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House and Senate Pass 2010 Budget Outlines

April 3, 2009

by Scholarships.com Staff

Yesterday, the House and Senate both passed outlines for the 2010 federal budget.  Both propose about $3.5 trillion in spending and preserve many of the priorities of President Obama's budget, including more spending on federal student financial aid. A conference committee will hammer out the differences between the two packages and create a compromise budget.

On financial aid, the main point of contention continues to be the proposal to eliminate the bank-based Federal Family Education Loan Program and switch to federal Direct Loans for Stafford and PLUS loans.  The language of the House budget outline paves the way for the elimination of FFELP by instructing the Committee on Education and Labor to find $1 billion in savings through the budget reconciliation process.  The Senate bill does not include such a provision, and instead includes (largely symbolic) language promoting a student lending system built on competition and choice.

After an outline is agreed upon, then specific spending legislation will start to emerge, and the fate of FFELP, as well as the proposed expansions to Pell Grants and Perkins Loans, can be determined.  So far, it appears that many of these changes, as well as healthcare and environmental reform, are on their way to becoming reality.

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Anonymous Donations Fund Scholarships at Several Universities

April 21, 2009

by Scholarships.com Staff

In the past few weeks, at least nine universities have received donations of at least $1 million, with instructions that the money be used primarily to fund scholarship programs. The donations, which total at least $45 million, have been given to colleges across the country since March, according to the Associated Press.

While anonymous donations happen from time to time, this circumstance is still highly unusual, since no college officials know who provided the gifts.  Typically, the college knows the donor's identity but agrees not to reveal it.  However, schools benefiting from this wave of anonymous donations have been contacted by representatives of banks or law firms, rather than by the donors themselves, and have been asked not to attempt to ascertain the donor's identity.

The donations have largely been met with gratitude. They are well-timed, given the state of the economy and many colleges' current attempts to meet the increased financial need of students.  Families are experiencing greater need for financial aid, and colleges' endowment funds, including endowed scholarships, have lost large amounts of money, giving them fewer resources to use.

For students at these colleges, as well as other schools that have recently benefited from generous donations, the scholarship opportunities they provide could mean the difference between attending college and staying home.  However, these anonymous donors are not the only people out there dedicated to making a college education possible for students in tough times.  You can do a free scholarship search for information on more scholarship awards.

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Obama Signs National Service Bill

April 22, 2009

by Scholarships.com Staff

Yesterday, President Obama signed into law a bill to expand Americorps, a national service program that provides small stipends to people of all ages engaged in volunteer work throughout the country.  The act, officially known as the Edward M. Kennedy Serve America Act, paves the way for Americorps to grow in size from its present 75,000 volunteers to as many as 250,000 volunteers by 2017.

In addition to creating more volunteer positions, the Serve America Act will also increase the education stipend for volunteers to $5,350, the same amount as Federal Pell Grants.  This will enable more recent graduates and people currently attending college to participate in Americorps programs, which are becoming an increasingly popular alternative to employment in the current economy.

The national service bill, sponsored by Senator Kennedy, quickly made its way through both houses of Congress, receiving bipartisan support, as well as a ringing endorsement from President Obama, who has long been a proponent of community service.  Congress still needs to find funding for Americorps to begin to expand, but a provision to provide an immediate 25% increase in funding to the program was included in Obama's 2010 budget proposal.

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Study Shows Substantial Increase in Private Student Borrowing

April 23, 2009

by Scholarships.com Staff

Analyses of the data published last week by the National Center for Education Statistics are already starting to emerge.  The Project on Student Debt has announced that a significantly larger portion of students borrowed private loans in the 2007-2008 academic year than in 2003-2004, according to the NCES survey.

Private loan borrowing increased by 9 percentage points, with 14 percent of students now relying on private loans, as opposed to 5 percent in 2003-2004.  Not surprisingly, more expensive schools saw the biggest increase in private student loans.  At for-profit colleges, the percentage of students borrowing private loans increased from 14 percent to 43 percent, while private non-profit colleges also saw a substantial increase.  Overall, 32 percent of students at schools charging more than $10,000 per year in tuition wound up borrowing private loans in 2007-2008.

While the credit crunch may slow the rate of private borrowing in the near future, these student loans still are regarded as the best or only option by some students.  According to the Project on Student Debt's analysis, 26 percent of private loan borrowers did not take out any Stafford Loans first, and 14 percent did not even complete the FAFSA.

Private loans generally carry the highest interest rates and least flexible repayment terms out of all student loans and most experts encourage students to avoid them if possible.  Explore other options for financial aid first, especially grants and scholarships.  You will also want to consider your potential debt loand when choosing a college.  Since students at more expensive schools are more likely to have to borrow private loans, students with limited financial resources should think carefully about the relative merits of a private college as opposed to a state college or community college before committing themselves to private loan debt.

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Student Loan Default Rates on the Rise

April 24, 2009

by Scholarships.com Staff

Student loan default rates are rising for both federal and private loans as more recent grads struggle to find work.  The Wall Street Journal reports that the federal default rate is nearing 6.9 percent, the highest it's been since 1998.  Similarly, some private lenders are experiencing default rates that have already nearly doubled in just a year or two.

Loan repayment woes are expected to get worse as tuition continues to rise and the job market remains depressed.  Since student loans cannot be discharged through bankruptcy, borrowers are stuck with their debt no matter what happens.  Add in continued increases in the number of students borrowing to pay for school and the amount they borrow, and student loan defaults are poised to be a serious long-term problem whether or not the economy recovers quickly.

Borrowers do have some flexibility in negotiating their loan repayment terms, especially with federal Stafford Loans.  Borrowers of federal and private loans are also able to apply for a temporary forbearance, halting payments but not the accrual of interest, if they find themselves unable to pay.  However, reduced monthly payments now will mean either larger payments or more payments in the long run.

If you are looking at ways to pay for college, the best strategy is still to avoid student loans to the greatest extent possible.  Do a free college scholarship search and be sure to factor cost and available financial aid into your college search, as well.

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Student Loan Debate Heats Up

April 28, 2009

by Scholarships.com Staff

As Congress moves forward with a federal budget plan for 2010, rhetoric is ramping up on both sides of what is proving to be one of the most contentious budget debates so far:  whether or not to eliminate the Federal Family Education Loan Program.  President Obama initially proposed this move in his budget outline, saying that a move to Direct Loans would result in a savings of $48 billion, money that could be put towards expanding the Federal Pell Grant program.

After the Congressional Budget Office revised the estimated savings to $94 billion over 10 years, many members of Congress and several higher education professional organizations have been offering up tentative support for the plan.  Democrats on the joint budget committee have even begun paving the way for this portion of the budget to be eligible for reconciliation, a filibuster-proof process that will allow portions of the budget to pass with a simple majority vote in the Senate.

However, lenders and other groups have begun suggesting and campaigning for alternatives that would allow the bank-based student loan program to continue to exist while still cutting costs to some extent.  Concerns have been raised that Direct Loans will not be as efficient or as kind to borrowers in the long run, though the credit crisis has made the program especially appealing as FFELP has required repeated government interventions to avoid grinding completely to a halt.  With many schools voluntarily making the switch to direct lending based on the program's current stability, concerns have also been raised about a rapid expansion in Direct Loans overwhelming the program as it currently stands.  Others worry that eliminating FFELP may speed lenders' exodus from private loans, ultimately leaving many students in a worse place financially than they find themselves in now.

What's emerging is a war of words between banks and the President.  In a speech on Friday, Obama characterized lenders as, "gearing up for battle," to which he responded, "So am I. . . And for those who care about America's future, this is a battle we can't afford to lose."  Considering the President's popularity and lenders' tarnished reputations from crisis after scandal after crisis over the last two years, we may see big changes happening soon in student loans.

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Colleges Have Facebook and Know How To Find You

April 29, 2009

by Scholarships.com Staff

By now you've probably been told at least once to be careful what information you put online.  A survey conducted by the National Association for College Admission Counseling serves as a reminder of just how many people might be viewing your online presence, and just how high the stakes can be.

According to results published in Inside Higher Education, 26 percent of colleges admit to running students' names through search engines, while 21 percent use social networking sites, such as Facebook.  While this is far from everyone, it's still a significant portion of schools, and if you apply to even four or five, there's a chance that at least one of those schools has a policy of checking up on at least some prospective students.

This doesn't mean you need to agonize over the psychological implications of every single status update, though.  Schools that report viewing students' online profiles do so primarily in the context of reviewing candidates for prestigious scholarship awards or highly competitive degree programs, mostly to make sure nothing potentially embarrassing to the program surfaces when your name is announced.  Setting debates over privacy and potential discrimination aside for a moment, this information should give you an idea of what you should and should not post, and why.

If you're applying for scholarships or your college search is skewing towards the prestigious and highly competitive, you may want to have a chat with your friends about any incriminating photos they've tagged you in.  Similarly, you may want to avoid publishing any highly offensive or objectionable content on anything that appears high in a list of search results for your name.  All of this is good practice for life, since admission officers are hardly the only people who may think to look into your online life before offering you something you want.  Scholarship providers, internship programs, and future employers may all check out this information.

So before starting your scholarship search or writing your college application essays, do a search for your name and see what comes up.  If it's something that may embarrass you or hurt your chances of winning scholarships or gaining admission to your dream school, consider deleting it.  Maintaining a professional image online is going to benefit you in both the short and long term.

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Scholarships Are Still Available for Students Short on Aid

May 1, 2009

by Scholarships.com Staff

As prospective college students are making their final decisions and sending in deposits to their schools of choice, many are finding themselves unexpectedly short on financial aid.  The New York Times and Los Angeles Times each ran a story today on California high school seniors struggling to pay for school in the midst of their state's continuing economic woes.  State budget difficulties have caused schools to limit enrollment and stretch institutional aid even thinner, while high unemployment means more students need more aid than before.

Students in Florida are also struggling to make up for an unexpected gap in their financial aid.  According to the Miami Herald, recipients of the state's Bright Futures scholarships will not see an increase in their awards next year, despite projected tuition hikes of 8 to 15 percent across the state.

Other states and university systems are also facing difficulties meeting students' full financial need, so many other students are likely to be in this boat.  If you've completed a FAFSA and applied for institutional and state aid, but are still short of what you need to pay for school, there are still scholarship opportunities out there, even this late in the game.  For example, Scholarships.com is currently accepting applications for our Resolve to Evolve Scholarship, a $1,000 award that can be applied towards your tuition next fall. There are many other college scholarships available. You can find out more by doing a free scholarship search.

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Students Encouraged to Write to Congress about Student Loans

May 6, 2009

by Scholarships.com Staff

A little over a week after announcing his plans to gear up for battle with student lenders over the future of the Federal Family Education Loan Program, President Obama has begun calling in the troops.  An e-mail message sent to young Obama supporters by the Democratic National Committee is urging students to speak up in favor of the President's proposal to switch all federal lending to the Direct Loans program and to use the savings to expand Federal Pell Grants.

Students have been asked to call, write, or e-mail their Representatives and Senators to let them know what they think of the proposal to eliminate FFELP for Stafford Loans and PLUS Loans.  The text of the e-mail, as reported by The Chronicle of Higher Education, urges students to stand against "special interests" and to help "fix a broken system."  Rhetoric on the other side has focused primarily on preserving jobs and preserving choice (technically, the choice is primarily left to schools, not students, as students aren't able to choose freely between DL and FFELP until they graduate and consider consolidation loans).

Regardless of whether you favor or oppose this plan, now is a good time to let your people in Congress know how you feel, since changes in federal student financial aid are likely to affect you directly.  So, what do you think?  What changes, if any, should Congress make to student loans? Do you plan on writing to Congress about this issue?

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High School Seniors: Your Last Semester Still Matters

May 7, 2009

by Scholarships.com Staff

We're now a solid week into May, and for most high school seniors, that means a switch back from obsessively worrying about making it into college to concentrating on the more immediate task of trying to make it to graduation while finalizing those all-important summer plans.  Once AP exams are out of the way and college deposits are paid, it can be tempting to shift focus entirely away from schoolwork and towards enjoying your last days as a high school student.

However, an article in USA Today warns that the temptation to just coast through the last days, weeks, or even months of one's senior year of high school can carry dire consequences this year.  Colleges typically request a final transcript once you've officially graduated from high school, and often include language in their admission letter saying that their decision is contingent on receiving this information.  While colleges have always given this final semester at least a cursory glance, in previous years, they have tended to largely be forgiving.  But as with nearly everything else in college admissions, this year may be different.

Many schools are admitting more students and adding more names to their wait lists due to a larger group of applicants and greater uncertainty about where students will end up attending college.  As a result, it's more possible now than ever that some schools will overfill their freshman class, prompting them to need to rescind some admission invitations, while others may find themselves drawing extensively from the wait list, meaning students who may not have been reevaluated at all are having their transcripts scrutinized for possible acceptance into their dream school.

Students are encouraged to let colleges know if any problems have come up that might jeopardize their acceptance for fall.  Your college would rather hear from you than your high school, especially if you are able to explain extenuating circumstances and how the situation has been addressed.  This is generally good policy if you find yourself falling short of requirements after something's been awarded, whether it's acceptance into a program or a college scholarship.  On the same note, letting schools know if something fantastic has happened your final semester of school also couldn't hurt.  For example, if your GPA has jumped and you are now eligible for more financial aid at your college, contact the school and see if there is still funding.  I know people who have found themselves awarded university scholarships as late as July, and every time it was because they contacted the school, explained their situation, and asked about the award.

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