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Limiting the amount of money you borrow is a basic principle of good money management. College students who are able to finance their education through federal student loans, are fortunate to have access to low interest rate educational funding that puts earning a degree within their reach.

However, just because money is available to borrow does not necessarily mean that you should borrow it. If you are eligible for more student loan money than you really need, you may want to limit the amount you borrow. After all, even though the interest on a federal student loan tends to be lower than on other types of debt, it is still debt.

Additionally, you shouldn’t stop looking for scholarship resources just because you are able to access student loans. If you can get a scholarship to cover some of your expenses, you can reduce the amount of money you need to borrow and will ultimately have to repay. Many scholarship programs are available only to upper division students, so you should definitely keep your eyes open for funding opportunities even after you enroll in college.


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by Administrator

It would seem there are a substantial number of students in California that are relying on local community colleges to provide them with the education they need. Fortunately for them, nearly all of California’s community colleges are willing to dip into their reserves to enroll these unfunded students. Still, though, many of these schools have waiting lists in the thousands as the price of higher education rises and there just aren’t enough paid-for chairs to go around.

Of course, this also raises the issue of whether the number of students being added to the classrooms will have a detrimental impact on the quality of education students can expect to receive at one of these colleges. For example, College of the Sequoias has increased their average class size by about 20% (from 26 to 31 students per class) in addition to using almost $2 million from its reserves to accommodate some students who would probably have had to wait until next year (perhaps longer) to enter college otherwise and whose prospects of employment would not have been very good, either.

With unemployment as high as 18% in the surrounding region, College of the Sequoias’ president Bill Scroggins feels it is his duty to do all he can to make sure as many of these folks as possible have the opportunity to receive a post-secondary education. In Mt. San Jacinto College’s immediate surroundings the unemployment rate is at 15% and, consequently, more than 25% of its students are unfunded. While these schools have not yet furloughed faculty or cut their pay, many other budgetary cuts have been made, such as eliminating travel and conference budgets. Clearly these are short-term solutions and a more permanent solution will need to be found, but at least some of the unfunded students are being taken-in and given an opportunity to get the education they will need in order to work toward their desired career.

Apparently, while California’s economy is running at a high deficit, there are these small bastions of efficient colleges who managed to put away some of their assets for a few years’ worth of rainy days. Hopefully the economy that surrounds them will turn around before their reserves are depleted and the would-be students in the surrounding communities find themselves entirely dependent upon state and federal funding.


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by Administrator

Weighed down by an economic downturn and a cut in federal subsidies, student lenders have been lining up at the FFEL exit sign for months. But if the past two days are a sign of what’s to come, many are reconsidering their departure. On Wednesday, Margaret Spellings sent a letter to numerous student lenders pledging the Department of the Treasury’s support in helping them get back on their feet.

According to The Chronicle of Higher Education, the Department of Education’s plan to purchase loans student lenders have trouble selling had three student lenders declaring their plans to return within two days. Though the funds are meant to be a temporary, one-year solution to the student loan crunch, the decision was enough to convince NorthStar, the Brazos Group and Graduate Leverage to return to the FFEL program.

"Many details still need to be worked out, and we will share those as they become available. But the good news is we’re back in the federal student loan business, and students and families will have more loan options for the upcoming year,” stated NorthStar’s Chief Executive Taige Thornton on the company website.

The security now provided by the federal government may be enough to lure more FFEL student lenders back into the business. It may also prove incentive enough for student lenders to relax the increasingly tight criteria used to judge potential borrowers. While the credit crunch is certainly not over, the current federal aid contributions may prove sufficient in convincing some, if not most, lenders to return to the workforce.


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by Agnes Jasinski

A new study offers surprising news in an uncertain economy: families are actually borrowing less money to cover college costs.

The study, titled "How America Pays for College," shows that about 58 percent of families did not borrow money for college for the 2008-2009 school year. Despite rising tuition prices of up to 5 percent over the last year, according to the College Board, high unemployment rates and deep budget cuts at schools across the country, it seems more families are relying on their own savings, scholarships and grant funding. While parents paid for about 36 percent of college costs, about 25 percent of students' costs in the year surveyed were covered by grants and scholarhips, and more than half of the respondents received some form of free aid, according to the study. The reliance on grants and scholarships increased by  15 percent over the last year, which could show more of an awareness by students to money available outside of lending in a struggling economy.

The same survey last year showed that about 53 percent of families chose not to take out loans for college. According to the New York Times, the numbers do not suggest that students would rather skip college than take out loans. In fact, fewer students than last year said taking out loans would stop them from pursuing an undergraduate degree, according to the article.

Other highlights of the study showed that:

  • 67 percent said they were confident in their ability to continue to meet the cost of college in the current economy.
  • 5 percent used credit cards to pay for college expenses.
  • 10 percent of costs were covered through students' own savings and employment.
  • 6 percent of costs were covered through students' relatives and friends.
  • 91 percent said that pursuing higher education led to a better life.

Of those who did borrow for the last school year, 25 percent took out federal student loans and 12 percent borrowed private education loans. Those who did borrow also spent about 30 percent more on their educations than those who did not, suggesting a higher cost of education for those who took out federal and private loans.

The study was conducted by Gallup for Sallie Mae last spring with more than 1,600 college-going students and parents of undergraduates responding.


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by Agnes Jasinski

As the Senate prepares to begin looking at similar measures recently passed by the House to stop or further regulate bank-based lending, student-loan companies have been looking for ways to lobby for their own cause, spending millions in the process, according to an analysis of federal records done by The Chronicle for Higher Education.

Earlier this month, the House of Representatives voted to approve the Student Aid and Fiscal Responsibility Act of 2009, legislation that would stop lending from the bank-based Federal Family Education Loan Program in favor of the Department of Education-run Federal Direct Loans Program by July 2010. Student-loan companies have understandably been feeling threatened, and have spent nearly $14 million over the last year and a half lobbying the government to abandon attempts to stop bank-based lending. The country's largest lender Sallie Mae, which handed out about a quarter of the nation's federal student loans last year, spent $2.5 million this year alone, according to the Chronicle. The Senate's version of the legislation could come onto the floor as early as this week.

While the legislation has strong support from the Obama administration, some  Democrats in Congress have voiced concerns about the potential for job losses in states that headquarter private loan agencies. Sallie Mae has reported it would need to lay off about a quarter of its workforce if Congress voted to end bank-based lending. Republican lawmakers have argued more broadly that the student loan industry, while it could use some tweaks, has served college students well and should not go under the control of the federal government.

So does the bill stand a chance? The Obama administration would like it to be a sure thing, as legislation to limit bank-based lending was a campaign promise during election season. The Congressional Budget Office claims it would save taxpayers around $87 billion, but that's a figure disputed by Republican lawmakers. Colleges and admissions officials seem to be on the fence, worried mainly about any delays in financial aid funding for their neediest students and potential costs to schools' already tight budgets. The bill's proponents argue that savings from the legislation would either go toward overhauling the financial aid system or higher education programs. While the Obama administration has urged lawmakers to avoid interactions with special interest groups, the upcoming arguments on the Senate floor will determine whether those lobbying dollars swayed any opinions.


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by Agnes Jasinski

Whether it's about a little cross-promotion or getting students' hands on the latest technologies out there, Seton Hill University will join a handful of other colleges across the country in offering students the iPad, Apple's newest tablet computer.

The school will begin distributing the iPad to its 2,100 students this fall; every full-time student is eligible to receive one. (Often, similar offerings are limited to incoming freshmen.) According to the Chronicle of Higher Education, the effort is part of the school's Griffin Technology Advantage program, which will expand hybrid and fully online course offerings at the college. The program does come at a cost. Students will see an additional $500 fee tacked on to their tuition and fee bills to cover a wireless campus. The school will absorb the costs of the iPads themselves.

Many schools currently offer their students laptops and computers to supplement course curricula or level the playing field for those who come onto their campuses unable to afford new technology. At Seton Hill, incoming freshmen also receive 13-inch MacBooks, with the option to request an opt-in to the program for sophomores, juniors, and seniors. George Fox University is getting on the iPad bandwagon as well, offering incoming freshmen the choice between the tablet and a MacBook. That school has been offering students computers - as part of their tuition - for the last 20 years. Duke University offered incoming students iPods between 2004 and 2006; Oklahoma Christian University has been offering students Apple laptop computers and iPhones or an iPod Touch since 2008; Abilene Christian University has been offering students iPhones since 2008 as well.

Technology on college campuses is here to stay, despite a persistent technology gap - or the perception of a technology gap - on some college campuses. Social networking in particular has become more common in college coursework. Students in a journalism course at Depaul University, for example, have been using Twitter as a research tool and learning how to use the site to supplement their reporting techniques. At Harper College, a one-time course there showed students how to use Facebook and Twitter from a business perspective.

What kinds of technology tools are being used at your college? Does your school offer laptops, desktops, or other technologies as part of your college experience?


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by Agnes Jasinski

The country's top college sports programs haven't been faring as well as you'd think when it comes to bringing revenue in to their respective schools. With the close of March Madness upon us, USA Today decided to release a data analysis looking at the finances behind some of the most high-profile college athletic programs. And it seems that the schools are keeping their sports programs afloat by tapping into student fees and other general funds.

According to USA Today, more than half of the athletic departments at public schools in the Football Bowl Subdivision (formerly known as Division I-A) were subsidized by at least 26 percent last year. Those figures are up from 20 percent in 2005, or an additional $198 million if you account for inflation. That means athletic programs are getting subsidized by student fees and whatever general funds schools have set up to cover budget shortfalls. The analysis also shows that spending on athletics has increased, despite more of a reliance on outside funding to cover the costs of sports funding in the past year compared to the previous four years.

Why the increase in athletic expenses? Inflation could be one culprit. Drops in ticket sales, declining endowments and state appropriations overall, and general overspending all contribute to rising costs. Many of the big programs also embarked on expensive capital campaigns over the last few years, and those costs are catching up to them. According to USA Today, the number of schools that have sports programs that pay for themselves - via ticket sales and general marketing revenue, for example - fell from 25 to 14 schools over the last year.

Another story published in USA Today as part of their look at sports programs' finances looks at rising coaches' salaries as another factor. Although sports program budgets have shrunk over the last year, coaches' salaries have not shrunk alongside those figures. The country's top coaches, who had been making upwards of $2 million annually just two years ago, now make around $4 million. (Mike Krzyzewski at Duke University and Rick Pitino at the University of Louisville both made more than $4 million this season.) Coaches' compensation has grown so much that it has become the number one expense for college sports programs, replacing athletic scholarships. Last year, Division I schools spent more than $1 billion on coaches' salaries.


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by Agnes Jasinski

July 1 marks the official date that colleges, if they haven’t already, must transition to the recently approved Federal Direct Loans Program. Schools will no longer offer students the option of having private banks or credit unions handle their federal loans; federal loans will now be coming directly from the U.S. Department of Education. Advocates of the student loan bill have said this will make the process more seamless and fair, with the government taking responsibility for keeping interest rates manageable. And private loans will still be available via the traditional channels, although those loans are typically offered at higher interest rates.

The student loan debate has been a constant in the world of higher education, as legislators and administrators look for ways to reduce the debt of graduates. This week, The Christian Science Monitor considered student loans in a different way. Is it ethical to send students out into the world with all this debt, especially when they may not be making enough in their chosen careers to pay back those loans in a timely fashion? Are student loans moral?

The Christian Science Monitor piece looks at the history of the student loan industry, questioning whether it was ever right for Congress to increase borrowing amounts to current levels, or to offer students described as “in need” much easier access to federal loans through the re-authorization of the Higher Education Act in the 1990s. According to the Project on Student Debt, student loan totals only continue to rise. The average national debt for graduating seniors with loans rose from about $18,650 in 2004 to $23,200 in 2008. Meanwhile, employment prospects have not increased at comparable levels; by 2009, the unemployment rate among new graduates hovered near 11 percent, the highest on record.

It isn’t just a case of telling college students not to borrow so much. Student loans are often a necessary evil, and while debt can be minimized some through scholarships and grants, most students will end up taking on some amount of debt. The Monitor questions whether there should be more strict limits on borrowers that exist in other scenarios where credit checks and expectations that borrowers will be able to pay back what they borrow are enforced. There is no guarantee of a job after college, after all, so why shouldn’t the fact that a student is unable to pay off more than the minimum on their credit cards be taken into account more when they take out loans? (On that note, the U.S. Senate has approved an amendment that would lower “swipe fees” that banks charge college bookstores when students use their credit cards for purchases.)

Student loans are a hot topic, and will continue to be. What do you think? What else can be done to reduce graduates' debt, especially among those graduates who are not entering high-paying fields?


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by Agnes Jasinski

Internet auction site eBay has removed a recent listing from a Purdue alum, citing a terms of use violation in his attempt to sell his bachelor’s degree in psychology.

Nick Enlow, a 2008 graduate from Indiana University-Purdue University at Indianapolis, set the starting bid for his diploma at $36,000, plus $3.50 for shipping. His justification for the listing was that the student loan debt he accrued to complete his bachelor’s wasn’t worth the degree. While he wasn’t confident that he’d get any bids—he thought perhaps a wealthy eccentric might take pity on him and his student loan burden—he was fairly confident that the move would strike up a dialogue on the value of a liberal arts degree. The listing was removed by eBay last week “due to the sensitivity and nature of the item,” according to a recent article in the Journal and Courier.

In that article, Enlow said he felt universities should be held more accountable, as they are “handing out too many degrees that have zero real-world application.” A main complaint was that he felt unprepared to face the $470 monthly payments to his loan provider Sallie Mae; the only job he’s been able to find is one substitute teaching, work that barely allows him to make ends meet. Enlow admits that he was somewhat naïve as a college student at Purdue, assuming that his degree would land him automatic employment in an area he loved. His college’s response has been sympathetic, but realistic. Irwin Weiser, interim dean of Purdue’s College of Liberal Arts said in the Journal and Courier that a liberal arts degree “is not an automatic ticket to a job, but then again, no degree is.”

This isn’t the first time a recent graduate has been unhappy about job prospects post-graduation. Last August, Monroe College graduate Trina Thompson tried suing her alma mater to recoup the $70,000 she spent on a degree that she says left her jobless and with few options for employment. In response to students’ worries that they would complete school only to be met with student loan debts and increased competition in the job market, Lansing Community College introduced a plan earlier this year where students would be guaranteed jobs if they completed training in high-demand fields.

If you find yourself struggling to cover student loan payments as a recent graduate, know your options. If you can’t find a job, you may defer your loans until you’re on better financial footing. And if you’re just starting your undergraduate degree, remember that the fewer student loans you take out, the better. Check out our tips for borrowing responsibly and making the most of your financial aid package.


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by Agnes Jasinski

It’s rare for a college to tell a prospective student that their school may not be affordable enough for them to attend come fall. For a year, New York University did just that, calling admitted students and their parents and families to talk about the debt they could get themselves into if they chose to attend the pricey college. Citing little effect on enrollment rates, however, the school will not be pursuing a similar effort this summer, according to a recent article in The Chronicle of Higher Education.

The purpose of the calls was to make sure students and parents were aware how much an education at the school cost long-term. NYU doesn’t offer as much “free money” in scholarships and grants as many other schools, leaving students no choice but to take out student loans to cover the more than $50,000 annual tuition, fees, and room and board bill. According to previous articles on the school’s efforts in The Chronicle, the 58 percent of students who carry debt loads once graduating from NYU do so with an average of more than $33,000 in student loans. (The national average hovers around $20,000.)

NYU won’t be abandoning all efforts to inform students and parents about the costs of attending the college. Administrators say they’re now looking for ways to make sure those admitted know of ways to finance the “significant investment” that is NYU, according to The Chronicle, and that these efforts need to start sooner rather than later when students are still deciding where to enroll. The college also plans to give students a more “general financial education” rather than giving them advice based on their specific circumstances. However, Randall C. Deike, NYU’s vice president for enrollment management, said in the Chronicle article that he has already told some students it may be better for them to start out at a less expensive college and then transfer to NYU later on.

NYU has gotten quite a bit of criticism lately from students graduating with mountains of debt, degrees in the humanities, and limited job prospects. One article last month in The New York Times took a look at Cortney Munna, a 26-year-old graduate of NYU with nearly $100,000 in student loan debt. Munna is saying she wasn’t counseled properly about the true cost of college and what it would be like to repay a loan that high once she was done at NYU. According to The New York Times article, it was NYU that suggested she take out an additional $40,000 private loan when she and her mother found that the lower-interest student loans didn’t cover all of the costs of attendance. The college has since said it would have been inappropriate for them to counsel Munna out of NYU, or to counsel her out of taking on more debt to remain at the school. Who is to blame here? Were Munna and her mother naïve in assuming they could handle the loan? Should private lenders consider students’ existing loan totals when doling out funds? Should the college have been more forthright?


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