Student Loan Blog : The Chronicle of Higher Education

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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Report: High Scorers May Benefit Most From Standardized Test Preparation

Student Loan Girl — Wed, 27 May 2009 20:35:00 GMT

Students who receive above-average scores on standardized college admissions tests, such as the SAT, may benefit the most from commercial test preparation services, according to new report from the National Association for College Admission Counseling, although the benefits of such test preparation may not outweigh the costs for many families (“Test Preparation May Help High Scorers Most, Report Says,” The Chronicle of Higher Education, May 20, 2009).

Research indicates that commercial test preparation services may raise students’ SAT scores by up to 30 points, however the score gains may not be directly attributable to the coaching alone, says author of the NACAC report Derek Briggs, associate professor of education at the University of Colorado at Boulder.

In his report, “Preparation for College Admission Exams,” Briggs suggests that students who don’t use test prep services may still be able to achieve the same range of score increases seen by those students who do use the services just by purchasing a test preparation handbook and taking a series of practice tests.

“If there are effects to be gained through preparation,” Briggs said, “can you get the same effect without spending the money? That’s a pertinent question in this economy.”

Does Test Prep Coaching Improve Admissions Chances?

Of all the colleges Briggs surveyed in his study, only one third said that in some cases an increase of 20 points on the math portion of the SAT or an increase of 10 points on the critical-reading section could “significantly improve” an applicant’s chance of being admitted. This was especially true, the report indicated, at highly selective colleges where applicant scores tend to fall within a narrow range.

“If you come from a wealthy family and have high scores to begin with and can spend $1,000, then test prep might be worth it for those 30 points,” Briggs said. “What’s unfortunate is if middle- class or poorer families think test prep is going to raise their scores by 300 points. If you’re a kid with scores between 400 to 500, I’m not sure it’s going to make any difference.”

Seppy Basili, a vice president at Kaplan Test Prep and Admissions, is concerned what effect Brigg’s findings might have on test takers, especially black and Hispanic students who typically don’t score as high as white students on the SAT.

Basili said, “I wouldn’t want the message to minority students to be that you can’t benefit by preparing.”

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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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No More Fixed Tuition for Georgia Students

Student Loan Girl — Fri, 17 Apr 2009 23:43:00 GMT

In response to a $274 million loss in state funds, Georgia’s Board of Regents voted unanimously to suspend its “Fixed for Four” program, which guaranteed freshmen entering the University System of Georgia a set tuition rate for four years of school, The Atlanta Journal-Constitution reports (“Regents Suspend Fixed Tuition Program,” April 14, 2009).

The change will not affect the cost of tuition for freshmen beginning this fall; all freshmen — except those attending Georgia Tech and the University of Georgia — will pay the same tuition cost as last year’s freshman class. This entering freshman class will, however, be the first since 2006 that will be subject to tuition increases throughout their subsequent academic years.

Freshmen at Georgia Tech and the University of Georgia will now pay tuition based on 15 credit hours instead of 12 — which amounts to a 25-percent increase in tuition costs — and any additional credit hours will be free of charge. Students attending the other state schools in the university system, on the other hand, will only pay increased tuition when they take more than 12 credit hours (“Georgia Suspends its Fixed-Tuition Program,” The Chronicle of Higher Education, April 14, 2009).

For students already enrolled in the “Fixed for Four” program, the public school system will continue to honor the guaranteed tuition rates. “Efforts to lessen the impact on students and their families while implementing changes that reflect today’s economic realities are the focus of the new strategy,” University System of Georgia Chancellor Erroll B. Davis Jr. wrote in a letter to parents and students (“An Open Letter to Parents and University System of Georgia Students from Chancellor Erroll B. Davis Jr.”). “The Board has worked to find the appropriate balance between controlling costs and providing requisite resources to colleges and universities.”

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Tens of Thousands of College Work-Study Students to Benefit From Stimulus

Student Loan Girl — Tue, 24 Feb 2009 22:08:00 GMT

An additional 130,000 college work-study students may have jobs next year thanks to the economic-stimulus bill that President Obama just signed into law which allocates approximately $200 million in new funding for Federal Work-Study Programs, reports The Chronicle of Higher Education (“Economic-Stimulus Law Creates Jobs for Students, Too,” Feb. 19, 2009).

The money, which colleges should receive by April 1 of this year, will not be tied to a new community service requirement as some higher education officials had expected. Work-study funds will be distributed to undergraduate and graduate students next year based upon “existing formulas and information that colleges have already submitted.”

With the additional $200 billion in stimulus money, Federal Work- Study Programs could receive $1 billion in total funding this fiscal year — a level not seen since 2001, The Chronicle reports.

College work-study programs have widespread support in Congress, unlike Pell Grants and tax credits, notes Cynthia Littlefield, director of federal relations for the Association of Jesuit Colleges and Universities.

“Federal Work-Study continues to be highly regarded in a very bipartisan manner on Capitol Hill because everybody realizes the importance and purpose of it,” said Littlefield. “Everyone understands the concept of working your way through school.”

Although the $200 million in stimulus funding for colleges is targeted at providing more work-study jobs, it may not be so easy for schools to get the money that will create the new jobs for their students, The Chronicle suggests.

Since colleges match the Federal Work-Study money on a 25-percent to 75-percent basis, schools can only qualify for the additional funds if they have the extra institutional funds on hand to match the federal money.

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States That Don’t Need Stimulus Funds to Benefit Anyway

Student Loan Girl — Thu, 19 Feb 2009 18:35:00 GMT

While some states whose colleges are starving for money due to budget cuts are eagerly awaiting their share of the federal economic stimulus bill, the states that don’t need the stimulus money, or may not want it, may be getting it anyway, reports The Chronicle of Higher Education (“Some States Get Stimulus Whether They Need or Want It,” Feb. 16, 2009).

Under the $54 billion “State Fiscal-Stabilization Fund,” the portion of money states receive will be based on their population and not based on the state’s level of need or whether the state’s facing significant reductions in higher education spending. Several smaller states that are currently experiencing severe budget crises will not get enough money to address their financial needs, while several larger states will get much more than their budgets call for.

For instance, Nevada, which has a population of almost 2.5 million, is facing a $1 billion budget gap — a figure that represents 38 percent of the state’s general fund, the Chronicle reports. Even though Nevada Gov. James Gibbons intends to cut approximately one- third of funding for state colleges, the state will only receive about $400 million from the stimulus bill, leaving a staggering $600 million shortfall.

Oklahoma, on the other hand — a state with 3.6 million people and a $309 million budget shortfall, representing only 4 percent of the state’s budget — will receive $579 million from the fund, resulting in a $270 million surplus.

And Arkansas, which isn’t projected to face a state budget shortfall in either the current or following fiscal year and won’t have to make any cutbacks in higher education, will receive $445.7 million from the stabilization fund.

Governors to Decide How to Spend Funds

States are directed to spend almost 75 percent of their stabilization funds on public schools and colleges in order to restore budget cuts, update facilities, and prevent layoffs, the Chronicle reports. But the remainder of the funds will be given to state governors to be allocated at their discretion for high- priority educational needs, including construction projects for colleges.

Those states that aren’t experiencing cuts in the area of higher education may still choose to allocate the money for higher education construction projects, which could help stimulate state economies and reduce unemployment rates by providing work for contractors and builders. And states that spared higher education by making cuts in other areas may use their stimulus money to makeup for those deficits they created.

Some states, however, may not accept the federal stimulus funds at all. South Carolina, for example, has said it will refuse the money even though lawmakers cut 18 percent from the state’s higher education fund last year, the largest percentage reduction in the nation.

“We’re getting into a danger zone with our country’s borrowing,” said Joel Sawyer, Gov. Mark Sanford’s spokesperson. “It’s something that, sooner rather than later, may have some very negative effects on the value of the American dollar.”

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Financial Aid Experts Brainstorm Ways to Help Students Survive Recession

Student Loan Girl — Fri, 30 Jan 2009 00:48:00 GMT

At a recent financial aid conference, aid professionals discussed what colleges and universities can do to help struggling families pay for college amid a weakening economy, reports The Chronicle of Higher Education (“Student-Aid Experts Offer Advice to Colleagues on Weather the Recession,” Jan. 26, 2009).

Josph Russo, a speaker at the “Aid in an Age of Uncertainty” conference and the director of student financial strategies at the University of Notre Dame, said that “time and compassion” are two key things a financial-aid office can extend to students, at a time where high unemployment and tight credit make it difficult for students to cover college costs.

One of the most practical ways that offices can help students, he said, is by extending deadlines for tuition payments. Colleges could allow students more flexibility when it comes to paying their tuition in full instead of sticking to a firm deadline where students are automatically kicked out of school if they can’t immediately pay.

Schools could also offer students no-interest or low-interest institutional loans, Russo said, which many schools are, in essence, already doing when they extend deadlines for tuition payments.

Natala Hart, former financial-aid director at Ohio State University, suggests colleges could also leverage underused funds including any scholarship money that remains after awards have been distributed. She says schools may be able to borrow against these unused funds in order to subsidize institutional loans to students.

Hart urged financial-aid offices to distribute Fall award letters to returning students prior to summer and to call both new and returning students during the summer to address any financial concerns families may have.

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UC System Considers “Free” Tuition for Lower-Income Families

Student Loan Girl — Tue, 27 Jan 2009 23:02:00 GMT

The University of California is considering a program which would offer certain students free tuition, reports The Chronicle of Higher Education (“U. of California to Consider Covering Tuition for Families Below State’s Median Income,” Jan. 22, 2009).

As part of a series of measures intended to “broaden the reach of the university during the recession,” the university would cover the tuition and fees at any of its nine college campuses for an estimated 50,000 qualified students whose families have incomes below the state’s $60,000 median household income level.

The proposed tuition plan, known as the Blue and Gold Opportunity Plan, is intended to encourage more low and middle-income students to attend a UC school, at a time when tuition costs are rising and state funding for colleges has been significantly reduced.

Estimated to cost the school $3 million a year, the plan will likely be funded from tuition increases, as well as from existing state, federal and institutional aid, said university system president Mark Yudof. The University of California’s Board of Regents must first approve the proposal, a process that The Chronicle of Higher Education reports could take several months.

It’s possible that the regents could vote to raise undergraduate tuition by as much as 10 percent, the Chronicle suggests, at the same time that regents approve the “free tuition” plan.

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Down Economy May Be Driving Students to Online Education

Student Loan Girl — Thu, 15 Jan 2009 21:05:00 GMT

As jobs continue to disappear and unemployment soars, large numbers of adult learners may soon be enrolling in online programs, particularly at two-year colleges and for-profit institutions, according to a new online education survey (“Recession May Drive More Adult Students to Take Online Courses,” The Chronicle of Higher Education, Jan. 9, 2009).

These two-year colleges and for-profit institutions, which offer programs tailored to working adults, will likely see the biggest boost in enrollment, but all types of colleges could experience an enrollment surge as more people turn to higher education to gain marketable skills in the recession, revealed the 2008 online education survey by the Sloan Consortium, a non-profit organization working to improve online education.

“A lot of people want to increase their skill levels or get that degree they didn’t have,” said I. Elaine Allen, one of the report’s authors. The threat of losing their job can be as big a motivator for people to get a degree as actually losing their job, Allen told The Chronicle.

She said that the primary motivator for adults turning to online education over a traditional classroom-based education may be one of convenience. “Time-wise, you have the flexibility of logging online and taking the course whenever you want,” Allen said. With Internet -based courses, “you don’t have to leave your house. If you have a family, that’s going to make things much easier for you.”

Over 20 percent of all U.S. students enrolled in higher education were taking at least one online course in the fall of 2007, according to data from the Sloan Consortium. And, The Chronicle suggests, if the recession were to drive more students to take courses online as expected, the percentage of online education students is likely to rise sharply.

Most of that growth will likely come from the two-year and for- profit colleges that have not yet maximized their potential for online enrollment, Allen predicts, while public institutions likely won’t see “huge growth” in Web-based learning. Of all the colleges surveyed, 58 percent said that online courses were critical to their enrollment strategies, and a full 70 percent reported that competition for the growing number of students pursuing an education online is increasing.

Allen said, “For the first time, [schools] are seeing students choose another college for its online program.”

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Univ. of Phoenix Accused of Manipulating Its Default Rate

Student Loan Girl — Wed, 14 Jan 2009 23:39:00 GMT

Three former University of Phoenix students are suing the for-profit higher education giant for using a questionable loan repayment practice that skews the university’s default rate and takes away federal student loan repayment options from students who withdraw from the school, according to The Chronicle of Higher Education (“Lawsuit Accuses U. of Phoenix of Protecting Its Default Rate at Students’ Expense,” Jan. 14, 2009).

The lawsuit, which could soon reach class-action status, alleges that the university’s ”payback” policy is designed to manipulate the school’s default rate — the percentage of a school’s students who stop repaying their loans. Under the current policy, the school “pays off” students’ federal college loans without students’ knowledge or consent after they have withdrawn from the institution. The University of Phoenix then attempts to improperly collect on the paid-off loans directly from the students “under terms more onerous than those of the original federally guaranteed loans.”

By canceling the federal student loan debt of students who withdraw from the school, the University of Phoenix, which has one of the lowest default rates among the nation’s for-profit colleges, effectively prevents those loans from being considered in its default rate.

Statistics suggest that students who withdraw from school are more likely to default on their student loans, and the more borrowers a school has who go into default thereby increasing its default rate, the more likely the school is to lose its ability to participate in the federal student loan program, among other restrictions.

Students Lose Repayment Benefits Under ‘Payback’ Policy

According to the lawsuit, the university’s payback policy harms students by preventing them from being able to take advantage of generous loan repayment terms offered by the federal student loan program, which include below-market interest rates and longer repayment terms and grace periods.

Students who must repay the University of Phoenix directly are “routinely bombarded with calls, letters, and e-mails from [the university] to collect tuition along with threats that refusal to pay will result in referral to collection agencies and negative reports on their credit.”

The lawsuit seeks actual and punitive damages on behalf of thousands of borrowers affected by the university’s repayment practice over the past four years, as well as an injunction barring the university from continuing its current payback practice, which could affect numerous other for-profit colleges that use similar practices, the Chronicle reports.

In a statement, the University of Phoenix said that the students bringing the lawsuit have “misconstrued” the Higher Education Act, and that the U.S. Department of Education had determined in January 2008 that the school’s refund policies were compliant with federal student aid rules.

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Auditors Accuse Bank of Illegally Getting Student Loans

Student Loan Girl — Fri, 09 Jan 2009 21:20:00 GMT

A recently completed audit of Fifth Third Bank — the 20th largest lender of federal student loans in the country according to college financial aid site FinAid — found that the bank violated federal law by illegally paying three companies for loan applications (“Audit Slams Fifth Third Student Loans,” The Enquirer, Jan. 9, 2009).

According to the law, lenders may not provide inducements in the form of “points, premiums or payments” in exchange for loan volume, reports The Chronicle of Higher Education (“Fifth Third Bank Offered Inducements for Loan Volume, Audit Finds,” Jan. 7, 2009).

The bank had agreements with Law School Financial, MSA Solution Inc., and Pacific Loan Processing Inc. to solicit loan applications that allowed these third-party companies to participate in the federal student loan program through Fifth Third, which acted as a trustee on their behalf. These arrangements allowed the third-party companies to make or purchase federal student loans.

As a result of the audit’s findings, the Department of Education’s Inspector General recommended terminating the bank’s participation in the Federal Family Education Loan Program. The audit also recommended imposing penalties that range from a fine to removing government subsidies on more than $3 billion of improperly obtained loans, which would require more than $300 million in reimbursements.

Fifth Third said that the audit’s findings represented a new, stricter interpretation of the law which authorizes a bank to buy and sell loans, but doesn’t allow lenders to pay another company to market loans or solicit applications. “The payments at issue were for the sale of actual loans, and not for the marketing of loan applications,” the bank said in response to the Inspector General’s audit.

Although the dispute won’t affect current Fifth Third borrowers who already have loans with the company, it could affect the way student loan companies do business and make it much more difficult for students to obtain loans in the future.

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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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Job Outlook for College Graduates Not Encouraging

Student Loan Girl — Thu, 04 Dec 2008 21:20:00 GMT

Up-and-coming college graduates may soon face one of the toughest job markets in years as they encounter employers who are scaling back hiring and a job market flooded with hundreds of thousands of recently unemployed workforce veterans.

Just last month, the U.S. Department of Labor reported a 6.5 percent unemployment rate, the highest rate seen in 14 years. And a recent annual employment report revealed that corporations plan to scale back hiring graduates of all degree levels by 8 percent over last year (“Economy Chills Hiring Prospects for College Graduates, Report Says,” The Chronicle of Higher Education, Nov. 18, 2008).

The “2008-2009 Recruiting Trends” report, conducted by the Collegiate Employment Research Institute at Michigan State University, paints a very grim job outlook for college graduates, a dramatic change from only a few years ago.

“In two short years,” the report states, “we have moved from a zenith of exuberant and aggressive college hiring, through a period of cautious optimism, to a place of quiet desperation.”

In the CERI survey, hiring projections varied by company size, industry, and location. Of the 945 employers who responded to the survey, 49 percent said they expected to decrease their total hiring this year, while 29 percent said they would increase hiring, and 20 percent planned to hire at the same levels as last year.

The smallest employers — organizations with fewer than 54 employees — said they would increase hiring for bachelor’s degree graduates but by only one percent. The largest organizations, those with more than 3,700 employees, said they were planning to decrease hiring by about 9 percent.

With Limited Prospects, Students Should Start Job Searching Now

Defense and government organizations may be the hardest hit among larger employers, with expected 15-percent declines in hiring, while nonprofit organizations anticipate no change in hiring from the previous year.

The best job prospects for graduates are in the fields of technology and science, where oil and gas industry employers plan to hire 8 percent more bachelors degree graduates, and in the fields of medical manufacturing and healthcare, where employers say they will offer positions to 10 percent more associate degree graduates.

Many employers dealing with economic uncertainty are looking to hire new graduates as soon as possible, perhaps before things get worse, said Philip Gardner, director of CERI. Gardner advises students to start work on lining up a job at their first opportunity. “It’s going to get worse,” he said. “Spring is going to be very, very difficult for students to find work.”

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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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