax Credit can be claimed for expenses for the first four years of post-secondary education.
  • The American Opportunity Tax Credit is a $700 increase over the Hope Credit.
  • The term "qualified tuition and related expenses" has been expanded to include expenses used for "course materials," which means books, supplies, and equipment needed for a course of study.
  • A qualified, nontaxable distribution from a Section 529 plan during 2009 or 2010 now includes the cost of the purchase of any computer technology, equipment, or Internet access and related services, if such purchases will be used by the beneficiary of the plan and the beneficiary's family during the time those beneficiaries are enrolled in an institution of higher education.

Other important facts before you file for an American Opportunity Tax Credit:

  • The credit is claimed using Form 8863, attached to Form 1040 or 1040A.
  • You have to choose between tax credits. You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the lifetime learning credit. (You should choose which one will offer you the best refund. It's fine to take advantage of all of your options.)
  • 60 percent of the American Opportunity Tax Credit is nonrefundable, so if your credit exceeds your tax, the difference isn't refunded to you.

Make sure you and your family are prepared this tax season, because the federal government does offer perks to going to - and paying for - higher education.


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by Agnes Jasinski

Several colleges across the country have opened food banks to assist students struggling to make ends meet at a time when tuition costs continue to rise and schools look to find ways to recoup budget losses over the last academic year.

Michigan State University, where students have dealt with the loss of the Michigan promise scholarship, has seen a 25 percent increase since 2008 in the number of students who visit its student-run food bank. Grand Valley State University opened a food pantry in April to help students cope with higher tuition costs. An article in the Detroit Free Press over the weekend describes the situations students have found themselves in. Some have parents who have been laid off and can no longer contribute to college educations, some have children and families of their own that they have had trouble supporting, some have lost part-time jobs that covered the costs of food, and others just need some help in between paychecks as they work campus jobs when they're not attending class.

Michigan State's Olin Health Center, where the food bank operates biweekly, and the Grand Valley State pantry, which has helped more than 200 students since it opened. Both are able to run through regular donations of cash and food.

Food banks across the country have seen an increase in visitors, both student and not, in tough economic times. Nearly one in 10 Massachusetts residents visited a food bank in 2009; one in eight people in both Fort Worth, Texas, and Greensboro, North Carolina visited a food bank last year. College campuses have responded with other types of emergency financial assistance, as well. The University of Michigan has been offering emergency grants to students who need help paying for the costs of food or medication, or an unexpected move. Students can apply online and receive $500 by the next morning, according to the Free Press article. Western Michigan University offers short-term emergency loans to help with living expenses.

If you're having trouble covering costs, despite living frugally and within your means, there is help out there. Whether you look to your local community or explore options through your financial aid office, consider every option.


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by Agnes Jasinski

Despite recent trends of more students across the country enrolling at institutions of higher learning, many students and their families remain mostly uninformed and unprepared to navigate the college and financial aid application process, according to a report issued yesterday called "Planning for College: A Consumer Approach to the Higher Education Marketplace."

The report, from MassINC, a think tank in Massachusetts, looked at decisions students and families need to make when applying to and paying for college, and the information they need to make those decisions. It found that students and parents currently have great difficulty "getting the most out of their col­lege dollar," as the price of higher education only continues to rise.

Perhaps even more alarming is that families have started borrowing more to pay for college, without considering risk and the rate of their return. Related to increases in student borrowing amounts, an article in The Chronicle of Higher Education yesterday looks at the idea that doctoral students finish faster if they take out large loans. The most obvious answer why is that taking out more student loans allows the students to take more classes, and quit part-time jobs that may have been reducing their college costs. It's a choice students must make every day - should you sacrifice some comfort to reduce your student loan debt, even if it means taking longer to complete your degree? It's a personal decision, but students should be aware that they'll be expected to start repaying any debt once they graduate.

The Massachusetts study also found that students and families had little knowledge of tax benefits and college savings plans, and how to compare them. For example, there are 118 different 529 Plans, and the resources out there do little in the way of pointing consumers to the advantages and disadvantages of each. Families and students also admit to knowing little about the actual sticker price of colleges, as that often depends on the funds available to assist incoming students, an unknown when those students first apply.

The report's authors suggest families and students must become more like "savvy consumers" who are able to understand and successfully manipulate the college and financial aid application process to their advantage. The process should also be made less complex, an idea that is already being explored by federal legislation such as the Higher Education Opportunity Act. Finally, families need reliable measures about the educational experience that colleges and universities offer beyond the annual rankings we see in the Princeton Review, for example. According to the report, while the U.S. Department of Education is providing increasingly consistent and accessible indicators, such as graduation rates, this branch of the college-bound decision remains the weakest.


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by Agnes Jasinski

The president of Middlebury College has introduced a plan that would cap the school's annual comprehensive cost increases at 1 percentage point above inflation, a proposal that would slow increases that have been running well above and independent of changes in the Consumer Price Index. The school's board is expected to approve the proposal prior to planning its budgets for the next year.

According to an article in Inside Higher Ed today, the decision to come up with a proposal for a tuition increase cap came when administrators started talking a hard look at the ever-growing cost of a liberal arts degree. At Middlebury, the "comprehensive fee" of an education there - tuition, room and board - has reached past the $50,000 per year mark. And despite a record number of students applying to the school, administrators felt they should be forward-thinking rather than taking advantage of the current windfall of applicants. Those numbers won't keep up forever, after all. In a speech at the college on Friday, the school's president, Ronald D. Liebowitz, said there would eventually "be a price point at which even the most affluent of families will question their investment; the sooner we are able to reduce our fee increases the better."

A number of schools have tried to impose tuition freezes in the past, only to revert back to their old ways when budgets tightened. Princeton University tried in 2007; Williams College tried in 2000. Middlebury administrators, however, hope their cap is sustainable for the long term. Middlebury's increase for the current 2009-10 year was 3.2 percent, 3 points above inflation. The average annual increase for private, four-year colleges is 4.4 percent, according to the College Board. Critics of the proposal worry that cuts will come from elsewhere to make up the funds lost by the cap; the school loses about $900,000 for each percentage point increase it doesn't make. In the Inside Higher Ed article, Liebowitz said he saw revenue potential in the school's unique programming, and that the move could make the college even more desirable to applicants also applying to private colleges who are not considering tuition increase caps.

In 2008, only five colleges charged $50,000 a year or more for tuition, fees, room, and board. In 2009, 58 did, making $50,000 the new norm. Still, it could be worse. Tuition and fees increased by an average of 4.3 percent at private colleges and universities nationwide for the 2009-2010 academic year, according to data from the National Association of Independent Colleges and Universities. Those figures, although much higher than the rate of inflation, were still lower than previous averages. In fact, those tuition increases were the lowest they have been in 37 years, despite the struggling economy. On average, schools also allocated 9 percent more to college scholarships and grants for 2009-2010 than the previous academic year.


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