Student Loan Blog : Donald Heller

Number of Students Applying for Federal Financial Aid Goes Up Almost 20%

Student Loan Girl — Tue, 12 Aug 2008 23:21:00 GMT

While college enrollment is only expected to grow by 300,000 students this year, some 1.3 million additional college students have already applied for federal financial aid — an increase of 17 percent, according to an article in U.S. News World Report (“Financial Aid Applications Jump 17 Percent,” Aug. 11, 2008).

The U.S. Department of Education accepts the Free Application for Federal Student Aid (FAFSA) between January 1 and June 30 of every year. (Submitting the FAFSA is the only way undergraduates can apply for federal grants and student loans.) In the first six months of 2008, the Education Department received more than 9 million FAFSAs, up from 7.7 million in 2007.

Some financial aid experts are postulating that this increase is a sign that more students are unable to afford their school costs this year, as college tuition continues to rise, outpacing cost of living, and as high gas and food prices, along with the current credit crunch, leave families with tighter budgets and fewer financing options.

“What we are seeing is more people filling out requests for financial aid, and for those who do, more people are qualifying and the aggregate need is increasing,” says Richard Toomey, associate vice provost at Santa Clara University (“Student Aid Requests Soar as Economy Plummets,” San Francisco Chronicle, Aug. 11, 2008). “Students who haven’t needed assistance before are coming in. You had to expect that this was going to happen with all the news of companies laying off thousands of people.”

Donald Heller, director of the Center for the Study of Higher Education at Pennsylvania State University, has a different theory: He believes the surge in FAFSA submissions could simply mean that more eligible students are becoming aware of their federal financial aid options and are trying to take advantage of them.

Extensive press coverage of a potential student loan availability crisis and the news of elite institutions expanding their financial aid offerings to accommodate more low- and middle-income families may have helped encourage more students to apply this year, Heller says.

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Drexel University to Open Graduate Studies Program in California

Student Loan Girl — Tue, 03 Jun 2008 21:14:00 GMT

Pennsylvania–based Drexel University is planning to establish a graduate studies center and perhaps a “full-blown bi-coastal university” in California after receiving a 1,100-acre land offer just north of Sacramento from a group of real estate developers, according to an article in Inside Higher Ed (“Higher Ed Gold Rush?” May 29, 2008).

Drexel, following a similar move by Pittsburgh–based Carnegie Mellon University to launch software engineering programs in California in 2002, has expressed interest in establishing a west-coast presence due, in part, to the declining number of college students in its home state. By 2025, the state of Pennsylvania will have approximately one million college-aged students, fewer than were there in 1995, according to the U.S. Census Bureau.

To establish Drexel’s brand on the west coast and to grow the institution in a state with a booming college population, the school has established a $10 million fellowship fund. The money will be awarded to students based on both need and merit, with the intention of attracting some 650 students in its first five years.

The Drexel University Center for Graduate Studies in Sacramento will offer five master’s programs including business administration, information systems, higher education, engineering management, and library and information sciences beginning in January, 2009, and will add four more in September.

“This idea of starting up a new campus, particularly within an entirely different regional area, that’s certainly something you’re not seeing very much,” said Donald Heller, director of the Center for the Study of Higher Education at Pennsylvania State University. “I think it’s something a lot of other institutions are going to be watching.”

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Harvard’s Aid to Middle-Class Families a Signal for Change

Student Loan Girl — Thu, 03 Jan 2008 15:03:00 GMT

In December Harvard University announced it would begin offering increased financial aid to students of middle and upper-middle class families. Those families earning between $120,000 and $180,000 will only have to pay about 10 percent of their income, or no more than $18,000 of the $45,600 traditionally charged for tuition, Jonathan D. Glater of the New York Times reports (“Harvard’s Aid to Middle Class Pressures Rivals,” Dec. 29, 2007).

For a school like Harvard, with a $35 million endowment, the gesture is reasonable, and other schools have followed suit: the University of Pennsylvania, Pomona College, Swarthmore College and Haverford College. But smaller liberal arts schools are beginning to find similar cost-cutting discounts to be less than feasible.

Schools Fail to Financially Compete

Harvard’s competitors are finding that the Ivy League school’s change in financial aid policy is affecting their students as much as its own. Small, but competitive liberal arts schools have been receiving comments from concerned parents and students asking for equivalent financial aid offers.

“Harvard has started to redefine the financial aid landscape, and it’s redefined it in a way that is quite beneficial to the wealthiest institutions,” Dean of Admissions and Financial Aid at Bryn Mawr, Jenny Rickard, told the Times. “It’s just a handful of schools that can really respond this way, but it leaves others kind of pulling their hair.”

William D. Durden, president of Dickinson College in Pennsylvania, says his school is one of the many finding it difficult to compete.

“A lot of us are going to be under huge pressure to do these things that we just can’t do,” he tells the Times.

Durden, along with other college president’s like himself, say Harvard’s move could also end up taking away financial aid opportunities from low-income students, making tuition pricing seem even more arbitrary, and causing schools to raise already increasing tuition costs to account for the additional financial assistance.

College Costs at the Heart of the Issue

Harvard officials made their decision in part because they noticed students from middle-class families were simply not applying. Although Harvard allows almost any student from a household making less than $60,000 to attend the school almost for free, Harvard’s Dean of Admissions William R. Fitzsimmons noticed that his school was missing out on some “exciting” middle and upper-middle-class students, most likely because of the school’s high price tuition.

“People were voting with their feet,” Fitzsimmons said in the Times article.

But others see Harvard’s efforts as capable of reversing admissions trends. Donald E. Heller, director of the Center for the Study of Higher Education at Pennsylvania State University, says an increase in middle-class students to Harvard could bump out lower-class students from the school’s acceptance pool.

Some of the arguments surrounding Harvard’s recent tuition discounts are turning into the chicken and the egg type discussions. While some officials have used Harvard’s move as an example of why schools need additional federal funding, others fear that parents and students will point their fingers back at the institutions arguing that they’re clearly charging too much for an education.

“It will educate those parents into thinking, ‘Eighteen thousand dollars a year is what we ought to be paying; why should we have to pay any more than that?’” the president of Ursinus College, John Strassburger, asked in the Times article.

And perhaps that’s where the real problem lies: college affordability. There’s no saying when and if college costs will ever be overhauled, but in the meantime it looks like the only people winning in this situation are those Harvard students whose families make just the right amount of money.

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