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More Students Receiving Financial Aid

April 15, 2009

by Scholarships.com Staff

As college costs continue to rise, the percentage of students receiving financial aid also continues to grow.  As of the 2007-2008 academic year, a full two-thirds of undergraduate students received some form of student financial aid, with 47 percent receiving federal aid. This is according to the "First Look" report on the National Postsecondary Student Aid Study published by the National Center for Education Statistics yesterday.

The First Look report shows that the percentage of students receiving aid has continued to increase, from 63 percent in 2003-2004, and 55 percent in 1999-2000.  It also provides a breakdown of the percentage of students receiving different forms of financial aid, such as grants and scholarships, federal student loans, federal work-study, and federal PLUS loans.  According to the report, 52 percent of students received college scholarships and grants, while 38 percent of students borrowed federal student loans.  Relatively few students took advantage of work-study and PLUS loans.

NCES collects and publishes data on financial aid every three years and the First Look report is typically followed by a more in-depth analysis.  The National Postsecondary Student Aid Study draws from a sizable sample of students:  114,000 undergraduates and 14,000 graduates at 1,600 colleges and universities. Additional information is available on the NCES website.

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College Students' Credit Card Debt Increasing

April 16, 2009

by Scholarships.com Staff

While an increasing number of college students received financial aid in the 2007-2008 academic year, that calendar year students also ran up more credit card debt.  The average college student owed $3,173 on credit cards in March 2008, compared to $2,169 in 2004.  This information comes from the student lender Sallie Mae, which has been tracking students' credit card debt since 1998.

The study also found that student credit card debt increases with grade level.  The average freshman owed $2,038 on credit cards, while the average senior owed $4,138.  The money is not just being spent on beer and pizza, either.  According to a supplemental survey by Sallie Mae, the vast majority of students (92 percent) report charging at least one educational expense, such as books, to a credit card.  This figure is also higher than in 2004, as is the percentage of students charging tuition to a credit card, which now stands at nearly 30 percent.  Students reported charging an average of $2,000 in educational expenses to credit cards.

Higher tuition, a poor economy, and difficulty finding private loans may have already pushed these numbers higher for 2009.  With high interest rates and the need to begin repayment immediately, credit cards are one of the worst ways to pay for school.  Scholarship opportunities and federal student financial aid should definitely be explored before students resort to charging tuition to a card.  A variety of grants and scholarships, as well as low interest student loans, can help students avoid credit card debt while in college, and keep their debt from consuming their entire salary when they graduate.  Before you reach for the plastic to pay your campus bills, spend a few minutes doing a free scholarship search.  You may be very glad you did.

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A Look Inside a Financial Aid Office

April 17, 2009

by Scholarships.com Staff

There was an interesting article in The New York Times today offering a rare behind-the-scenes look at a university financial aid office.  If you're still baffled by your financial aid award letter, or you just are curious to find out how it was created, this article is a good read.  While it focuses on Boston University, an elite and expensive private college, many of the processes discussed carry over to other schools, both public and private.

The article does an especially good job of explaining how financial need is determined, using the FAFSA, the CSS profile and an institution's policies.  It also includes a couple of concrete examples of financial aid packages and family circumstances that provide a valuable window into the logic behind determining financial aid awards, especially for families who may have received markedly different offers from different institutions.  While I'm not sure how universal the process of weighing aid so heavily in the favor of the top tier of students is, it definitely provides support for the idea of broadening your college search and applying to a wide range of colleges and comparing financial aid offers.

The complex nature of college financial aid awards, as well as the common practice of "gapping," where the school does not cover a student's entire financial need, also make a compelling argument for doing a thorough scholarship search.  While some of the largest college scholarships and grants come from universities, there's no guarantee you'll land a full-tuition scholarship anywhere you apply.  Winning scholarships from other organizations gives you more flexibility in where you attend college, as well as a greater level of certainty about how much help you'll receive.

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Study Shows Substantial Increase in Private Student Borrowing

April 23, 2009

by Scholarships.com Staff

Analyses of the data published last week by the National Center for Education Statistics are already starting to emerge.  The Project on Student Debt has announced that a significantly larger portion of students borrowed private loans in the 2007-2008 academic year than in 2003-2004, according to the NCES survey.

Private loan borrowing increased by 9 percentage points, with 14 percent of students now relying on private loans, as opposed to 5 percent in 2003-2004.  Not surprisingly, more expensive schools saw the biggest increase in private student loans.  At for-profit colleges, the percentage of students borrowing private loans increased from 14 percent to 43 percent, while private non-profit colleges also saw a substantial increase.  Overall, 32 percent of students at schools charging more than $10,000 per year in tuition wound up borrowing private loans in 2007-2008.

While the credit crunch may slow the rate of private borrowing in the near future, these student loans still are regarded as the best or only option by some students.  According to the Project on Student Debt's analysis, 26 percent of private loan borrowers did not take out any Stafford Loans first, and 14 percent did not even complete the FAFSA.

Private loans generally carry the highest interest rates and least flexible repayment terms out of all student loans and most experts encourage students to avoid them if possible.  Explore other options for financial aid first, especially grants and scholarships.  You will also want to consider your potential debt loand when choosing a college.  Since students at more expensive schools are more likely to have to borrow private loans, students with limited financial resources should think carefully about the relative merits of a private college as opposed to a state college or community college before committing themselves to private loan debt.

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Student Loan Default Rates on the Rise

April 24, 2009

by Scholarships.com Staff

Student loan default rates are rising for both federal and private loans as more recent grads struggle to find work.  The Wall Street Journal reports that the federal default rate is nearing 6.9 percent, the highest it's been since 1998.  Similarly, some private lenders are experiencing default rates that have already nearly doubled in just a year or two.

Loan repayment woes are expected to get worse as tuition continues to rise and the job market remains depressed.  Since student loans cannot be discharged through bankruptcy, borrowers are stuck with their debt no matter what happens.  Add in continued increases in the number of students borrowing to pay for school and the amount they borrow, and student loan defaults are poised to be a serious long-term problem whether or not the economy recovers quickly.

Borrowers do have some flexibility in negotiating their loan repayment terms, especially with federal Stafford Loans.  Borrowers of federal and private loans are also able to apply for a temporary forbearance, halting payments but not the accrual of interest, if they find themselves unable to pay.  However, reduced monthly payments now will mean either larger payments or more payments in the long run.

If you are looking at ways to pay for college, the best strategy is still to avoid student loans to the greatest extent possible.  Do a free college scholarship search and be sure to factor cost and available financial aid into your college search, as well.

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Congress Working on Credit Card Legislation

April 30, 2009

by Scholarships.com Staff

Student loans and credit cards make up the two most dangerous, and often difficult to avoid, debt traps for college students.  While some amount of borrowing for college can make life easier for students, too much debt can make life nearly impossible for graduates.  The same goes for credit cards.  Having a card is great for emergencies and your credit rating, but running up a large balance while in college can really hurt, especially for students who were approved during days of easy credit and are now seeing rates soar and credit limits plummet.

However, Congress is working to make things easier for current credit card holders and also to make the choice of whether or not to open a credit account less nerve-wracking for new college students.  Legislation in both the House of Representatives and the Senate seeks to create a "credit card holders' bill of rights," curbing confusing and predatory practices by banks issuing credit cards.  While the bills have received bipartisan support, including a ringing endorsement from President Obama, there is still some concern about possible backlash in the form of even more stringent credit requirements for people who want to open credit card accounts.

Still, picking up a poorly screen printed t-shirt along with a new line of credit with an 18+ percent interest rate is a campus tradition unlikely to be missed by many.  With college students' credit card debt still on the rise as of 2008 and relief from private loans still nowhere in sight, any new consumer debt protection will likely be welcomed by many college students and recent graduates.

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Scholarships Are Still Available for Students Short on Aid

May 1, 2009

by Scholarships.com Staff

As prospective college students are making their final decisions and sending in deposits to their schools of choice, many are finding themselves unexpectedly short on financial aid.  The New York Times and Los Angeles Times each ran a story today on California high school seniors struggling to pay for school in the midst of their state's continuing economic woes.  State budget difficulties have caused schools to limit enrollment and stretch institutional aid even thinner, while high unemployment means more students need more aid than before.

Students in Florida are also struggling to make up for an unexpected gap in their financial aid.  According to the Miami Herald, recipients of the state's Bright Futures scholarships will not see an increase in their awards next year, despite projected tuition hikes of 8 to 15 percent across the state.

Other states and university systems are also facing difficulties meeting students' full financial need, so many other students are likely to be in this boat.  If you've completed a FAFSA and applied for institutional and state aid, but are still short of what you need to pay for school, there are still scholarship opportunities out there, even this late in the game.  For example, Scholarships.com is currently accepting applications for our Resolve to Evolve Scholarship, a $1,000 award that can be applied towards your tuition next fall. There are many other college scholarships available. You can find out more by doing a free scholarship search.

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Colleges Rethinking General Ed Requirements

May 19, 2009

by Scholarships.com Staff

A large part of attending college is gaining exposure to new ideas outside your area of study and acquiring a broad base of knowledge and critical thinking skills along the way.  Traditionally, colleges have pushed students towards this goal through the use of general education requirements, which are rarely met with uniform enthusiasm.  English majors may dread the mandatory laboratory science class, while future engineers may fail to see the point in spending two semesters learning MLA citation style and how to write an argumentative essay.  Other students complain that general education requirements leave their college experience feeling disjointed and not directly connected to their working life. While they may eventually have the chance to draw on knowledge, experiences, or methods of inquiry from all of their classes, many students fail to see how when staring a list of required introductory courses in the face.

Colleges are aware of these concerns and many are beginning to rethink general education requirements, according to survey results highlighted recently in Inside Higher Ed. A number of colleges are studying general education requirements and desired learning outcomes, starting by identifying goals and asking students what they're taking from their courses.  Others are implementing new course requirements to expose students to a variety of disciplines beyond what they would normally get from introductory courses in their first two years of college.  More focus is also being placed on integrating a student's courses into the focus of their degree and career goals with the hope that students will be able to tie these lessons together and bring a more well-rounded approach to their major.

With renewed focus on college costs, the time it takes students to earn a degree, and the value of a college degree in the working world, the attention being paid to these courses seems timely. As many schools begin reevaluating or restructuring general educuation requirements, it's likely that the college experience of today's high school students will be different from not only that of their parents, but also that of today's undergraduate students.  What do you think of required general classes? Does the system need to be changed?  Don't just limit yourself to blog comments! If you're attending college right now, check out this year's Resolve to Evolve Essay Scholarship for a chance to win $1,000 by weighing in on this topic.

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Should Colleges with Large Endowments go Shopping?

October 11, 2007

by Scholarships.com Staff

It’s been a long year for colleges across the nation. Aside from the student lender and college study abroad fiascos, investigators are looking more closely at the handling of endowments by colleges.

According to The Chronicle of Higher Education, many schools have accumulated large endowment funds, some in excess of $1 billion. This is tax-free money, and if investments are well-planned, interest will lead to annual gains.

Despite this, college tuition rates have soared across the country, and students are increasingly left with debts that sometimes mirror mortgages. A proposal that could allay this problem involves forcing schools with large endowments to spend about 5 percent of their money each year, or be subject to taxes. After all, endowments are meant to aid, not hoard.

But some schools say that this is not as easy as it may seem. People who donate often leave specific instructions for endowment spending. Money may be set aside, for example, for students who are financially needy and epileptic, or for those who conduct research in the hearing sciences.

Based on the written testimony of four higher education associations, the American Council on Education, the Association of American Universities, the National Association of Independent Colleges and Universities and the National Association of State Universities and Land-Grant Colleges, proposed legislation is based on inaccurate college endowment information.

According to the testimony, an average of 80 percent of endowment assets were restricted at public institutions in 2006, and 55 percent were restricted at private ones. That, of course, still leaves plenty of unrestricted funds that could be used to greatly relieve student needs. This, by the way, is what higher education associations already claim to do.

The issue is a bit of a slippery slope. Endowments could diminish if expenditure choices were left up to college officials. Plus, available money doesn’t necessarily translate into swimming pools of cash for directors to dive into. 

Then again, tuition is getting out of hand, and storing large amounts of money when students have little choice but to take out excessive loans seems a bit immoral. Perhaps additional information is needed on unrestricted money expenditures and on how much is needed to maintain interest that would keep funds afloat.

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Pros and Cons of Large State Universities

October 18, 2007

by Scholarships.com Staff

For some individuals, a large state university is the best college choice. For others, a smaller school or private college might be the best selection. Before making a final decision to attend the largest university in your state, it is a good idea to consider the pros and cons of state universities.

State University Pros  
     
  • Affordable tuition, particularly for in-state students
  •  
  • Knowledgeable instructors
  •  
  • Large library facilities
  •  
  • Many social opportunities
  •  
  • On-campus employment opportunities
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  • Opportunity to meet and develop relationships with many different types of people
  •  
  • School spirit and student loyalty
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  • State universities often attract distinguished scholars as professors
  •  
  • Varied selection of extracurricular activities
  •  
  • Well-funded athletic programs
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  • Wide variety of majors from which to select
  •  

State University Cons  

     
  • Access to professors may be limited
  •  
  • Classes may fill quickly, so you might not be able to get the schedule you want
  •  
  • Class sizes may be very large
  •  
  • Environment may not be as nurturing as a smaller college
  •  
  • Lack of one-on-one attention from instructors
  •  
  • Some professors may be more focused on conducting research and publishing than teaching
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  • Sometimes there is a tendency to over-emphasize athletics
  •  
  • Students may get lost in the crowd, particularly if they are introverted or not inclined to join student organizations
  •  

For more information on choosing the right college, major,  or even roommate, visit our resources section.

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