Student Loan Blog : The Boston Globe

‘Frill-Less’ Campuses Shave Thousands Off College Tuition

Student Loan Girl — Thu, 05 Feb 2009 20:24:00 GMT

At a time when parents and students are finding it increasingly challenging to get the money they need for college, some schools are coming up with creative options to cut thousands of dollars off annual tuition bills, The Boston Globe reports (“Students Forgo Frills to Save Thousands,” Feb. 3, 2009).

Offering savings of up to approximately $10,000 to $15,000 annually, these colleges are gambling that parents and students — worried about layoffs, getting student loans for college, and an unstable economy — will go for these less-expensive satellite campuses that forgo the traditional college campus amenities of lavish food courts, fitness centers, and dorms.

Students Find Value In Commuter Education

Twenty miles south of its main campus in Manchester, Southern New Hampshire University has established a no-frills sister campus in Salem, New Hampshire.

Freshmen and sophomore students attend classes taught by some of the same professors found on the Manchester campus and study subjects as diverse as Greek tragedy, the Roman Empire, and business statistics.

The school believes that many students will be willing to pay considerably less, $10,000 as opposed to $25,000 in tuition, for the same quality of education that students receive on its main campus.

Daniel Webster College, another small private school located in Nashua, New Hampshire, intends to extend a comparable tuition break for freshmen students who live at home and commute to the main campus — $15,000 a year in tuition versus $26,000 for those students who live on campus.

And in Pennsylvania, the public university system is contemplating whether to move forward with plans to create four-year colleges without dorms, athletics, or extracurricular activities in order to lower the price of a bachelor’s degree.

Cheaper Model as Effective?

While many parents may relish the savings that these new frill-less colleges represent, other people question whether the less expensive, commuter-based model of higher education is as effective as the traditional campus-based model, the Globe reports. Research indicates that those who live on campus are, on average, more likely to graduate on time, get better grades, and be happier in college.

However, Richard Ekman, president of The Council of Independent Colleges says, “A no-frills approach is better than nothing, but it’s very difficult to achieve the same thing as having a total educational experience that comes with living on campus.”

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Harvard’s $34 Billion Endowment Not Immune to Financial Crisis

Student Loan Girl — Thu, 13 Nov 2008 01:24:00 GMT

Harvard University’s whopping $34 billion endowment is declining in the current economic crisis, and the hits could keep coming, wrote university president, Drew Gilpin Faust, in a recent e-mail sent to students and employees (“A Sober Message From Harvard’s President,” The Chronicle of Higher Education, Nov. 10, 2008).

While it is not known just how deep Harvard’s endowment losses go, Moody’s Investors Service projects that the value of college and university endowments, in general, have decreased by 30 percent this fiscal year. For Harvard, the nation’s wealthiest university, that would mean an $11 billion drop.

The declines mean that Harvard will have to make tough choices in the months ahead, Faust wrote, in anticipation of continued losses to an endowment that pays for more than one-third of the university’s operating budget.

“We must recognize that Harvard is not invulnerable to the seismic financial shocks on the larger world,” Faust wrote. “Our own economic landscape has been significantly altered.”

Although markets could improve, she added, “We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.”

Harvard Exploring Cost-Cutting Measures

To cut costs, Harvard is in the process of reviewing its compensation expenses, which account for nearly half of the school’s budget, as well as reassessing its ambitious expansion program, which includes plans to build campus additions across the Charles River.

Like fellow Ivy League schools Brown University and Cornell University, which are delaying planned projects and implementing hiring freezes due to the effects of the economy, Harvard is also considering a budget freeze on all programs and a wage freeze for administrators and faculty. The Faculty of Arts and Sciences alone — Harvard’s largest body of instructors — has lost roughly $4.5 billion of its own endowment, or $225 million in net budget losses, a Harvard official familiar with the school’s financial picture told The Boston Globe (“Harvard Looks to Tighten Its Belt,” Nov. 11, 2008).

Despite Harvard’s belt-tightening measures, the school says it still intends to implement new initiatives that expand financial aid offerings for low- and middle-income families.

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Governor Asks Pension Board, State’s Colleges to Help Keep Massachusetts Student Loan Provider Afloat

Student Loan Girl — Thu, 07 Aug 2008 20:46:00 GMT

A week after the cash-strapped Massachusetts Educational Financing Authority announced that its 40,000 borrowers would have to find a new private student loan provider, Massachusetts Gov. Deval Patrick has asked the Massachusetts pension fund to invest $50 million in the state loan agency.

Patrick’s proposal would involve the Massachusetts pension fund buying portions of a $425 million bond sale that MEFA is planning for later this month, reports The Boston Globe (“A Late Try to Salvage Student Loans,” Aug. 7, 2008).

The governor also intends to ask Boston College, Harvard, MIT, and the University of Massachusetts, among other schools in the state, to make similar investments in MEFA bonds.

“This is an idea we’re definitely going to explore,” said Robert Connolly, a UMass spokesman. “We do see it as a potential win-win in terms of providing the university with a sound investment while helping families cope with their financial aid challenges.”

But State Treasurer Timothy Cahill, chairman of the state pension board, remained noncommittal in response to the governor’s request, saying only that the board would consider the proposal.

The emergency measure, put forward to the state pension board yesterday, is meant to generate liquidity for MEFA, which left thousands of families scrambling to find a new student loan provider just weeks before fall tuition bills are due and at a time when a number of other student loan lenders, feeling squeezed by the troubled credit markets, are tightening their credit criteria for private student loans. MEFA would use proceeds from the bond sale to finance new student loans.

Although MEFA, until last week, had still been offering fixed-rate private student loans, the agency stopped offering federal student loans in April, citing the troubled economy and fallout from the subprime mortgage crisis. The nonprofit student loan authority provided more than $500 million in college loans to Massachusetts students last year.

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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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