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by Scholarships.com Staff

More Americans are regarding a college education as necessary, but fewer are regarding college as accessible for everyone according to survey results released today by Public Agenda and the National Center for Public Policy and Higher Education.  While the economy is likely a factor, these trends have been ongoing since at least 2000, even during times of relative economic strength.

In the latest survey, conducted in December 2008, 55 percent of Americans regard a college education as not only advantageous but essential for success in today's work world.  Meanwhile, 67 percent of respondents believed that many qualified people don't have the opportunity to go to college.   63 percent believed that college costs are going up faster than other costs, and 53 percent believe that colleges could reduce tuition while still offering a high-quality education.

While 74 percent believed that cost should not deter students from attending college, concern is growing about the availability of financial aid and the extent of students' reliance on student loans.   67 percent (up from 60 percent in 2007) believed that students were borrowing too much to pay for school, while 22 percent (up from 15 percent in 2007) believed that sufficient financial aid was not available to everyone who needed it.

While public perception does not always accurately reflect reality, these survey results do suggest that more needs to be done to make college affordable or to inform the public about grants, scholarships, and campus-based and federal student financial aid.  College scholarships and grants are still out there, and they're not just for A students or the exceptionally needy.  Complete a FAFSA (a free application for federal student aid) and conduct a free scholarship search to see what's available for you.


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by Emily

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."

While neglecting even one payment is a bad idea at any time, borrowers who have found themselves in default on their loans are facing an even more difficult time as a result of the credit freezeThe Chronicle of Higher Education published a story today about this particular aspect of the trouble facing participants in the Federal Family Education Loan Program. Currently, 19 of the nation's 35 guarantee agencies (the companies that service student loans in the FFEL program) lack a buyer for their student loans, including rehabilitated loans.

People who borrowed Stafford loans, defaulted on their payments, then agreed to "rehabilitate" their loans, or make consistent payments until the loan can be repackaged and resold and thus brought out of default, are finding that there's currently no market for their rehabilitated loans, so they're stuck in default status longer than necessary. This hurts their credit score and also keeps them from being eligible for federal student financial aid if they choose to go back to college, as many people affected by the recession are doing.

Currently, the federal government cannot buy up these loans, though legislation may be in the works to fix this.  While students do have other options, such as consolidation through Direct Loans (the federal government loan program), students were typically pushed toward rehabilitation before the credit crunch, as it was most profitable for the lenders, according to the Chronicle of Higher Education article.

If you have a student loan currently in repayment, be sure to work with your lender if you're having trouble making payments.  Look into consolidation loans, and ask about extended payment plans, in-school deferments (if you're planning to go back), loan forgiveness programs for certain career paths, and hardship forebearances.  Student loan debt cannot be discharged in bankruptcy, so if you default, you're stuck with the consequences--possibly for much longer than you'd think.


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by Emily

The loss in funding faced by state and community colleges this year may not be a one-time thing.  A report issued this week by the State Higher Education Executive Officers (SHEEO) indicates that state budget cuts to higher education made during recessions tend to become permanent.  With many attempting to eliminate multi-billion dollar budget shortfalls, cuts to education are almost certain to happen across the country, and based on data collected by SHEEO, they are likely to continue into the future.

Per-student state higher education spending peaked in 2001, when it hit the highest level in inflation-adjusted dollars since data was first collected in 1983.  A recession in 2001 prompted drops in education spending that continued until 2006, when spending began to grow again until 2008, though per-student funding did not return to 2001 levels before another recession interfered.

In response to cuts in funding of around 7 percent between 1998 and 2008 and increases in enrollment of around 25 percent over the same period, tuition revenue has risen 20 percent.  The report suggests this trend is likely to continue, with funding potentially falling off permanently and tuition hikes continuing as a result of this year's budget cuts.  Thus, the burden is passed on to already cash-strapped students and families, who are already facing the prospect of needing more student loans due to losses of income and declines in college savings plans.

The SHEEO expressed hope that the stimulus package currently moving through Congress might mitigate this effect.  However, the version passed yesterday by the Senate eliminated billions of dollars that would have gone to offset state budget cuts, so the positive impact on higher education could be less than is hoped.  Additionally, members of Congress have expressed frustration with rising tuition rates, especially given tuition's likelihood to continue to outpace increases in Federal Pell Grants, such as the new funding currently included in the stimulus.


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by Scholarships.com Staff

The Senate passed their version of the economic stimulus bill Tuesday, and by late afternoon yesterday it was announced that a compromise had been reached between the House and the Senate. The compromise bill includes less funding than either version--$789 billion as compared to $820 or $838 billion, and one of the areas that faced cuts was education.

While the final draft of the stimulus bill has not been released--or necessarily written--yet, some details are emerging in media coverage. It appears that a Pell Grant increase has made it into the final draft, though the exact amount is still unknown. Federal Work-Study also receives a funding boost, though it's also unclear whether it's the full $490 million appropriated by the House. The $2,500 tuition tax credit has also survived, as have several other tax credits not related to education. Proposed increases to Perkins Loans and unsubsidized Stafford Loans appear to have been axed from the conference committee's version of the bill. States will receive some money to offset educational expenses and aid in school construction and renovation, though not as much as the House had appropriated.

More details will likely emerge over the next couple days as the bill makes its way back through the House and Senate for final approval. The stimulus package could be signed by President Obama as soon as Monday. While the stimulus will provide some help to most people attending college, it's not too late to find other ways to boost the funding to your own college education. Conduct a free college scholarship search to see what financial aid is out there.


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by Emily

The House of Representatives just passed the compromise version of the economic stimulus package.  Now there are just two stop left for it before it becomes law: the Senate and President Obama's desk.  The Senate plans to vote later this evening, putting it on track to be signed on Monday.

As the dust settles, more detailed accounts of what's actually in the bill are emerging.  While the final totals have not yet been made public, Inside Higher Ed has an updated version of their stimulus chart online today, featuring many of the stimulus provisions related to higher education.  The $787 billion stimulus package will include: 

     
  • $17.1 billion to increasing the maximum Pell Grant award by $500 and eliminate a shortfall in funding
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  • $200 million to college work-study programs focused on community service
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  • A $2,500 education tax credit available for four years of college.  The credit is 40 percent refundable, so people who don't make enough to pay taxes can still receive $1000.
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  • A provision to allow computer purchases to count as qualified educational expenses for 529 plans
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  • $39.5 billion to offset state budget cuts to education, including money to modernize facilities
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  • $8.8 billion for states to award to high-priority needs, including education
  •  
 While several items related to federal student financial aid were cut from earlier versions of the stimulus, the final verison will hopefully minimize tuition hikes by giving states more money for education, help the neediest students deal with tuition increases through an increase in grants and work-study, and help all college students a little with the tax option included.  The stimulus package also includes tax rebates, increased funding to several social welfare programs, and changes to unemployment benefits, which could further aid struggling students and families.


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Making College More Affordable

February 17, 2009

by Emily

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.

Jesse Jackson recently wrote an article in the Chicago Sun-Times suggesting that Congress pass a law to offer a 1% interest rate on federal student loans, including Stafford Loans and PLUS Loans.  The Minneapolis Star-Tribune ran a column in January that went even further, suggesting that the federal government forgive all student loan debt.  Meanwhile, Lamar Alexander, a republican Senator from Tennessee, has gotten some publicity for suggesting that more colleges offer three-year paths to degrees, as one of many potential cost-saving measures.  Some states are looking into "no-frills" universities, and partnerships between state colleges and community colleges are also gaining traction as cost-saving options.

So we were wondering what people who are in the process of paying for college think.  What would you like to see happen to make college more affordable and reduce the burden of student loan debt on college graduates?


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Students Protest College Costs

February 20, 2009

by Emily

This week, several groups of students have decided to take a new approach in attempting to reduce their college costs.  Students in Minnesota and South Carolina both held rallies at their state capitols this week to try to influence their state legislature's decisions regarding their schools.  Meanwhile, students at New York University have barricaded themselves inside a building on campus, refusing to come out until the university meets their list of demands.  Each group has different requests, but most come down to money.

More than 200 students from state colleges and universities in Minnesota protested outside the State Capitol Wednesday.  Many held signs stating their anticipated student loan debt (answers included $38,000 and "too much" according to an article in The Minneapolis Star-Tribune), while others gave speeches and encouraged their legislators to reject the governor's proposed budget cuts to higher education.  Several legislators expressed solidarity with the students, and a newly formed student group plans further protests.

Students in South Carolina also urged their state legislature to make college funding a spending priority, though their actions were largely in protest to a proposed state tuition cap.  Students expressed concern that their universities may need to sacrifice educational quality by cutting faculty or course offerings to deal with reduced funding.  Students were concerned they'd wind up getting less for their money and possibly paying more money over time by taking longer to get the classes they needed to graduate.  They urged the legislature to leave the power to set tuition in colleges' hands.

New York University had the most radical student protest and the lengthiest list of demands, with a small group of students taking over a cafeteria and demanding greater accountability and transparency in the university's budgeting process.  The NYU students also wanted a tuition freeze, a union and better benefits for graduate student assistants, and according to one sign, "enough financial aid" for all students, among other things.  The students and the university have been in an ongoing standoff since Wednesday night, with crowds of up to 300 students gathering outside the occupied building at one point yesterday.

Whether student rallies, protests, or sit-ins are the best means of funding your education is debatable.  Students with activist inclinations who seek other routes to paying for college with better odds of immediate success should consider doing a scholarship search.  There are numerous scholarship opportunities for students who are involved in their communities and interested in bringing about change, and they don't require presenting anyone with a list of demands.


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by Emily

In a speech delivered before a joint session of Congress, President Obama called for every American to complete at least one year of postsecondary education and pledged greater financial support for those attending college.  He also urged that America become the "best educated" nation and set the goal of having the highest proportion of college graduates in the world by 2020.

In addition to healthcare and alternative energy, the president declared education to be a top priority for improving America's economy and its place in the world.  He called on families, schools, and Congress to embrace this priority, and to better prepare citizens for careers that increasingly require some amount of  education or training beyond high school.

President Obama promised greater funding for higher education in the federal budget for 2010. This may include the educational tax benefits he advocated in his campaign, as well as other increases to federal student financial aid. He once again mentioned community service or other national service as requirements for future financial aid.

In addition to pledging greater state support, he also asked for an individual commitment by each American to not only graduate from high school, but to set college goals and attend a college, university, community college, or vocational training program for at least one year.  In addition to helping people succeed individually, greater education and training can lead to greater success for society.

Obviously, problems with paying for school will not disappear overnight.  But with help from schools and the government, individuals who work hard and make higher education a priority can reap the benefits, despite the challenges that remain.


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by Emily

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.

While Pell Grants received a funding boost, SEOG grants will remain at 2008 funding levels, as will work-studyPerkins Loan cancellation programs will receive a boost in funding to cover shortfalls.  Additionally, TRIO and Gear Up programs, aimed at helping low-income students get into college, also received more funding.

The first draft of the budget for the 2010 fiscal year is also heading to Congress soon after being unveiled by President Obama this morning.  While details are still emerging, based on an address the president delivered Tuesday, it's likely that further funding for financial aid programs and higher education in general will be included. 

While budgets are being hashed out and college aid is generally on its way up, more trouble may be brewing for student loans.  A PLUS loan auction program slated to go into effect this summer could reduce the availability of these loans that parents take out on behalf of their students, at least at schools participating in the FFEL program. Financial aid officers have petitioned Congress to delay the scheduled cut in PLUS loan subsidies so as not to jeopardize students' ability to pay for school in the midst of a recession that has already driven dozens of banks away from one form of student lending or another.


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by Emily

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.

After remaining nearly stagnant between 2002 and 2007, the maximum award for the Federal Pell Grant has increased significantly over the last few years.  It shot up from $4050 in 2006-2007 to $4310 in 2007-2008, then $4731 in 2008-2009 and now stands at $5350 for 2009-2010.  If this provision in President Obama's 2010 budget is adopted by Congress, the maximum Pell Grant will be set at $5500 for 2010-2011, and from there on out, it will increase in step with the consumer price index, plus 1%.  This award amount would become mandatory, as well, saving Pell funding from being at the whim of Congress.  This is good news across the board for now, but may be a problem later, since tuition and fees have steadily outpaced inflation for most of recent memory and it is entirely possible that they will soon leave the Pell Grant in the dust, despite this new funding commitment.

While the president's plans for Pell Grants and tax credits have largely been met with enthusiasm, the proposed changes to student loans have received mixed reactions.  Changes to Perkins Loans would be good for some schools and students and bad for others, but would increase access to the loans overall.  The move from FFELP to Direct Loans also has its ups and downs.

Channeling all Stafford Loans and PLUS Loans through Direct Loans would save money and streamline the process, and it may even reduce confusion about federal versus private loans, since students would no longer be borrowing both from the same bank.  However, some worry that despite the extent to which incentives have already disappeared and the FFEL program has been subsisting off temporary goverment support for the past two years, abolishing it entirely may hurt students in the long run.  Moving to a single lender system would eliminate what little competition in the student loan market remained, doing away with the possibility of future repayment or loan consolidation incentives.  Others worry that some of the counseling and support that FFELP funding provided to borrowers would disappear, though a new $2.5 billion grant program would likely supplement these programs.


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