Skip Navigation Links

Community College Students Need More Access to Federal Loans

October 9, 2009

by Scholarships.com Staff

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.

Comments

New Report: Tuition and Financial Aid Rise, Private Loans Fall During Recession

October 21, 2009

by Scholarships.com Staff

On Tuesday, the College Board published the latest installment in its Trends in Higher Education Series, annual reports detailing changes in college costs and student financial aid. These newest reports cover the 2008-2009 and 2009-2010 academic years and provide some insight into how economic difficulties have affected paying for college. Despite the recession, tuition continued to rise at a pace comparable to previous years, but financial aid has undergone some changes.

Between 2008-2009 and 2009-2010, tuition increased 6.5% at 4-year public colleges and 4.4% at 4-year private colleges. Tuition and fees for in-state students at four-year state colleges rose from $6,591 to $7,020. Out-of-state tuition and fees at public colleges rose to $18,548, a 6.2 percent increase. Private college tuition and fees rose to $26,273. Total costs of attendance also rose to $19,388 for public colleges (a 5.8% increase) and $39,028 for private colleges (a 4.4% increase). Rising college costs are attributed to declines in state funding and massive endowment losses brought about by the recession.

Despite tuition increases and greater financial difficulties for students and families, total student borrowing dropped by 1% when adjusted for inflation in 2008-2009.  Federal student loan borrowing increased by $11 billion, or 15 percent, to about $84 billion. Most strikingly, there was a 50% drop in private loan volume in the 2008-2009 academic year, as a result of the tightening of credit markets. The 2008-2009 academic year also saw a growth in grant aid (both need-based and merit-based college scholarships and grants). About 2/3 of full-time undergraduates receive grants and the average grant was $5,041. The College Board anticipates that students will receive an estimated $5,400 in grant aid and tax benefits in 2009-2010.

A large portion of grant aid is made up of merit-based awards, like academic scholarships, which worries some analysts who are concerned with the increasing cost of tuition pricing lower income families out of college entirely. While, after adjusting for aid, the average net cost of tuition actually has declined for families over the period covered in these reports, another recent report by Postsecondary Education Opportunity research Tom Mortenson showed that students from the poorest families tended to have the largest amount of unmet financial need. The sharp drop in private loans suggests those families may be less likely to be able to secure funding to cover that unmet need, even if colleges and the federal government have made more aid available this year.

Much of the growth in federal student loans and college grants and scholarships is likely due to the increased amount of aid colleges and the federal government made available to struggling students as a result of the recession. However, much of this emergency aid is intended to be temporary, so these changes may turn out to be anomaly, rather than an overall trend.

Comments

Survey Shows Students Know Too Little About College Aid

October 22, 2009

by Scholarships.com Staff

Can college students correctly answer basic questions about federal student financial aid? Researchers from CALPIRG, the California Public Interest Research Group, sought to find out, asking California community college students three questions about financial aid. The results of the survey were published this week. The majority of students did not do so well, with over half of students answering one or zero questions correctly.

How would you do? Students were asked to say whether the following three statements were true or false (the questions below are paraphrased from the report):

  1. I have to go to school full time to be eligible for financial aid.
  2. Taking more classes per term could increase my financial aid award.
  3. Financial aid can be used to cover expenses beyond tuition and fees, such as living expenses.

The answers:

  1. False. You do not have to go to school full time to be eligible for financial aid. Students enrolled at least half-time are able to apply for and receive federal student financial aid, including Pell Grants and Stafford Loans. Only 47 percent of students surveyed answered this correctly.
  2. True. If your tuition goes up, your aid award can go up, especially when it comes to federal work-study and low-interest student loans. Additionally, students who move from half-time to three-quarter-time or full-time enrollment can see an increase in Pell Grant awards and also potentially become eligible for more college scholarships and grants. Half of students answered this correctly.
  3. True. Financial aid can be used to cover college expenses including food, rent, car maintenance, books, computers, and other essentials. These items are included in the living expenses portion of the cost of attendance figure used by the financial aid office to calculate your aid eligibility. Students surveyed did the best on this question, with 54 percent answering correctly.

Knowing About Aid Can Boost College Success: At this point, it's becoming fairly well-documented that not enough community college students apply for federal student financial aid, despite the fact that many are eligible. While some students don't apply because their schools do not participate in federal aid programs, others don't apply because they don't know they're eligible for aid. The results of the CALPIRG survey suggest that this is a fairly substantial group of students. Namely, 13 percent of students surveyed didn't get a single question right, 44 percent of students answered only one question correctly, and only 2 percent of students who did not apply for aid got all 3 questions, compared to 10 percent of students overall.

Additionally, the survey shows that many students are loan-averse, with almost half of students saying they would drop a class or an entire semester than take out a student loan to cover books or other expenses, and students showing nearly as much willingness to put their books on a credit card than to take out a federal loan for books.  A full 57 percent of surveyed students saying they would only borrow as a last resort or would not borrow for college at all. With additional research suggesting that many community college students are not balancing work and college effectively and that their reluctance or inability to borrow is hurting their chances of graduating, more financial aid education is important.

Community college students are not the only college students who may need help learning about financial aid. If you found that you answered one or more question incorrectly, you may want to review information about paying for school. We have a wide variety of student resources available that can help you learn about financial aid programs and requirements and maximize the amount of aid you receive.

Comments

House Moves to Further Regulate Private Loans

October 23, 2009

by Scholarships.com Staff

Private student loans may soon come under increased federal regulation as Congress takes up legislation that would create a consumer financial protection agency. The bill moved out of the House Financial Services Committee yesterday and will soon go to a floor vote.

Lenders fought the legislation, but the proposed amendment to exempt student loans from the agency's oversight was defeated in committee. A brief but heated debate also arose over whether the agency should also regulate "gap loans" made by private for-profit colleges directly to students to help cover tuition and other expenses. Ultimately, the panel sided with the schools who argued that new Truth in Lending restrictions already offered students sufficient protection in regards to borrowing from schools.

Student loans are only one of several aspects of lending that would be regulated by the new agency. They'd be accompanied by mortgages, credit cards, and other bank-based loans. This comes in addition to legislation that's already been passed that will limit lenders' ability to market credit cards to college students. However, auto financing plans offered by car dealers were exempted and the agency's role in regulating smaller banks and lending institutions was also limited by amendments.

Backers of the proposed regulatory agency hope that its creation will offer greater protection to consumers, including college students, who find themselves overwhelmed by risky debt or deceptive lending practices. They hope that they will be able to limit the extremely high interest rates and confusing terms that accompany some private loans.  Student lenders have previously come under fire for questionable lending practices and have paid out large settlements and agreed to new codes of conduct governing their practices of marketing loans to students and offering incentives to colleges to promote their services on "preferred lender" lists. Private loans have also seen increased regulation this year, with previous student aid legislation requiring them to disclose terms up front, among other steps taken to make their lending practices more transparent.

Comments

Student Loan Debate Continues as Legislation Languishes behind Health Bill

November 12, 2009

by Scholarships.com Staff

As the wrangling over proposed healthcare legislation drags on in the Senate, progress on other bills has stalled, including a piece of legislation that would impact federal student financial aid programs.  The Student Aid and Fiscal Responsibility Act, passed by the House of Representatives in September, has yet to see its counterpart taken up for debate in the Senate.  Yet the debate over student loan reform is heating up again as the Department of Education and lenders both attempt to press their agendas forward.

Student loan reform has been a topic of contention since President Obama announced his 2010 budget proposal at the beginning of the year.  Among them was doing away with the Federal Family Education Loan Program, which subsidizes private banks to make and service federal student loans, such as Stafford Loans and PLUS Loans. Students would borrow directly from the Department of Education through the Direct Loans Program. The money saved from the subsidies would then be channeled into Pell Grants and Perkins Loans, among other education funding priorities.  The proposed changes would go into effect on July 1, 2010 necessitating a quick switchover to direct lending for all colleges still participating in FFELP.

After the bill passed the House, the Department of Education began urging schools to voluntarily make the change to Direct Loans, which concerned some financial aid administrators and most lending agencies.  Concerns have been expressed over the efficiency of direct lending, the loss of choice in eliminating FFEL, the feasibility of making the switch, and the continuation of services such as financial aid counseling that some lenders currently provide.  Many of these were aired at a recent meeting of a panel of financial aid experts in Washington.  Representatives of student lenders were also there to champion an alternate plan that would bring some of the savings proposed by SAFRA, but would maintain a role for banks in student lending.

It's widely expected that the Senate will ultimately pass a version of the bill similar to what was passed by the House, but when that will happen remains uncertain.  Procedural regulations and concerns over support are currently preventing the bill from progressing until the issue of healthcare is settled.  In the meantime, it appears debate, analysis, and lobbying will continue on both sides of the issue.

Comments

Law Schools Offer to Pay Graduates' Loans

December 1, 2009

by Scholarships.com Staff

Dreading student loan payments? While it may seem counterintuitive, you might want to think about law school. Two law schools are now offering to pick up the tab on student loan repayment for their graduates who go into public service. The University of California at Berkeley School of Law and Georgetown University Law Center are both unveiling new student loan forgiveness programs to complement the federal public service loan forgiveness program.

Attorneys in public service professions typically earn much less than their colleagues who pursue more lucrative legal careers. While the Bureau of Labor Statistics puts the median income of all lawyers at just over $100,000, public interest lawyers can expect to start out making around $41,000 and many law students can expect to graduate with at least double that amount in debt. This can make pursuing a career in public service while living independently and avoiding default on debts nearly impossible. This is where loan forgiveness comes in.

Under the federal loan forgiveness program, college graduates who work in public service (a category with a surprisingly expansive definition-most governmental, non-profit, and education careers are covered) for ten years while making payments on their student loans through the federal Income Based Repayment plan will see their remaining debt forgiven. Income Based Repayment requires borrowers to pay no more than 15 percent of their discretionary income on their loans each year.

The programs at Georgetown and Berkeley take care of graduates' monthly loan payments for the ten years it takes to have their loans forgiven, provided they pursue legal careers in public service areas and earn below particular income thresholds. Berkeley grads qualify for some amount of help if they earn less than $100,000 per year, with their total loan costs covered if they make less than $65,000. Georgetown currently covers graduates earning less than $75,000 but plans to expand its program as funding allows.  Until recently, Harvard University offered a plan that provided one free year of law school to students planning to work in public service, but that plan was rescinded due to economic hardships facing the university.  However, other schools still offer financial assistance to students pursuing law degrees, especially ones that lead to careers in public service.

These programs still may not cover private loan debt that students amass while pursuing law degrees. However, law students are able to borrow more in federal loans, such as Stafford Loans and PLUS Loans, than undergraduates typically can. There are also a variety of law scholarships available to students who are interested in pursuing legal careers. If you're interested in public service, but not in law, there are other forms of financial assistance available, as well.

Comments

Supreme Court Considers Student Loan Bankruptcy Case

December 1, 2009

by Scholarships.com Staff

The U.S. Supreme Court began hearing arguments today on the intricacies of one student's 20-year-old debt that could change the way bankruptcy law handles student loan cases.

The case, United Student Aid Funds Inc. v Espinosa, goes back to 1992, when Francisco Espinosa, a technical school graduate, filed for Chapter 13 bankruptcy. Espinosa by then owed nearly $18,000 in not only student loans taken out four years earlier, but interest on those loans to lender United Student Aid Funds Inc. He filed for bankruptcy to relieve him not of his loan debt, but the nearly $5,000 in interest accrued on the $13,000 he initially borrowed. Thinking he had reached an agreement with his lender, Espinosa eventually paid off the principal on the loan over a five-year period.

Several years later, however, he received notice from his lender that he still owed the remaining interest. The lender claimed Espinosa had not sufficiently shown "undue hardship," a requirement under bankruptcy law for students to qualify their student loans under Chapter 13. Espinosa says he fell on hard times when the hours for his baggage handler job through airline America West were cut, and he was unable to find a job that fit his degree in computer drafting and design through the technical college.

That's when the legal battle began. Espinosa won on the bankruptcy court level, but the district courts ruled in favor of the lender and demanded a hearing to show whether Espinosa met the criteria for a bankruptcy filing. The Ninth Circuit Court of Appeals ruled that it was too late for the lender to challenge the filing, which then landed the case in the U.S. Supreme Court.

An article in the Chronicle of Higher Education previewing the case this week looked at the implications of the court's eventual ruling. If the Supreme Court overturns the last appeals court's decision, lenders could feel free to collect back interest on student loans that have already been approved for Chapter 13. If the Supreme Court rules in favor of Espinosa, lenders could be open to abuse by borrowers taking advantage of the law to get out of their student loan repayments. The article suggests that the Court should consider redefining the "undue hardship" criteria to make it easier for judges to apply that criteria across the board, as many say it is already too subjective.

The case is an important one for students, especially in a difficult economic time when college students are not only borrowing more, but having a tougher time finding jobs to make payments on their student loan debt. Student loan default rates are also on the rise for both federal and private loans as tuitions only continue to rise. If you're worried about the amount of debt you'll accrue going to that dream school, consider all of your options. Factor college cost into your college search, and make sure you have a good idea of financial aid and scholarship money available to you before taking out student loans.

Comments

Report Shows Student Debt by State and by School

December 2, 2009

by Scholarships.com Staff

Although the economic downturn has changed some borrowing and spending habits, recent college graduates are more in debt than ever before. Average student loan debt has continued its steady rise, with graduating seniors holding an average of $23,200 in student loans in 2008. This information comes courtesy of a report by the Project on Student Debt on average debt for the college class of 2008, the latest in an annual series profiling the previous year's graduating class and the financial situations they face upon leaving school.

As debt rose for graduating seniors, so did unemployment, with the unemployment rate for workers age 20-24 (the typical age range for recent college graduates) now standing at 10.6 percent, the highest on record. This combination of factors is likely contributing to the rising student loan default rates we've seen in the last year.

The highest-debt states include the District of Columbia, whose class of 2008 held an average of $29,793 in student loans, Iowa ($28,174), and Connecticut ($26,138). Six other states also topped the $25,000 mark, compared to only two last year: Iowa and New Hampshire. Utah and Hawaii held onto their low-debt distinctions, once again being the two cheapest bets in higher education, at $13,041 and $15,156 respectively. Other low-debt states for 2008 included Kentucky, Wyoming, Arizona, Georgia, and California, though soaring tuition and reduced state funding may soon bump California off this list.

South Dakota, West Virginia, and Iowa had the highest portion of student borrowers in 2008, with 79 percent of graduating seniors in South Dakota taking out a student loan at least once in their college career. More than 70 percent of 2008 graduates in Minnesota and Pennsylvania also went into debt to fund their educations. Hawaii, Nevada, and Utah had the fewest students borrowing, with 37 percent of students in Hawaii, 40 percent of students in Nevada, and 41 percent of students in Utah graduating with debt in 2008.

In addition to describing trends state-by-state, the Project on Student Debt also looked at debt by college. An interactive state map offers not only pop-ups of the state's average debt and percentage of students borrowing, but also provides a link to a list of data by college, including the percentage of borrowers and the average debt for 2008 where available. The report, available on the Project on Student Debt website, also lists which colleges' graduates had the highest and lowest average amounts of debt.

This information can be especially useful to students currently involved in the college search or college application process. Schools whose students borrow less to complete college often have low tuition, generous scholarship opportunities, or other programs to keep costs down. If you're concerned about paying for school, this can be very appealing.

Comments

Congress Considers Increased Student Loan Oversight

December 3, 2009

by Scholarships.com Staff

Federal student loans aren't the only form of student borrowing that may soon undergo a legislative makeover. As Congress debates the creation of a Consumer Financial Protection Agency, advocacy groups are continuing to push for inclusion of rules that would give the agency more oversight of student loans.

The Consumer Financial Protection Agency would already oversee other kinds of lending, such as credit cards and student loans. However, there's growing debate over how extensive the agency's student loan oversight should be, specifically regarding loans that some colleges make directly to their students. A House amendment to specifically include these loans under the agency's purview was rejected by the Financial Services Committee, but is expected to be revisited as the House prepares to take up a floor vote on the bill. The Senate version of the bill, meanwhile, does authorize the agency to supervise loans made by colleges to their students.

The House version initially excluded loans schools make to their students because many colleges make small, short-term, "emergency" loans to their students to help them pay bills while they secure other forms of funding. Career colleges, on the other hand, have begun lending large sums to their students, often with terms that are less favorable than many private loans. These loans typically have a high default rate and can burden students with difficult payments, as interest rates can easily reach 18 percent and the schools may have less forgiving repayment processes than traditional lenders. This has student advocates concerned, especially in light of recent economic events.

Colleges have been increasingly encouraged to act as lenders to their students in the face of the economic recession and the preceding credit crunch. As it became harder for students to obtain sufficient student loans from banks and other traditional lenders, schools began to step in to close the gap. This included for-profit career colleges lending significant portions of the cost of tuition to their students. The latter category of loan is increasingly widespread, with many of the largest career colleges reporting plans to lend out tens of millions of dollars directly to their students next year.

In addition to being a way to enroll students who wouldn't otherwise be able to secure funding, these direct-to-student loans are also ways for for-profit colleges to get around the "90/10" rule that states that no more than 90 percent of a for-profit college's revenue can come from federal student financial aid. By charging more in tuition but giving more in loans, colleges can get around this requirement, even as more of their students qualify for federal aid.

This isn't the only career college practice that's receiving criticism at the federal level. The Department of Education has been investigating recruiting practices at for-profit colleges and recently issued several proposed rules in its negotiated rule-making process with career colleges. The proposed changes would do more to ensure that colleges aren't giving incentive pay to recruiters and that students who are being enrolled are able to adequately benefit from a degree.

Comments

Three-Year Default Rates Show Difficulty of Student Loan Repayment

December 14, 2009

by Scholarships.com Staff

As Congress continues to puzzle out questions of student loans and consumer protection, new information released today suggests that young adults attempting to repay their student loans may be having even more trouble than previously thought.

As a condition of the Higher Education Opportunity Act, the US Department of Education has started tracking three-year instead of two-year default rates for federal student loans. The first set of data was released today and the numbers are pretty shocking: the three-year cohort default rates are nearly twice as high as the two-year rates overall--11.8 percent compared to 6.7 percent.

Default is defined as failure to make payments on a student loan according to the terms of the master promissory note the borrower signed, and federal student loans are considered in default only after nine months of missed payments. This means that 12 percent of students who started repaying their loans in 2006 had stopped making payments for 270 days or more by September 2009.

The difference between two-year and three-year default rates was most dramatic at for-profit colleges, rising from 11% to 21.2%. For-profit colleges have the highest default rates in both two-year and three-year measures, and also make up the largest proportion of institutions that may lose the ability to distribute federal student financial aid in 2014, when the rule changes associated with the new three-year default rate calculations go into place.

Colleges will become ineligible to participate in federal student aid programs if their cohort default rates are above 30 percent (currently 25 percent) for three consecutive years, or if they go over 40 percent any one year. Inside Higher Ed has published a list of institutions whose three-year cohort default rate is over 30 percent this year-in addition to a number of for-profit colleges, several community colleges have also made the list.

In addition to this information's implications for colleges, it also means that default on federal student loans is even more common than previously assumed. More than 1 in 10 students currently default on a loan within three years, and it's possible that a significant percentage of students may default on their loans after more time has passed. If you're planning to borrow to pay for college, do so wisely. You may want to make sure that you only take out an amount that you can pay back in a worst-case employment scenario. It's not too late to start your scholarship search for next year (or even this year) to help cut down on the amount you have to borrow, as well.

Comments

Recent Posts

Tags

ACT (19)
Advanced Placement (24)
Alumni (16)
Applications (80)
Athletics (17)
Back To School (73)
Books (66)
Campus Life (453)
Career (115)
Choosing A College (51)
College (984)
College Admissions (238)
College And Society (293)
College And The Economy (368)
College Applications (144)
College Benefits (289)
College Budgets (213)
College Classes (444)
College Costs (484)
College Culture (585)
College Goals (386)
College Grants (53)
College In Congress (87)
College Life (551)
College Majors (220)
College News (568)
College Prep (166)
College Savings Accounts (19)
College Scholarships (154)
College Search (115)
College Students (436)
College Tips (113)
Community College (59)
Community Service (40)
Community Service Scholarships (26)
Course Enrollment (19)
Economy (117)
Education (26)
Education Study (29)
Employment (41)
Essay Scholarship (38)
FAFSA (54)
Federal Aid (98)
Finances (70)
Financial Aid (410)
Financial Aid Information (56)
Financial Aid News (54)
Financial Tips (40)
Food (44)
Food/Cooking (27)
GPA (80)
Grades (91)
Graduate School (56)
Graduate Student Scholarships (20)
Graduate Students (65)
Graduation Rates (38)
Grants (62)
Health (38)
High School (129)
High School News (70)
High School Student Scholarships (179)
High School Students (303)
Higher Education (110)
Internships (526)
Job Search (177)
Just For Fun (113)
Loan Repayment (39)
Loans (46)
Military (16)
Money Management (134)
Online College (20)
Pell Grant (27)
President Obama (23)
Private Colleges (34)
Private Loans (19)
Roommates (100)
SAT (22)
Scholarship Applications (162)
Scholarship Information (177)
Scholarship Of The Week (266)
Scholarship Search (214)
Scholarship Tips (86)
Scholarships (399)
Sports (62)
Sports Scholarships (21)
Stafford Loans (24)
Standardized Testing (45)
State Colleges (42)
State News (33)
Student Debt (82)
Student Life (510)
Student Loans (137)
Study Abroad (67)
Study Skills (215)
Teachers (94)
Technology (111)
Tips (503)
Transfer Scholarship (16)
Tuition (93)
Undergraduate Scholarships (35)
Undergraduate Students (154)
Volunteer (45)
Work And College (83)
Work Study (20)
Writing Scholarship (18)

Categories

529 Plan (2)
Back To School (357)
College And The Economy (507)
College Applications (249)
College Budgets (341)
College Classes (564)
College Costs (743)
College Culture (922)
College Grants (133)
College In Congress (131)
College Life (939)
College Majors (330)
College News (897)
College Savings Accounts (57)
College Search (389)
Coverdell (1)
FAFSA (115)
Federal Aid (131)
Fellowships (23)
Financial Aid (699)
Food/Cooking (76)
GPA (277)
Graduate School (107)
Grants (72)
High School (532)
High School News (251)
Housing (172)
Internships (565)
Just For Fun (221)
Press Releases (1)
Roommates (138)
Scholarship Applications (219)
Scholarship Of The Week (342)
Scholarships (591)
Sports (74)
Standardized Testing (58)
Student Loans (224)
Study Abroad (61)
Tips (822)
Uncategorized (7)
Virtual Intern (532)

Archives

< Feb March 2015 Apr >
SunMonTueWedThuFriSat
22232425262728
1234567
891011121314
15161718192021
22232425262728
2930311234

<< < 5 6 7 8 9 10 11 12 13 14 > >>
Page 7 of 14