Student Loan Blog : College Scholarships

Colleges Receive $70 Million in Anonymous Donations

Student Loan Girl — Wed, 29 Apr 2009 22:21:00 GMT

An anonymous donor is playing secret Santa with at least a dozen colleges and universities nationwide, but instead of giving $5 trinkets this Santa has left schools with $1 million to $10 million gifts, The New York Times reports (“Anonymous Donor Gives Millions to Colleges,” April 24, 2009).

Over the past two months the donor has given away $70 million to select schools. To remain anonymous, the donor employs a bank to contact the schools either with a call or letter that relays sentiments similar to what was written in one letter: “It is hoped that this will make a substantial difference to your students during these challenging times… enabling a more confident, sharper focus on their studies with improve career and life prospects.”

None of the school officials at the selected schools know whether the donations are coming from a man, woman, or organization, and no one seems to want to jeopardize their gift by speculating too much about the reasoning behind the donor’s selections. There’s a pretty clear consensus, however, that the schools share one common trait: they’re all led by women.

Lois DeFleur, president of Binghamton University in New York, is more than fine with this reasoning, if it is indeed the case, “The actions say, ‘I’m investing in an institution because it has achievements and I believe that with women leaders it will have future accomplishments.’ That’s pretty powerful in my view.”

The donations, which at some schools have been the single largest donation in the school’s history, have ranged from the $10 million given to Michigan State University, to the $1.5 million given to the University of North Carolina in Asheville. In return the donor has asked for complete anonymity and for the majority of the donation — 50 percent to 80 percent of the total donation in each case — to be used for financial aid.

The schools say they are extremely grateful for being chosen, particularly since higher education institutions across the country have seen an increasing demand for financial aid at the same time that state funding and endowments are drying up.

“In the best of times we never have enough scholarship money for students who have financial need,” said Susan Cole, president of Montclair State University in New Jersey. “In these difficult times, that is multiplied. The gift is incredibly important to us. I cannot adequately express the depth of our gratitude.”

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Top-Performing Students Denied State Scholarship Funds

Student Loan Girl — Mon, 27 Apr 2009 23:02:00 GMT

Some 1,500 Georgia high school students will not receive the state scholarship funds they were promised for becoming valedictorians or for graduating in the top of their class, The Associated Press reports (“Georgia Scholarships to End for 1,500 Students,” April 26, 2009).

In a last-minute decision, state legislators cut the Governor’s Scholarship Program out of Georgia’s 2009 state budget, leaving the state’s Student Finance Commission to notify students they won’t be receiving the financial aid they were promised for the coming academic year.

The scholarship program was created in the mid-1980s to encourage the state’s top high school graduates to choose in-state schools for their college education. Over the past few years the state has significantly reduced funding for the scholarship, cutting the program’s funds from more than $4.5 million in the mid-1990s to $1.3 million in recent years.

Governor’s Scholarship recipients also receive Georgia’s HOPE scholarships, which give students up to $3,500 to cover tuition, fees, and books at the state’s public institutions. The Governor’s Scholarship is intended to help students pay for room and board and other miscellaneous college expenses.

Some state officials have argued that the funding cuts to the program may have made it difficult for the program to meet its intended goal of retaining the state’s top students.

“[$900 is] not enough to say, ‘Instead of going to Harvard or going to Vanderbilt or going to Duke, I am going to the University of Georgia,” said president of the Georgia Student Finance Commission, Tim Connell. “It’s probably became more of an ‘attaboy’ for valedictorians.”

State Representative Kathy Ashe, a former teacher and a member of the House Education Committee, said she wasn’t made aware of the program’s elimination until she received a copy of the Student Finance Commission’s letter to students but she believes that these incentive programs are needed.

“We need to make it a priority to reward these deserving students and keep them in the state,” Ashe said. “I think it’s one of those places where priorities become very clear.”

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Students Reach Record-High Levels of Credit Card Debt

Student Loan Girl — Wed, 15 Apr 2009 23:00:00 GMT

College students are piling up alarming amounts of credit card debt, according to a recent survey by student loan company Sallie Mae, which suggests that not only are more students relying on credit cards to pay for their rising college costs, but that more students are charging more frequently (“Average College Credit Card Debt Rises With Fees, Tuition,” April 13, 2009, USA Today).

“The message is clear,” said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group. “Students are carrying more debt on credit cards, and more students are paying for education on credit cards.”

Sallie Mae’s survey of 1,200 private student loan applicants found that 84 percent of undergraduate students had at least one credit card, a 76-percent increase from 2004 when the survey was last conducted. The survey also revealed that students are carrying an average $3,173 in credit card debt — the highest level seen since the data was first collected in 1998.

Financial aid experts attribute these increases, in part, to the fact that college tuition and fees have increased 439 percent over the past 25 years and that the average median family income has not kept pace, rising only 147 percent by comparison, according to the National Center for Public Policy & Higher Education (“Study: Undergrads Relying on Credit at Record Levels,” Creditcards.com, April 13, 2009).

In fact, students in the survey cited not having enough “savings or financial aid to cover all the costs” of college as their number one reason for taking out a credit card, a problem that has been exasperated by the fact that private student loan lenders have scaled back lending and tightened their credit standards due to the waning credit markets.

Because lenders have severely limited students’ access to private student loans, students have more often been charging textbooks, room and board, and schools supplies to credit cards. In 2008, students charged an average of $2,200 in educational expenses on their cards, a 134-percent increase compared to four years ago.

Once considered the “lender of last resort,” says Kalman Chany, president of Campus Consultants, a college funding advisor, credit cards are now higher up in the hierarchy of students’ college funding sources. “If (students) can’t get private loans, they turn to credit cards.”

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Experts Recommend: Fill Out Your FAFSA Early

Student Loan Girl — Fri, 02 Jan 2009 23:37:00 GMT

Students who want to maximize their federal financial aid for the 2009–10 academic year should fill out their FAFSA (Free Application for Federal Student Aid) this week — the first week applications are accepted, reports The Baltimore Sun (“Ringing in the New Year With FAFSA Might Be a Good Move for 2009,” Dec. 30, 2009).

“The sooner you get [the FAFSA] done, the better,” says Mark Kantrowitz, publisher of FinAid, a financial aid website.

Since many states and colleges use the FAFSA to determine how to allocate their funds and some schools have early admissions deadlines, students who complete their application sooner rather than later may have a better chance of getting federal financial aid. Schools often have two separate financial aid funds, each with their own deadlines, and make more money available to families who met the earlier deadline, Kantrowitz says.

He recommends that families should always fill out the FAFSA even if they think they make too much money to qualify for need-based financial aid; a family making $100,000 or more could still qualify for federal and state aid to attend an expensive institution.

Resources to Get Started

Find out how to fill out your FAFSA online.

Use the FAFSA4caster at www.fafsa4caster.ed.gov to calculate how much financial aid you may qualify for and to get tips on how to reduce the time it takes you to complete your FAFSA.

Call the Federal Student Aid Information Center for free at 1-800-433-3243 if you need help with your application.

Go to www.finaid.org for tips on how to maximize the need-based aid you could receive.

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Bill Gates To Give Low-Income Students $70 Million In Grants

Student Loan Girl — Thu, 11 Dec 2008 00:16:00 GMT

To help ensure that low-income students can afford a college education in the midst of a recession, the Bill & Melinda Gates Foundation is committing nearly $70 million in grants toward its goal of doubling the number of low-income students who earn a college degree or vocational credential by age 26, The New York Times reports (“Gates Grants Aim to Help Low-Income Students Finish College,” Dec. 5, 2008).

Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University, says the foundation’s latest efforts to assist low-income students couldn’t come at a more opportune time since college-educated employees are more likely to get jobs during a recession. The unemployment rate for people without a college education is generally four times as high as for those with a two- or four-year degree, he says.

Low-income students are already at a disadvantage, graduating from college at only a 25-percent rate. And a majority of the 560,000 high school students in the U.S. who graduate in the top of their class, Carnevale adds, don’t earn a degree within eight years of their high school graduation and come from families that earn less than $85,000 a year.

“We console ourselves that we’re going to be fine in the world because we have this great higher education system and all our kids are going to college,” said Hillary Pennington, who will direct the Gates Foundation’s postsecondary effort. “But [low-income students are] not finishing. That is enormously debilitating for young people.”

Foundation Proposes Far-Reaching Initiative

While the Gates Foundation — the world’s largest philanthropy — has given almost $2 billion to help U.S. high schools make needed improvements over the last eight years and dedicated another $2 billion for minority college scholarships, this is the foundation’s first endeavor into postsecondary education reform and it hopes to gain the support of other groups and organizations.

“The Gates Foundation can’t address the financial burdens by itself, but its focus on what types of programs work best may help spur action by the federal government,” said Richard Kahlenberg, a senior fellow with the Century Foundation.

If the foundation meets its goal, the number of U.S. college graduates each year would increase by 250,000.

The foundation will dedicate $33.2 million of its $70-million grant initiative to help prepare postsecondary education students to better succeed in college and $13 million in grants to assist the MDRC, a nonprofit education research organization, in expanding its performance-based scholarships for low-income college students.

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Sen. Edwards Ends College Scholarship Program Originally Proposed As a National Model of Higher Education

Student Loan Girl — Tue, 05 Aug 2008 20:50:00 GMT

After awarding more than 191 college scholarships over the past three years, a North Carolina scholarship program begun by former U.S. Sen. John Edwards is ending with the Class of 2009, according to an article in The Chronicle of Higher Education, (“John Edwards Ends Scholarship Program He Called a National Model,” August 1,2008).

Established in the state’s Green County school system in 2005 using private donations, the College for Everyone Scholarship Program paid the tuition, fees, and book costs of eligible North Carolina students at any public college in the state for one year. In return, the student agreed to work at least 10 hours a week while enrolled in college, take college prep courses in high school, and stay out of trouble.

Originally proposed during Edwards’ 2004 democratic presidential- nominee bid, and set up after his return to North Carolina, the program was intended to improve college access for all students and to be a major component of his 2008 presidential campaign platform. The former senator had hoped the program would serve as a national model of higher education.

Some educators were surprised to learn the college initiative was ending, but Pamela Hampton-Garland, College for Everyone’s program director, said that the scholarship program had always been intended to be a three-year pilot effort. It will end with this year’s graduating class at Green Central High School.

Green County school district superintendent Patrick Miller, praised Edwards’ initiative, saying it “certainly was an accelerant” in helping his school system increase the number of students who are college-bound. The district serves a population that falls below state averages in both income and education.

When the program was initiated in June of 2005, the percentage of graduating seniors who applied to at least one college was at 74 percent. With the help of Edwards’ program, this spring, 94 percent of the program’s final graduating class applied to at least one college.

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College Offers Students a No-Cost, No-Student-Loan Education With Funds From Its $1.1 Billion Endowment

Student Loan Girl — Tue, 22 Jul 2008 22:39:00 GMT

Berea College is drawing the attention of lawmakers for its no-frills approach to education and its free tuition policy.

The private Kentucky college — founded 150 years ago to educate freed slaves and “poor white mountaineers” — accepts only applicants from low-income families and charges no tuition, according to an article in The New York Times (“With No Frills or Tuition, a College Draws Notice,” July 21, 2008).

Every Berea student is awarded a four-year tuition scholarship and the school doesn't offer student loans.

School Spends Endowment on Students, Not on High-End Amenities

Despite its $1.1 billion endowment Berea, unlike other colleges with large endowments, has no football team, coed dorms, hot tubs, or rock climbing walls. Students eat food from the college’s own farm, make the furniture used to furnish the school, and are required to work 10 hours a week in an on-campus job.

Although Berea keeps costs down with its streamlined approach to higher education, without tuition revenue to supplement its funding, Berea relies on endowment income to cover 80 percent of its $43 million education and general budget, and about two-thirds of its $55 million operating budget.

“You can literally come to Berea with nothing but what you can carry, and graduate debt free,” says Joseph Bagnoli, the school’s associate provost for enrollment management. “We call it the best education money can’t buy.”

A Push to Use Endowments for the Public Good

News of Berea’s unusual approach to higher education is spurring debates about whether the nation’s wealthiest universities are doing enough for the general public to warrant their tax-exempt status, or if they’re simply hoarding money to serve an elite few, writes New York Times reporter Tamar Lewin.

In January, the Senate Finance Committee requested detailed endowment and spending data from the 136 colleges and universities with endowments of at least $500 million, with an eye toward possibly forcing them to spend at least 5 percent of their assets each year, as foundations are required to do.

Dozens of wealthy colleges have since increased their financial aid to low- and middle-income students, in some cases, replacing loans with grants. More than three-quarters of the students at Berea already receive Pell Grants.

“You see some of these selective liberal arts colleges building new physical education facilities with these huge sheets of glass and these coffee and juice bars, and charging students $40,000 a year, and you have to ask, does this contribute to the public good, or is it just a way for the college to keep up with the Jones?” says Berea’s president Larry Shinn.

He adds, “We are a tax-exempt institution, so I think the public has a right to demand that out educational mission be at the heart of our expenditures.”

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Low-Income Students May Get Free Tuition at Houston Community College

Student Loan Girl — Mon, 14 Jul 2008 22:07:00 GMT

Students who are eligible for a new scholarship program at Houston Community College could have up to two years of their college education paid for.

To qualify for the scholarship program, students must be eligible to receive a Pell Grant, a form of federal financial aid that is offered to some of the nation’s most financially-needy students.

HCC’s scholarship fund, known as Opportunity 14, is designed to help low-income students who qualify for some financial aid, but who do not receive enough to completely cover the total cost of their education, according to an article in the Houston Chronicle (“HCC Program Makes College Free,” July 13, 2008).

Opportunity 14, which is sponsored by the Houston Community College Foundation, will pay for eligible students’ college expenses that are not covered by federal aid, like grants and subsidized Stafford student loans, and state grants.

Students could receive up to $6,000 over a period of two years with a maximum of $1,500 during fall and spring semesters and $1,000 for summer semesters. In most cases, the college says, the combination of financial aid and Opportunity 14 scholarship funds will cover all costs of students’ tuition, fees, and textbooks.

As many as 1,500 students may be eligible for the program this year.

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Some Students Could Get Boost in Financial Aid This Summer

Student Loan Girl — Tue, 08 Jul 2008 19:46:00 GMT

This year, college students who are still struggling to get the money they need to pay for school may be able to take advantage of a phenomenon, colleges and universities refer to as the “summer melt” — the phase where students make last-minute decisions not to attend a school because of high tuition costs.

When that happens, schools are under extra pressure to fill their freshmen classes and may offer students more financial aid, according to an Associated Press article (“Students Can Find Aid, Even at Last Minute,” July 6, 2008).

“The later in the year we get, the more valuable each student becomes and the harder they are to replace,” said Lynn Nichelson, director of financial aid at Illinois Wesleyan University in Bloomington. “The quality student is in demand all over the place.”

Before ruling out a school because of costs, experts recommend that students contact their financial aid office to discuss additional financial aid options. Some evidence suggests that, as more colleges and universities are doing away with their early-decision programs, schools have been more willing to offer students more money in grants, student loans, and scholarships in order to keep their enrollment numbers up.

But parent Debbie Bloss, whose son attends Drury University in Missouri, says you really have to do your homework.

“It’s a lot of work, and it’s painful because there’s a lot of reading, a lot of investigating, a lot of understanding involved,” she said. “And the key is finding someone in the financial aid office who’s willing to take the time to help you get all that you can get.”

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Pennsylvania Student Loan Agency to Cut Grant Aid, Offer Employee Buyouts

Student Loan Girl — Thu, 01 May 2008 00:06:00 GMT

Pennsylvania’s student-loan agency will cut college grant amounts for the 2008–09 academic year by up to $750 and will offer voluntary buyouts to some of its nonunion employees in an effort to keep the company afloat.

The Pennsylvania Higher Education Assistance Agency will determine the adjusted grant amounts based on a recipient’s college costs, family size, and the number of children from the family enrolled in college. Next year’s awards will range from $2,100 to $3,948, compared to this year’s awards which ranged from $2,500 to $4,700.

The agency expects to save $12.5 million annually with the nonunion buyout agreements, after losing more than $37 million in the nine months leading up to March 31, agency spokesman Keith New said in an Associated Press article, (“Pa. Student-Loan Agency to Cut Aid, Offer Employee Buyouts,” April 24, 2008).

During the same period last year, the agency earned nearly $113 million in operating income.

Employees eligible for buyouts will receive two weeks’ pay for each year of service at the agency for up to 16 weeks. The number of buyouts needed to steady the company has yet to be determined and is dependent on the salaries of departing employees.

The agency, which New said has “never before experienced more difficult or severe economic conditions,” will only impose layoffs as a last resort.

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Medical Institute to Provide $60-Million in Science Grants to Colleges

Student Loan Girl — Fri, 25 Apr 2008 18:52:00 GMT

On April 22, the Howard Hughes Medical Institute, the largest private supporter of science education in America, announced the latest batch of colleges and universities to receive a total of $60 million in funding for science education, writes Jeffrey Brainard of The Chronicle of Higher Education (“$60-Million in Grants to Help 48 Colleges Improve Science Teaching,” April 22, 2008).

This year’s 48 grantees, including some of the nation’s top colleges as well as lesser-known private institutions and non-research universities, will be awarded between $700,000 and $1.6 million each over a four-year period to improve their undergraduate biological sciences programs.

The institute’s grant program focuses on the retention of undergraduate science students, both during and following their freshman year — a time when colleges often lose a large number of their first-year students, Peter Bruns, vice president for grants and special programs at the institute, told The Chronicle.

Recipient schools are encouraged to use their grant money to develop model projects that may be adapted at peer institutions. Last fall, the institute formed the Science Education Alliance, a network of scientists and educators that develop and distribute new science education material, to help facilitate this objective.

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The STAR Act: College Scholarships that Cost More than You Think

Student Loan Girl — Tue, 20 Feb 2007 17:10:00 GMT

For weeks now, we have been watching what has been happening with the Pell Grant and the effect the likely increase will have on students and taxpayers. In the middle of all this, I somehow missed a key piece of legislation that, if it becomes law, will dramatically affect college students and their parents. According to a Feb. 13, 2007 article titled “House & Senate Lawmakers Introduce STAR Act” that appeared in the National Council of Higher Education Loan Programs Inc.’s Daily Briefing, the legislation “proposes to ‘boost college scholarships without costing taxpayers a dime.’”

It appears that rectifying this scenario is high on the agenda for those who sponsored the bill, in particular Sen. Edward Kennedy, D-MA, who also serves as chairman of the Senate Education Committee. His vision seems to be eliminating wasted funds and putting this money to work for those who need it most: college students.

$13 Billion in Potential Savings

If the legislation becomes law, bill sponsors claim a savings of $13 billion, an encouraging proposition especially considering the significant cuts to other government programs that will boost the average Pell grant. “According to a press statement issued by Kennedy, the Congressional Budget Office has estimated that the legislation would generate a savings of $13 billion by encouraging schools to switch to the Federal Direct Lending Program. Of these funds, a total of $10 billion would be reinvested toward additional Pell Grant funding and graduate fellowships,” the article stated.

While this sounds good at first glance, please note that this does not mean $13 billion for scholarships, necessarily. What it does mean is that we could save that amount if colleges across the nation switched from using the Federal Family Education Loan Program to the Federal Direct Lending Program. Of that amount saved, $10 billion could show up as scholarships, grants and fellowships, assuming a high number of schools actually switch.

Bill Not Likely to Become Law

On top of that, Kennedy questioned the support of the Bush administration regarding the bill. Again, the article reported, “Kennedy also stated that he did not believe the Bush Administration would support the bill, as they have not been a proponent of the measure in the past. However, the Administration has not issued an official Statement of Administrative Policy. The official bill text and filing number has yet to have been reported by the Government Printing Office.”

It is important to keep up to date on all the news regarding student loans and education.

Talk to the education financial advisors at NextStudent. They have all the information and advice you need on student loans. Check out www.nextstudent.com.

Be sure to tune in next Monday for my next blog on student loan issues in the news.

Student Loan Girl

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