July 29, 2008
Brazos Higher Education Service Corporation, Inc., the fourth largest holder of guaranteed student loans and the largest nonprofit loan provider, will not be able to issue new student loans to college students this fall. The company had initially announced in March that it would suspend providing Federal Family Education Loan Program (FFELP) student loans, but after emergency legislation passed this summer to help FFELP lenders, it looked like Brazos may be able to stay in the game. However, they recently issued a news release stating they would not be able to provide new loans to students this fall, citing the short amount of time between the passage of the Ensuring Continued Access to Student Loans Act and fall semester loan disbursement dates. "We have simply run out of time to secure financing to disburse loans as soon as they are needed," said Brazos CEO Murray Watson.
In another blow to many families' pocketbooks, the Massachusetts Educational Financing Authority (MEFA), the state's nonprofit student loan agency, also announced that it would be forced to suspend its student loan services in the fall. With continued uncertainty in the availability of FFELP Stafford Loans and private student loans, now more than ever students are encouraged to keep in touch with their financial aid offices, and also to explore alternate ways to find money for college. Many universities and state governments are continuing to look at adding new grant programs, with North Dakota being the latest to introduce legislation to provide a new $2000 state grant to its residents attending college in-state.
In addition to grants, scholarships remain excellent resources to pay for school. Students can conduct a free college scholarship search on Scholarships.com to find out instantly which scholarship opportunities may be open to them.
August 5, 2008
August 8, 2008
Earlier this week, Massachusetts Governor Deval L. Patrick asked his state's wealthiest universities (such as Harvard University and the Massachusetts Institute of Technology) to help bail out the Massachusetts Education Financing Authority (MEFA), which announced last week that it would not be able to provide loans to over 40,000 students this fall. However, as an article published today in The Chronicle of Higher Education explains, many parties regard this request as well-intentioned but highly problematic, mainly due to recent lawsuits and legislation regarding potential conflicts of interest in relationships between colleges and student loan providers. The Massachusetts state treasurer, who vetoed the governor's request to invest money in MEFA, stated that bailing out MEFA was not a good investment and could set a dangerous precedent for use of state funds. While several colleges said they would consider investing in MEFA to help them provide enough loans to be able to receive assistance from the federal government, none have yet said yes, and many express concerns about what people will think of their relationship with the lending agency once the economy recovers. When viewed in light of last year's preferred lender list scandal, such hesitation is understandable.
However, while both sides of this issue have adopted positions based on sound principles and the belief in doing what will ultimately be best for students, thousands of students are still left in a lurch when it comes to finding money for college. With the new Higher Education Act still sitting on President Bush's desk, and the school year fast approaching, many families, and not just ones in Massachusetts, may be struggling to find ways to pay for school. It's never too late to start applying for financial aid, though! Students who haven't yet done so should complete a FAFSA on the Web, which could potentially qualify you for federal grant programs. Once you've received your financial aid award letter, be sure to talk to your school's financial aid office, especially if you plan on receiving loans. Finally, students of all ages should also check out our free scholarship search, as there are scholarships being awarded year-round, and scholarship awards can be one of the best means of funding your education.
August 11, 2008
The Scholarship of the Week for this week is the Fleet Reserve Assocation Americanism Essay Contest, a scholarship essay contest for students in high school and junior high. Contestants need to write a scholarship-worthy essay of 350 words or less on the theme "what the United States flag stands for." Applicants should submit their completed scholarship application packet to their nearest FRA branch, which does not necessarily need to be in their home state. Essays are first judged at the local level, with winners progressing to regional and national finals.Prize:
The Grand National Prize is $15,000 U.S. Savings Bond, with $5,000, $3,000 and $2,000 Savings Bonds awarded to the first, second and third place winners in each grade category. Certificates and other prizes are awarded at the branch and regional levels, as well.
All students entering grades 7-12 in the fall, as well as home schooled students at an equivalent grade level, are eligible for this scholarship.
Entries must be postmarked by December 1, 2008.
January 6, 2009
Full-tuition scholarships, half-tuition scholarships, and financial aid packages free of student loans continue to be unveiled at institutions across the country. While it may be too late for many students to alter their college application plans, if you are still looking for colleges for 2009, or if you happen to have applied to one of these schools, you may find the following information useful. This week, The Chronicle of Higher Education profiled several significant scholarship programs private, community, and state colleges are launching or expanding for incoming students in 2009.
Northern Illinois University recently announced the Huskie Advantage, a program that will ensure that all incoming freshmen eligible for Federal Pell Grants will receive enough financial aid to meet the full cost of tuition. Similarly, Montgomery County Community College in Pennsylvania is raising money to provide larger scholarships to students who receive a small Pell Grant or narrowly miss the cutoff for Pell eligibility.
The University of Pennsylvania will be eliminating student loans from the financial aid packages of all students this fall. It's the latest in a string of well-endowed private colleges to put forward generous institutional aid for its students. The Sage Colleges of New York are also following suit, promising to offer aid to meet new students' full financial need in the next academic year.
Two private colleges in Georgia and Minnesota aren't eliminating loans, but they are drastically reducing the cost of college for many applicants. Agnes Scott College in Georgia is offering scholarships and grants to nearly halve the cost of attendance for all recipients of the Georgia Hope Scholarship, as well as an additional $3,000 grant for first-year students. Saint Mary's University of Minnesota offers students with family incomes of under $100,000 financial aid packages that will reduce the cost of attendance to the average price of a Big Ten school. For the neediest 25 percent of students, St. Mary's will provide all of this aid institutionally, allowing students to use federal student financial aid to cover much of the rest of their college costs.
January 7, 2009
Barack Obama became known for his web presence during his Presidential campaign. He and his transition team have kept up this reputation through YouTube addresses and websites such as Change.gov, the official transitional website. Now the Obama transition team is asking for public comments--or at least blog comments--on issues related to paying for school. A post on the Change.gov blog is currently soliciting feedback about college affordability. While there's no guarantee that the President-elect himself will read your post, if you would like to weigh in on educational policy at least in a small way, you can view and comment on the January 5 Change.gov blog post "Keeping College Affordable."
The blog post, along with many other recent discussions of college costs, makes a nod to former Rhode Island senator Clairborne Pell, who passed away on January 1. Pell was instrumental in shaping the current federal student financial aid system by helping create the Federal Pell Grant, which was named after him. Pell Grants continue to make up an important part of the financial aid packages of many students, covering up to the full cost of tuition at some state and community colleges.
However, as tuition costs rise, Pell Grants and other sources of federal aid are not enough to make college affordable for an increasingly large number of students. During his campaign, Obama proposed a few substantial changes to the way college financial aid is structured, and hopefully his administration will do more to seek out and act upon feedback from those who are struggling with the costs associated with higher education. However, if you're skeptical, or just looking for more immediate ways to make college affordable, there are resources available. Start with a free college scholarship search on Scholarships.com. Many scholarship application deadlines are approaching in the coming months, but there is still abundant scholarship money for those who take the time to apply.
January 8, 2009
Fifth Third Bank could potentially lose its right to participate in the Federal Family Education Loan Program, the Department of Education's program that allows private banks to offer Stafford Loans and PLUS loans. An audit by the Department of Education's Office of the Inspector General suggests that Fifth Third may have offered illegal inducements to third-party lenders. Lenders that participate in FFELP, such as Fifth Third, are legally allowed to act as trustees for third-party non-FFELP lenders, allowing the non-FFELP lenders to make or purchase federal student loans. Fifth Third's actions in some of these "eligible lender trustee" agreements have come under scrutiny, resulting in the audit and harsh recommendations from the Office of the Inspector General.
Fifth Third and the now-defunct Student Loan XPress entered into eligible lender trustee agreements with three lenders: MSA Solution Inc., Pacific Loan Processing Inc., and Law School Financial. The two FFELP lenders then paid these three trustees premiums to generate higher volumes of student loans. According to the audit, this violates federal law and could cost Fifth Third its status as an FFELP lender. The Office of the Inspector General also recommended that the Department of Education further penalize Fifth Third through fines and the withholding of federal guarantees on the over $3 billion in loans generated through these agreements.
This is not the first time an FFELP lender has come under fire for lending practices. Over the past two years, numerous lenders have been investigated by the Department of Education or New York Attorney General Andrew Cuomo for questionable actions ranging from bribing schools for places on preferred lender lists to recycling loans through a loophole to claim millions of dollars in federal subsidies.
January 9, 2009
The Illinois State University Center for the Study of Education Policy released its annual report on state tax support for higher education today. According to the Grapevine report, the best case scenario is that for fiscal year 2008-2009 (July 1, 2008-June 30, 2009), state higher education spending grew by an average of 0.9 percent across the country. The report acknowledges this figure is likely rather optimistic, as many states are still in the process of trimming budgets for the current fiscal year, and some are requesting that colleges not spend appropriations they've already received.
While almost flat growth in state spending nationwide is bad enough, the picture looks even worse compared to last year's growth of 7.5 percent, the largest year-to-year increase in higher education spending since 1985. Some states have cut education spending significantly, such as South Carolina and Alabama, whose state education budgets have seen decreases of 17.7 percent and 10.5 percent respectively. Some states still are showing substantial increases in higher ed spending for the current year. The two biggest increases, in Wyoming and Hawaii, are 10.9 and 10.6 percent.
Coupled with shrinking endowments and more student requests for financial aid, this news isn't good for state colleges and universities. Tuition increases, including some substantial ones, are becoming increasingly likely for 2009-2010, despite families' increasing inability to pay for school out of pocket or access lines of credit such as private student loans. This is yet another reason to fill out a FAFSA and do a scholarship search today.
December 5, 2008
December 12, 2008
With bailouts, economic stimulus packages, and a number of other pieces of emergency legislation being passed to prop up seemingly every aspect of the economy this year, a group of organizations connected to student financial aid are asking for additional support for college students. In a letter to Congress, thirteen higher education advocacy groups, including the Project on Student Debt and the National Association of Student Financial Aid Administrators, asked that the next economic stimulus legislation include expansions to financial aid, namely Federal Pell Grants and Federal Work-Study.
While maximum Pell Grant awards have gone up slightly in recent years and legislation such as the Ensuring Continued Access to Student Loans Act has helped students continue paying their bills, these thirteen advocacy groups feel that more still needs to be done. Family 529 plans and other savings, as well as college endowments, have taken enormous hits, putting tuition costs potentially further out of reach of many. Meanwhile, private loans have become harder for students with poor credit or no cosigner to obtain, further jeopardizing some students' ability to continue attending college. Advocacy groups hope that stimulus legislation can help alleviate these college financing problems.
The letter called for four major changes. Two involve contributing more to existing federal aid programs, a third suggests making minor adjustments and clarifications, and a fourth involves establishing an emergency fund for students who have been hit hardest by the recession. Under the proposed plan, Congress would increase the maximum Pell Grant amount to $7,000 per year (it's currently $4731) and fully fund the program. Funding for campus-based work-study programs would also increase by 25%. The group also would like to see PLUS loans become easier for families to learn about and obtain. Finally, the group suggests that an emergency student loan pool be created for students who still are unable to meet their financial need through help from their schools, college scholarships, and federal student financial aid. This pool would only be available at institutions that show a strong commitment to helping students pay for school.
While there's no guarantee Congress will incorporate any of these suggestions, higher education groups are hopeful.
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