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Colleges Accused of Misleading Students About Financial Aid Applications

by Suada Kolovic

Figuring out how you're going to pay for your college education can be daunting. And while no one would argue that filling out the FAFSA is an important piece of the financial aid puzzle, it seems that some colleges might be making the process more complicated...and costly.

Rep. Elijah E. Cummings of Maryland alleged this week that more than 100 universities – including dozens of elite and Ivy League institutions – may be violating the law by telling potential applicants that they have to spend money filling out an unnecessary form. In a letter to U.S. Education Secretary Arne Duncan, Cummings said 111 universities required a financial aid form developed by the College Board to be considered for any financial aid. Fifty-eight of the schools told applicants that they had to submit the $25 PROFILE form "in order to secure any type of financial aid, including federal student aid," Cummings wrote. The other 53 directed applicants to "submit both the FAFSA and the PROFILE to obtain federal financial aid, although they do not clarify what each form is used to assess." And while Cummings insists that these schools appear to be in violation of the Higher Education Act, some college officials have defended their use of PROFILE, stating that because it takes into account factors the FAFSA doesn't — like home equity and some business income — it allows universities to make fairer decisions on who needs aid the most. Meanwhile, Cummings has requested a meeting with Duncan to figure out what steps need to be taken to ensure that colleges are not creating unnecessary barriers to federal assistance. (For more on this story, click here.)

With all the outrageous fees students already must endure, what do you think of universities adding an additional one? Are you for filling out a form that costs you $25 if there is a chance you might get additional aid or against forking up more money than necessary? Let us know your thoughts in the comments section.


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For Some, "Pay it Forward" A Step Backward

3% Over 24 Years Not a Bargain for All

August 22, 2013

For Some, "Pay it Forward" A Step Backward

by Kevin Ladd

Dreamed-up in Portland Oregon and soon lauded in New Jersey, Washington, Ohio and elsewhere, the "Pay it Forward" plan could cost some folks more than simply taking out loans at 6.8%. With the plan calling for approximately $9B in start-up funds and requiring college grads to pay 3% of their income for the 24 years following graduation, only those making below a certain amount would benefit. Certainly, it would be great in the beginning and sounds easier than securing loans, but anybody looking at the big picture and planning to earn over $55K per year upon graduation should probably consider a more traditional path. As always, we recommend finding as many scholarships as possible to keep student loans to a minimum. Free money is better than either of the aforementioned options!

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Merkley's "Pay it Forward" Guaranteed College Affordability Act

Dem. Senator Jeff Merkley Proposes Income-Based Loan Repayment

August 20, 2013

Merkley's "Pay it Forward" Guaranteed College Affordability Act

by Kevin Ladd

The new student loan bill Senator Merkley (D-Ore.) plans to introduce is a progressive idea intended to battle high loan repayment costs and hopefully restore the middle-class in the United States. The announcement of this proposal came after President Obama signed a student loan bill into law on August 9th. The new loan bill sets interest rates for undergraduate loans to the 10-year Treasury note plus 2.05% with a cap of 8.25%. While some Democrats oppose the bill as they feel Congress shouldn't "profit off the backs of students", it seems widely to be seen as an improvement over the default doubling of rates from 3.4% to a flat 6.8%. Merkley's goal is to make much bolder steps and pursue steps that more favor the middle-class and promote more affordable post-secondary education. As always, any ideas or comments you have are welcome and we will be sure to pass your ideas onto both the President and Senator Merkley!

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Obama Signs Student Loan Deal

by Kevin Ladd

There has been a lot of talk around student loan rates over the last few months, or even the last year or two, depending on how closely you've been listening. With the rising cost of higher education and the harsh reality that most students will need to take out loans to finance at least a portion of their education, federal student loan rates are a concern for many of us. Recently, President Obama signed a student loan deal to bring rates back down from the 6.8% to which they doubled on July 1st, when Congress failed to act before the deadline. Basically, the legislation is connecting student loan interest rates to the financial markets. This offers lower rates this fall because the government can borrow money relatively cheaply at this time and is far better than the 6.8% it has been for the last several weeks.

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by Agnes Jasinski

Sen. Edward Kennedy, a U.S. Congressman for more than 40 years, has left behind a long history of higher education programming, including the passage of an act last summer that expanded grant funding for low income students.

Kennedy died late Tuesday from the cancerous brain tumor he was diagnosed with in May of last year. One of his most recent efforts was working to pass the Higher Education Opportunity Act last August, which reauthorized the Higher Education Act for the first time since 1998. The act increased Pell Grant maximums, reaffirmed several scholarship programs, including the Robert C. Byrd Honors Scholarship Program, implemented loan forgiveness programs for eligible teachers and services in areas of national need, and detailed requirements that lenders provide borrowers with more information before issuing loans. The focus of the latest reauthorization was on expanding opportunities for scholarships and grant funding and streamlining the federal financial aid process in the wake of rising tuition costs and a more competitive student loan industry.

Kennedy had a long history of crafting higher education and student financial aid programs beginning with his work in 1972 on Pell Grants and Title IX, which prohibits the discrimination of women in education institution and has become known for increasing the number of women participating in college sports typically dominated by men. An article in the Chronicle for Higher Education today describes him as a "lifelong champion of equal rights and educational opportunity," attributing to him much of the work that went into the implementation of the federal direct-loan program introduced in the 1990s. The program allowed the government to lend money directly to students through their colleges.

>Kennedy, while not without his share of controversies, was able to get much of his work done through compromise and friends in the Republican base. Still, he was not without his critics. He publicly expressed his displeasure when the No Child Left Behind Act, legislation he had worked on with a number of Republican lawmakers, was passed with restrictions on grant aid to high-achieving math and science majors. In 2003, Kennedy attempted to move a bill through that would target colleges that gave preference to children of alumni, a timely topic today in the wake of the admissions controversies at several Illinois universities. His ties to his home state were obvious in much of his work in higher education, as Kennedy opposed any legislation that would impact the amount of student financial aid available to Massachusetts students

Eunice Kennedy Shriver, the Senator's sister and the founder of the Special Olympics, died earlier this month. Jean Kennedy Smith is the last surviving Kennedy daughter.


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by Agnes Jasinski

A report released today examines what policy makers should be paying attention to when crafting educational policies that benefit all college students. The report also comes to the conclusion that many decisions regarding Latinos in higher education are based on misconceptions about that student population.

The report, "Taking Stock: Higher Education and Latinos," was put together by Excelencia in Education, an organization that looks at racial and ethnic trends to identify where the need exists for more effective educational policies. The Lumina Foundation for Education, Jobs for the Future, the Congressional Hispanic Caucus Institute (CHCI), and the National Association of Latino Elected and Appointed Officials (NALEO) supported the report.

In a preview of the report earlier this week, The Chronicle of Higher Education described conversations at a panel discussion on Monday morning with the report's authors and leaders from a number of Hispanic organizations. The panelists suggested that public policy is based less on facts and more on stereotypes that define Latinos as an immigrant population with high drop-out rates. A majority of Latinos, however, are native-born and want to succeed in higher education.

Other highlights of the report include the following:

  • Administrators should look into expanding current college and university programs that are proven to accelerate Latino success and graduate Latino students.
  • Policy makers should consider the success of Latino students, a rapidly growing student population, when considering the educational success of the entire country.
  • In order to meet President Obama's degree-completion goals, policy makers must make degree completion among Latino students more of a priority.

According to the National Center for Education Statistics, the number of Hispanics enrolled in college rose from 20 percent in 1996 to 24 percent in 2006, a greater increase than seen among white students. Still, Hispanic students are still lagging behind other groups when it comes to college admission, retention and graduation rates. Studies looking into that attainment gap suggest that while most Hispanic students believe in the value of a college degree, their educations may be cut short for a variety of reasons. In data released in October by the Pew Hispanic Center, about 74 percent of respondents said they had to leave school because of personal and family responsibilities. Others said poor English skills hampered their ability to keep up with the rigors of college, and even high school. About 40 percent said it was just too expensive to go to college.

All minority students should know there is help out there when it comes to funding your education. Scholarships for minorities are the most common student-specific awards out there, and minority students are eligible for funding from not only the federal government, the state, and their intended colleges, but outside organizations that aim to diversify college campuses. Try conducting a free scholarship search to find not only Hispanic scholarships, but scholarships based on a myriad of criteria specific to you.


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by Agnes Jasinski

A recent Scripps Howard News Service article looks at one government job you may be surprised you don't need a college degree for. According to the Congressional Research Service, 27 House members, one senator, and two governors are currently serving without college degrees.

The article claims this is great news, considering the history of the position. Just 30 years ago, Congress had at least 48 representatives and seven senators without college degrees. Historians point to the idea that a college degree is becoming increasingly relevant for the position, which currently only requires U.S. citizenship and a number of years of residency in the state a politician is running in.

That shouldn't come as a surprise, right? We want our lawmakers to be educated. Do you know if your Congressman or Congresswoman holds a college degree? Considering the number of bills moving through Congress now related to college students' financial aid options and student lending practices, a college campus experience could be especially beneficial.

According to the article, the degree-less lawmakers defend themselves by saying they came up in a different era, when it was more beneficial to have a background in labor-intensive professions. In certain constituencies across the country, it may also be more useful to come from a farmer's background than an Ivy League one to better serve the communities those lawmakers look to represent. "They put their pants on the same way I put my pants on," Rep. Solomon Ortiz, a Democrat representing Texas' 27th District, was quoted as saying in the article about the difference between lawmakers with and without college diplomas. Ortiz joined the Army as a military officer to help support his migrant family, eventually becoming a sheriff when he returned home. Rep. Steve King, an Iowa Republican, ran a construction business for 28 years in Western Iowa before pursuing a Congressional seat.

According to the Congressional Research Service, the more educated Congressional lawmakers include 169 House members and 57 senators with law degrees, 83 House members and 17 senators with master's degrees, 16 doctors, six former Peace Corps participants, and five accountants. A more educated Congress also reflects the national trend. The percentage of people 25 and older with bachelor's degrees has increased from 4.6 percent to 28.7 percent between 1940 to 2007, according to the National Center for Education Statistics.


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by Agnes Jasinski

Despite some Republication opposition, The House of Representatives voted 253-171 to approve a bill Thursday that would stop lending from the bank-based Federal Family Education Loan Program in favor of the Department of Education-run Federal Direct Loans Program by July 2010. The bill, known as the Student Aid and Fiscal Responsibility Act of 2009, would also increase the current maximum Federal Pell Grant from $5,350 to $5,550 and provide for annual increases to the grant in the years to follow through a $40 billion pool of funding over the next decade.

The bill is expected to have more of a fight when it comes before the Senate, where even Democrats have voiced concerns about the potential for job losses in states that headquarter private loan agencies. Many Republican lawmakers argue that the student loan industry has served college students well, and oppose the government takeover.

Amendments to the bill that failed before its passage looked at ways to allow the private sector to continue student lending as a way to offer the college-bound more choice in financing their educations. Amendments that passed included strengthening support services to borrowers and making part-time students eligible for Year-Round Federal Pell Grants, according to the National Association of Student Financial Aid and Administrators.

The bill would also:

  • use the projected $87 billion in savings from the move to direct lending to expand aid to students and colleges.
  • provide $10 billion in grants to community colleges as part of the Obama administration's American Graduation Initiative, a project that aims to nearly double the number of two-year institutions across the country.
  • overhaul the Perkins Loan program and expand its funding from $1 to $6 billion per year.
  • provide $8 billion in grants targeting early-learning programs over the next 10 years.
  • make interest rates on need-based federal student loans variable starting in 2012.
  • simplify the financial aid application process.

The legislation has broad support from the Obama administration. The president called the bill a "historic set of reforms," adding in a statement that the bill "will end the billions upon billions of dollars in unwarranted subsidies that we hand out to banks and financial institutions." Currently, about one-forth of students' loans come through the government's direct loan program.


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by Agnes Jasinski

As the Senate prepares to begin looking at similar measures recently passed by the House to stop or further regulate bank-based lending, student-loan companies have been looking for ways to lobby for their own cause, spending millions in the process, according to an analysis of federal records done by The Chronicle for Higher Education.

Earlier this month, the House of Representatives voted to approve the Student Aid and Fiscal Responsibility Act of 2009, legislation that would stop lending from the bank-based Federal Family Education Loan Program in favor of the Department of Education-run Federal Direct Loans Program by July 2010. Student-loan companies have understandably been feeling threatened, and have spent nearly $14 million over the last year and a half lobbying the government to abandon attempts to stop bank-based lending. The country's largest lender Sallie Mae, which handed out about a quarter of the nation's federal student loans last year, spent $2.5 million this year alone, according to the Chronicle. The Senate's version of the legislation could come onto the floor as early as this week.

While the legislation has strong support from the Obama administration, some  Democrats in Congress have voiced concerns about the potential for job losses in states that headquarter private loan agencies. Sallie Mae has reported it would need to lay off about a quarter of its workforce if Congress voted to end bank-based lending. Republican lawmakers have argued more broadly that the student loan industry, while it could use some tweaks, has served college students well and should not go under the control of the federal government.

So does the bill stand a chance? The Obama administration would like it to be a sure thing, as legislation to limit bank-based lending was a campaign promise during election season. The Congressional Budget Office claims it would save taxpayers around $87 billion, but that's a figure disputed by Republican lawmakers. Colleges and admissions officials seem to be on the fence, worried mainly about any delays in financial aid funding for their neediest students and potential costs to schools' already tight budgets. The bill's proponents argue that savings from the legislation would either go toward overhauling the financial aid system or higher education programs. While the Obama administration has urged lawmakers to avoid interactions with special interest groups, the upcoming arguments on the Senate floor will determine whether those lobbying dollars swayed any opinions.


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by Agnes Jasinski

The topic of health care has dominated the news recently. Voices on both sides of the political spectrum have been trying to either stop the debate entirely or come up with ways to compromise on a complicated issue even legislators have become perplexed by. In a big push forward, the Senate Finance Committee voted "yes" yesterday to approve an overhaul of the country's health care system, signaling at least the first step toward potential medical reform.

But how will college students be affected in all this, if at all? An article in Inside Higher Education today looks at whether the proposals currently being considered will have an adverse affect on students and campus-based health care plans, which many students leave their parents' plans for. The article suggests that without any major changes, the bill up for debate ignores college health insurance plans altogether as it focuses instead on employer-based group plans and individual policies. Allowing students to remain on their parents' health insurance plans for a longer period of time could be an option under the proposal, although this would not address students whose parents have lost their jobs and health insurance, for example, and need an affordable plan to get them through their college careers.

Lookout Mountain Group, a nonpartisan group that researches the impacts of health care reform on students, released a statement last week that the proposals currently on the table did little in the way of making sure college students had access to affordable, quality health care plans. The group further warns that the cost of health care for students could actually increase if language isn't included in the bill that would address the lack of campus-based options. Jim Mitchell, the director of Student Health Services at Montana State University and spokesperson for the Lookout Mountain Group, said in a release that any health care proposals should strive to include college? and university?sponsored student health insurance/benefit plans under the bill's definition of "group insurance."

Worst case scenario, how would students' health care be affected if no changes were made? According to the Government Accountability Office, 71 percent of four-year private colleges, 82 percent of four-year public colleges, and 29 percent of two-year public colleges offer student health care plans. Best case scenario, legislators realize the oversight and work on including amendments that would not only maintain campus-based student health insurance plans, but expand health insurance offerings for college students, a population that definitely needs affordable options.

No matter what happens with the health care bill, consider your health insurance options before you get to college. Many insurance plans will allow full-time students to remain dependents under their parents' health care plans while those students are in college. If you choose to go this route, make sure you've notified your college; many schools that carry student health insurance plans automatically charge and enroll new undergraduates for their plans. (You may need to provide proof of your insurance in this situation, but that's for your own benefit. Trust us. You don't want to start college uninsured, and will be thankful for insurance when you get sick at college.) If you go with your college's plan, you'll probably pay less than you would for a private plan, and you'll need to be comfortable going to your school's clinic or health center for most of your minor ailments.


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