Student Loan Blog : The Associated Press

Top-Performing Students Denied State Scholarship Funds

Student Loan Girl — Mon, 27 Apr 2009 23:02:00 GMT

Some 1,500 Georgia high school students will not receive the state scholarship funds they were promised for becoming valedictorians or for graduating in the top of their class, The Associated Press reports (“Georgia Scholarships to End for 1,500 Students,” April 26, 2009).

In a last-minute decision, state legislators cut the Governor’s Scholarship Program out of Georgia’s 2009 state budget, leaving the state’s Student Finance Commission to notify students they won’t be receiving the financial aid they were promised for the coming academic year.

The scholarship program was created in the mid-1980s to encourage the state’s top high school graduates to choose in-state schools for their college education. Over the past few years the state has significantly reduced funding for the scholarship, cutting the program’s funds from more than $4.5 million in the mid-1990s to $1.3 million in recent years.

Governor’s Scholarship recipients also receive Georgia’s HOPE scholarships, which give students up to $3,500 to cover tuition, fees, and books at the state’s public institutions. The Governor’s Scholarship is intended to help students pay for room and board and other miscellaneous college expenses.

Some state officials have argued that the funding cuts to the program may have made it difficult for the program to meet its intended goal of retaining the state’s top students.

“[$900 is] not enough to say, ‘Instead of going to Harvard or going to Vanderbilt or going to Duke, I am going to the University of Georgia,” said president of the Georgia Student Finance Commission, Tim Connell. “It’s probably became more of an ‘attaboy’ for valedictorians.”

State Representative Kathy Ashe, a former teacher and a member of the House Education Committee, said she wasn’t made aware of the program’s elimination until she received a copy of the Student Finance Commission’s letter to students but she believes that these incentive programs are needed.

“We need to make it a priority to reward these deserving students and keep them in the state,” Ashe said. “I think it’s one of those places where priorities become very clear.”

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$1M Awarded to Unnamed Whistleblowers in Federal Student Aid Suit

Student Loan Girl — Fri, 24 Apr 2009 21:22:00 GMT

Alta Colleges, operating 17 campuses in six states, recently settled a lawsuit involving student-aid fraud allegations and has agreed to pay the federal government $7 million, The Chronicle of Higher Education reports (“Proprietary College to Pay $7-Million to Settle Federal Student-Aid Charges,” April 20, 2009).

Unnamed whistleblowers filed the suit, which alleges Alta Colleges made false claims to be eligible for federal student aid, under the False Claims Act. The act allows individuals to sue on behalf of the federal government and get a portion of a suit’s monetary settlement, in this case, about $1.19 million.

The suit accuses Denver-based Alta Colleges Inc. of improperly obtaining a state license to operate in Texas under the name Westwood Colleges by lying that its campuses complied with state requirements on job-placement reporting.

To obtain the licensing, Alta claimed that more than 90 percent of its students received jobs after graduation when the actual figure was 54 percent and only about 33 percent of Alta graduates were actually placed in positions by the school, reports The Associated Press.

Alta was also accused of misrepresenting its interior design program, The Chronicle reports, saying that its program complied with professional interior design industry licensing requirements when it did not.

George Burnett, Alta CEO, assured school faculty and staff by letter that the company believes it had acted lawfully, but chose to settle with the government due to the projected cost and time involved in litigation.

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Students’ College Access to Improve, Vice President Pledges

Student Loan Girl — Thu, 23 Apr 2009 23:50:00 GMT

Vice President Joe Biden intends to make higher education a reality for more young people, the Associated Press reports, in part by closing the gap between families’ incomes and rising college costs (“Biden Wants to Make Higher Ed More Affordable,” USA Today, April 18, 2009).

At a town hall–style meeting he hosted in St. Louis Biden told about 300 people that he’ll be asking the Treasury Department to figure out how to make college savings plans more effective and more reliable.

“We’re going to make a series of investments, investments in our families and our students,” he said, highlighting the administration’s efforts to improve tax breaks for families and increase need-based grants for low-and middle-income families.

White House Taps Existing Programs to Increase College Affordability

Since so many families save for college using tax-deferred 529 savings plans, which allow families to set aside funds to cover future tuition expenses, fees, books, and supplies, the Obama administration is examining a program that would allow families to take out low-interest loans against their 529 plans to help them cover college costs.

Obama has already increased funding for the need-based federal Pell Grant program, which helps low-income students afford school, but Biden said the Obama administration also wants to ensure continued Pell Grant funding by setting up the program to be automatically subsidized each year.

The government is also considering extending The American Opportunity Tax Credit beyond 2010, which allows families to claim a $2,500 tax credit for college expenses for up to four years.

But by far the most sweeping proposal from the Obama administration, which has drawn fierce criticism from leaders in the student loan industry, is the suggested cancelation of the federally funded student loan program.

Lenders say that cancelling the program will eliminate families’ option to choose from a variety of private lenders and federal student loan incentives and, instead, require them to borrow federal student loans through government’s Direct Loan Program.

Biden alleges that the move to cancel the federal student loan program would result in up to $94 billion in savings to the federal government over the next 10 years, which he said, “We can take … and reinvest … in more loans, more grants and more access to college.”

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Gloomiest Job Outlook for New Grads in 25 Years

Student Loan Girl — Thu, 09 Apr 2009 23:20:00 GMT

Recent college graduates face one of the worst job markets in years, making the prospect of finding a job that much more daunting at a time when America is experiencing the highest unemployment rate in a quarter century.

Landing a job may be even more difficult, according to a survey by the National Association of Colleges and Employers, since companies have indicated they plan to hire 22 percent fewer graduates this spring (“College Grads Face Worst Job Market in Years,” The Associated Press, March 31, 2009).

But that may not be the worst of the job shortage, says Sheila Curran, former head of career services at Duke University. Curran says that employers, particularly those that offer entry-level positions in April and May “just in time” to hire newly minted college graduates, may actually be looking to hire far fewer graduates than the survey indicates. However, the full extent of how much employers will pull back from hiring for these “just-in-time” positions — which account for 80 percent of jobs for new grads — may not be known until later this fall.

Despite a dismal job outlook for new graduates, career counselors say there are still some bright spots in certain industries.

Graduates looking for a job in the healthcare field are still in demand, and graduates looking for a career in finance may find jobs are still available, since small regional companies are stepping up their recruiting efforts on college campuses while larger firms in New York and elsewhere are downsizing, the Associated Press reports.

Surprisingly, one of the biggest potential employers for graduates this spring may be the federal government, which recently posted some 46,000 job openings on its website, including positions for budget analysts, historians, and firefighters.

Students Learning to Persevere as They Expand Their Networks

Career counselors say one good thing to come out of this tightened job market is that many students are being forced to develop better job-search skills than in years past when jobs were more readily available.

“In a sense it's like, ‘Welcome to the real world,’ and it’s not a bad thing,” said Elizabeth Alexander, manager of marketing and program evaluation for the career services center at the University of Texas at Austin’s College of Liberal Arts. “If you come out of college thinking, ‘I’m entitled to a great job,’ the first time you get laid off, it’s going to come as a great shock. Life is full of peaks and troughs.”

New graduates, who will likely change jobs three times within five years of graduation, are learning valuable job-search skills that will help them persevere later in their careers, suggests the Associated Press.

“Where we’re seeing a difference this year is [that students] have to do the right things over and over again,” said Teresa Olsen, associate director of career services at Colgate University. “It’s not just reaching out to two or three contacts. They have to keep coming back.”

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Students Brace for Largest Tuition Jump in Years

Student Loan Girl — Tue, 20 Jan 2009 23:18:00 GMT

Tuition increases at the nation’s colleges are inevitable.

However, in the current economic climate — where states are slashing budgets to the bone — public colleges are being forced to raise tuition at rates that haven’t been seen in years, reports The Associated Press (“Families Await Sharpest Tuition Increases in Years,” Jan. 15, 2009).

Public, state-supported institutions have hiked tuition fees by 8 to 10 percent during economic recessions of the past in order to make up for reductions in government contributions, according to Nick Johnson of the Center on Budget and Policy Priorities in Washington.

“This recession is worse. This state fiscal crisis is worse than last time, so we would expect state tuition increases to be larger than in past years,” Johnson said.

With severe budget cutbacks in the governor of California’s new budget proposal, for example, university fees are expected to rise by at least 10 percent at California state schools. And the New York state government’s recent announcement of an unusual midyear increase to state public college tuition made it clear that the state’s budget crisis was so severe it couldn’t afford to wait until fall to impose a 14-percent tuition hike.

John Hayek, interim vice president of finance for the Kentucky Council on Postsecondary Education, says although the state announced it will hold tuition increases below last year’s, which ranged from 6 to 10 percent for in-state students, the state still plans to raise tuition by about 5 percent at community colleges and between 7 and 10 percent at public universities.

Families Uncertain How to Cover Extra Costs

For the four out of five American college students who attend public schools, these tuition increases have become a cause for concern, particularly in regard to their families’ ability to afford their college education.

Since many families lost savings in the stock market or can no longer tap home equity loans due to the real estate crash, says Jim Boyle, president of advocacy group College Parents of America, paying for college next year may be a particularly painful process with fewer means of financing college available.

“We’re probably going to have to take some options off the table (for the other children) unless things change,” said Donna Kopec, whose daughter’s college mutual fund lost a third of its value.

Kopec says that the drop in the market has created a funding challenge for all three of her college-bound daughters. She hopes President Barack Obama will follow through on campaign promises that include increasing Pell Grant amounts and implementing programs that award college grants in exchange for community service.

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Economy Takes Its Toll: Some Small Colleges to Shut Their Doors

Student Loan Girl — Wed, 19 Nov 2008 22:59:00 GMT

Americans could see more college closures, particularly among small schools with shrinking enrollment numbers as the slowing economy continues to claim more victims across every sector, The Associated Press reports (“College Closings Rare, but Could Rise in Downturn,” Nov, 17, 2008).

While the American Council on Education reported that only four out of 4,400 colleges closed in all of 2007, this year alone, four schools have announced they will either shut down certain branch campuses or close entirely by next school year.

Tuition costs that far exceed what state schools charge, diminishing enrollment numbers, and mounting debt loads have made it increasingly difficult for some small colleges, most notably those with religious affiliations, to stay afloat in recent years.

And now the same effects from the mishaps that took down the mortgage industry have bled into the higher education sector. Some schools may be discovering, much like many American consumers and homeowners, that the allure of low-interest loans caused them to take on more debt than they should have. The median debt of private colleges has increased 50 percent in the last five years, according to Moody’s Investors Service.

But now, like homeowners with variable-rate mortgages, some schools have seen their once low debt payments skyrocket to unmanageable proportions.

“Instead of holding long-term debt at lower interest rates, they have gotten stuck with short-term obligations at higher rates — a scenario [colleges] knew existed on paper but never expected to happen,” writes Justin Pope of The Associated Press.

Faith-Based Schools Hardest Hit by Economic Decline

Cascade College, a small Christian school in Portland, Ore. with just 280 students, announced it will be shutting down after the current academic year as it continues to struggle with a $4 million debt load. as will Pillsbury Baptist Bible College in Owatonna, Minn. and Vennard College in University Park, Iowa. Vennard, with just 80 students, will close its doors two years shy of its 100-year anniversary.

Taylor University in Indiana, another Christian institution, will shut down the undergraduate program at its Fort Wayne branch.

Paul Corts, president of the Council for Christian Colleges & Universities, said the financial crisis has become a “very serious” problem. “I think people are sensing that this is not short-term. It’s something that’s going to take a couple of years to play out.”

Enrollment at the council’s 102 member schools grew 71 percent between 1990 and 2004, and Corts said he doesn’t foresee that many of its schools will be closing.

He adds, however, that school closures may be difficult to predict because, “Nobody knows what the ultimate extent of this whole financial crisis is going to be.”

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Number of Students Taking ACT Goes Up, Scores Go Down

Student Loan Girl — Thu, 14 Aug 2008 21:08:00 GMT

Although the number of high school students taking the ACT this year increased by 9 percent compared to last year, students’ average scores on the college entrance exam dipped slightly, according to a recent report released by the testing agency.

This year, students averaged a score of 21.1 on the ACT out of a possible score of 36, down from 21.2 last year. This year’s test scores show that more than three in four test-takers will likely need remedial help in at least one subject area in order to be successful in college.

The fact, however, that scores held somewhat steady this year even as more students took the exam, means that more students are earning scores indicative of college readiness.

“More students are reaching at least a minimum level of readiness for college-credit courses,” says Cyndie Schmeiser, president and COO of the ACT Education Division. (“ACT Scores Down, But More Students College-Ready,” The Associated Press, Aug. 13, 2008)

Overall, 22 percent of the 1.42 million high school students who took the test this year received scores indicating that they were “ready for college,” determined by whether these students are “likely to earn a ‘C’ or higher” in their first-year courses of math, science, English, and reading.

“We’re keeping a lot of kids from having to take remedial level courses,” Schmeiser adds. “That translates to millions of dollars that are being saved at the state level.”

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