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.
Meanwhile, families are in similarly rough shape. Investments are in trouble, unemployment is up, and families are having trouble getting home equity loans or other lines of credit that they may have previously used to cover tuition. 529 plans have taken a hit, as well, and student loans have also tightened credit requirements. All this means that students might face greater difficulty getting into and paying for school.
So that's the bad news. Now for some good news:
- Congress has expanded the Ensuring Continued Access to Student Loans Act (ECASLA) to make it easier for banks to access enough funds to make loans. The increases in unsubsidized Stafford Loan limits have also been renewed into the next academic year. This could further shore up the Federal Family Education Loan Program (FFELP) and make it easier for students to borrow what they need to pay for school. A new economic stimulus package is in the works, as well, and part of the money involved may go to Federal Pell Grants.
- Despite financial difficulties, colleges are pledging to maintain or increase their spending on campus-based aid for their students.
- The Department of Education is planning to present its vision for simplifying and improving the federal student financial aid program. One of the most notable aspects of the new plan is the proposal to shorten the FAFSA on the Web application. Greater efforts to standardize federal aid among colleges are also being proposed.
- A new study indicates that what you get out of a college experience might be less dependent on where you go to college than on how you choose to approach your education. Researchers found more variance among learning outcomes and student satisfaction within institutions than among them. In fact, 90% of the difference in quality reported by students occurs among individual students attending college on the same campus. So if you do find yourself having to take a pass on your dream college, a positive attitude can make your experience at your safety school just as rewarding.
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