Student Loan Blog : Kim Clark

Number of Students With Unpaid Tuition Bills Growing

Student Loan Girl — Tue, 13 Jan 2009 23:24:00 GMT

Colleges and universities all across the country are seeing larger numbers of students who may soon be forced to drop out of college due to unpaid bills, according to a recent survey (“Unpaid College Tuition Bills Rise, Survey Finds,” U.S. News & World Report, Jan. 9, 2009).

The American Association of Collegiate Registrars and Admissions Officer s found that of the 43 college registrars it surveyed, more than 65 percent said that they’d experienced an increase in unpaid bills over the previous year. At Spelman College in Atlanta, for example, nearly 25 percent of the student body — a record-breaking 500 students — is behind on their bills by an average of $3,000; nearly double the number of students who fell behind last year.

5 Things Cash-Strapped Students Can Do to Stay in School

In order to avoid being kicked out of college, students may take the following five steps to resolve their unpaid tuition bills:

Contact the registrar.
Some schools are willing to work with students to bring their accounts up to date. Schools may offer students an “emergency” loan, or give them the option of using a payment plan that allows a student to pay off the total amount they owe in small payments over a period of time.

Stop by the financial aid office.
There may be several school-sponsored scholarships available to students that schools didn’t offer before. To help students affected by the recession, some schools have raised additional funds to expand or create new financial aid programs, although aid may be limited.

Complete last year’s FAFSA.
Students who fill out the Free Application for Federal Student Aid could still retroactively receive college grants and low-cost loans that they would’ve qualified for last year. If nothing else, by filling out the FAFSA now, students may qualify for a federal student loan that could get help them get through the next semester.

File a “PJR”
If a student’s or a family’s financial circumstances have changed, such as a job or income loss, a student may request a PJR, a “professional judgment review,” from their financial aid office. During a PJR, the financial aid office may determine that a student needs more funds for college and could award them emergency or other aid.

Try peer-to-peer lending.
Once all other options are exhausted, students may want to explore borrowing money from extended family members, friends, or even strangers through social lending sites like GreenNote or LendingClub. But students should read the fine print on any loan documents to ensure they understand their rates and terms before borrowing.

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NextStudent to Be Spotlighted at Largest Virtual College Fair

Student Loan Girl — Thu, 10 Jul 2008 16:06:00 GMT

Don Fenstermaker, the founder and CEO of NextStudent, will join noted names Mark Kantrowitz, publisher of FinAid.org, and Kim Clark, senior writer for U.S. World & News Report, as one of only a few financial aid experts to give a live streaming video keynote presentation on college financing at today’s CollegeWeekLive event.

CollegeWeekLive, the largest virtual college fair on the Web, is hosting its “Paying for College” event today as a free online resource for students and parents looking for information on college financing and the financial aid process.

Fenstermaker’s presentation, “Paying for College A–Z,” will be streamed live from his NextStudent office in Phoenix, Ariz., and NextStudent’s professional Education Finance Advisors will be on-hand to interact directly with students and parents, discussing their college financing options, answering questions about parent and student loans, and offering guidance on where to find the financial resources that can help families cover all their college costs.

CollegeWeekLive participants are also invited to visit NextStudent’s virtual booths and watch spotlight video presentations on the company’s free online scholarship database, its flagship private student loan program, and its popular NextPath blogs for students, graduates, and parents.

From any NextStudent booth, attendees can connect directly to the NextStudent website, chat live with a NextStudent Education Finance Advisor, search over $16 billion in available scholarships, and apply free for a private student loan.

The fair kicks off at 10 a.m. Eastern today and runs until 8 p.m. Admission is free, and students and parents can still register online through the CollegeWeekLive website.

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Word to the Wise on New Loan Forgiveness Programs: You May Not Qualify

Student Loan Girl — Tue, 10 Jun 2008 22:56:00 GMT

College students looking to relieve their federal student loan debt “will be sorely disappointed” with the government’s new loan forgiveness programs that will begin in 2009, according to an article in U.S. News & World Report (“The Problem with Federal Loan Forgiveness Programs,” May 28, 2008).

Under the public-service loan forgiveness program, students must make payments on their student loans for 10 years before the loans can be forgiven, said Diane Auer Jones, assistant secretary for postsecondary education, at the College Savings Foundation conference last month. Since a majority of federal student loans have a 10-year term, there may be no loan balance left to be forgiven.

In addition, the Department of Education is concerned that "some students will see the program and take on more debt than they would have otherwise, not realizing it is unlikely that most of their loans will be forgiven," Jones commented.

The public-service loan forgiveness program grants $4,000 in “Teach grants” to students studying to be teachers in “high need” classrooms. But teachers who accept the grants and do not end up working in needy schools, will see those grants turn into loans that have to be repaid. Based on the outcome of similar government programs, up to 80 percent of grant recipients ended up having to repay their grant-turned-loan with interest, U.S. News reports.

Robert Shireman, director of the Project on Student Debt, suggests instead that students consolidate their loans under the federal government’s new Income-based Repayment option. The program allows low-pay service workers to make reasonable monthly payments based on their income level and to have the balance of the loan forgiven after 120 payments.

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Availability of Federal Perkins Student Loans Is Dwindling

Student Loan Girl — Sun, 13 Apr 2008 09:28:00 GMT

A growing shortage of funds in the federal Perkins student loan program could affect as many as 50,000 students in the upcoming academic year, according to a recent article in U.S. News & World Report.

Students who would have been eligible to receive a low-cost Perkins loan last year may not be offered one this year due to the limited availability of funds.

And the students who do manage to get a Perkins loan will likely see the size of their award shrink, writes U.S. News reporter Kim Clark (“Why Perkins Loans Are Harder to Get This Year,” March 25, 2008).

Schools Struggle to Replenish Limited Perkins Funding

Federal Perkins loans, which carry a fixed interest rate of 5 percent and are subsidized by the federal government, are reserved for undergraduate and graduate students who are considered to be “exceptionally needy.”

Financial aid officials at the nation’s colleges and universities are attributing the scarcity of Perkins loans to a combination of factors: the failure of federal funding for the Perkins program to keep pace with what has been a steady increase in college enrollment, and Perkins borrowers who are taking longer to repay their loans.

Schools are each assigned a fixed pool of Perkins funds from which to lend. Unlike other federal college loans, which are paid back directly to the government or to lenders in the federal education loan program, Perkins funds are payable to the school, with schools dependent on that repayment money to generate new Perkins loans for incoming and returning students.

The longer alumni take to repay their Perkins loans, the less money is immediately available to current students eligible for these loans.

Many Perkins borrowers, faced with rising interest rates over the last few years on everything from private student loans and federal consolidation loans to credit cards and home loans, have focused on repaying their higher-interest student loans and other debt, steering away from paying off their Perkins loan early and opting instead to take the full 10-year Perkins repayment term.

Adding to the problem, says Rick Shipman, director of Michigan State University’s financial aid office, is the fact that some students are able to discharge their Perkins loan if they go into the military or teaching.

“Their debts are forgiven by the federal government but the federal government doesn’t necessarily reimburse the school,” explains Shipman (“Credit Crunch Alarms Student Loan Lenders,” MSU State News, March 26, 2008).

Colleges and Universities Scaling Back on Perkins Awards

With less Perkins repayment money coming in and no government funds being added to expand the federal Perkins pool, schools are being forced to scale back their Perkins awards.

At Ohio University, Perkins funding is so limited, Clark writes, that officials anticipate a 12 percent decline in the number of Perkins student loans the school will be able to issue this fall.

Also expecting to make cuts to its Perkins student loans is the University of Maryland at College Park, which has seen its Perkins funding shrink this year to just half of the $2.3 million it had available last year.

At Michigan State University, where the Perkins pool has dropped from $7 million to $5 million in the last year alone, financial aid officials plan to eliminate over 2,000 Perkins awards in the fall and cut the average award from $1,200 to $1,000.

MSU expects to award about 4,400 Perkins loans to undergraduates in the upcoming academic year, down from the 6,600 it issued in 2007–08. The school already eliminated Perkins loans for its graduate students last year.

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