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by Emily

The global economic recession of 2008-2009 has had an impact on seemingly every aspect of life, especially large expenses like college tuition. There has been much speculation about the economy's effect on college financial aid, and as the fall semester gets underway at colleges across the nation, information is starting to emerge that helps paint a picture of paying for school in a recession. So far, the results are mixed.

While a poll by Gallup and Sallie Mae showed fewer students borrowing for college this year, a survey conducted by NASFAA, the National Association of Financial Aid Administrators, shows more students applying for and receiving federal student financial aid this year than last year. Additional data from the Department of Education also backs this up, showing 25 percent more borrowing in federal student loan programs this year.

The NASFAA survey of nearly 500 financial aid offices shows that in comparison to the same time last year, 61 percent of colleges and universities are seeing an increase of 10 percent or more in financial aid applications, with 63 percent of institutions also seeing a significant increase in Pell Grant awards this year. Only 8 percent of institutions saw no increase in aid applications, with only 5 percent reporting no increase in Pell awards. Also, despite 65 percent of schools seeing an increase in financial aid appeals by 10 percent or more, 51 percent saw an increase of 10 percent or more in the number of students with unmet financial need.

Additionally, the majority of colleges have increased institutional aid (such as scholarships and grants), with 74 percent of four-year colleges and universities offering some increase in aid. Community colleges were the majority of institutions not increasing aid, with many citing a lack of available funding as the reason for this decision.

Many of the changes found by NASFAA and the Department of Education can be attributed to the federal response to the economic downturn. The increased borrowing is most likely due to the increases in loan limits, with larger unsubsidized Stafford loans being made available to both undergraduate and graduate students in the last two years. Financial aid administrators speculate that the increased aid awards are likely due to a combination of the increasing unemployment rate, changes in rules for adjusting financial aid awards, and nationwide awareness campaigns to let those collecting unemployment benefits know they are eligible for increased financial aid for college.


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by Emily

Personal savings, college endowments and college savings plans all suffered when the stock market took a nose dive last fall. Students, families and even schools who thought they were financially secure soon learned otherwise and had to scramble to come up with alternative plans to pay bills. Now that things are beginning to even out and return to a state of normalcy, those affected by the recession are looking towards recovery and assessing their long-term plans. For some college savings plans, especially "guaranteed" tuition savings plans, the future looks particularly bleak, even without further financial setbacks.

Guaranteed tuition savings plans are one of several types of college savings plans, which allow families to save for college tax-free and often involve other incentives, as well. Prepaid tuition savings plans allow families to pay tuition ahead of time at certain schools, ensuring that bills will be paid for students, even if tuition skyrockets, as it seems likely to continue doing. Many families in states where they're offered have purchased them for young children who may not be attending college for another 15 years or more, but some plans have already begun to run out of money due to losses in the stock market and the sharp rise of college costs.

As a result, states including Texas, Alabama and Pennsylvania are struggling with the prospect of not being able to fund their current obligations to these plans. Several prepaid tuition plans have been closed off to new investors, including the plans in Texas and Alabama. Despite this, Alabama may not have enough money to pay tuition for all students currently enrolled in its prepaid plan. Pennsylvania has introduced legislation to remove "guaranteed" from its tuition savings plan's name and make it clear that the state has no obligation to bail out the plan if it doesn't earn enough money to meet its obligations.

Texas has also announced a rule change for people who currently have money invested in its guaranteed tuiton plan. When they invested, families were told that if their children did not go to one of the state colleges whose tuition the plan will fully fund, they would be able to close their account and withdraw the full amount of tuition at those institutions at that time. Now, the Texas Prepaid Higher Education Tuition Board has said that families whose children do not attend one of the schools included in the plan can only withdraw the amount they invested, minus an administrative fee. State legislators have urged the board to reconsider, but so far it appears that those with money invested have three choices: they can pull their money out before the rule goes into effect on October 30, they can limit their children's college choices to those sanctioned by the tuition savings plan, or they can take a guaranteed loss on their "guaranteed" tuition investment.

To help you avoid the problems currently facing Texas parents, US News has a helpful article on questions to ask before investing in a prepaid college savings plan. Prepaid tuition plans, 529 plans, and other college savings vehicles can still be a good idea, even though they've been through difficult times. As with many things, the trick to being successful in your choice is first doing your research and figure out which plan is best for you and your family.


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by Agnes Jasinski

It's obvious the economy has had an effect on the world of higher education. While there have been reasons to remain optimistic - some schools have created new scholarships to compensate for students' increased needs for aid - many states continue to deal with deep budget cuts, which have had a trickle-down effect on students' financial aid packages. Some have been forced to consider shutting down merit scholarship programs; others have raised tuition.

Schools' athletic programs then aren't immune to the economy's effects. An article today in The Chronicle for Higher Education describes the potential trouble schools could be in if they have recently embarked on big athletic program projects, like new stadiums (University of Minnesota) or extensive remodeling (Oklahoma State). The article compared schools' spending on sports programs to that of homeowners now finding they've purchased properties they can't actually afford. New projects will probably stall until economic projections brighten, and schools may find that it's not so easy justifying pouring money into capital improvements to athletic facilities when those same schools are facing layoffs and budget cuts elsewhere.

Numbers and hard data showing how the economy has affected sports programs has been vague. While schools report anecdotes of slow ticket sales to sports events, others say their endowments remain strong and that their football stadiums are more full than ever before. Perhaps students and alums use sports events as diversions from the economy. Or it's schools with a lot of buzz surrounding their football programs that are doing well this season. Luckily for sports fans, many projects that have been in the pipeline since before the economy began faltering are being paid for through donations and private funding, rather than borrowed money that may be harder to come by and riskier to an administration unsure when things will return to normal.

Or maybe those schools with the big athletic programs are just adding more to their debt. Debt overall has risen at colleges. Over the last four years, the average debt has gone up more than 50 percent, according to rankings of 200 public institutions by Moody's Investors Service. At the same time, revenue at those schools has been down significantly. The Chronicle article suggests funding that has gone to sports facilities has at times been diverted from other campus sites that could use more work, like remodeling old dormitories or improving academic facilities. It can get difficult, though, to criticize spending money to improve programs that bring so much money into a school, especially at schools with high-profile athletic teams. Sports will always be an important piece of many big campuses, and student athletes should still go for athletic scholarships if they have the grades and the talent, since the situation would probably never get so dire that teams would be disbanded.


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by Agnes Jasinski

The Federal Reserve Board proposed new regulations last week that would prohibit creditors from issuing credit cards to anyone under 21 without the consent of that applicant's parent or guardian, or proof that the consumer would be able to make the required payments on their own. Those rules would amend some of the provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009, a bill passed by Congress last May that, among other things, would hinder credit card companies from getting college students to sign up for offers at on-campus booths.

You know you've seen it before - the free T-shirt that you probably wouldn't wear, but was appealing anyway because it was free. All you had to do was sign up for a credit card. An article in The Chronicle for Higher Education when the bill was first moving through Congress described college students as the most targeted population when it comes to new customers for credit card companies.

Critics of the bill then said that college students, who take on a slew of new responsibilities once they get on campus, should be treated as adults. And during a time when students are more apt to use credit cards to pay for college expenses, they shouldn't meet obstacles when using their credit cards for college expenses. According to a recent survey by student lender Sallie Mae, 84 percent of undergraduates have at least one credit card; 92 percent of those undergraduates use the cards toward college expenses. College students' average balances are more than $3,100.

So what's the bigger problem? Having access to credit to pay for college expenses, or preventing college students from accruing large sums of debt?

Credit cards should be used as the last line of defense, and ideally for emergencies only. There are many options out there for you to find money for college that have nothing to do with being faced with high interest rates and exorbitant fees. Do your research to apply for college scholarships and grants that would result in free money to cover your college expenses. Consider a part-time job on campus if you have the time and can balance work and college. And while not as desirable, investigate low-interest student loans to supplement your financial aid package.

If you need to use credit, make sure you're keeping within a manageable budget, and only charging as much as you'd be able to realistically pay off at the end of the month. The decisions you make now will matter post-graduation, and any decision involving opening a new line of credit should be approached with caution. Stick to one card if you need one, and if you find yourself in debt, pay off as much as you're able to each month until you're done. (Don't be using that card while you're trying to pay it off, though.) Browse through our site to see more tips on budgeting, how you can avoid mounds of credit card debt, and how to keep your credit card score healthy.

The new regulations would go into effect after Feb. 2010, but the public, credit card industry and others will have a chance to voice their opinions beforehand. Other rules proposed by the Board included:

  • Limiting high fees associated with subprime credit cards.
  • Prohibiting increases in a credit card interest rate during the first year after an account is opened, and increases in a rate that applies to an existing credit card balance.
  • Requiring creditors to obtain consumers' consents before charging fees for transactions that exceed their credit limits.


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by Emily

While prospective college freshmen are already beginning to fill out their college applications in preparation for fall application deadlines, transfer students traditionally enjoy a bit more leeway. However, the sharp state budget cuts and larger enrollments in community and state colleges this year may mean that students planning to transfer from a two-year to a four-year school will want to get their applications together as early as possible this year.

California, a state whose severe budget crisis has made it something of a canary in the mineshaft for most funding issues this year, has recently begun turning transfer students away in droves from its four-year public colleges. The reason: the state university systems have had to cut back enrollments across the board, and after many decisions had already been made for the academic year now underway, in order to deal with a sharp decrease in available state funding for the current fiscal year.

This means that many conditionally admitted transfer students have been told they need to wait a year or look elsewhere, simply because they didn't correctly complete all the necessary steps far enough ahead of time to secure seats in state universities for the fall and spring semesters this year. This leaves students applying last-minute to pricey private colleges, vying for seats in courses that likely won't even count just to kill time until the next admissions cycle, or even dropping out for a semester or more.  The state's budget picture shows no signs of improving, meaning transfer students will likely need to contend with the same situation next year, as well.

While other state university systems haven't had to cap or reduce enrollments or close budget holes to the same extent as California, a decrease in funding coupled with an increase in interest in state and community colleges may still result in wrenches being thrown in many students' transfer plans. More students at community colleges will make it harder for some students to get into classes they need to complete to successfully transfer to a four-year college. More students applying to state colleges means available seats may fill up faster and transfer applications may be delayed. It can also mean stiffer competition for financial aid, such as transfer student scholarships. Like in California, it could also mean that students whose transfer applications are not perfect the first time may see their plans derailed, or at least delayed, much more easily than in previous semesters.

Because of these concerns, students who are planning to transfer from a community college to a state college (and also students considering a move between four-year schools) will want to stay in touch with their academic advisors this year and complete all required steps as quickly as possible. Make sure you are applying for admission and aid well ahead of deadlines, and make sure you're meeting all requirements to ensure a smooth transfer process. Staying on top of things this fall can save you headaches, and possibly money, when it's time to switch schools.


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by Agnes Jasinski

The economy has made college admission totals difficult to predict. Many community colleges are seeing significant increases in the number of students applying to their schools, perhaps as a result of more adult students seeking to pick up new skills to make themselves more desirable in a tough job market. Some private colleges have faced declining enrollments as students look for more affordable options when considering which school they'll attend in the fall, while others that have maintained generous financial aid packages have experienced an increase in applicants.

Ithaca College can't complain about declining enrollment. The Chronicle of Higher Education reported this week that the New York school has offered 31 students $10,000 each to defer their enrollment for one year. Ithaca's target for new freshman was between 1,700 to 1,750. They ended up with an incoming fall class of 2,027, or 20 percent more than expected. Sure, having a larger class is better than seeing significant decreases in enrollment, but enrolling more freshmen than the school can handle won't only affect the college's bottom line as they adjust this year, but the four years that large class will be moving through the ranks. The school will also be forced to enroll fewer students over the next few years, making it harder to recoup any losses in spending this fall.

According to the Chronicle, the college had to make several other adjustments to prevent a repeat situation and compensate for the extra funding they'll need to get through the next four years with a larger class:

  • Raising admissions selectivity for the fall of 2010 to bring in fewer applicants from the beginning.
  • Building a temporary, $2.5 million residence hall.
  • Reinstating early decision.
  • Providing reduced rates on room charges and paying cable bills for students housed in lounges.
  • Providing $2,000 in incentives for upperclassmen to urge them to move off campus.
  • Hiring additional instructors.
  • Allowing for additional financial aid funding.

The Chronicle suggests missing the admissions mark by this much is rare. Ithaca had been seeing declining admissions numbers up until this point, so they worked harder this year to boost enrollment. Ithaca also accepted 73 percent of its 2009 applicants, compared with 59 percent in 2008. Administrators at the school maintain a positive outlook, and say that while they did need to spend some to get the situation under control ($250,000 for those deferred enrollments alone), they plan to come out with a modest surplus.


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by Agnes Jasinski

Although community colleges nationwide have seen significant boosts in enrollment, a report released yesterday suggests many will be forced to put their educations on hold or find new sources of funding if their institutions continue blocking access to federal student loans.

The Project on Student Debt released the report, and despite their stance on promoting that students take on as low a student loan burden as possible, they say community college students are at risk for taking on riskier private student loans or watching their grades slip as they take on more work hours to cover gaps in funding because they aren't able to apply for and receive federal student loans. About one in 10 students in 31 states surveyed don't have access to federal student loans, and in some states, more than 20 percent of students can't get the federal loans. Minority students have less access to federal loans than other student groups, as the report found many minority students attending community colleges that don't participate in the federal student loan program.

Why have many community colleges moved away from offering federal student loans? In an uncertain economy, the answer is risk, according to the report. Defaults on student loans have begun to rise among not only community college students, but among all college students over the last few years. The report always says many community college administrators believe students shouldn't have to borrow to attend their schools. Tuition is lower, they say, and if students are saddled with large amounts of debt now, they could hurt their chances for qualifying for low interest rates and federal student loans if they were to transfer to a more expensive, four-year institution.

But some students do need the additional funding even at a low-cost option like a community college, especially in the current economic climate. According to survey results released by the National Council of State Directors of Community Colleges last month, about half of the nation's community colleges are expecting budget cuts and midyear reductions in their state appropriations. Many administrators in that survey also reported that stimulus money provided by the Obama administration went toward meeting existing budget deficits, and that they would be forced to raise tuition rates substantially despite record enrollments to make up for a lack of state funding. (The average tuition increase among community colleges is expected to be about 5 percent for the 2009-2010 academic year.)

While you should always exhaust your options with grants and scholarships first, student loans are often a necessary evil, and we have plenty of tips on how to go about applying for them and making sure you're getting the best rate possible. Never rely on credit cards to fund your education, or you'll run the risk of getting into more debt than you can handle not only post-graduation, but while you're still in school. Browse through our site for more information on your student loan options.


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by Agnes Jasinski

Colleges may need to work harder to find cost-effective ways to promote diversity on their campuses, as schools' diversity departments that have enjoyed growth over the last few years have found they aren't immune to the economic crunch.

An article in the Chronicle of Higher Education yesterday described strategies being considered by colleges in order to preserve their existing diversity departments and to make as few changes to minority-based programming as possible. Some schools have had to scale back diversity efforts to protect other programs affected by reduced budgets. Financial aid budgets are understandably a top priority at many schools, which is critical for not only minority students but all low-income students relying on aid, but staffing and across-the-board cuts have not spared diversity departments. According to the article, some schools' diversity programs must now make do with less, a common refrain in not only higher education but everywhere over the last few years. Central Connecticut State University's diversity office is down to two employees, for example.

But more broad cuts at college campuses will undoubtedly affect minority students more than other groups. Caps in enrollment at the big state universities where minority students make up a large percentage of the student populations could change the makeup of those schools, as minority students often apply for financial aid and admission later than white students, according to the article. The California State University system, for example, where 55 percent of the student population is composed of minority students, has been forced to cut its enrollment numbers by about 35,000 students over the next two years. Other schools like Reed College have been forced to reject students who would require more financial aid than the college is able to afford, harming those less-affluent students who don't have the means to attend the more expensive or private schools without significant aid.

Numerous studies have looked at how colleges can expand opportunities for minorities, both in getting them enrolled in college and getting them to apply for financial aid to pay for college. And while colleges have been trying to compensate for cuts that may affect minority students more than others by coming up with new, more cost-effective programming targeting those student groups, it will take some time for colleges to get back to the level of funding they once enjoyed and replenish those departments most affected by by budget cuts.

For minority students concerned about changes on their college campuses, consider a free scholarship search. Scholarships for minorities, including the growing number of Hispanic scholarships, are some of the most common student-specific scholarships out there, so for those putting their college plans on hold because of finances, be sure to conduct a free scholarship search to view all of the scholarships you’re eligible for.


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by Emily

Colleges across the country have had to make sweeping budget cuts to cope with substantial endowment losses and reductions in state funding sustained as a result of the recession. In many places, these cuts have led to fewer instructors, larger class sizes, and fewer course offerings. In addition to potentially reducing the quality of instruction students receive (even as they see their tuition continuing to rise dramatically), these factors are also making it harder for students to graduate on time.

An Associated Press article details the struggles some students at state colleges are facing trying to finish their educational careers. Despite the limits placed on freshmen and transfer enrollment this year, upperclassmen in California, as well as other states facing large-scale financial difficulties, are finding it nearly impossible to get into the classes they need to complete their plans of study.

Some students are able to only enroll part-time, jeopardizing their financial aid eligibility, while others are spending money on classes that basically amount to filler, at least as far as education requirements are concerned. Still other students may be choosing to take a semester or more off from school when faced with the prospect of being unable to enroll in any of the classes they want or need to take. Even more frustrating for students who need to take specific courses to graduate is that along with overstuffing sections of popular classes, universities are more likely to cut sections and courses (and even departments) with low enrollments to conserve resources, potentially leaving even more students high and dry.

Aside from analyzing every possible approach to fulfilling their degree requirements; petitioning professors, colleges, and department heads to grant exceptions in the wake of overflowing classrooms; and being sure to register as early as possible for next semester, there are few other options available to undergraduate students caught in this situation. However, students who are in the midst of their college searches can take steps to protect themselves against canceled classes and prolonged stays in college. A growing number of schools offer four-year graduation guarantees and accelerated degree programs, allowing students who can make the commitments required to avoid frustrations and minimize their time to degree.


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by Agnes Jasinski

The topic of health care has dominated the news recently. Voices on both sides of the political spectrum have been trying to either stop the debate entirely or come up with ways to compromise on a complicated issue even legislators have become perplexed by. In a big push forward, the Senate Finance Committee voted "yes" yesterday to approve an overhaul of the country's health care system, signaling at least the first step toward potential medical reform.

But how will college students be affected in all this, if at all? An article in Inside Higher Education today looks at whether the proposals currently being considered will have an adverse affect on students and campus-based health care plans, which many students leave their parents' plans for. The article suggests that without any major changes, the bill up for debate ignores college health insurance plans altogether as it focuses instead on employer-based group plans and individual policies. Allowing students to remain on their parents' health insurance plans for a longer period of time could be an option under the proposal, although this would not address students whose parents have lost their jobs and health insurance, for example, and need an affordable plan to get them through their college careers.

Lookout Mountain Group, a nonpartisan group that researches the impacts of health care reform on students, released a statement last week that the proposals currently on the table did little in the way of making sure college students had access to affordable, quality health care plans. The group further warns that the cost of health care for students could actually increase if language isn't included in the bill that would address the lack of campus-based options. Jim Mitchell, the director of Student Health Services at Montana State University and spokesperson for the Lookout Mountain Group, said in a release that any health care proposals should strive to include college? and university?sponsored student health insurance/benefit plans under the bill's definition of "group insurance."

Worst case scenario, how would students' health care be affected if no changes were made? According to the Government Accountability Office, 71 percent of four-year private colleges, 82 percent of four-year public colleges, and 29 percent of two-year public colleges offer student health care plans. Best case scenario, legislators realize the oversight and work on including amendments that would not only maintain campus-based student health insurance plans, but expand health insurance offerings for college students, a population that definitely needs affordable options.

No matter what happens with the health care bill, consider your health insurance options before you get to college. Many insurance plans will allow full-time students to remain dependents under their parents' health care plans while those students are in college. If you choose to go this route, make sure you've notified your college; many schools that carry student health insurance plans automatically charge and enroll new undergraduates for their plans. (You may need to provide proof of your insurance in this situation, but that's for your own benefit. Trust us. You don't want to start college uninsured, and will be thankful for insurance when you get sick at college.) If you go with your college's plan, you'll probably pay less than you would for a private plan, and you'll need to be comfortable going to your school's clinic or health center for most of your minor ailments.


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