Student Loan Blog : Loans

Colleges and Universities to Subsidize Unpaid Internships

Student Loan Girl — Wed, 23 Jul 2008 22:08:00 GMT

Some small, private schools are beginning to offer internship grants to students who would otherwise have been unable to accept an unpaid or low-paying intern position, according to an article in The Chronicle of Higher Education (“Subsidizing the Internship,” July 18, 2008).

“That’s one of the more important aspects of career assistance that a university can provide a student,” said Mark Oldman, co-founder of Vault, a career-information company. Amid so many unpaid and low- paying internships, he told the Chronicle, “the university can come to the rescue financially.”

Once considered an added bonus to a college degree, internships have now become “a prime form of professional capital” for college students. But being that most internships offer little to no financial compensation, lower-income students are often placed at a disadvantage in the competitive internship field.

Internship-grant programs now being offered by schools across the country will subsidize unpaid or low-paying internships and allow more financially needy students to take advantage of these experience-building opportunities:

Connecticut College awarded up to $3,000 grants to two- thirds, or 285, college seniors
Austin College in Texas gave 54 students $2,300 each
Whitman College in Washington paid 26 students $2,100
Smith College in Massachusetts has pledged financial support for all internship-seeking students, regardless of their financial need

American University in Washington, D.C., while unable to offer direct financial assistance for internships, provides room and board for Native American students who secure internships at federal agencies or private corporations.

Butler University in Indianapolis, Ind., offers on-campus housing at a subsidized rate for summer interns through the Brain Gain program, as well as career counseling for those who participate in the program.

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Professors Pay Students’ Tuition With New 'Opportunity Scholarship'

Student Loan Girl — Thu, 17 Jul 2008 23:17:00 GMT

In an effort to stem the drop-out rate of low-income and immigrant students at California’s Santa Ana College, some professors are paying for their students’ tuition through the school’s new Opportunity Scholarship, according to an Inside Higher Ed article (“Professors Pay Student's Tuition,” July 8, 2008).

To be distributed for the first time this fall, the scholarship will cover a full year of tuition at Santa Ana for students who have unmet financial needs and who carry at least a B-average GPA. The idea for the scholarship came from Jeff McMillan, a chemistry instructor and former president of the Academic Senate, who wanted to help prevent students from dropping out of classes due to finances.

McMillan commented that since a large number of Santa Ana’s low- income students are ineligible for federal government aid, such as Pell grants or Stafford student loans because they are children of undocumented immigrants, they often experience difficulties finding enough funds to cover the costs of their education.

McMillan, along with Santa Ana College counselor Issac Guzman, approached the school’s vice president of student services with the idea of a scholarship program that would be funded by college employees.

Largely due to publicity about the program, including an article that ran in the Los Angeles Times emphasizing the program’s need for community involvement, the number of scholarships to be distributed ballooned from the original estimate of 10 to 25 up to 100. The increase in awards was made possible, in large part, by contributions from individuals outside the Santa Ana College community.

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Pending 21st Century GI Bill: New Benefits for a New Era

Student Loan Girl — Thu, 26 Jun 2008 22:39:00 GMT

Many educators are excited about the potential impact of the proposed GI Bill, legislation that has gotten the nod by President Bush in its current form, according to an article in Inside Higher Ed (“Gauging the New GI Bill,” June 20, 2008).

“I think that expanding the GI bill, making it more generous, can be one component of really expanding access to higher education for people who come from disadvantaged backgrounds,” said Suzanne Mettler, Cornell University professor.

Current GI Bill benefits, worth only $1,101 monthly, have not kept pace with the escalating cost of a college education. Many experts believe that the current level of veterans’ benefits — used primarily by those from low socioeconomic backgrounds — are not enough to help veterans attain a decent college education.

But in the next couple of weeks, the Senate will vote on a revised version of the GI Bill that would:

Increase education benefits to cover up to the cost of in- state tuition at the most expensive public college in a veteran’s state
Offer a monthly housing allowance
Provide $1,000 a year for books
Open up the option of allowing transferable educational benefits for a veteran’s spouse and/or children

Benefits Unlikely to Affect Vets’ Choice of School

Educators at some two-year schools, where about 40 percent of GI Bill recipients pursue their degrees — are concerned that their enrollment numbers will dwindle significantly once these soldier- students are able to attend more expensive institutions.

However Keith Wilson, director of the Department of Veterans Affairs, says that may not necessarily be the case. He says the new bill isn’t expected to radically alter how and where veterans will attend college.

“In my experience, I’m not sure that’s necessarily true. I think convenience is still going to be paramount,” Wilson concluded.

Regardless of how the results of the bill shakes out, James Wright, president of Dartmouth College, says veterans should be able to choose the college that is the best fit for them and believes the new Bill will allow them to do so.

“Those who are coming out of the military should be able to think about going to the best schools in the country,” Wright said. “They should be thinking about going to the colleges that most meet their needs.”

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In Fight to Lower Tuition, Small Universities May Be Harmed

Student Loan Girl — Wed, 25 Jun 2008 22:43:00 GMT

Some small U.S. colleges and universities are concerned that they may be the target of a new bill that would force schools with multi -billion dollar endowments, like Harvard, to reduce their tuition costs, and place other high-tuition institutions without large endowments at a financial disadvantage when competing for students, according to an article on Bloomberg.com (“Kennedy’s Tuition List Targets Harvard, Wounds Bates” June 19, 2008).

This year President Bush is expected to review the portion of the reauthorized Higher Education Act that requires the Department of Education to maintain lists of schools that have the highest and fastest-growing costs of attendance. These lists would have rankings in six categories for nine different types of schools, including four-year private schools and for-profit two-year or technical colleges. If approved by the president, the lists would go into effect in 2011.

Sen. Edward Kennedy, D-Mass, who called the rankings a national “watch list” last July, is pushing for the legislation to hold schools “accountable for skyrocketing college costs.” College administrators counter that they’re being punished for expenses beyond their control, and smaller colleges, that don’t have huge endowments, may be the most affected.

“It is totally unfair and it is cheap politics,” said Leon Botstein, president of New York’s Bard College. “This is fighting the wrong people. Most colleges are being penalized due to the actions of a few wealthy ones.”

Watch Lists Portray Schools’ Costs Inaccurately

College officials like Terry Beckmann, vice president for finance at Bates College in Maine, believe that the lists, known in the industry as “the wall of shame,” have the potential to be embarrassing for schools and misleading for students.

He cites his college’s ranking as evidence: Bates is listed as having the most expensive tuition in the 2006—07 academic year among private four-year schools. While room and board are included in Bates’ $44,350-price tag, other schools listed lower on the list do not incorporate these figures, creating an inaccurate representation of actual costs.

Alternately, Rep. Buck McKeon, R-Calif. who originally proposed the watch lists, believes the rankings will “help parents and students make better decisions” for college.

McKeon commented that grocery stores have several different price options when selecting one type of apple over another. “In education, you don’t really get that kind of opportunity,” he said.

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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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Library Book Past Due: Loan Denied

Student Loan Girl — Wed, 26 Dec 2007 23:00:00 GMT

Chances are you have overdue library books laying around in your dorm room or apartment. Maybe the book you checked out six months ago has become a part of your décor—a handy paperweight on your desk or an unconventional coaster on your coffee table.

You’ve thought to yourself, no biggie, right? Not quite. You might want to dust off the CD’s, DVD’s and other library materials you have and drop them off. Return them before the fines you’ve racked up get turned over to a collection agency.

Turns out, more and more libraries think their missing property and your laid-back attitude about it are quite a big deal. And they’re hitting you where it hurts the most, your wallet.

If you’re not careful that overdue book could prevent you from getting a loan for a car or a house.

Libraries Collecting on Overdue Fines with Big Help

Many libraries have teamed up with Unique Management Services, Inc., a collection agency that specializes in recovering library books and late fees.

The company based in Jeffersonville, Indiana, tracks down late accounts for more than 850 clients (libraries of all sizes) in the United States, England, Canada and Australia. Its goal is to shock library abusers—most of whom are average, well-meaning people—into action, Kenes Bowling, the company’s manager for customer development, tells The New York Times.

The debt collector’s website states it send letters that gently nudge people into returning items that rightfully belong to the library and the people it serves.

New York Times reporters Anne Barnard and Jo Craven McGinty write that included in one of the company’s standard letters is language like: “Once reported, this adverse information can stay on your record for seven years!” The letter goes on to warn that car dealers, department stores and banks may learn of the library users’ misdeeds. “Why allow this to happen?”

The company typically sends out two letters and follows up with a phone call to your home. It claims phone calls improve results as much as 30 percent over letters alone.

The Moral: Be a Good Patron

With such verbiage, it’s hard not to see that your local library means business.

It’s not that libraries want to be seen as bullies. But when you consider that in a little over a decade, Unique Management Services has managed to retrieve $5.8 million for the New York Public Library System alone, you can see why libraries are turning to debt collection agencies like UMS for help.

Libraries want to penalize people who believe items can be checked out to infinity and beyond and those who simply want to sell them or keep items for their personal collections.

If you’re reported for owing a library fine, you could see your credit rating drop by 100 points or more, Craig Watts a spokesperson for Fair Isaac, the company that scores your credit history, tells CNN.com.

So don’t wait to be tattled on. Just take your library items back and pay up before you pay too much.

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