January 23, 2008
Faced with government subsidy cuts and a major slump in the mortgage loan market, Sallie Mae has decided to get picky about who they lend their money to. For students, this may be either a scary setback or a much-needed lesson in wise financing. Most likely, it will be both.
Students who don’t receive sufficient financial aid from the government will soon find it more difficult to secure the funding they need to cover college expenses. This may force more students to opt for cheaper but not necessarily most desirable colleges and universities. If the problem becomes severe, a drop in the number of students who pursue a college education may be seen.
However, the rising number of student borrowers with overwhelming debt may make the news a benefit in disguise. Many students don’t realize the impact debt can have on their post-graduate lifestyles. Students who cannot quickly find high-salary jobs often find themselves either struggling to get by or sacrificing career goals for better-paid, less appealing jobs.
Because of Sallie Mae’s high standing in the business, their decision may be an early indication of what’s to come. Students who decide to take out loans frequently turn to Sallie Mae for help. The company manages almost $164 billion in student loans for 10 million borrowers and tops the list of most popular lenders. Troubles for Sallie Mae may portend ones for lesser-known student lenders.
This is not the first setback Sallie Mae has faced in the recent months. Over the past year, details of New York Attorney General Andrew Cuomo’s investigation into illegal actions within the lending industry have placed Sallie Mae in hot waters. Along with a number of other lenders, Sallie Mae has been accused of paying college financial aid officials to place the lender’s name on preferred lender lists, lists students heavily rely on when making important and difficult borrowing decisions.
Luckily, loans are not a student’s only option. Those who cannot afford a postsecondary education and have not received enough government aid should take advantage of the numerous scholarship opportunities available to them. By conducting a free college scholarship search at Scholarships.com, students can gain access to information about more than 2.7 million college scholarships and grants worth over $19 billion. Just about everyone can find awards they will be eligible to receive.
April 30, 2008
After an appeal by the Students for Sensible Drug Policy (SSDP), an international grassroots network of students concerned about the impact drug abuse has had on communities, the court has once again rejected the claim that withholding federal student aid from drug offenders is unconstitutional.
According to the 1998 Higher Education Act, students who have been convicted for having, for the first time, used drugs are to be denied federal college funding, including free aid in the form of Pell Grants, from the government for one year. The length increases to two years for a second conviction and becomes permanent after the third. For those convicted of selling drugs, the punishment is a two-year federal aid loss or, for two offenses, the permanent withholding of federal aid.
The SSDPF has complained that the double jeopardy law, one which prevents an individual from being tried twice for the same offense, makes such procedures illegal. According to The Chronicle of Higher Education, Judge Kornmann disagreed with the claim stating that the law served legitimate federal interests by minimizing college drug use and preventing taxpayers from having to fund the education of drug users or sellers.
February 1, 2008
Complaints about skyrocketing tuitions at four-year colleges and universities have been reverberated around the nation for quite some time—especially within the past year. Less attention has been paid to the financial difficulties at community colleges.
Even though four-year schools offer less expensive classes, they also possess fewer funds to offer students additional help in affording an education. Many universities have alumni who donate thousands, sometimes millions to their beloved alma maters. Some have accumulated endowments in excess of $1 billion. Such is rarely the case for community colleges.
According to an article published by the Associated Press, the financing problem is further compounded by the fact that community colleges are in dire need of funding for graduation rate improvement. While few four-year colleges and universities can brag about the high number of students who receive diplomas after enrolling, especially as far as undergraduate programs are concerned, rates are particularly poor at community colleges. These schools enroll 6.6 million students who seek credits or degrees (and a few more million who don’t), but many students don't accomplish their graduation or transfer goals before leaving.
The results of a Cal State Sacramento Institute for Higher Education Leadership & Policy study that tracked 520,407 community college students over a six-year period showed that only 24 percent of those seeking to graduate or earn a degree were able to do so in six years.
Community colleges find themselves in a difficult situation because they need funds to get students in and ones to get them out, with a degree. These schools receive financial aid based on the student population, so they go out of their way to make enrollment easy. Once students are in, including ones with outside jobs and those who registered late, they have trouble completing their education.
February 5, 2008
On February 4th, President Bush unveiled his much criticized national budget to a frustrated Congress. Members of both parties found fault with the president for his proposal to increase funding for the military at the expense of Medicare. According to the Los Angeles Times, President Bush’s proposal could slow the growth of Medicare programs by nearly $208 billion over the next five years.
The budget for the Department of Education, on the other hand, was received with mixed reviews. A firm advocate of scientific research, the president proposed that funds for physical-science research, much of which would go to colleges and universities, increase in the upcoming year.
While physical scientists cheered in one corner, medical researchers jeered in the other. Once again, The National Institute of Health (NIH), the primary government agency responsible for health-related research, was upset with the president's funding proposal.
After his decision to veto a bill that would increase NIH funding in November, the president's budget did not come as much of a surprise. Upon hearing last year's proposal, Bush claimed that Congress was, "acting like a teenager with a new credit card." Ironically, if Bush's budget is approved, skyrocketing national debt is expected. The current U.S. debt could more than double over the next two years if Congress chooses to accept the budget. More likely, the proposal will be stalled until President Bush leaves office.
February 6, 2008
There is plenty of room for college students to make a difference in the election, and many are taking it upon themselves to do just that. It is projected that political interests, registration and voting numbers for youth across the nation will be at an all-time high during the 2008 election.
According to the Center for Information & Research on Civic Learning and Engagement, less than 50 percent of eligible voters between the ages of 18 and 29 cast their ballots in the national election of 2004. At 68, the percentage of voters ages 30 and over who did so was, unsurprisingly, greater. This year, things are expected to change.
Presidential candidates are counting on young voters for support, and they have been putting in extra effort to address their interests. To remind college students and recent grads to vote, candidates have been sending out text messages, speaking at college campuses, offering campaign internships and promoting themselves on popular student websites such as MySpace and Facebook.
While it's still a bit early for P.Diddy and his MTV Rock the Vote campaign, loyal supporters always get a head start. With locals fighting over each other to hand out presidential "pompflets" and campus supporters scrambling to student dormsteps wearing big grins excess energy, the competition has barely begun.
February 12, 2008
The lawsuit filed last Friday against Wheaton College officials again brings into question the policies at numerous colleges providing study-abroad programs. Though largely advertised as the opportunity of a lifetime—a way to expand the mind and experience outside cultures—the impartiality of study-abroad policies at certain schools has become increasingly dubious.
The most recent allegation in a string of study-abroad investigations is that of Mr. James P. Brady, the father of a Wheaton College alumna who studied abroad in South Africa. According to The Chronicle of Higher Education, Mr. James P. Brady is suing the school for overcharging his daughter for her study abroad travels. Had his daughter studied at the South African college herself, the stay would have cost her roughly $17,000. Instead, Wheaton College asked the family to pay the tuition of regular undergraduate students residing at Wheaton.
Paying the South African tuition would have allowed Mr. Brady's daughter to save money in college--nearly $4,500. According to Brady, the school did not even provide additional services in exchange for Wheaton tuition and other costs. Though she did not stay at the school, his daughter was charged the full price of an education at Wheaton, including room and board. The school denied accusations of unfair billing practices stating that trip costs were clearly established beforehand.
This lawsuit is yet another blotch in the study-abroad records of colleges across the nation. Earlier this year, New York Attorney General Andrew Cuomo sent out numerous subpoenas to schools whose study abroad offices were suspected of unfair business practices.
Months before that, an article from The New York Times told the story of a Columbia student angry with his school for having denied him credit transfers for his work at Oxford. After traveling with an outside study abroad program, the student was upset to find that his credits would not be accepted by Columbia. While his peers received credit for their work at lesser academically-recognized schools, the classes he completed at one of the most prestigious universities in the world would not fulfill his graduation requirements at Columbia.
The study abroad investigation continues to haunt schools across the nation. For some, the accusations are a second blow following last year’s findings of illegal incentive-based relations between student lenders and financial aid officials. With a general search for unfair policies within the study abroad industry still in progress, the problems of colleges are far from over.
February 14, 2008
In a bold move reflective of the volatile loan market, Michigan announced its decision to temporarily suspend the state-run Michigan Alternative Student Loan (MI-Loan) program. Alternative loans, otherwise known as private student loans, are often used by students to supplement federal Pell Grants and government loans.
Those who are ineligible for government aid or who don’t receive enough of it often look to alternative loans for additional funding assistance. According to the Associated Press, about 8,500 loans totaling $68 million were offered through the MI-Loan program last year. As of Friday evening, these loans will no longer be available to students.
In their notice, the Michigan Higher Education Student Loan Authority stated that “There is not sufficient available capital to continue making MI-Loans.” With student lenders facing the effects of a major mortgage crisis as well as subsidy cuts from the College Cost Reduction and Access Act, the pressure is on to make a profit. Numerous student lenders have already announced their plans to cut loan benefits and tighten eligibility requirements. Some have even closed their doors completely.
Michigan students eligible for MI-Loans (students attending Michigan colleges or universities) can still look to other lenders for assistance. In fact, JPMorgan Chase & Company is even decreasing their loan rates and fees. Once funding becomes available-- if funding becomes available--MI-Loans will again be an option.
To diminish their reliance on loans, affected students can also apply for Michigan scholarships. By conducting a free college scholarship search at Scholarships.com, students from each state will have access to information about more than 2.7 million college scholarships and grants worth 19 billion.
February 19, 2008
Despite investigations into shady business practices of study-abroad programs across the nation, Congress continues to support the idea of travel for college students. Last June, a bill to increase study-abroad funding was passed in the House, and a similar version was approved last week by the Senate Foreign Relations Committee.
The initial version of the Paul Simon Study Abroad Foundation bill was passed by the House in June, 2007 and introduced to the Senate by Senators Dick Durbin (D-IL) and Norm Coleman (R-MN). If passed, it would allow Congress to appropriate $80 million each year towards a foundation awarding financial aid to study-abroad students.
The bill would encourage one million students to study abroad, especially in non-traditional settings. According to Senator Durbin, the travel will, “allow students the opportunity to grow and gain skills to help our nation compete in the globalized world.”
Now that the bill has been approved by the Senate committee, it will move to the Senate floor for a full vote. Approval seems likely as positive feedback has been expressed by both parties.
The proposal is particularly aimed at assisting minority students with scholarships and grants. Senator Coleman stated that, “The goal of the Paul Simon Study Abroad Foundation Act is to make study abroad in high-quality programs in diverse locations around the world the routine, rather than the exception, for American college students.”
Over the past year, study abroad programs have received more publicity for their troubles than their benefits. Inquiries into the actions of program representatives who received free trips and money for meeting student traveler quotas have marred the image of numerous programs. If the appropriations are approved, increased financial accountability is likely.
Students interested in studying abroad need not wait until this bill clears both chambers. By completing a free college scholarship search, students can find information about numerous college scholarships and grants that can help them afford school. Both study-abroad scholarships and awards based on different criteria are available.
February 21, 2008
The idea that Ivy League schools are reserved for the rich and the richer may soon be a thing of the past. In fact, after unveiling its latest financial aid package, Stanford will become one of the most affordable schools in the country.
According to The Stanford Daily, undergraduate students whose parents make less than $60,000 will soon be spared the tuition, the room & board and other educational expenses. Those whose parents make less than $100,000 will have to pay for the living expenses, but tuition will still be taken care of. As far as the rest are concerned, tuition will soon increase.
The price for a year at Stanford will jump to $47,212 during the 2008-2009 school year—a ludicrous amount for the average family. Thankfully, the average family does not have to worry about it.
However, families whose liquid funds are much smaller than their paychecks and graduate students who do not reap the benefits of this news are less than thrilled. What seems like a large income on paper may not translate into spending money for a number of families affected by the tuition hike. Students whose parents have large mortgages or investments will have a difficult time setting aside money for the new cost of Stanford. The same is true for graduate students who don’t receive federal Pell Grants to begin with.
Still, Stanford is keeping those who need aid the most in mind, and that's the bottom line. Okay, okay, there is more to that bottom line. In recent months, a number of distinguished schools have announced large increases in financial aid, and Stanford must worry about keeping up with the Joneses. After Duke, the University of Pennsylvania, Tufts, Haverford, Swarthmore and Harvard each stated their intent to make schools more accessible to all, others colleges and universities have been struggling to keep up.
Of course, most students aren’t headed for the Ivy Leagues, and the above only constitute a small minority of all colleges and universities. For most students dealing with financial woes and fears of burdensome student loans, scholarships are still an option. By conducting a free college scholarship search at Scholarships.com, students can find the money they need to complete their education—regardless of the school they attend.
February 27, 2008
Another victim of the student loan crisis, the Pennsylvania Higher Education Assistance Agency (PHEAA) announced that it will suspend its student lending program. PHEAA, a federally-insured lender, has followed in the footsteps of the Michigan state loan program by pausing—indefinitely—its lending services.
On February 21, PHEAA hosted an emergency student loan funding summit to, “address a potentially devastating shortage of loan funds for students and families.” At the summit, State Representative and Chairman of the PHEAA Board of Directors William F. Adolph stated that like many homeowners, “millions of college students may now face foreclosure on their plans for a higher education.”
Days later, PHEAA announced that it had no choice but to pause its loan program. Loans to out-of-state students have already been suspended, and those to in-state students will be paused on March 7. Students who borrowed money prior to that date will not be affected.
The remaining Pennsylvania students will have to turn to banks to meet their student loan needs. Unlike lenders who participate in the federally-subsidized, price-regulated Federal Family Education Loan (FFEL) program, private lenders have more leeway in setting their prices and creating stipulations.
Though Chief Executive Officer and PHEAA Interim President James Preston stated that students can receive comparable rates by borrowing from banks, somewhat higher rates and additional restrictions are to be expected. Aside from loan suspensions, numerous lenders have had to add new eligibility criteria and to reduce lending benefits to stay in business. Lenders that could not compete have closed their doors entirely.
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