Student Loan Blog : Pell Grants

Students Could Wave Goodbye to Merit–Based Federal Aid

Student Loan Girl — Thu, 25 Jun 2009 16:41:00 GMT

In another move to restructure the federal financial aid system, President Obama has proposed ending the government’s five-year foray into merit-based student aid and redirecting those financial aid funds to the need-based Pell Grant program, reports The Chronicle of Higher Education (“An Experiment in Merit-Based Student Aid Is Likely to End,” June 26, 2009).

The Academic Competitiveness Grant and the National Science and Mathematics Access to Retain Talent Grant programs were created by Congress in 2006 to encourage students to take academically “rigorous” coursework in high school and then choose college majors in fields with labor shortages.

Only students who are eligible for need-based Pell Grants can qualify for the Academic Competitiveness Grants, which provide $750 and $1,300 to college freshmen and sophomores respectively, and for the SMART grants, which provide $4,000 to college juniors and seniors who major in science, math, and certain foreign languages.

But so far both grant programs have fallen short of their participation projections, due in large part to the Department of Education’s failure to promote the programs, as reported by the department’s own inspector general in 2008.

The other major problem has been the programs’ vague qualification criteria, which has made it difficult for financial aid officers’ to determine award recipients. The American Council on Education, in a 2006 letter to the Department of Education, called the grant program’s guidelines “unworkable” and defined them as placing a “breathtaking administrative burden” on colleges’ financial aid officers.

Obama’s Proposal Receives Support From Education Officials

Education Department officials support the president’s proposal to make the Pell program an entitlement with annual increases tied to inflation and to raise the maximum Pell awards by $200 to $5,500 by the 2010–11 academic year because, they say, the Pell Grant program better serves low-income students than the competitiveness grant programs.

This proposal “would benefit the vast majority of the nearly six million Pell Grant recipients worldwide,” even though the annual increases amount to significantly less funding for the one in 10 students who qualify for the Academic Competitiveness and SMART grants.

Even former Secretary of Education Margaret Spellings, who crafted the merit-based programs under the Bush administration, backs the proposal.

“Do higher education officials and K-12 officials prefer free money with no strings attached? Absolutely,” Spellings said. “But if we’re trying to move the needle, putting resources behind our policy goals is a more powerful and prudent way to go."

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Overhaul of Student Loan System in the Works

Student Loan Girl — Mon, 22 Jun 2009 15:30:00 GMT

A bill to overhaul the student loan industry may reach Congress as early as next week; education-committee chairs are working behind the scenes on a piece of legislation that would eliminate the third-party student loan system called the Federal Family Education Loan Program, The Chronicle of Higher Education reports (“Behind the Scenes, a Student-Loan Overhaul Takes Shape,” June 16, 2009).

Although few details have been released about the proposed legislation, lenders and a large number of Congressmen are hoping the FFEL program won’t end up on the chopping block like President Obama has proposed. Already as many as 13 counterproposals to the elimination of FFELP have begun circulating Congress, including a detailed plan from lending giant Sallie Mae.

It’s not likely, however, that the FFEL program will survive this legislative session, some Congressmen say, considering taxpayers could see as much as $94 billion in savings over the next 10 years if FFELP were eliminated, according to estimates from the Congressional Budget Office.

Obama had originally suggested that these savings, which have been readjusted down to $87 billion, could be used to increase Pell Grants award amounts each year at a rate equal to the Consumer Price Index. It now looks like Congress will, instead, propose that the money be infused into the Pell Grant program to allow appropriators to “continue to set the maximum [Pell Grant] award” so as not to end up capping the maximum award amount.

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Private Student Loans: Proceed With Caution

Student Loan Girl — Mon, 04 May 2009 21:07:00 GMT

Although the government has taken steps to bolster the federal student loan program by expanding Pell Grant awards and raising the maximum award amount of federal Stafford student loans, federal financial aid will still not be enough for many families to pay for college this year.

Grappling with stock market losses that have negatively affected 529 college savings plans and with declining home values that have essentially made home equity loans nonexistent, families of college students will likely have to rely more on private student loans, in addition to federal aid, this year to help pay for their education expenses, reports The New York Times (“Students’ First Lesson: Beware Loans’ Fine Print", May 2, 2009).

But the Times warns that private student loan borrowers need to be particularly cautious when applying for loans.

Private student loan lenders can set their own loan terms and aren’t required to inform their borrowers of the loans rates, fees, and terms. Citing data compiled by Student Lending Analytics, a company that helps schools analyze lending programs, the Times advises families applying for private student loans to weigh their options carefully and to take a close look at the fine print.

Interest Rates Vary From Lender to Lender

Unlike federal student loans, which have fixed interest rates, private student loans carry an average interest rate of 11 percent, according to Student Lending Analytics. However, lenders charge interest rates higher than 11 percent and, in some cases, won’t disclose the interest rate a borrower will be charged until after a borrower signs a promissory note.

Banks offer fixed-rate loans ranging from 7 percent to 12 percent, with big banks charging the highest rates. But at times, banks — particularly JPMorgan Chase, PNC Financial, and SunTrust Bank — hike up the rates on these loans by two to three percentage points if a borrower misses just one loan payment.

The variable-rate loans that private lenders offer can be tied to a specified interest rate index, like the prime rate, and their rates can vary depending on the changes to rate index. Chase, for example, charges interest as high as 13.5 percent on these loans.

Lenders Should Disclose All Fees

Tim Ranzetta, the founder of Student Lending Analytics, says lenders should be required to disclose any adjustments they make to an interest rate when a borrower misses a payment or when any other negative activity takes place on a borrower’s account.

Currently, lenders don’t disclose all the possible fees borrowers may be charged in the servicing and collection of their student loans, and lenders’ loan contracts don’t always inform borrowers of the borrower benefits promised in the lender advertisements, including the possibility of a borrower being charged a lower interest rate after graduation.

Ranzetta says, in addition to demanding that lenders fully disclose their loan terms, lenders should also be required to list their advertised benefits in the promissory note in order to contractually obligate lenders to offer their benefits.

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College Board Pushes Obama to Grant Financial Aid to Undocumented Immigrants

Student Loan Girl — Tue, 28 Apr 2009 20:10:00 GMT

The College Board — an organization of some 5,000 colleges best known for its college admission tests — has petitioned Congress to allow students who are undocumented immigrants to qualify for tuition aid and citizenship, The Associated Press reports (“U.S. Colleges Push Tuition Aid for Immigrants,” April 21, 2009).

While undocumented immigrants are legally entitled to a K-12 public education, the issue of granting undocumented immigrants the same college access given to American citizens has proven controversial. As the immigration debate has intensified, several states have moved to bar undocumented immigrants from paying in-state tuition, and in some cases, from enrolling in their public colleges.

Citing data from its recently-released report, which found that states that offer financial aid to undocumented immigrants have generally increased their college revenue, not lessened it, the College Board says federal legislation is needed to nationally extend in-state tuition rates to all undocumented students.

“This is a new area for us, but it was an easy call,” said Thomas Rudin, senior vice president of the College Board. Rudin says it's contradictory that the same undocumented immigrants who receive a K-12 public education suddenly encounter obstacles when applying to college, even those who are “honor-roll students, athletes, class presidents, and valedictorians.”

“We absolutely believe it’s important for opening up economic opportunities,” Rudin said.

Federal Stance Unclear: States Set Own Agenda

Although the Supreme Court ruled in 1982 that undocumented immigrants may obtain a K–12 education, the federal law remains silent on what higher education benefits they’re entitled to, leaving it up to the discretion of individual states.

Nine states offer in-state tuition to undocumented immigrants, while other states including Arizona, Georgia, Colorado, and Oklahoma have adopted legislation barring undocumented immigrants from paying in-state tuition rates, the Associated Press reports. Other states such as South Carolina bar undocumented immigrants from even enrolling in any of their public colleges.

President Obama is expected to address the issue of immigration reform later this year. In particular, Obama will look at the Dream Act, legislation first proposed in 2001, that would grant conditional legal status to undocumented immigrants who have lived in the U.S. for five years and who have graduated from high school. These students would then be eligible for in-state tuition and federal financial aid, including Pell Grants and federal student loans.

While critics contend that such immigration reform would eliminate jobs and reduce college enrollment slots, the College Board’s findings reveal that immigration reform would help to stimulate the economy, since a college education would help undocumented students to obtain better jobs and higher incomes than they would have received with only a high school education. The boost to the economy would show up in the form of increased tax revenue and consumer spending, the organization stated.

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Despite Down Economy, College Student Aid Still Thriving

Student Loan Girl — Tue, 24 Mar 2009 00:18:00 GMT

In economic downturns, colleges and universities become flooded with students of all ages looking to better prepare themselves for an increasingly competitive job market. But these schools haven’t been immune to the effects of today’s recession.

Fortunately, for every recent economic downturn in higher education — tuition hikes, state budget cuts, scholarship and grant cutbacks, and a fluctuating student loan market — there’s also been a tangible upside (“Glimmer of Hope for Student Aid in a Bad Economy,” USA Today, March 19, 2009).

Tuition Assistance

Downside: Public colleges have increased tuition by 4 percent per year over the past 10 years, and many schools are set to bump up tuition even more this year as they face unprecedented state budget cuts.

Upside: Federal stimulus money should help some public colleges to better cope with the loss of state funding and to minimize any increases in tuition. The state of Maryland is hoping to go a fourth-straight year without in-state tuition increases. Other colleges are offering one-time deals to students; Kent State University in Ohio is offering laid-off workers a one-time tuition and application waiver at its Trumbull campus, and Manchester College in Georgia is offering to refund one year of tuition for students who aren’t able to secure a job or admission to grad school within six months after graduation.

Institutional Aid

Downside: Trouble in the stock market has caused colleges’ endowments to drop 25 percent in value this year, which has severely hampered schools’ ability to offer scholarships.

Upside: Despite their endowment losses, more than 90 percent of the nation’s private colleges and universities will be increasing financial aid next year by 9.8 percent to make up for 4-percent tuition increases, according to the National Association of Independent Colleges and Universities.

Government Grants

Downside: Aid for merit scholarships has taken one of the biggest hits this year, primarily due to state budget cuts.

Upside: The federal stimulus package has increased the maximum award for Pell Grants — federal financial aid for low-income students — from $4,731 to $5,350 for the coming academic year and to $5,500 for the 2010–2011 academic year. And, an additional 800,000 students are expected to receive Pell Grant funding this year.

Federal Student Loan Programs

Downside: The $50 billion Federal Family Education Loan Program — the government program that provides federal student loans to more than 10 million students through third-party lenders — has been the larger of the two federal student loan programs. But over the past two years, the FFEL program has lost business to the Direct Loan Program, the government’s other federal student loan program through which the U.S. Department of Education provides federal student loans directly to families, as hundreds of cash-strapped FFELP lenders have been forced to exit the program.

Upside: The FFEL program has still managed to increase its student loan volume this year, and some lenders are returning to the student loan market now that the federal government has bought nearly $25 billion in lenders’ student loan securities, providing them with the capital to make new loans. The Direct Loan Program has picked up the slack, providing an additional $7 billion in lending this year.

Private Student Loans

Downside: The overall supply of capital for private student loans is estimated to have decreased by one-third — a decrease of between $6 billion and $7 billion — due in large part to the fact that lenders have made it harder for families to qualify for private student loans.

Upside: Increased government funding for federal Stafford student loans has helped to reduce students’ reliance on private student loans. And more students are maxing out their federal financial aid before turning to private student loans, which the USA Today suggests has helped students avoid over-borrowing in private student loans.

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House Dems Get Second Crack at Higher Education Appropriations Bill

Student Loan Girl — Wed, 25 Feb 2009 23:23:00 GMT

Just days after President Obama signed a $787 billion economic stimulus bill into law, House Democrats have reintroduced a $410 billion overdue appropriations measure that would finance dozens of federal agencies and programs, including many related to higher education, whose budgets went unapproved during the last session of Congress, reports The Chronicle of Higher Education (“Delayed Appropriations Bill Would Increase Pell Grant and Research Funds,” Feb. 24, 2009).

During the tail end of the Bush administration, democratic lawmakers chose to put the original appropriations bill on the back burner after President Bush threatened to veto any measure that would exceed his fiscal budget. Instead, legislators passed a “continuing resolution” to fund the budgetless organizations at fiscal 2008 levels through March 6, so that legislators could revisit the appropriations bill under a new administration.

Lawmakers, after being delayed by work on the stimulus bill, are finally taking a second look at the appropriations bill just days before the continuing resolution’s termination date and President Obama’s scheduled release of his fiscal year 2010 budget.

The proposed spending bill will “keep the government running and finish last year’s business,” said David Obey D-Wis., head of the House Appropriations Committee, as wells as complement the Obama administration’s economic recovery package.

While the proposed budget measure will provide expanded funding to a variety of agencies and programs, it currently offers few specific financing details. The Fund for the Improvement of Postsecondary Education could get $133.7 million to fund projects intended to model improvements to college education and accessibility, the Gear Up program could get $313.2 million to help financially needy middle and high school students prepare for college, and the government’s student financial aid programs could get a $19.2 billion boost.

The House Appropriations Committee bill would also expand research funding for the National Institutes of Health by $938 million, and provide an additional $347 million in funding to the Federal Pell Grant Program, drawing on the budget previously allocated for the underutilized, and Bush administration-supported, Academic Competitiveness and National Science and Mathematics Access to Retain Talent grant programs.

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Colleges Step Up, Help Students With Extra Financial Aid

Student Loan Girl — Thu, 08 Jan 2009 23:13:00 GMT

If recent data is any indication, families are struggling to come up with the cash they need to send their children to college, and schools across the country are doing something to help those who’ve come up short, reports The Chronicle of Higher Education (“Colleges Offer Extra Aid to Strapped Students,” Jan. 9, 2009).

During the first few days of the new financial aid season that began Jan. 1 — the first day college students could submit their FAFSA (Free Application for Federal Student Aid), the application required for students seeking federal aid — 40 percent more families over the previous year had already sought out financial assistance (“Families Face Fierce Competition for Student Aid: Season Starts With Sharp Increase in Demand,” Business Wire, Jan. 6, 2009).

“The demand for student aid has been climbing as the recession batters family budgets, parents’ jobs are eliminated, and self- employed parents experience business downturns,” said Craig Carroll, CEO of Student Financial Aid Services, a financial aid advisory company.

Schools Create New Aid Programs or Beef Up Existing Ones

In response to the growing number of families facing limited options to pay for college, some schools are offering families an extended grace period to pay tuition bills, and other schools are meeting the growing demand for aid by expanding existing financial aid programs or creating new ones.

At Northern Illinois University, for instance, school administrators recently introduced the Huskie Advantage, a new aid program that meets tuition costs not covered by state and federal aid. The program, which the school will subsidize by shifting financial funds away from upperclassmen to underclassmen, who usually don’t qualify for as much federal aid, is only available to freshmen who qualify for Pell Grants and need-based state grants, according to Brent Gage, the school’s assistant vice provost for enrollment services.

Agnes Scott College in Georgia also recently announced a new program, the Agnes Solution, targeted at students who are eligible for the state’s Hope Scholarship. The school hopes that by providing qualified students with a $13,500 Agnes Solution scholarship and a $3,000 grant each year, combined with the $3,000 Hope Scholarship, the program will be able to cut the cost of attendance almost in half.

As part of a Saint Mary’s University of Minnesota plan to lower the cost of attendance for low- and middle-income students to match the average cost of the nation’s Big Ten universities, the school is expanding its Brother James Miller Program for Access. The program originally only covered students who met certain academic qualifications and whose families made less than $75,000, but due to the economic downturn, the institution has raised the income qualification to $100,000, and is currently collecting private funds so that it may provide aid for the school’s most financially needy students.

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FBI Investigates California College That Overpaid Financial Aid to Some Students, Underpaid Others

Student Loan Girl — Tue, 14 Oct 2008 01:32:00 GMT

A California community college is being investigated by the FBI and the Department of Education for overpaying students more than $327,000 in financial aid during the 2005–06 school year, reports the Contra Costa Times (“Berkeley City College Overpaid Financial Aid,” Oct. 8, 2008).

Berkeley City College, under former financial aid director Robert Vergas, was also found to have underpaid Pell Grant recipients by nearly $40,000.

The federal government has ordered Berkeley City College to repay the Department of Education for the funds it overpaid to its students. The school has already repaid $40,000 and will pay about $37,000 per quarter until the balance is paid off.

The school must also pay the affected Pell Grant recipients the remainder of the grant awards that they should have originally received.

An independent audit of Berkeley City College found, in all, more than 400 mistakes in the files of 1,135 financial aid recipients.

Vergas, who retired in April shortly before he was to be fired by the community college district for “negligence and incompetence,” has denied any wrongdoing and said he is being blamed for deficiencies in the school’s financial aid process.

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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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Sex Offenders May Lose Pell Grant Eligibility Under Revised Higher Education Act

Student Loan Girl — Mon, 04 Aug 2008 23:49:00 GMT

Starting July 1, 2009, sex offenders confined in treatment centers throughout the country may no longer be eligible to receive need-based federal Pell Grants, under a new provision of the reauthorized Higher Education Act, according to an article in the Associated Press (“Congress Cuts Off College Aid For Sex Offenders,” Aug. 4, 2008).

President Bush has yet to sign the act into law, but after the act passed through Congress July 31, Rep. Ric Keller, R-Fla., said, “Today, the most insane wasteful spending program in America comes to an end.”

Keller cited an AP article from March that revealed dozens of rapists and child molesters had taken higher education classes at taxpayers’ expense while confined to treatment centers after serving their prison sentences. Some prisoners were using the financial aid to buy clothes, DVD players, and music CDs even after they had dropped their classes in some cases.

While the U.S. Department of Education does not know exactly how many sex offenders receive Pell Grants, spokeswoman Stephanie Babyak predicted that making sex offenders ineligible for the aid would save taxpayers millions.

Critics say the new measure may rule out a higher education for sex offenders who are trying to rehabilitate themselves. Instead of cutting off grant aid to all sex offenders, Congress should better regulate how it administers the program in order to help prevent abuses, said Michael Macleod-Ball, chief legislative and policy counsel for the American Civil Liberties Union.

The grant aid provision would affect the 20 states that allow violent sex offenders — those who it is believed would likely repeat their crimes if they were to be released — to be held indefinitely in treatment facilities after they have served their prison sentences. Prison inmates have been ineligible for Pell Grants since 1994, but sexual offenders can qualify for the grants once they are transferred from prison to treatment centers.

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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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House Stalls Spending Bill That Would Boost Pell Grants, Biomedical Research

Student Loan Girl — Fri, 27 Jun 2008 21:31:00 GMT

A proposed spending bill that would raise Pell Grant award amounts and increase funding for the National Institutes of Health was delayed indefinitely Thursday after Democrats and Republicans began squabbling over the bill’s provisions, according to The Chronicle of Higher Education (“Spending Bill for Student Aid And NIH Hits Partisan Roadblock in House,” June 26, 2008).

Republicans want to strip out the financial aid and biomedical research funding provisions of the proposed legislation — which the House of Representatives Appropriations Committee had been poised to approve for the 2009 fiscal year — and replace them with unrelated provisions, including one authorizing an expansion of oil drilling in the United States, the Chronicle reports.

The move incensed the Committee’s chairman Rep. David Obey, D-Wisc., who called it “a political stunt,” the kind that explains why Americans “despise” Congress. Democrats then moved to adjourn the session.

The breakdown came a week after the Appropriations subcommittee had approved the current form of the spending bill, which would raise the maximum Pell Grant award to $4,900 and increase the NIH budget by $1.2-billion.

If the full House Appropriations Committee resumes consideration of the bill and approves it, the bill would go before the full House of Representatives for a vote.

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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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Who Wants More Money for College?

Student Loan Girl — Wed, 13 Jun 2007 07:01:00 GMT

The easy answer is “everyone does,” of course. This is especially true if you are putting yourself through school and do not have mom and dad to help you pay for your college education. But, whether you are just starting out or even one year away from your degree, we all need more money for college.

Apparently, the government is starting to hear our cries. According to the June 8, 2007 article by Andy Guess, titled “More Money All Around,” that appeared in Inside Higher Ed, “A House of Representatives panel presented a bipartisan gift to educators, researchers and college students on Thursday when it approved legislation that would significantly increase the maximum Pell Grant and support for the National Institutes of Health in the 2008 fiscal year, while at the same time protecting other student financial aid programs whose funding the Bush administration has proposed cutting off completely.

“The 2008 spending bill passed the newly Democratically controlled appropriations subcommittee that allocates funds for health, education and jobs programs without a single ‘nay,’ illustrating a spirit of bipartisanship in marked contrast to last year’s vote along party lines.”

Pell Grant May Be Raised Again for 2008

This bit of news is extremely exciting for college students. The actual Pell Grant increase is not huge, but represents a shift in policy. It appears the government has not only realized that college costs are steadily rising, but has also chosen to take action to help offset those costs by allocating more grant money for students, for the second year in a row. While the bill is not yet law, it may soon become so, if all goes well.

As reported in the article, “The bill would raise the maximum Pell Grant to $4,700, a $390 increase over the 2007 level that would add $2 billion to the program’s cost. The increase, which would represent the largest for the program in nearly a decade, is not accompanied by the administration’s requested cuts of the Perkins Loan and Supplemental Educational Opportunity Grants Programs, which would be financed at their 2007 levels under the House legislation.”

Legislation Receives Support

While most students and their parents naturally support this legislation, many others are likewise commending it. As stated in the article, “‘I think the bottom line is the bill provides one of the largest increases for Pell in the history of the program,’ said Cheryl Smith, staff director for the Subcommittee on Labor, Health and Human Services, Education and Related Agencies.

“The Association of American Universities also welcomed the outcome. ‘This legislation provides greater college opportunity for millions of needy college students, whose participation in higher education is an essential ingredient of American competitiveness,’ the association’s president, Robert M. Berdahl, said in a statement Thursday.”

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 Student Loan/Aid Programs: TRUE Reform Forthcoming?

Student Loan Girl — Tue, 27 Feb 2007 18:16:00 GMT

In the midst of the plethora of democratic legislation being in limbo (STAR Act, Sunshine Act, Student Debt Relief Act, H.R. 5, still pending), the U.S. Department of Education appears to be doing something fresh and original. Instead of devising ways of transferring funding from one program to another or making increases to high profile programs like the Pell Grant while slashing other less known ones like the SEOG, it would seem that we may be on new ground. Could it be that the U.S. Department of Education is really looking to make an impact on the student loan dilemma, as opposed to participating in typical “smoke and mirrors” politics and policy change?

According to the Feb. 23, 2007 article by Scott Jaschik titled “Looking for Big Ideas” that appeared in Inside Higher Ed, a recent meeting was convened where the U.S. Department of Education sought out “the next big ideas in student aid — with a strong emphasis on promoting simplicity of programs and reaching students in their pre-college years.

“Senior department officials invited about 20 experts on student aid — campus aid administrators and researchers on financial aid — for a private day of meetings Wednesday. Participants said that the department appears to be thinking ambitiously about changing student aid programs, suggesting that the experts not focus on tinkers, but on how aid programs would be restructured if starting from scratch.”

Original Aid Ideas Needed

How refreshing! I know, I know. Appearances are deceiving and it could just be another distraction that keeps our attention off of what takes place with the key legislation that I mentioned above. Legislation, I offer, that detrimentally could affect students and borrowers if the bills become law. But, I am hopeful if not naive.

While the meeting was private, and the participants were told that the department did not want the details becoming public knowledge, according to the article, some information did leak out. Jaschik reported:

“One aid administrator who attended said he had the impression that the department had two goals in mind: looking for ‘low hanging fruit’ on which the department might find a way to act in the short term, while setting out an agenda that might carry weight even in a future administration. Some were also surprised by the department’s search for new big ideas, right after the conclusion of the work of the Secretary of Education’s Commission on the Future of Higher Education, which has offered a set of goals — some of them controversial — for improving American colleges.

“Many of the objectives discussed at the session are, at least in theory, things that just about all educators would embrace: encouraging academic rigor at the pre-college level, doing a better job of letting children from low-income families know that aid will be available for them to go to college, and simplifying the aid system so that it is easier for students and their families to understand, and for colleges to administer. Simplicity received a lot of attention, attendees said, reflecting a call from the Spellings Commission for ‘replacing the current maze of financial aid programs.’ Sara Martinez Tucker, the under secretary of education, opened the discussion by talking about how important it is to provide the opportunity for all Americans to go to college.”

Change from Status Quo Hopeful

While the bottom line result may not end up being anything new, it is encouraging that our government is considering alternative solutions to the student loan funding dilemma and the money needed for college students to pay for college that is not necessarily the “status quo.” Jaschik summarized the meeting as follows:

“Participants in Wednesday’s meeting said that there wasn’t any attempt to build support for any particular aid reorganization, but that the plans discussed did at least in some cases amount to major changes from the status quo.”

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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