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by Emily

An omnibus appropriations bill for the current fiscal year passed the House yesterday and is on its way to the Senate.  This piece of legislation will raise the maximum award for Federal Pell Grants to $5350 for 2009-2010.  The bill was put on hold last year due to threats of a veto from President Bush.

While Pell Grants received a funding boost, SEOG grants will remain at 2008 funding levels, as will work-studyPerkins Loan cancellation programs will receive a boost in funding to cover shortfalls.  Additionally, TRIO and Gear Up programs, aimed at helping low-income students get into college, also received more funding.

The first draft of the budget for the 2010 fiscal year is also heading to Congress soon after being unveiled by President Obama this morning.  While details are still emerging, based on an address the president delivered Tuesday, it's likely that further funding for financial aid programs and higher education in general will be included. 

While budgets are being hashed out and college aid is generally on its way up, more trouble may be brewing for student loans.  A PLUS loan auction program slated to go into effect this summer could reduce the availability of these loans that parents take out on behalf of their students, at least at schools participating in the FFEL program. Financial aid officers have petitioned Congress to delay the scheduled cut in PLUS loan subsidies so as not to jeopardize students' ability to pay for school in the midst of a recession that has already driven dozens of banks away from one form of student lending or another.


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by Emily

Details of President Obama's proposed 2010 budget are emerging, with education being one of the first sections unveiled.  In the budget proposal are increases and structural changes to Federal Pell Grants, changes to Federal Perkins Loans, and the potential elimination of the Federal Family Education Loan Program, so that all new Stafford Loans and PLUS Loans for 2010-2011 would be originated by the federal Direct Loans program.  The president's budget also recommends that the new $2500 American Opportunity Tax Credit be made permanent, and that $2.5 billion be devoted over the next five years to programs to increase college access and completion.

After remaining nearly stagnant between 2002 and 2007, the maximum award for the Federal Pell Grant has increased significantly over the last few years.  It shot up from $4050 in 2006-2007 to $4310 in 2007-2008, then $4731 in 2008-2009 and now stands at $5350 for 2009-2010.  If this provision in President Obama's 2010 budget is adopted by Congress, the maximum Pell Grant will be set at $5500 for 2010-2011, and from there on out, it will increase in step with the consumer price index, plus 1%.  This award amount would become mandatory, as well, saving Pell funding from being at the whim of Congress.  This is good news across the board for now, but may be a problem later, since tuition and fees have steadily outpaced inflation for most of recent memory and it is entirely possible that they will soon leave the Pell Grant in the dust, despite this new funding commitment.

While the president's plans for Pell Grants and tax credits have largely been met with enthusiasm, the proposed changes to student loans have received mixed reactions.  Changes to Perkins Loans would be good for some schools and students and bad for others, but would increase access to the loans overall.  The move from FFELP to Direct Loans also has its ups and downs.

Channeling all Stafford Loans and PLUS Loans through Direct Loans would save money and streamline the process, and it may even reduce confusion about federal versus private loans, since students would no longer be borrowing both from the same bank.  However, some worry that despite the extent to which incentives have already disappeared and the FFEL program has been subsisting off temporary goverment support for the past two years, abolishing it entirely may hurt students in the long run.  Moving to a single lender system would eliminate what little competition in the student loan market remained, doing away with the possibility of future repayment or loan consolidation incentives.  Others worry that some of the counseling and support that FFELP funding provided to borrowers would disappear, though a new $2.5 billion grant program would likely supplement these programs.


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by Emily

As college affordability continues to be a major issue for many Americans, more states and colleges are implementing policies to save students money.  Three recently unveiled programs tackle different aspects of the college cost dilemma confronting different groups of students, parents, and graduates.

A partnership between the University System of New Hampshire and businesses in the state could pay up to $8,000 of New Hampshire residents' student loan debt.  The program is set to take effect this fall and the University System of New Hampshire hopes to recruit at least 30-40 businesses to participate in its first year.  Students will be eligible to receive payments of $1,600 per year for the first two years of employment and $2,400 per year for the next two if they graduate from a New Hampshire college and remain in the state to work for four years.

Meanwhile, in New York, one college is formalizing a program to save students one year of loan debt by offering a clear three-year path to graduation.  Hartwick College has long offered students the option of taking more classes per semester and graduating in 3 years, but now the practice has been turned into an official academic program for high-performing students.  Students must have a strong high school GPA to qualify, and will be expected to take 18 credits in the fall and spring, plus four credits during a J-term each year, finishing with 120 credits in three years.

Three Nebraska state colleges are also trying to minimize student loan debt, but are targeting a group of low-income students to receive more university grant funding.  Wayne State College, Peru State College, and Chadron State College have announced plans to pay freshman year tuition and fees for all students eligible to receive Pell Grants.  Students would still be responsible for room, board, and books, but removing the worry of paying tuition and fees may encourage more low-income students to attend college in Nebraska, as well as enable them to stay enrolled past the first year.


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by Emily

According to US Department of Education data, over the last year colleges and universities have continued to leave the Federal Family Education Loan Program in droves, switching to the federally run Direct Loans Program.  Between February 2008 and February 2009, the number of schools issuing federal Direct Loans increased from 1,072 to 1,620, an increase of nearly 34 percent.

Direct Loans and FFEL are two competing programs schools choose between for the two most common varieties of federally funded student loans.  Both Stafford Loans and PLUS Loans can be issued and consolidated through either program (Perkins Loans are issued through separate loan programs).  Previously, FFEL was more popular, due in part to generous government subsidies that allowed participating banks to offer breaks on origination fees and loan repayment, as well as comprehensive programs to prevent borrowers from defaulting.

However, subsidy cuts and the collapse of credit markets in 2008 both took their toll on FFEL, as well as private loans, which are often issued by the same banks that participate in FFEL.  Many lenders left the program, and those still participating in FFEL could no longer afford to offer incentives to borrowers, and when the government stepped in to keep the system afloat last year, part of the deal involved taking other incentives and inducements (primarily ones involved in the conflict of interest scandals of 2007) off the table.  This ongoing string of troubles prompted more college financial aid offices to decide to make the switch to Direct Loans for Stafford and PLUS.

Direct lending has also received an endorsement from the executive branch of the federal government.  President Obama has called for an end to the lender subsidies that comprise the FFEL program, and urged Congress to consolidate funding into one federal student loan program: Direct Loans.


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by Emily

The omnibus spending bill passed by the House of Representatives in February was approved by the Senate last night, and is expected to be signed by President Obama this week.  The bill includes more funding for Federal Pell Grants, fixing the maximum award at $5,350 for 2009-2010, a number that's already been widely publicized.

Other student financial aid programs also receive a funding boost for the current fiscal year, including the Federal Perkins Loan cancellation program and several federal scholarship and fellowship programs.  These increases aren't necessarily tied to larger award amounts, however.  Federal Work-Study, which received a boost in the stimulus bill, will see the increase put into effect in the 2009-2010 fiscal year under the omnibus legislation.

Funding was held steady for SEOG, another federal grant program, as well as new Federal Perkins Loans.  ACG and SMART grants actually saw a decrease in funding--now these programs have funding equal to the amounts they award, but no longer have large, unawarded funding surpluses.  The surplus money from these programs has been redirected towards Pell Grants.

The passage of this bill, which should represent pretty much the final word on education spending for the current fiscal year, comes just in time for colleges to begin sending out financial aid award notices to students who have completed the FAFSA.  If you still have your fingers crossed for a magic bullet for college costs, it's still not too late to kick your scholarship search into high gear and begin looking at ways to pay for school beyond federal aid.


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by Emily

New college grads may face an especially tough time due to the recession.  The growth in anticipated new hires, which is measured twice a year by The National Association of Colleges and Employers, has been slowing since it reached a high in spring 2007, falling almost flat in the fall.  The numbers for spring 2009 show that for the first time in years, businesses actually anticipate hiring fewer college graduates this year than last--22 percent fewer, in fact.  According to The Boston Globe, the business and finance sectors have an even bleaker outlook, as does the northeastern region of the United States.

With this dim hiring picture in mind, soon-to-be college graduates are looking at alternatives to the traditional workforce. Additional education, teaching fellowship programs, and volunteer work are all proving popular. If you're a college student staring graduation in the face, keep in mind the increased competition and start researching and applying sooner, rather than later.

Graduate programs, including ones offered by business schools, are seeing increased enrollment as many students choose to either delay their entry into the workforce or push up their long-term plans to attend graduate school.  Graduate students can potentially land full-tuition fellowships or assistantships, as well as generous scholarship awards.  Many graduate degrees can help recipients become more competitive when they do enter the workforce, even if the economy does not recover substantially.

Similarly, teacher certification programs, such as the popular Teach for America, are seeing an increase in applicants.  These programs offer a stipend, as well as teacher certification, and in some cases a master's degree in education, in exchange for a commitment of one or two years teaching in a low-income school or a high-need subject.  Other programs exist with similar benefits, including teaching fellowships in several major cities such as New York and Chicago.  College students or recent grads who want to teach but don't want to pay for more school may want to consider these options.

Other volunteer programs, like AmeriCorps and the Peace Corps, also are seeing more applicants.  Such programs often come with a stipend or living allowance, as well as student loan deferments or even loan cancelation or repayment benefits.  Students can also participate in many of these programs while still in college or while pursuing graduate degrees.  If you're interested in an alternative to the post-collegiate rat race, there's no time like the present to start considering your options.


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by Emily

A bill to expand AmeriCorps and create new community service opportunities has passed the House of Representatives.  The Generations Invigorating Volunteerism and Education, or GIVE, Act passed today with bipartisan support in the House, and a similar bill, named the Serve America Act, has also been approved by the Senate education committee.  It will move to the Senate floor early next week, where it is expected to be met with a similar level of enthusiasm.  National service has been a priority of the Obama administration, so expect to see opportunities for community service expand shortly.

Over the course of five years, the bill will appropriate $6 billion to AmeriCorps, increasing positions from 75,000 to 250,000 and also increasing education stipends to $5,350--the same dollar amount as Federal Pell Grants.  The GIVE Act also includes provisions to encourage middle school students to volunteer, as well as funding to increase volunteerism on college campuses.  The GIVE Act will create volunteer programs focused on issues that have become major priorities in recent years, such as education and healthcare.

This legislation is heralded as the largest expansion in national service since the Kennedy administration.  While AmeriCorps and other volunteer programs pay far less than a full-time job, many students have been showing increased interest in them due to the education stipends and living allowances they provide, as well as the opportunities for service and unique experiences volunteers gain.  People serving full-time in positions affiliated with AmeriCorps or other programs also qualify for a new federal loan forgiveness program, which forgives Stafford loan debt for public service employees after ten years.


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by Emily

On the heels of last week's announcement that Sallie Mae would not participate in the upcoming PLUS loan auction, the student lending giant once again comes bearing news that may ruffle some feathers and potentially hurt its customers' ability to pay for school.

In a move to reduce default rates, Sallie Mae has announced changes to their popular private loan program.  As of next week, borrowers will be expected to make interest payments on their loans while they're still in school.  Additionally, the repayment period will be kicked down to under 15 years, as opposed to the current norm of 15 to 25, and the bank will also grant forbearances only in the case of serious financial hardship.  Other student lenders have expressed interest in this plan and may soon follow suit, according to an article in The Chronicle of Higher Education.

This is actually good news for student borrowers with the means to repay their student loans quickly and make interest payments while still in school--the total amount they repay will be much smaller under this plan.  Additionally, if Sallie Mae's loans become more appealing to buyers, it may help the bank stay around to make more loans and could potentially increase loan availability.  This move will also cause borrowers to think twice before applying for a private loan from Sallie Mae, which could encourage more responsible borrowing.

However, not everyone is taking out tens of thousands in private loans to drive a sports car to the campus climbing wall at an elite private college.  Many borrowers may already be at a community college or state university and may be using their private loans to buy ramen.  These students could potentially be edged out of college unless they find alternative sources of funding.  If they do stick with private loans, they may need to borrow more to be able to cover their interest payments on their current private loans.  This will in turn drive their interest payments and loan balances even higher, while allowing them fewer opportunities to receive a forbearance if they struggle to make payments.

Students who are currently relying on private loans from Sallie Mae to remain enrolled in college should be aware of these changes and search for other funding options if paying interest while in school is not an option.  Make your first move a scholarship search before reviewing other private loans or alternatives to alternative loans.


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by Emily

Student loans are becoming increasingly difficult for the average college student to obtain.  However, it appears at least one group is able to borrow private loans with relative ease: 80-something hospice patients in Florida.  A student loan scam recently uncovered in St. Petersburg, Florida involved two stolen identities and between $15,000 and $18,000 in loans.

An 80-year-old woman and an 83-year-old man had their identities used to take out private student loans from Sallie Mae.  A news story in The St. Petersburg Times describes the fraud as "poorly executed," involving blatant and inconsistent forgeries, including a fake ID with nothing changed but the picture--not even the 80-year-old's birth date. Private student lenders have previously come under fire when student loan scams were revealed, as private loans are by far the easiest type of student loan to fraudulently receive.

While many student loan scams don't even involve the pursuit of a real college degree, this one appears to have been perpetrated by a nursing student who had previously cared for the two victims of identity theft.  The woman accused of identity theft successfully completed coursework at Keiser Career College and received her Licensed Practical Nurse certification in the fall. Bail is currently set at $40,000--already more money than she would have owed had she taken out the loans herself.


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CollegeWeekLive

March 25, 2009

by Emily

Are you getting ready to kick off the college search, but unsure where to begin?  Today and tomorrow, prospective college students can participate in CollegeWeekLive, a free college prep event featuring college admissions and financial aid information from schools and experts across the country.  The event takes place online at CollegeWeekLive.com and kicks off today at 10 AM EDT, with the first keynote address scheduled for 11 a.m.

Participants in CollegeWeekLive will be able to visit virtual information booths and speak with admissions officers from colleges of all sizes in every part of the United States, as well as several online and international schools.  Current students from over 75 colleges will also be available to chat live and answer your questions about student life.

Admissions, testing and financial aid experts will also give live, streaming presentations throughout the day both days.  Topics range from athletic scholarships to standardized test preparation.  Speakers include Scholarships.com's Kevin Ladd, who will be sharing information and advice about finding and winning scholarships.  Kevin will be speaking at 5 PM Eastern tomorrow, so take the opportunity to hear what one of our scholarship experts has to say!

If you're a current high school student thinking ahead to college, this is a great event to check out.  Learn about colleges you may want to attend without spending hours in a car, and hear what people in the know have to say about paying for school.  Students who register also have a shot at winning prizes.


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