December 12, 2008
With bailouts, economic stimulus packages, and a number of other pieces of emergency legislation being passed to prop up seemingly every aspect of the economy this year, a group of organizations connected to student financial aid are asking for additional support for college students. In a letter to Congress, thirteen higher education advocacy groups, including the Project on Student Debt and the National Association of Student Financial Aid Administrators, asked that the next economic stimulus legislation include expansions to financial aid, namely Federal Pell Grants and Federal Work-Study.
While maximum Pell Grant awards have gone up slightly in recent years and legislation such as the Ensuring Continued Access to Student Loans Act has helped students continue paying their bills, these thirteen advocacy groups feel that more still needs to be done. Family 529 plans and other savings, as well as college endowments, have taken enormous hits, putting tuition costs potentially further out of reach of many. Meanwhile, private loans have become harder for students with poor credit or no cosigner to obtain, further jeopardizing some students' ability to continue attending college. Advocacy groups hope that stimulus legislation can help alleviate these college financing problems.
The letter called for four major changes. Two involve contributing more to existing federal aid programs, a third suggests making minor adjustments and clarifications, and a fourth involves establishing an emergency fund for students who have been hit hardest by the recession. Under the proposed plan, Congress would increase the maximum Pell Grant amount to $7,000 per year (it's currently $4731) and fully fund the program. Funding for campus-based work-study programs would also increase by 25%. The group also would like to see PLUS loans become easier for families to learn about and obtain. Finally, the group suggests that an emergency student loan pool be created for students who still are unable to meet their financial need through help from their schools, college scholarships, and federal student financial aid. This pool would only be available at institutions that show a strong commitment to helping students pay for school.
While there's no guarantee Congress will incorporate any of these suggestions, higher education groups are hopeful.
December 11, 2008
If you're thinking of heading off to a community college next year to either pick up an associate's degree or save some money on your core credits for a bachelor's degree, expect company. Similarly, if you're planning to attend a for-profit career college to up your chances of landing a decent job, you are definitely not alone. During recessions, people typically flock to college, often choosing cheaper or quicker degree programs to help them get on their feet and be more competitive on the workforce. Enrollment is up at career colleges and community colleges are expecting a similar increase. While reduced state higher education funding and continued troubles in the private loan market are causing some problems at two-year and career colleges, both types of schools are expecting major increases in enrollment as more Americans deal with fallout from the faltering economy. If you're heading off to college in 2009, you definitely want to take all of this into account. Apply early for admission and financial aid, and register early for classes. Several community colleges are also instituting programs to fill empty seats in classrooms with unemployed students, so if you typically wait until almost the start of the term to register for classes, you may have more trouble finding a seat than you have in the past. While students enrolled in online degree universities won't have to compete for physical space, they may still notice some effects of increased enrollment. With state universities and community colleges facing budget cuts and increased enrollment, you may face more competition for fewer resources as everyone searches for ways to save money. One group of students may actually see less competition, though. The number of students taking the Graduate Record Exam (GRE) this year is down, suggesting that fewer students may be planning to apply for graduate programs. Typically, like community college and career college applications, graduate school applications go up during recessions. However, while MBA applications are up this year, many programs that require the GRE may see fewer prospective graduate students. The effects of the credit crunch on student loans, the uncertainty of the economy and employment prospects, and the desire not to lose a source of income were all listed as possible reasons for this decrease in an article in Inside Higher Ed.
December 10, 2008
Last month, the Bill and Melinda Gates Foundation revealed plans for a new grant program that would focus on improving rates of college completion for low-income students. The first recipients of the grants were announced Tuesday, primarily consisting of organizations that either study or promote college preparedness and completion among the foundation's target groups. While few of the grants awarded will translate directly into college scholarships for first-generation, low-income, or minority students, many of the programs receiving funding are intended to help these students go to college and create success. Currently, only 25 percent of low-income students finish college, and each year high schools produce over 560,000 college-eligible graduates (most whose parents make less than $85,000 a year) who will fail to earn a college degree within 8 years, according to research cited by the New York Times. The Gates Foundation's stated goal for this grant program is to eventually double the percentage of low-income students completing a college degree or certificate program by the age of 26. The Chronicle of Higher Education explains that the grant initiative will have a three-pronged approach: "making the case to policy makers, educators, and business leaders about the need for increasing college-completion rates; accelerating success in remedial education; and ensuring that young people have the financial, social, and academic support to succeed in college." Coupled with the existing Gates Millenium Scholarship Program, which helps disadvantaged and minority students pay for school, these Gates Foundation grants have the potential to ultimately make not only attending college, but earning a degree and achieving college goals possible for the majority of American high school graduates.
December 9, 2008
Yesterday, New York Attorney General Andrew Cuomo and Connecticut Attorney General Richard Blumenthal announced that they had reached a settlement with the College Board regarding the preferred lender list controversy that has been unfolding since early 2007. The investigation revealed that the College Board had been offering discounts on its products to college financial aid offices that agreed to add their student loan service to a preferred lender list. Discounts of more than 20 percent off the College Board's proprietary software were given in exchange for placement on preferred lender lists. The College Board pulled out of private loans in 2007, but the investigations continued, culminating in yesterday's settlement, the latest of several with private student lenders.
The College Board has agreed to adhere to a code of conduct if it ever returns to the private lending market. The organization will be required to put $675,000 towards developing tools to help students and financial aid offices compare student loan offers. The College Board will also be required to distribute its new student loan calcualtors and "requests for proposals" (the forms that will allow for comparison among student loans) freely to schools for the next two financial aid cycles.
This news came as the Career College Assocation, an organization of private career-training institution administrators, released the results of a survey indicating the difficulty that students at two year, for-profit schools currently face finding money for college. More students are registering but not attending classes, and having trouble finding a private loan without a cosigner. The majority of schools report students needing to change lenders or facing higher interest rates. Some students are unable to procure a private loan at all, while others are contending with delayed loan disbursements. A number of these colleges have stepped in to offer institutional student loans, ranging from less than $1,000 to over $10,000, to students who are unable to meet the gap between their federal student financial aid and their cost of attendance.
December 8, 2008
December 5, 2008
December 4, 2008
Providing incentives for good grades is an increasingly common policy for parents of elementary and high school students. In my household, report card day meant personal pan pizzas and a reprieve from the topping battle among my sister who didn't eat cheese, my sister who only ate cheese, and my own vote for a supreme pizza with extra cheese. After pizza ceased to be a point of contention, my parents switched to the popular plan of offering financial incentives for good grades. I don't remember the pay scale exactly, but I do remember missing it once I hit college. Many undergraduate students are probably in the same boat, thinking about how even $10 or $20 per A could mean fewer trips to the plasma bank or even an extra textbook or two next semester.Two brothers, who also happen to hold economics degrees from Harvard and Princeton, had a similar idea. Michael and Matthew Kopko launched the website GradeFund last month to apply a model similar to fundraising for a marathon, where sponsors pledge to donate a certain amount per mile completed, to finding money for college. College students' friends and family members, as well as corporate sponsors and others interested in donating money to help deserving students fund their educations, sign up on the site to give a certain dollar amount per grade earned to a particular student.Students create profiles donors can search, and are matched up with people interested in helping them finance their educations. Rather than agreeing to provide student loans or cover tuition in exchange for work, like in other peer-to-peer financial aid programs we've mentioned on our blog, donors on GradeFund, like scholarship providers, don't require anything in return for their donations. While it's unlikely that a student will pay for their entire university education this way (according to The Chronicle of Higher Education, the current highest pledge per A is $400), they could easily pay for their books and possibly even a good part of other expenses that college scholarships or student financial aid might not cover. Plus, since these payments are linked to concrete achievements by students already attending college, donors may feel less apprehensive about the recipients of their philanthropy floundering once they face the academic challenges of their undergraduate studies.
December 3, 2008
December 2, 2008
December 1, 2008
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