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College Reps and National Associations Hold Ethics Meeting

September 24, 2007

by Scholarships.com Staff

On September 20, 2007, a meeting of more than 40 representatives and national associations was held to discuss college ethics matters.  The off-the-record discussion was organized by David Ward, the president of American Council on Education (ACE), in part as a response to recent investigations into unethical business practices between student lenders and colleges.

According to The Chronicle of Higher Education, the meeting dealt with problems within the student lending industry as well as with questionable credit card solicitations to alumni and sporting-event ticket distributions. Mr. Ward was quoted as saying, “"If, for example, a president is about to sign a contract, somebody should say, 'What's the story we're giving to the public on this?' And if the president pauses, then maybe they need to pause on the contract too."

Pressures on schools to come up with funds have led to questionable actions that include receiving kickbacks from lenders and study abroad organizations. The meeting was to address such actions and to come up with plausible solutions. During the conference, Mr. Ward was asked to create a committee that would address legal problems between colleges and businesses and to come up with a checklist to assist college administrators in recognizing potential ethical problems.

To avoid or minimize the use of student lender services, students can look to scholarships and grants that can assist them in funding a college education. Conducting a free scholarship search will allow students to find myriad awards they are eligible to receive. For additional information on financial aid and college-related issues, students can take advantage of Scholarships.com Resources.

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College Culture , College News



Rumsfeld to Receive, Give Fellowship

September 26, 2007

by Scholarships.com Staff

Former Defense Secretary Donald Rumsfeld is to receive a much contested Stanford University fellowship, and to offer one.

Much of Stanford University’s faculty as well as numerous students and alumni were outraged after it was announced that Donald Rumsfeld would be receiving a one-year fellowship from the school. The appointment would entail Rumsfeld examining and advising a university panel on issues of national security and the aftermath of September 11th.

Like most Ivy League schools, Stanford is known to be campus of liberal thinkers—the same can’t be said of its public policy research center that extended the invitation. It is unsurprising that a former high-ranking staff member of the Bush administration, one who resigned amidst accusations of Iraq war mishandling, was immediately deemed a campus misfit.

A petition with, as of now, 3,483 students, alumni and faculty signatures has been created in the hopes of withdrawing the offer.  As stated in the petition, “We view the appointment as fundamentally incompatible with the ethical values of truthfulness, tolerance, disinterested enquiry, respect for national and international laws, and care for the opinions, property and lives of others to which Stanford is inalienably committed.”

Donald Rumsfeld also had something to say on the topic of fellowships—that he will soon be awarding them.  There are plans in store for a new Rumsfeld foundation that will shortly be awarding fellowships to students who plan to enter the field of public policy after graduating from college. Rumsfeld hopes that the award will encourage students to work for the government.

In addition to assisting graduates, the foundation will offer loans to micro-enterprises in developing countries and support Central Asian republics. It will likewise fund lectures on various topics, the kind of work Rumsfeld may be doing for Stanford.

According to the Washington Post, Rumsfeld has recently criticized both the press and Congress for “creating an environment that is not particularly hospitable to public services.” It was a comment in response to an advertisement that blasted Army General David H. Petraeus as one to, “Betray Us”.  But that was the press. Who is left to blame for student and faculty criticism?

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College News , Fellowships



Student Loans: To Consolidate or not to Consolidate

September 26, 2007

by Scholarships.com Staff

President Bush is certainly keeping students waiting. Graduates debating loan consolidation and lenders pressuring them to go through with it are standing by to see if the Congress-approved College Cost Reduction Act will finally be signed by the president.

If the bill is passed, the government will cut lender subsidies by October 1st. The savings will then be used to increase Pell Grants to needy students. October is fast approaching, but the president has yet to make a move on the bill approved by Congress on September 7th. The potential law is not only important because of the grant factor; it is important because it may mean cuts in financial breaks offered by student lenders.

Lenders have warned that if the bill passes, students will not be granted many of the financial perks they were once eligible for. One of the perks in jeopardy is the Sallie Mae (the largest lender in the business) interest rate cut on consolidated loans to borrowers who pay on time for three years. Sallie Mae and other lenders are making the best of the situation by pressuring students to consolidate with them before things change.

Except that consolidating is not always in a student’s best interest. Students who have loans issued before July 2006, ones with interest rates that change each year, may lock in this year’s rates by consolidating. (loans borrowed after July 1, 2006 have fixed yearly rates.) If interest rates increase, students may be doing themselves a favor. They will be able to keep their discounts and maintain lower rates.

But there is a large chance that rates will go down. If students wait, they may be able to get lower rates that can offset lender discounts, ones that many students aren’t even eligible for. Students should also remember that by consolidating and increasing the lifespan of their loan, they will be paying more in the long run. They will be paying less each month, but additional payments mean more interest buildup.

Consolidation is a tough call. It’s hard to foretell the future. Numerous financial aid administrators suggest that students contact their lenders to find out exactly what discounts they can keep by consolidating. If they are big and the likelihood of eligibility is there, they can consider.

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College Cost Reduction and Access Act Officially an Act

September 28, 2007

by Scholarships.com Staff

After an anxious wait on the part of students and lenders, President Bush finally signed the College Cost Reduction and Access Act into law. And you know this is big if MTV reported on the bill even though partying at club Les Deux wasn’t involved.

According to the new law, the maximum Pell Grant offered to students will increase while the subsidies the government offers student lenders will decrease. This is the biggest boost in student aid since the GI Bill for veterans---and a fresh change from the 2005 $12 billion financial aid cut.

Among those who will benefit are needy students eligible for government grants and those who borrow from the government. Currently, students are eligible to receive a maximum $4,310 Pell Grant each year. This number will increase gradually, reaching a high of $5,400 by 2012.

Under the act, new subsidized Stafford loan interest rates will also be cut. A low point of 3.4 percent will be available to students who borrow between July 1, 2011 and July 1, 2012. Unfortunately, students will have to wait until 2008 to take advantage of this change. Until then, they are stuck with the current fixed 6.8 percent loan interest rate.

Students who plan to teach in low-income neighborhoods after graduating may also benefit. Future teachers may receive a $4,000 TEACH Grant for each year they attend school (up to $16,000 for undergraduates and $8,000 for graduates), but a pretty detailed list of additional eligibility criteria must also be met.

The bill was largely a result of New York Attorney General Andrew Cuomo’s investigation into illegal actions within the $85 billion student loan industry. The investigation revealed that numerous financial aid administrators, including one from the Department of Education, received financial incentives from lenders who hoped to improve their standing with schools.

Some of the financial aid changes outlined in the act were previously considered, but Cuomo’s investigation provided much-needed impetus. Although Bush had initially threatened to veto the bill, he agreed to sign once recommended changes were made. In a White House photo, the president is shown signing the bill with four smiling college students, three smiling congressmen and a smiling Secretary of Education Margaret Spellings looking over his shoulder. A sign that read, “Making College More Affordable” hung from his desk.

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New GRE Questions Coming in November

October 2, 2007

by Scholarships.com Staff

The Educational Testing Service (ETS), the GRE administrators, will be making small changes to the GRE next month. After dropping their plans to vastly alter the GRE, the ETS decided to go for something smaller.

Instead of creating a new grading scale, different formats and a new time limit (as was originally planned), ETS decided to begin by introducing two new question types, one for verbal reasoning and one for math. The remaining questions will remain the same, and the students’ answer to new questions will not count towards their score—at least not yet. David Payne, Associate Vice President of Higher Education at ETS, announced that, “We will begin counting these question types toward examinee scores as soon as we have an adequate sample of data from the operational testing environment."

But for now, students are safe.  Those who encounter the new math question will be asked to type their answer in a box rather than to select it from a set of provided choices. Those who see the new verbal reasoning question will be asked to choose two or three, rather than the standard one, answers to complete a phrase. Each test taker will only be shown one new question, if any.

Both changes, once officially employed, will make the test harder for most. Because many graduate schools heavily weigh GRE scores when making admissions decisions, it is best to prepare as early as possible.
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Sallie Mae Buyout in Abeyance

October 3, 2007

by Scholarships.com Staff

Buying Sallie Mae, the biggest lender in the business, may have seemed like a great idea at first, but doubts have been creeping up. A group of investors that includes J.C. Flowers & Company, Bank of America, JP Morgan Chase, and Friedman Fleischer & Lowe initially offered $25 billion for Sallie Mae, but has recently retracted the offer blaming new legislation for the decision. The College Cost Reduction and Access Act signed by President Bush last week entails, among other things, government cuts on subsidies given to student lenders. Over the next five years, about $21 billion would be cut from lender support and invested in student aid programs.

J.C. Flowers & Company stated that their decision abides by contract rules and that such legislation was considered when the contract was drawn up. A smaller purchase price was still proposed, and, if Sallie Mae performs well, the offer may increase.

The legislation will certainly not put the lender giant out of business, but Sallie Mae may feel some pressure. The lender has stated that the new law will force it to give up some student perks, and that won’t go over well with borrowers. Those who have financial needs will still be forced to borrow once government grants and loans are exhausted, but increased caps on both may decrease student needs.

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College News , Student Loans



Sallie Mae Files Lawsuit against Buyers

October 10, 2007

by Scholarships.com Staff

On October 8, 2007, Sallie Mae announced its intent to file a lawsuit against the company’s potential buyers, a group of investors led by J.C. Flowers & Company. In April, the student lender agreed to a buyout offer of $60 per share. Since then, the buyers retracted their initial proposal, citing recently passed student loan legislation as reason. 

By signing the College Cost Reduction and Access Act, President Bush agreed to cut student lender subsidies by about $21 billion. Numerous companies, including Sallie Mae, threatened that the cuts would force them to eliminate borrower benefits such as, among other things, on-time payment reductions.

Following the bill’s passage, buyers lowered their initial buyout price to $50 per share. Sallie Mae rejected the offer and filed a $900 million lawsuit for contract termination. Albert L. Lord, the Chairman of Sallie Mae’s Board of Directors stated, “We regret bringing this suit. Sallie Mae has honored its obligations under the merger agreement. We ask only that the buyer group do the same.”
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College News , Student Loans



College Board to Leave Lender Industry

August 23, 2007

by Scholarships.com Staff

Effective October 15, 2007, College Board will no longer accept student loan applications. College Board, best known for administering the SAT and AP tests, announced its decision to leave the lender industry on August 22nd. In a press release, College Board stated that legislation aimed at curbing unethical relations between lenders and colleges made it too difficult to cover costs associated with education professional meetings. 

The legislation was created as a result of findings that numerous lenders made payments to colleges in exchange for spots on college preferred lender lists. Legislation included a more concrete definition of a lending institution—which categorized College Board as a lender—and restrictions on lender payments to financial aid officials. Although College Board does not itself lend money to students, it receives payments from lenders for allowing students to sign up. As it is now considered a lender, it can no longer offer funds to the financial aid officials it works with.

The meetings College Board convenes for education professionals are now subject to strict regulations. Under new rules, College Board would no longer be able to reimburse members for travel and lodging expenses.  Edna Johnson, a College Board spokeswoman stated, “If we no longer reimburse the educators, then only those educators from schools, colleges and universities with the financial resources to pay for the travel and the accommodation would attend.” The meetings held by College Board include discussions of practices for assisting families in paying for an education and tactics for effective administration of financial aid programs.

The new decision is likely to affect lenders more than it does College Board and the students who search for financial aid. According to the Washington Post, College Board issued 74,000 loans valued at $400 million in 2007, and the year is not over. However, less than 1 percent of College Board’s revenue comes from the lending sector.

Students who signed up with College Board aren’t the losers in this decision either. Those who wish to take out loans with companies represented by College Board may still do so by contacting lenders directly. They may be forced to do some extra research, but that’s a good thing. 

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College News



Pell Grants Increase While Lender Subsidies Decrease

July 20, 2007

by Scholarships.com Staff

On Friday June 20, the Senate approved the Higher Education Access Act of 2007 by a vote of 78-18. The bill, if approved by the House, would increase Pell Grant eligibility and lower government subsidies to outside lenders. The House passed a similar proposal—the College Reduction Act of 2007—in June, making a compromise on both versions likely. The overarching theme of the bill was an increase in government aid to students and, at the same time, a decrease in aid provided to student lenders.

Lowered subsidies would likely result in increased interest rates for students who take out loans from lenders outside of the government. Government loans offer students the best interest rates, but such loans also have smaller borrowing limits. Many students end up looking to lenders subsidized by the government for additional aid. While interest rates on subsidized loans are not as favorable as those offered by the government, they are still more favorable than those offered by private, unsubsidized lenders.

According to MarketWatch, the new bill could save the government up to $15.4 billion by 2012. The bill’s sponsor, Senator Edward Kennedy, D-Mass, was enthusiastic about the approval stating, "The passage of the Higher Education Access Act tonight was a victory not only for students and their families, but for the American people. With this new congress we made education a national priority again, and we’ve given the next generation the tools they need to compete in the global economy."

Fortunately for student borrowers, the bill did address worries about lender rate increases. Cuts on outside lender subsidies were also accompanied by increased caps on government loans as well as by increased laxity on government loan eligibility requirements. These changes are likely to benefit students who don’t borrow much. For those that do, effects will depend on just how much more the government is willing to lend and on how much outside lenders will choose to charge after cuts.

Students still have a lot to cheer about. The biggest perk of the Higher Education Access Act is its proposal to increase government grant offers. Free money is the best kind. Like scholarships, grants provide students with aid that need not be repaid. If the bill is enacted, the government would increase the amounts of Pell Grants a student may receive to a maximum $5,100. It would also alter the formula used to determine grant eligibility in a way that would lessen restrictions on financial circumstances required for grant reception.

Additional bill provisions include loan forgiveness options for borrowers who work in areas of public service for ten years, a cap on monthly loan payments required of students, and the establishment of a program that would increase competition between lenders. If the bill passes, the enactment may be expected within the next few months.

Posted By Scholarships.com to Scholarships.com Blog at 7/20/2007 09:57:00 AM

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College News



SAT Under Scrutiny Again: Scores Drop Further

August 31, 2007

by Scholarships.com Staff

College Board has been dealt another big blow. Just days after it was revealed they had bought their way into spots on preferred-lender lists, College Board announced a drop in SAT scores. College Board, a nonprofit organization that administers the SAT and AP tests, announced on August 28th that the average combined scores for 2007 graduates dropped by 1 point in critical reading and by 3 points in math and writing. Since 1967, average reading scores dropped by 41 points and math scores by 1 point (writing scores were not reported). College Board stressed the positive saying that more students, minorities in particular, were taking the test.

Earlier this year, the SAT was scrutinized after research released by the University of California revealed that the correlation between high school grades and SAT scores may not be as accurate as once thought. Although the test was a good indicator of first-year grades, the following three did not match up. Eventually, ambitious students adjusted to the University of California’s difficult curriculum, regardless of initial preparation.

The study was a continuation of a 2003 study which showed that SAT performance was better than GPA in predicting first-year college performance. Apparently, after catching up with the 80,000 students sampled, things had changed. In fact, findings showed that the longer students attended college, the greater the value in using high school grades as a means of predicting future performance. Such findings indicate that the strong correlation between SAT scores and socioeconomic factors is eventually watered down. The implications of this research are yet unclear. It is, however, becoming clear that the SAT may not be as good of an indicator of college performance as was once thought.

The question of whether the SAT & ACT tests should continue to be administered was one of two issues addressed in Scholarships.com’s annual Resolve to Evolve essay contest (the second dealt with the population’s effect on the environment.) To read what students had to say, you can visit the Scholarships.com 2007 Resolve to Evolve Award Winners page. To find sample questions and advice on preparing for standardized tests, you may visit the Resources section at Scholarships.com.

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