August 15, 2008
Yesterday, President Bush signed the Higher Education Opportunity Act, the official reauthorization of the Higher Education Act (HEA) which governs federal student financial aid for college, as well as other federal programs and regulations that pertain to higher education.
Under the new version of the HEA students can expect a number of benefits when it comes to finding money for college. Some of the changes include:
The National Association of Student Financial Aid Administrators also offers a point-by-point breakdown of the Higher Education Opportunity Act on their website.
August 20, 2008
The results of a poll conducted by Sallie Mae and Gallup were released today, painting a picture of where Americans across income levels find money for college. The study found that sources of funding varied, with parent borrowing (16%), student borrowing (23%), and parent income and savings (32%) taking care of the majority of college costs. Scholarships and grants followed closely behind, making up 15 percent of college funding.
The average grant and scholarship awards and student loan amounts were roughly the same for low income families (families making below $50,000 a year), while middle income families relied most heavily on parent income and student loans, and high income families (families making above $100,000 a year) predominantly used parent income and savings to pay for school.
While more students than parents were likely to rule out a school at some point in their college search based on cost (63% vs. 54%), two in five families said that cost was not a consideration in choosing the right college for them, and 70 percent of students and parents said that future income was not a factor when determining how much to borrow.
Additionally, 20 percent of families reported using either a second mortgage or a credit card to pay some portion of tuition, while only 9 percent of families reported using a college savings plan, such as a 529 plan, to pay for part of tuition (though those who did were able to cover nearly $8,000 of the cost of college with one). The study also found that only 76 percent of students whose families made between $35,000 and $50,000 per year, many of whom may be eligible for state and federal grant programs, did not complete the FAFSA. Only 73 percent of familes making between $50,000 and $100,000 per year completed a FAFSA, despite many families' reliance on loans to pay for college.
The full text of the report is available on the Sallie Mae website.
August 27, 2008
The city of Akron, Ohio plans to introduce a scholarship fund to encourage its high school graduates to stay in the city for college. Akron's plan follows in the footsteps of other cities with similar programs, such as Kalamazoo, Michigan, which gained national attention with the launch of the Kalamazoo Promise scholarship in 2005. An anonymous donor contributes to the Kalamazoo Promise fund, which offers free tuition to graduates of Kalamazoo high school attending college at local schools, such as Western Michigan University. At least 19 cities have followed suit in the last three years, according to the Associated Press, with many relying on private donors to provide scholarship awards.
But no donors have come forth in Akron, so the city is trying something new: leasing its sewage system to a private company, then using the money to establish a scholarship fund. The measure, which has earned the somewhat derisive nickname "stools for schools," is up for a vote in November. While any additional scholarships for high school students are welcome, this measure does come with some drawbacks. Up to 100 city employees in Akron may find themselves without jobs in an already tough economic climate and many residents have issues with the city choosing to privatize public works.
Additionally, students may not be interested in the scholarship anyway. Presently, only 600 Akron high school graduates attend the University of Akron, and the proposed tuition plan will only subsidize what's left of tuition after students' other scholarships are taken out, leaving them with the guaranteed responsibility of room and board. The scholarship committee is also throwing around the idea of attaching a thirty-year residency requirement to the scholarship money, converting the scholarships to student loans for all students who choose to leave Akron before retirement.
While local scholarships are usually a great idea for students, they can stop being appealing if too many requirements are attached. My guess is that few students will want to have their entire lives planned out for them in high school, especially if a change in plans carries a financial penalty of tens of thousands of dollars. Whether or not this measure passes in November, many students from Akron will undoubtedly want to continue their scholarship search. And Scholarships.com is a great place to start, with our database of 2.7 million college scholarships and grants worth over $19 billion, without a 30-year residency requirement in sight.
September 8, 2008
As a means of promoting diversity and developing talent, Scholarships.com has created a new set of scholarship awards for high school students and undergraduate students. The Scholarships.com “Fund Your Future” Area of Study College Scholarship consists of thirteen $1,000 prizes to be granted to students who pursue a postsecondary education in one of thirteen designated fields and 185 related majors.
Among them is the Scholarships.com College English Scholarship, an award for students who are pursuing or planning to pursue a degree in English or Literature. To ensure that current and future English majors receive the funds they need to afford a quality education, we have created a scholarship opportunity especially for them.
If you’re interested in applying for the Scholarships.com College English Scholarship, write a 250 to 350 word scholarship application essay in response to the following question (entries that fall outside of this word range will be disqualified): “What has influenced your decision to pursue a career in English?”
Deadline: October 31, 2008
Required Material: A 250 to 350 word response to the following question: “What has influenced your decision to pursue a career in English?”
Further details about the application process can be found by conducting a free college scholarship search. Once the search is completed, students eligible for the award will find it in their scholarship list.
September 9, 2008
In a hearing yesterday, Senator Charles Grassley of Iowa suggested that he would back off from his proposal of mandating that colleges and universities spend five percent of their endowments on financial aid, provided schools continue to voluntarily increase grant and scholarship awards to students as many have been doing this year.
This is the latest development in a series of events that began unfolding when Congress began looking into the endowment spending of several of the country's wealthiest universities earlier this year. Legislation to mandate increased endowment spending has since been proposed and withdrawn, as several schools with large endowments began offering significantly larger financial aid packages to their students.
The panel, which was made up of representatives of several universities and the Senate Finance Committee also discussed the rising cost of college education, what schools and lawmakers can and should do in the face of the issue, and the importance of flexibility in endowment spending. Lawmakers and educators are both concerned about the increasing burden of student loan debt on American students, but colleges are also concerned about being forced to spend more than they can afford to assist students with their tuition payments.
Primary among their concerns, though, was an increase in transparency of university endowments and spending habits. Colleges were more willing to agree to making information about their endowments and spending available to the public, as opposed to accepting a mandate for how much they are required to spend on student financial aid each year. Grassley also introduced a plan to make colleges fill out a Form 990, the tax form all nonprofits file, using a version of the form similar to the one designed for hospitals.
While the Senate Finance Committee has moved away from requiring colleges to devote a substantial portion of endowment spending to helping students pay for school, Sen. Grassley's words seem to suggest that if schools don't keep up their efforts to make attending college more affordable for their students, Congress may yet decide to intervene.
Hopefully, what this will mean for students is a continued increase in campus-based aid programs, such as scholarship opportunities and grants and fellowships. At the very least, it looks like it may be getting even easier to compare information about spending habits of various schools in your college search, being able to ultimately arrive at a better determination of which schools are most likely to want to help you afford to attend.
Inside Higher Ed has more complete coverage of the hearing available here.
September 10, 2008
Despite the student loan credit crunch that has been repeatedly making headlines this year, students and parents in several New England states had little to no trouble finding money for college this fall, according to a survey conducted by the New England Board of Higher Education.
The survey asked financial aid administrators at 214 colleges and universities to assess the level of difficulty students faced finding financial aid, as well as the effectiveness of the Ensuring Continued Access to Student Loans Act passed by Congress earlier this year to ensure continued availability of Federal Family Education Loan Program (FFELP) funds.
The survey found an increase in students borrowing unsubsidized Stafford Loans, as well as no major concerns over the availabilty of those funds through FFELP lenders. It also showed that more families have borrowed Federal PLUS Loans this year, possibly due to recent changes that allow families to defer payments until after students graduate. These changes seem to have mostly made up for the decreased availability of private student loans. However, some financial aid administrators are still concerned over continued availability of student loans, and caution that families may face difficulties making tuition payments in future semesters.
Based on this information, it appears there's little reason to put your college plans on hold, but you might still want to devote an increased amount of time to finding scholarships. While it looks like students are still able to pay for school, changes in the student loan landscape may still leave some students without a plan B for covering college costs if their initial plans fall through.
Really, though, financial aid advice hasn't changed much. Now, as always, planning ahead is key. As always, a good college financing strategy involves doing the following: conduct a scholarship search, take time to complete the FAFSA, learn about and take advantage of all possible federal student financial aid, apply for university scholarships and campus-based aid, and only then consider applying for a private student loan.
September 17, 2008
The House of Representatives voted Monday to extend the Ensuring Continued Access to Student Loans Act (ECASLA) into the 2009-2010 school year. The act also has broad support from lenders and financial aid administrators. The ECASLA was signed into law this May in response to concerns that the credit crunch would have a serious impact on the availability of student loans.
While it appears that students have had few problems finding adequate funding for school this fall, many lenders and financial aid administrators remain concerned about the potential for trouble in the next academic year based on the present economic situation. Many financial institutions continue to struggle with fallout from the subprime lending situation, and several major lenders have been forced to temporarily suspend student loan programs due to lack of financial backing.
The act still needs to be approved by the Senate and signed by the President. If this happens, the continued federal support will likely make it easier for families to figure out where they'll find money for college in the 2009-2010 academic year without worrying about student loan availability. The provisions of ECASLA help the federal government keep major student loan lenders and guaranty agencies in business and in a position to continue to serve students, which is good news, at least in the short term, for families who need to borrow to pay for school.
September 18, 2008
According to a Department of Education memo cited by the New York Times, the Federal Pell Grant program could face a budget shortfall of up to $6 billion in 2009 due to increases in grant amounts and numbers of applicants. The cap on Pell awards has risen from $4050 to $4731 between 2006 and now, and will increase to $6000 for the 2009-2010 academic year (if funding is available) according to the recently reauthorized Higher Education Act. Meanwhile, the number of FAFSA applications has risen by nearly 17 percent in the last year alone, driven by a worsening economic situation.
While data has not yet been released on whether more students are qualifying for Pell Grants or other need-based federal student financial aid this year, increasing college enrollment and unemployment rates, coupled with an overall economic downturn and increased cost of living for Americans, certainly suggest the possibility exists. According to the Department of Education memo to Congress, tough choices or an unpopular announcement regarding Pell Grant funding may have to be made shortly after the next President's inauguration. While it's speculated that Congress will ultimately find the money to fully fund the popular grant program, the federal government is by no means exempt from economic strain.
This announcement comes at the same time as the release of the results of an audit of 14 student loan guaranty agencies, which suggests the government may have lost over $1 billion to FFELP student loan companies taking advantage of a now-closed federal funding loophole. Lenders had been recycling new student loans through a loan program that guaranteed a 9.5 percent return from the government on student loans made before 1993. Lenders had been taking advantage of this loophole as late as 2006, claiming in some cases hundreds of millions of federal dollars for which they should have been ineligible.
When these loan recycling programs came to light, the Department of Education settled with lenders, allowing them to keep the money they had gained up to that point in the 9.5 percent program, but requiring them to immediately cease using the program or submit to an audit in order to continue receiving the subsidies on loans actually eligible. So far, 14 lenders have agreed to these audits. Based on the results, if the loan agencies audited are representative of all lenders that participated in the 9.5 percent program, federal losses could total $1.2 billion. Several of the lenders involved in this settlement, including Nelnet, a company that also recently settled with New York Attorney General Andrew Cuomo over other questionable business practices, have also announced that they are unable to completely fund their student loan programs for the 2008-2009 school year.
September 26, 2008
Congress will be in session only a few more days before breaking for the November election. While a lot has already been accomplished this session in terms of educational spending, such as the passage and renewal of ECASLA and the reauthorization of the Higher Education Act, some education funding concerns still need to be addressed. Primary among these is the education and research spending bill that will fund research and federal student financial aid programs for fiscal year 2009, which remains on the Congressional to do list.
When Congress reconvenes either in November or January, one of the most pressing financial issues they will have to contend with is finding the money to cover a projected $6 billion shortfall in the budget for the Federal Pell Grant program. Lobbyists still worry that Congress may wind up having to cut the maximum grant award, as they did last year when the bill exceeded Bush's budgetary requests. However, given the popularity of the program, such cuts are unlikely, especially after all of the attention financial aid has been receiving this election season.
Another issue Congress may contend with is whether to combine higher education tax credit programs, such as the Hope and Lifetime Learning credits into a single, partially refundable credit. The idea has received widespread support and is expected to come up during the next Congressional session.
You can read more about the educational issues still on Congress's plate in today's Chronicle of Higher Education.
September 30, 2008
The U.S. Department of Education released a series of new statistical reports last week showing a dramatic increase in participation in the federal direct lending student loan program. Motivated largely by the economic downturn and the credit crunch of the last year, 400 new colleges joined the federal direct lending program. Overall, student borrowing through the program has increased by 50 percent in the last year.
The federal direct lending program provides students at participating schools with Stafford Loans directly, instead of going through the intermediary of a bank, as is done in the Federal Family Education Loan Program (FFELP). In previous years, borrowing through FFELP could land students with lower interest rates, as well as significant repayment incentives, but that has changed significantly since 2007 as a result of subsidy cuts and economic difficulties faced by FFELP lenders. Since direct loans are serviced directly by the Education Department, they are largely exempt from the fallout of the credit crunch and are currently more appealing to many colleges.
There is good news for students at schools that continue to participate in FFELP, though. Lenders are participating in the loan buyback program enacted as part of the Ensuring Continued Access to Student Loans Act passed earlier this year. About 40 percent of the student loans in the bank system have been sold to the Education Department, with paperwork being completed on much of the remaining balance. This move appears to have worked to allow lenders to fund loans for students, as the Education Department also reports that not a single student has had to participate in the federal "lender of last resort" program.
In other financial aid news, Congress recently approved $2.5 billion in Pell Grant funding, to help tide the program over through March 2009, at which point most spring semester grant awards should have been disbursed. All of this news suggests that students are highly likely to be able to continue to find federal student financial aid for college, at least for the forseeable future. Of course, finding scholarships and avoiding student loans is still a smart plan, but this news suggests that despite growing fears about the economy, federal financial aid will still be available to students who need it.
Copyright © 1998 - 2015 Scholarships.com, LLC
Scholarships.comTM All Rights Reserved
Scholarships.com, LLC, Publisher