Student Loan Blog : Low-Income Students

Government Warns: Pell Grant Program in Trouble

Student Loan Girl — Mon, 22 Sep 2008 21:47:00 GMT

Without additional taxpayer funds next year, the government’s “most important” federal financial aid program may be unable to provide Pell Grants to millions of eligible low-income students, likely pricing these students out of a higher education, according to an article in The New York Times (“Pell Grants Said to Face a Shortfall,” Sept. 17, 2008).

In a memorandum issued last week, the Department of Education warned that it predicts a $6 billion shortage for the federal Pell Grant program next year, stemming from continuous budget shortfalls and compounded by the record-high number of students qualifying for the federal Pell Grant program.

Rising tuition costs, shrinking state aid to colleges and universities, and a growing number of adults who are reenrolling in college are all putting a strain on federal financial aid resources, particularly on Pell Grants, which don’t have to be repaid. This school year alone, six million students out of the nine million who applied for federal financial aid received Pell Grants, some of the highest numbers the program has seen since its inception in 1972.

“It’s the mother of all shortfalls,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “There’s more unmet need than anyone predicted.”

Last year Congress appropriated nearly $14 billion for the Pell Grant program, but as the troubled economy continues to force adults out of the workforce and back into the classroom, the Department of Education said it will either need to allocate more taxpayer money to the Pell Grant program or decrease the grant award amounts students can receive next year.

Should the Education Department decide to reduce Pell Grant awards, it would make an announcement detailing its decision sometime in February 2009, according to the memorandum.

“If [the Pell Grant program] is threatened, you’ll hear about it,” said Edward M. Elmendorf, senior vice president of the American Association of State Colleges and Universities. “The decibel level will be deafening.”

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Education Department at Fault for Low Participation in Grant Programs, Audit Shows

Student Loan Girl — Tue, 05 Aug 2008 00:58:00 GMT

In an audit of the Department of Education, the department’s own inspector general blames the lack of participation in the government’s Academic Competitiveness and National Smart Grant programs on his department’s failure to effectively promote the programs, according to an article in The Chronicle of Higher Education (“Education Dept. Blamed for Not Doing Enough to Promote Grants,” August 4, 2008).

Low-income students who completed their state’s rigorous coursework requirements in high school are eligible for Academic Competitive Grants, otherwise known as ACG, during their freshmen and sophomore years of college. Smart Grants are awarded to low-income college juniors and seniors who are taking classes toward the completion of specific majors, including math, engineering, or technology, and maintain a 3.0 GPA.

The audit, released Friday, suggests that the Education Department hasn’t done enough to “follow-up with nonparticipating schools to ensure those [schools] required to participate” in the two programs were doing so, the inspector general said.

Although Congress approved $790 million in grants for the two programs during the 2006–07 academic year and up to $4.5 billion through 2010, the Education Department only awarded $242 million in Academic Competitiveness Grants to 310,000 students, and only $206 million in Smart Grants to 64,000 students.

Secretary Spellings Justifies Programs’ Shortcomings

Last month, Education Secretary Margaret Spellings suggested that the low participation in the grant programs was due to the fact that not enough high schools were teaching courses that meet the academic standards of the program.

While Spellings lays the blame on high schools, the inspector general’s report showed that the department had a list of 640 nonparticipating colleges and universities that were potentially eligible for the ACG program.

More than half of the schools did not respond to the department when it attempted to contact them. In a random sample of 75, or 23 percent, of these 330 nonparticipating schools, however, the report found that more than 83 percent were considered eligible.

And among the 310 schools that did respond to the department’s outreach, administrators at 23 percent of these schools said they didn’t know their schools were eligible. The inspector general found that more than 73 percent of these school were, in fact, eligible for the programs.

To improve participation in the programs, the inspector general recommends that the Education Department do a better job of reaching out to colleges and universities with eligible students. The department should also consider fining schools or taking away their eligibility to participate in the federal Pell Grant program if they have qualified students enrolled but don’t participate in the ACG or the National SMART Grant programs.

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Concerned About College Costs, Texas Board Considers Changes to State Financial Aid

Student Loan Girl — Wed, 23 Jul 2008 00:13:00 GMT

The Texas Higher Education Coordinating Board is considering restructuring the state’s financial aid programs amid growing concerns about college affordability.

Proposed changes would raise the academic standards students must meet to qualify for the Texas Grant program, which helps low-income students pay for college, and would merge two of the state’s lesser-known financial aid programs with the Texas Grant. The board would also consider raising the income level at which students qualify for the Texas Grant, according to an article in the Houston Chronicle (“Financial Aid Fix Raises Concerns About Poorer Students,” July 21, 2008).

The Texas Grant program currently serves students who come from families that earn $39,000 a year or less and who have completed the recommended high school curriculum for Texas students, which includes four years of English, math, and science.

Changes Could Negatively Impact Low-Income Students

Some legislators are concerned that if enacted, the proposed changes would benefit middle-income students and widen the financial aid gap for low-income students. They also say raising the academic criteria for students who hope to qualify for a Texas Grant — requiring students to earn a 1350 on the SAT or an 18 on the ACT — would be detrimental to the most financially needy students who the grant program is designed to help.

“The changes will effectively cut off many of these students,” said Max Castillo, president of the University of Houston’s downtown campus.

Even under the current criteria, only about half of the students who qualify for the Texas Grant program receive a grant because there isn’t enough money, says state Senator Rodney Ellis, one of the original sponsors of the Texas Grant. Texas ranks last in per-capita spending for college grants among the 10 most populous states, according to the National Association of State Student Grant and Aid Programs.

If approved by the education board, the new merit criteria would apply for students entering high school in fall 2009.

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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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Massachusetts Shortchanges College Students on Financial Aid

Student Loan Girl — Thu, 17 Jul 2008 23:04:00 GMT

Although Massachusetts is known as a hub for higher education, the state lags behind other states in awarding financial aid to college students, a shortfall that many educators say is limiting access to a college education for low-income and minority families, according to an article in The Boston Globe (“State Lags on Student Grants,” July 13, 2008).

For the upcoming 2008–09 academic year, Massachusetts will only award about $83 million in college grants, an amount that trails the grant budgets of comparable states. Indiana will award $331 million in grant aid to students, while South Carolina, which has about 2 million fewer residents than Massachusetts, has dedicated $273 million.

With little money awarded in state grants, Massachusetts students often need to take out student loans, particularly private student loans — which tend to be more costly than federal college loans — to cover the remainder of their college costs.

“There’s simply not enough money in the system,” said Massachusetts Senator Robert O’Leary, chairman of the Joint Committee on Higher Education. “It just hasn’t kept pace with the growth in costs and the increasing number of students who need financial aid. Every year, we’re losing ground.”

The escalating cost of tuition at public and private colleges and universities makes this funding shortage more acute. Massachusetts state grant aid covers less than 5 percent of college costs compared with the national average of 19 percent. Educators say the problem has been magnified by the state’s reliance on its deep-pocketed private colleges like Harvard and MIT to provide the bulk of financial assistance.

Low-income students who qualify for Massachusetts’ main grant program are awarded an average of $780, an amount that doesn’t even cover the total cost of textbooks, which cost students an average of $900.

Governor Deval Patrick is expected to sign a bill that would increase financial aid by $3 million.

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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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State Program Gives 100 Montana Teachers up to $12,000 to Repay Student Loans

Student Loan Girl — Mon, 30 Jun 2008 19:31:00 GMT

In an effort to prevent young teachers from leaving the state for higher-paying jobs, the Montana legislature is helping 100 of the state’s educators pay back their student loans (“100 Lucky MT Teachers Having Loans Paid Off,” June 27, 2008).

Through the state’s Quality Educator Loan Assistance Program the teachers selected for the program will receive $3,000 a year for up to four years to repay their college loans. The program was created by the Montana legislature last year as a way to help rural school districts, which struggle to recruit teachers, retain the new teachers that the schools do manage to attract.

"The question is: ‘How can we get young Montana teachers to stay in Montana when they have $20,000 to $30,000 and beyond in loans to pay off?' " asks Governor Brian Schweitzer.

The loan assistance program just may be the answer, Schweitzer says. By helping recently graduated teachers pay off their student loans, Montana is better able to compete with states that may offer their teachers higher salaries.

The 100 Montana teachers were selected from a pool of 350 applicants at 57 schools. To qualify, teachers must have been employed at a school with a high percentage of economically disadvantaged students and must have been teaching in a subject designated by the Board of Education as a "critical quality educator shortage area," such as music, math, science, or world languages.

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Proposed Legislation Would Prevent Student Loan Lenders from ‘Cherry-Picking’ Schools They Lend To

Student Loan Girl — Fri, 20 Jun 2008 01:14:00 GMT

To ensure all students have access to student loans regardless of what type of school they attend, two Democratic senators introduced legislation Tuesday that would prohibit banks and other lenders from “picking and choosing” which institutions of higher education they do business with, according to a New York Times article (“Bill Promotes Universal College Loans,” June 18, 2008).

Under the proposal, lenders that participate in the Federal Family Education Loan Program would have to extend credit to any eligible student, regardless of a student’s income or the type of institution they attend, as long as the student’s college is a member of the FFEL program, writes Times reporter Jonathan Glater.

Senators Patty Murray, D-Wash., and Christopher Dodd, D-Conn., introduced the legislation in response to the decision of Citibank, JPMorgan Chase, PNC, and SunTrust to stop offering student loans to community colleges and other two-year institutions.

“Lenders offering loans backed by taxpayer dollars shouldn’t be able to discriminate against certain schools or students,” Murray said in a statement. “Denying loans based on school, program length, or income level locks the door for far too many.”

Bill Faces an Uncertain Future

Banks who have ceased lending to certain two-year institutions contend that they lose money on the loans. Schools that have been cut off by the banks tend to have higher default rates and fewer borrowers with small loan amounts — financial factors that, lenders say, make business at these schools less profitable.

But financial aid administrators counter that lenders should not be allowed to “cherry-pick,” because selective lending could make it harder for low-income students to pay for college.

The proposal, which is under review by the U.S. Department of Education, has already been met with controversy. Some financial aid officials support the measure as way of ensuring access to student loans, while others believe it might have the unintended consequence of pushing lenders out of the federal student-loan business altogether at time when over 100 lenders have already left the FFEL program.

While the bill’s prospects are unclear, Sen. Edward Kennedy, D-Mass., chairman of the Senate Committee on Health, Education, Labor, and Pensions, is expected to co-sponsor the bill.

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College Board Helps College Recruiters Target Low-Income Students

Student Loan Girl — Wed, 28 May 2008 20:38:00 GMT

As part of a College Board pilot program nearly 30 colleges and universities will be allowed to buy the names and personal information of low-income high school students — a data set that has been off limits since the early 1980s, according to the Chicago Tribune (“Colleges Recruit Low-Income Students,” May 24, 2008).

The College Board currently sells data to colleges that it collects from the SAT and other College Board–administered exams, including high school students’ grades, test scores, race, religion, and other demographic information. The nonprofit college membership association stopped offering family income data nearly 20 years ago after it found that some schools had misused that information to target admissions offers to students who could afford full tuition.

But in response to lobbying by colleges and universities that are “trying to bring more economic diversity to their overwhelmingly affluent student bodies,” the College Board is now making the income data partially available again, writes Chicago Tribune reporter Jodi Cohen.

“We are using it for good, not for evil,” said Bruce Poch, dean of admissions at Pomona College. “The myth of unaffordability has become a nightmare, and we can’t directly speak to kids or their families unless we can really target them.”

To ensure that students’ privacy isn’t violated and that the information isn’t misused, schools cannot request a search that would reveal which students have family incomes above or below a certain level. College admissions officers can only request the names of students who live in low-income communities, determined by their high school and nine-digit ZIP code.

While the College Board will not disclose the names of colleges currently participating in its expanded pilot program, Amherst College, Williams College, and Wellesley College were three of the schools that tested the system last year. Amherst Dean of Admissions Tom Parker said 1,000 more low-income students received direct mail from Amherst after using the program.

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Lowest-Income Students Need More Pell Aid, Authors of New Report Find

Student Loan Girl — Mon, 05 May 2008 23:35:00 GMT

To help low-income students attend college, larger Pell Grants should be awarded to the most “financially needy” college students, according to a new report (“Window of Opportunity: Targeting Federal Grant Aid to Students With the Lowest Incomes”).

In the report, researchers from the Institute For Higher Education Policy urged lawmakers to increase Pell Grant aid by up to $750 for students who have an expected family contribution (or EFC) that is a negative number. Currently, such students are awarded the same Pell amount as students whose EFC is zero.

The report’s authors concluded that raising the minimum and maximum Pell Grant awards could provide additional aid to the neediest students while ensuring that students with family incomes bordering the eligibility cutoff do not lose their awards.

The proposal to raise Pell Grant awards is gaining traction in the U.S. Senate, according to an article in The Chronicle of Higher Education (“Report Calls for Directing Federal Aid to Neediest Students,” April 28, 2008).

Sen. Edward Kennedy, D-Mass., is backing a proposed measure to boost Pell aid to the lowest-income students as part of a broader bill aimed at dealing with the effects of the credit crunch on the student loan industry.

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‘Fear Factor’ Experiment Seeks to Aid Low-Income Students

Student Loan Girl — Thu, 22 Feb 2007 22:52:00 GMT

The Feb. 20, 2007 article titled “Lifeline to Low-Income Students” written by Doug Lederman that appeared in Inside Higher Ed proposes an intriguing if shaky reason why lower-income students “are far less likely to go to college than their peers.” The reason? According to the article, “But one oftcited explanation is that potential college students from lower socioeconomic groups are either unaware of how much need-based financial aid is available or intimidated by the process of applying for federal student aid.”

Premise of Study Questionable

I find that a bit hard to believe, and I fail to see the connection. I really do not think that just because one socioeconomic group (lower-income students and their parents) may be less educated than their higher-income “brothers” means that they necessarily are “intimidated” to apply for financial aid or “unaware” of their options. A more likely explanation that rings true is that the lower-income students and their families simply are not willing to take on the suffocating debt of higher education, and, therefore, either opt out or select a less expensive option, like community college. Since the higher-income, middle-upper class believes that they may more ably pay off their high debt, they attend college, even at exorbitant costs.

While I do not necessarily agree with the premise behind the experiment, it is a very original approach to simplifying the FAFSA (Free Application for Federal Student Aid) process. The underlying idea is to make the FAFSA application process easier for low- to mid-income college students. Those behind the study want to see if their methods significantly improve their “college-going rates.” If nothing else, it will be interesting to see what happens.

Program Outlined

The article outlined the program:

“Here’s how the project, which involves researchers at Case Western Reserve University and University of Toronto in addition to Long [Bridget Terry Long, a Harvard University associate professor of education and economics], works: Randomly selected taxpayers with incomes below $45,000 who seek help from their taxes from H&R Block offices in and around Cleveland, Ohio, will be offered help filling out their FAFSA forms (a control group will receive only a brochure with publicly available information about attending and paying for college).

“H&R Block’s tax preparers, working with software the company and the researchers jointly created, will help transport the applicants’ tax information into the federal financial aid form (more than half of the FAFSA information comes from the tax form), and help them collect the information for, and complete, the rest of the form. The hypothesis is that using tax data to automatically fill in a large number of answers to the 108 questions on the financial aid form, and offering personal help in filling out the rest, will make the FAFSA less daunting than it might otherwise be.

“Next, company representatives, trained by the researchers, will give study participants projections of how much state and federal financial aid they may qualify for, and how far that would go in covering the cost of attending selected colleges in the area. ‘When we finish that interview, we give them a piece of paper that says, based on the information we’ve gathered today, here’s the tuition and here’s the aid you’d be eligible for,’ says Eric P. Bettinger, associate professor of economics at Case Western.”

Regardless of why you believe that lower-income students are “opting out” of college, any plan to make the FAFSA application process simpler is a welcome one. Hopefully, the results of this targeted experiment will be made known and have a beneficial, far-reaching impact on the financial aid community.

The student loan advisors at NextStudent are helpful and knowledgeable about student loans. They are a trusted source in getting you the appropriate information about your student loan consolidation, student loan options and helping students get the college financing they need. Go to www.nextstudent.com for more information.

Be sure to tune in next Thursday for my next blog on student loan advice.

Student Loan Girl

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American Council on Education Meeting

Student Loan Girl — Tue, 13 Feb 2007 17:02:00 GMT

The American Council on Education opened its 89th annual meeting this past Sunday, Feb. 11, 2007. According to a Feb. 12, 2007 article by Richard Byrne titled “At Annual Meeting, Council Focuses on Issues of Access and Accountability,” that appeared in The Chronicle of Higher Education, “The theme of the council’s 2007 meeting, which continues through Tuesday, is ‘The Access Imperative.’”

Access to higher education for lower-income families seems to be the prominent theme lately among higher education legislators, advocates and watchdogs. Byrne reported that within the American Council on Education circles, “Much of the discussion of the access issue has focused on a lack of preparedness for higher education among low-income and minority students, and the social and cultural barriers to their entry to universities in greater numbers.”

Questions on Accountability

As well as access to higher education, members at the meeting discussed the ever-looming issue of quality control when it comes to higher education and the pursuit by some institutions to rank on consumer guides to college such as that of U.S. News & World Report.

The article reports, “The members of a panel titled ‘Who Is Defining Quality in Higher Ed? At What Cost?’ agreed that a number of factors have created something of a mania for assessment and accountability in higher education. Those factors include recommendations made by the federal Commission on the Future of Higher Education and a scrum by universities to rise in popular institutional rankings, such as U.S. News & World Report’s annual college guide.

‘One of the great things about the blossoming of rankings is that there are a lot of different ways of looking at institutions from the outside,’ said Ben Wildavsky, a senior fellow in research and policy at the Ewing Marion Kauffman Foundation. (Before joining the foundation, Mr. Wildavsky served as editor of the U.S. News & World Report’s annual college rankings.)”

Low-Income Kids Given the Boot

Apparently, some members of the council see a correlation between a college’s desire to rank on consumer lists and limited access to higher education for low-income students. Byrne reported, “Some of the practical fallout of the pursuit of prestige has been reflected in a lessening of flagship universities’ commitment to low-income and minority students, said Kati Haycock, director of the Education Trust. Her group, an independent research and advocacy organization, released a report in late 2006 that ranked top state universities’ commitment to such access issues and found many of them wanting (The Chronicle, November 21, 2006). Those rankings suggest that ‘most flagship universities have walked away from low-income kids and kids of color,’ Ms. Haycock said on Sunday.”

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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2007 Budget Update

Student Loan Girl — Thu, 01 Feb 2007 22:45:00 GMT

It looks like Pell Grants are going to be getting the financial face-lift about which people have been buzzing on Capitol Hill. According to a Jan. 31, 2007 article by Doug Lederman titled “A Pleasant Budget Surprise” that appeared in Inside Higher Ed, the Democrats on Jan. 29, 2007 introduced a joint funding resolution that would raise the maximum Pell Grant by $260.

Lederman reported that the “resolution called for shifting a total of $2.3 billion (out of an overall budget of $463.5 billion) to health, education and labor programs, including an additional $620 million for biomedical research at the National Institutes of Health (to a total of $28.969 billion, a rise of 2.2 percent) and nearly $1 billion more for the Pell Grant Program. The new funds for Pell, which would bring funding for the program to $13.66 billion, would allow the maximum grant for low-income students to rise by $260 to $4,310, which would be the first increase in grant size in five years.”

College Lobbyists Happy

After a year of pushing for an increase in the Pell Grant, college lobbyists are happy to see their efforts culminate in a possible increase in funding. Lederman quoted Pat White, director of federal relations at the Association of American Universities, as saying, “Within the constraints of what the House and Senate leadership and the appropriators were facing, what they were able to do is heroic.” She continued, “With so many other competing priorities, for them to take the longer view and make investments in research and education is, to me, really inspiring.”

Democrats Eliminate Earmarks

So, where is the money coming from to fund this proposed increase in Pell Grants? According to Lederman, “Democrats appear to have come up with the extra funds partly by eliminating most earmarks and partly by moving out of the bill money that the government was planning to spend on military base closings. Republicans derided the latter move, particularly, as a bit of smoke and mirrors magic that will require the government to pay up later, but it wasn’t clear how aggressively Republican members of Congress would fight the Democratic measure.”

The White House will be releasing its budget for 2008 on Feb. 5, 2007. According to the article, there is speculation that the White House budget will also include an increase on Pell Grants but that the funds will be sourced from existing financial aid monies. Lederman wrote, “Speculation has been growing in recent days that the administration will propose a sizable increase in the Pell Grant Program – but that it will do so, in large part, by proposing to shift funds away from other student aid programs, most likely the Supplemental Educational Opportunity Grants Program, which provides additional funds to low-income students, most of whom are Pell recipients.”

The student loan advisors at NextStudent are helpful and knowledgeable about student loans. They are a trusted source in getting you the appropriate information about your student loan consolidation, student loan options, and helping students get the college financing they need. Go to www.nextstudent.com for more information.

Be sure to tune in next Thursday for my next blog on student loan advice.

Student Loan Girl

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College Tuition: Illusions in Financial Aid?

Student Loan Girl — Thu, 25 Jan 2007 19:24:00 GMT

Recently I watched this great movie called “The Illusionist” with Edward Norton, Paul Giamatti and Jessica Biel. Great flick. Lots of smoke and mirrors and a great ending – with a major twist – that you never would expect.

Princeton has received much press, accolades and positive response to its recent decision to freeze tuition next year. What does it all mean in the long run?

According to the article “Keeping (Tuition) Up With The Jones,” written by Scott Jaschik that appeared in the Jan. 24, 2007 edition of Inside Higher Ed, on Jan. 21, 2007 “Princeton University shocked many higher education observers by announcing that it would freeze tuition next year, prompting speculation on whether other institutions would follow. Some experts believe that Princeton’s move could prompt similar decisions from the relatively few private colleges that compete with that university not only for students but in terms of wealth.”

Consider ‘Bad’ May Be ‘Good’

Upon closer examination and according to opponents, the move may not be what it appears. Jaschik wrote that “while experts on higher education have been reluctant to criticize Princeton’s move, a number make the point that its decision – popular with students and generating lots of good press – will most help the wealthiest families.” At first glance it would seem that the school is leading the charge to assist lower-income students’ goal of attaining a higher education. In reality, it may be that it accomplishes little for that demographic, ending up benefiting those who may not readily need the help.

Since I regularly have assumed such actions as Princeton’s (tuition freezes/decreases, etc.) to be positive ones, I often have failed to dig deeper. I heard that the tuition freeze at Princeton was accompanied by a significant increase in room and board. What are we to make of that?

Which Is It?

A school by the name of Grinnell College soon will move its tuition UP to Princeton’s level, conceivably to “make the college more affordable and more equitable for low-income students,” the article said. So, if I understand correctly, BOTH an increase and a decrease in tuition are supposed to somehow benefit students, in particular, those of low income. What should we believe?

Russell K. Osgood, Grinnell’s president, made a very interesting point that causes one to pause and consider. Jaschik reported, “Osgood said that he realizes that many people associate tuition rates with actual cost, and so are quick to applaud a move like Princeton’s and criticize one like Grinnell’s. But he argued for an emphasis on what students actually pay — in which case he said that his college’s tuition increase will be a benefit for low-income students. ‘I believe the focus ought to be on guaranteeing access for people who have need,’ he said.”

Check the Facts and Be Wise

The moral of the story? Dig deep, check facts and see if things add up. The media may position certain events so they appear to be something they are not – in other words an illusion of sorts. And when it comes to financial aid and news relating to college costs, you have to keep on top of things. After all, it is your money and your education that is at stake.

Be sure to tune in next Thursday for my next blog on student loan advice.

Student Loan Girl

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Hope On The Horizon: Student Debt Relief Act in Senate

Student Loan Girl — Thu, 25 Jan 2007 03:47:00 GMT

I have posted blogs in the past several weeks regarding states that are implementing college financial aid programs at the community college or public college level, making education an affordable reality for lower-income students. Just yesterday a major Ivy League school announced that it was freezing tuition for an entire year (see my Thursday, Jan. 25, 2007 post for more info). While this all is good news, nationwide reform implies national legislative action.

It seems that everyone is waiting to see what will happen in the U.S. Senate now that H.R. 5 has passed the House. Hot on its heals comes a tandem effort by Sens. Edward Kennedy, D-MA, and Barbara A. Mikulski, D-MD, introducing the Student Debt Relief Act, whose purpose is to supply college student aid to borrowers who use loans to cover costs of their education, according to a Jan. 23, 2007 press release titled “Mikulski Fights For Student Debt Relief” issued from Mikulski’s office.

American Dream or Financial Nightmare?

According to a statement by Mikulski, who also serves as a member of the Health, Education, Labor and Pensions (HELP) Committee, “College tuition is on the rise across America. Our students are graduating with so much debt it’s like their first mortgage,” said Mikulski. “American families are stressed and stretched, and students are looking for help. We must make access to higher education a priority for everyone.”

College Affordability Solutions on the Way

Our government officials, in particular Mikulski and Kennedy, who also serves as chairman of Senate Health, Education, Labor and Pensions, finally may have given voice to what many college students and their parents have known for quite some time. It is getting exorbitantly expensive to achieve the American dream of attending college. A recent survey I came across stated that many students now are “settling” for their second choice of schools, in order to incur less debt. Hopefully, the new bill, which appears poised to help borrowers and instigate much-needed change, will quickly become law.

According to the press release, “The legislation outlines relief for student debt by addressing a number of critical issues including:

· Pell Grants: Increases maximum Pell Grant to $5,100.

· Interest Rates: Cuts student loan interest rates in half – to 3.4 percent for subsidized undergraduate student loans over 5 years.

· Debt Relief: Caps federal student loan payments at 15 percent of a borrower’s monthly discretionary income, and forgives student loans after 25 years.

· Public Service Loan Forgiveness: Provides loan forgiveness for social workers, teachers, police officers and other public sector employees after 10 years.

· College Tuition Tax Deduction: Extends college tuition tax deduction and increases allowable deduction to $12,000.

· Consolidation/Reconsolidation: Allows students to reconsolidate loans, repeals the elimination of in-school consolidation.

· Origination Fees: Reduces origination fees in Direct Loan program by 1 percent to track FFEL program origination fee reduction, and gives secretary explicit authority to reduce origination fees (as FFEL lenders have).”

It is important to keep up to date on the effects of legislation and news on student loans and education. What goes on in government and in your state can have a great impact on your student loans and your college education.

For all the information you need about student loans, go to NextStudent.com. And to find more information on debt relief for unsecured debt visit ThinkDebtRelief.com.

Be sure to tune in next Wednesday for my next blog on student loan legislation in the news.

Student Loan Girl

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