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Senate Passes 2009 Appropriations Bill


Mar 11, 2009

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. [...]

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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. [...]

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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. [...]

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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. [...]

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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. [...]

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Reducing college costs continues to be a hot topic of discussion, especially given survey results that show that college affordability is a growing public concern.  Recent congressional acts, including the education provisions in the stimulus bill President Obama will sign today, the Ensuring Continued Access to Student Loans Act of 2008, and last year's reauthorization of the Higher Education Act, have kept the issue in focus, as have economic events, such as losses to 529 plans, rising unemployment, and new financial troubles for colleges.  A wide range of ideas have attracted the attention of lawmakers and the media, including several suggestions making the rounds this month. [...]

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The recession seems to be bringing an almost constant stream of stories about people in all sorts of circumstances who are facing new and varied financial troubles.  These stories could easily be read as a guide for "things not to do in a recession."  The latest addition?  "Default on your student loans." [...]

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The student loan rescue plan that will allow the Department of Education to buy up student loans issued since 2003 will begin operating in February.  The plan will set up a bank to act as a "conduit" for purchasing older student loan assets and will also allow the Treasury to become the buyer of last resort for assets the conduit bank is unable to refinance.  The Treasury will buy up student loans through this program for the first 90 days, after which the Department of Education will take over.  The Bank of New York Mellon is currently the only authorized conduit, though more could be added later. [...]

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It's looking like federal student financial aid will be increased in the forthcoming economic stimulus package, at least based on the legislation presented in each house of Congress in its current form.  While the House stimulus bill contains more aid for education, the Senate bill also proposes higher education tax benefits and increases in Federal Pell Grant funding. [...]

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While it's still a long way from becoming law, the first published draft of the economic stimulus legislation created by the House of Representatives includes billions of dollars for higher education, including several provisions designed to make paying for school easier.  The bill still has to be approved by both the House and the Senate (which is drafting its own stimulus legislation) then signed by the President, so it remains to be seen how many of the following appropriations will make it into the final version of the stimulus package. [...]

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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. [...]

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Though it's a day off from school and work, New Year's Day is often seen as a day to get down to business.  While you're starting in on your New Year's resolutions, opening up a new calendar, and packing up the holiday decorations, there's one more thing that college students and college-bound high school students should consider doing.  The Department of Education starts accepting the 2009-2010 Free Application for Federal Student Aid (more commonly known as "FAFSA") on January 1.  State application deadlines start happening soon after, beginning with Connecticut's February 15 priority deadline.  So while you might not be starting school until August or September, you want to be applying for financial aid right now. [...]

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Yesterday, New York Attorney General Andrew Cuomo and Connecticut Attorney General Richard Blumenthal announced that they had reached a settlement with the College Board regarding the preferred lender list controversy that has been unfolding since early 2007.  The investigation revealed that the College Board had been offering discounts on its products to college financial aid offices that agreed to add their student loan service to a preferred lender list.  Discounts of more than 20 percent off the College Board's proprietary software were given in exchange for placement on preferred lender lists.  The College Board pulled out of private loans in 2007, but the investigations continued, culminating in yesterday's settlement, the latest of several with private student lenders. [...]

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As you've probably noticed, the current student loan market is not so great.  Between lenders backing out of the Federal Family Education Loan Program and temporarily or permanently suspending private loan operations, finding a loan has gotten tougher.  Family financial troubles and lenders' increased credit requirements for private student loans have made qualifying for a loan more challenging, as well.  While scholarship opportunities remain available, and many colleges and universities are even implementing new plans to help students cover college costs, many students and families are still coming up short on their tuition bills.New models for student lending have surfaced in recent years, but have gained media attention as the troubles with student loans have continued throughout [...]
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Yesterday, the Federal Reserve and Treasury announced a new program to further shore up the banking industry in the face of a recession that appears to still be worsening.  The program would devote $200 billion to shoring up consumer credit markets, including credit cards, car loans, and student loans.  The hope is that this new program will make these forms of credit more widely available to people who need them, including students who depend on private loans to help pay for school. [...]

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A struggling economy, shrinking endowments, turmoil in the student loan marketplace, and state budget cuts have all raised questions about students' continued ability to pay for school.  However, despite economic troubles, at least one state has plans to launch a new program to help its students find money for college in the form of low-interest student loans. [...]

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Are you considering a career in public service, such as working for the government or a non-profit organization, but more than slightly overwhelmed by the thought of repaying your student loans with an often minuscule salary?  Realizing that you may actually be taking a pay cut to transition from your summer job to your "grown up" career can be demoralizing, and dealing with debt on top of that certainly doesn't help.  While many noble individuals certainly make this sacrifice, perhaps you were hoping to forget where the grocery store kept its "manager's special" items after you graduated.  And who can blame you?  The college budget diet, and the accompanying lifestyle of cramming half a dozen people into one run-down apartment, eventually does get old.  Luckily, there are forms of financial aid out there to minimize or relieve your debt and help you stretch that public servant salary a little further. [...]

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Colleges are continuing to face financial hardships due to the current global economic crisis.  Endowments have shrunken by an average of 30 percent this year, primarily in the last two months.  Numerous colleges and universities, both public and private, are cutting or freezing spending, and several institutions have been forced to implement hiring freezes, offer early retirement to employees, or lay off employees.  Even Harvard University has announced a more conservative approach to future spending.  An article appearing in the New York Times earlier this week shows some schools considering a move away from entirely need-blind admissions policies (which ignore students' ability to pay when determining who to admit) in order to ensure they receive enough tuition revenue to maintain their financial aid programs. [...]

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Curious how colleges are weathering the recession?  Wondering just how different things are now than when your parents (or even your older siblings) went to college?  Reuters recently published a roundup of educational figures related to enrollment, endowments, student loans, and college costs.  Many of these statistics have already shown up elsewhere in the Scholarships.com blog.  [...]

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Fewer students may have to worry about finding a new lender for their Stafford Loans next year, as more colleges are turning to federal Direct Loans for student loans.  A web-based poll of college financial aid administrators at schools participating in the Federal Family Education Loan Program (FFELP) revealed that six percent of those surveyed are planning to make the switch to direct lending next year, with an additional 29 percent seriously considering it as an option. This means that Direct Loans could very likely become the leading supplier of student loans in 2009.  Since direct loans are taken out from the government, rather than from a bank, the stability they provide is proving popular among student borrowers.  Already, the amount of money in the direct borrowing system has grown by 50 percent this year, whereas the amount in FFELP is up only 7 percent.  While most students have been able to find different lenders and continue borrowing what they need in student loans, attending college at a school that participates in direct lending can save students a bit of hassle in getting financial aid.  [...]

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The Project on Student Debt just published information on the average student loan debt load for students graduating college in 2007.  The report shows that average student debt increased 6 percent from 2006 to 2007, while the average annual salary of college graduates increased by only 3 percent.  The percentage of students borrowing remained the same at 59 percent nationally, though some individual states experienced double-digit increases, including North Dakota, which surged ahead 14 percent to capture the #2 spot for percentage of student borrowers, with 75 percent of its students taking out loans, following South Dakota's 81 percent. [...]

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The results of a survey conducted by the National Association of Independent Colleges and Universities indicate that at least a few students at many private colleges and universities were unable to obtain enough private loan funding to pay their fall tuition.  The survey also indicates that the credit crunch may have steered a number of students away from private schools. [...]

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In a speech delivered yesterday at Harvard University, U. S. Secretary of Education Margaret Spellings announced that her department had managed to whittle the Free Application for Federal Student Aid (FAFSA) down to 27 questions.  The FAFSA is currently 120 questions long and described as Spellings as more complicated than an income tax form. A shorter FAFSA has been called for by Congress and advocated by virtually everyone aware of the form's existence.Spellings stated in her speech that the length of the FAFSA may be preventing many families from filling it out, despite the fact that they might qualify for federal student financial aid. While part of this phenomenon is likely due to the prevalence of financial aid myths, the complicated nature of the FAFSA likely does play a role.  [...]
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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. [...]

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In the wake of the credit crisis of the past year, innumerable articles have been written about the impact on the student loan industry, as several student lending agencies have been forced to stop offering federal and private loans to students or at least scale back their operations considerably.  Credit requirements have gotten more stringent for students whose lenders are still in business, and taking out a student loan is an even more time-consuming and uncertain process now than ever. [...]

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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. [...]

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