Student Loan Blog : Two-Year Colleges

Program to Offer NY Students Low-Cost College Loans

Student Loan Girl — Wed, 17 Dec 2008 23:36:00 GMT

Despite New York’s $15 billion budget deficit, Gov. David Paterson announced he is creating a student loan program that would allow New York college students to borrow $350 million in low-cost private student loans directly from the state, reports The New York Times (“Governor to Unveil a Low-Cost Student Loan Program,” Dec. 15, 2008).

State officials say the new student loan program, meant to help the state “retain the best and the brightest young minds,” will offer lower rates than most private student loans — potentially as low as 8 percent. Interest rates will be adjusted annually based on market conditions.

Paterson plans to allocate $50 million in state funds to jumpstart the program and $10 million each year thereafter — a key recommendation of the Commission on Higher Education. The commission studied New York’s higher education system for more than a year and found that the state’s 1 million college and graduate students had taken out $2 billion in private loans, and that those students often paid as much as 12 percent on their loans, double the interest that students paid in states with low-cost student loan programs.

Paterson hopes the loan program will help ease the financial challenges that face students now that lenders have tightened their credit criteria and as public and private colleges consider tuition increases to cope with state budget cuts. To help balance the state budget, Paterson has proposed increasing tuition at the City University of New York and the State University of New York.

“One of the big problems in the student loan program is that it is drying up,” said Jeffrey Gordon, a spokesman for the budget division of the governor’s office. “People who were able to get loans last year can’t get them this year.”

Under the loan initiative, students at two-year colleges would be eligible to take out a maximum of $20,000 in loans, while undergraduates at four-year institutions could borrow up to $50,000. New York students pursuing both an undergraduate and graduate degree would be capped at borrowing a combined total of $70,000 in private student loans.

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Trade Schools Are Better Than Community Colleges, Say Americans in Poll

Student Loan Girl — Thu, 12 Jun 2008 01:38:00 GMT

Results of a recent public opinion poll point to a strong belief among Americans that career and technical schools may be better than community colleges at preparing students for today’s competitive workforce, reports The Chronicle of Higher Education (“Americans Favor Career and Technical Colleges Over Community Colleges, Report Says,” June 4, 2008).

The poll results, released by the Career College Association, reveal 40 percent of the 830 respondents choosing career colleges as the best alternative to four-year institutions, versus the 17 percent who favored community colleges.

Community college officials have taken issue with the survey’s findings, pointing out that the growth in enrollment at community colleges has dwarfed increases in enrollment at career schools in the for-profit sector — a fact administrators consider to be a vote of confidence in the community college system.

“I don’t deny some [technical school] programs are good programs, but to draw a comparison like that and write a survey on it seems to me to be a curious way to use their resources,” said David Baime, vice president for government relations at the American Association of Community Colleges.

Survey Reveals Shift Away From ‘Education for Education’s Sake’

Instead of indicating the superiority of one type of institution over another, the survey results may indicate a subtle shift in education values, say CCA executives, with a greater number of students each year choosing the skills-based training at career or technical colleges over the traditional “book-learning” education found at other two- and four-year colleges.

“Spending four years cloistered on campus is growing increasingly unlikely for a growing number of Americans — Americans still in need of the skills and abilities delivered through higher education,” the report’s authors concluded.

The growing trend among college students has been toward viewing higher education as a pathway to a specific job or career, notes Harris Miller, CCA president. “Apparently, today they’re not convinced that traditional higher education, for all of its important strengths, really serves that purpose very well.”

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With Government’s Help, Lenders Returning to Federal Student Loan Market

Student Loan Girl — Thu, 05 Jun 2008 21:08:00 GMT

A number of lenders who abandoned the federal student loan market in recent months may be returning, in light of a new law designed to keep struggling lenders afloat, according to a Dow Jones Newswires article.

Many of the 102 companies that scaled back or withdrew from the Federal Family Education Loan Program, in which federal student loans are funded by private lenders, are expected to at least consider returning to the program for the 2008–09 academic year, writes Dow Jones reporter Melissa Korn (“Student Lenders Tiptoe Back to Market With Government Bailout,” June 4, 2008).

Brett Lief, president of the National Council of Higher Education Loan Programs, said every one of the lenders in his organization "changed their policies" during the credit crunch earlier this year — reducing or suspending their participation in the FFEL program. The 60 FFELP lenders that are members of the NCHELP reported that the changes were necessary because federal student loans were no longer profitable.

But after Congress passed the Ensuring Continued Access to Student Loans Act (HR 5715), which gives the U.S. Department of Education the authority to buy student loans from lenders who have been unable to sell them, those lenders are “all reviewing their policies again,” Lief said.

Before the passage of the act, Sallie Mae, one of the nation’s largest originators of federal student loans, was considering whether to remain in the FFEL program, and Nelnet, NorthStar Education Finance, Inc., and the Kentucky Higher Education Assistance Authority had left the FFEL program.

Under the new legislation, all four of these lenders have reaffirmed they will continue to issue new federal student loans. However, some lenders still question whether the government changes will ultimately be profitable despite the Education Department’s infusion of liquidity, while other lending banks, like Citibank, JPMorgan Chase, PNC, and SunTrust, remain unmoved.

These banks no longer offer student loans to certain colleges — schools that they have determined tend toward higher default rates, fewer borrowers, and smaller loan amounts that make business less profitable.

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Community Colleges Eliminate Friday Classes to Help Students Cut Gas Costs

Student Loan Girl — Tue, 20 May 2008 02:54:00 GMT

Several two-year schools with large numbers of commuter students have reduced the length of their academic week from five days to four in an effort to reduce their students’ commute and help them save money on gas.

Making class sessions longer, these schools have been able to cancel classes one day a week, mostly opting for Fridays. This move has allowed their students, who are typically low-income and often work part-time jobs or support families while going to school, to eliminate one round-trip drive out of their weekly schedules.

Meridian Community College in Mississippi recently decided to extend its four-day week — already planned for the summer schedule — into the fall semester as well, according to a story in Inside Higher Ed (“Dropping a Day to Save on Gas,” May 19, 2008).

MCC president Scott Elliot told Inside Higher Ed that 90 percent of Meridian’s students drive themselves to class, and over half of those students commute an average of 30 miles round trip. By his initial estimates, based on earlier gas prices, which have continued to rise, these students will save at least $200 a semester on gas under the new class schedule.

The school plans to try the four-day-week schedule for at least one academic year before evaluating its effectiveness with focus groups and surveys.

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$50 Million Given to California Community Colleges to Aid Needy Students

Student Loan Girl — Tue, 13 May 2008 00:30:00 GMT

In what may be the largest gift ever donated to the nation’s community colleges, the San Francisco–based Bernard Osher Foundation recently announced that it has pledged up to $50 million to help needy students attending California’s two-year institutions, writes Matt Krupnick of The Mercury News (“Endowment to Aid Needy Students,” May 5, 2008).

The gift funds will be placed in an endowment that will be managed by the Foundation for California Community Colleges, with $25 million to be paid immediately and the remainder to be paid over the course of the next three years. In order to receive the second $25 million, the FCCC must raise $50 million on its own during that three-year time period.

California’s community colleges serve nearly 25 percent of the nation’s community college students, with 2.6 million students enrolled each year, and comprise the world’s largest public college system.

To Bernard Osher Foundation President, Mary Bitterman, it had become clear that the state’s community colleges needed more financial assistance than the four-year universities to which the Foundation has already given millions.

“The more we have focused on the needs of California, we have really begun to look at the critical role community colleges play,” Bitterman said. “Our trustees decided that we would really like to help community college students.”

The Bernard Osher Foundation followed its initial donation with the announcement of an additional pledge of $20 million to multiple campuses within the University of California and California State University systems, to establish endowed scholarships for students transferring from California community colleges.

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Proposed Law Opens Door to Higher Education for Low-Income Students

Student Loan Girl — Wed, 24 Jan 2007 15:42:00 GMT

In a post in December I commented on how many states and even the federal government is beginning to set up programs and legislation that favors higher education opportunities for lower-income students. A case in point is the $4,000 college tuition deduction for households with incomes of less than $65,000. These lower-income households are a population segment that often patronizes community colleges over elite four-year public institutions as a matter of affordability.

New legislation proposed in the state of Virginia is poised to make the dream of a quality education a reality, but one that is affordable specifically for low-income students. According to the article written by Josh Keller titled “Virginia Lawmakers Consider Bill to Encourage Students to Start at 2-Year Colleges” that appeared in the Jan. 19, 2007 edition of The Chronicle of Higher Education, “A lot of students are self-selecting out because they just don’t believe it’s going to be affordable,” said Yvonne B. Hubbard, director of student financial services at the University of Virginia. “What this does is allow us to say, ‘Here’s how you can do it, here’s how it’s going to work,’ ” she finished.

Elite Public Schools May Be Possible

The article states that “the legislation could also help attract low-income students to the state’s four-year colleges, which recently increased the amount of their financial aid to needy students and guaranteed spots on some campuses to some community-college graduates with good grades.” It would do this by allowing qualified “transfer students to pay the same tuition and fees at public four-year institutions that they paid at a community college. Each student who transferred to an in-state private college after graduating from a community college would initially receive a voucher worth about $2,150 a year,” the article said.

In addition, the measure, if it becomes law, would help Virginia accommodate an influx of 20 percent to 25 percent “in college enrollment in the state over the next six years,” the article said. To qualify, students must graduate with a grade point average of 3.0 or higher from a community college, “and come from families with incomes of less than 150 percent of a state or local median,” the article said.

Solution to Uneven Disbursement of Pell Grants

One reason that Virginia appears to be so serious about assisting lower-income students may be the low percentage of Pell Grants disbursed. According to the article, during the 2005-06 school year “only 7.6 percent of undergraduates at the flagship University of Virginia received federal Pell Grants – the lowest proportion among the nation’s elite public colleges, according to a Chronicle analysis. Pell Grants typically are awarded to students from families with incomes of $40,000 or less. A university survey found that more than 60 percent of last year’s undergraduates came from families with annual incomes of $100,000 or more.”

This trend, favoring higher-income students with Pell Grants while neglecting those for which the grants were created, is a national one, seen at many elite public institutions across the country. The federal government has received much pressure to change the system so that lower-income students and their families receive a more equal share of the federal financial aid pie.

According to the article, Glenn DuBois, Virginia Community College system chancellor, said that “community colleges are an ideal ‘on ramp’ for students who might otherwise bow out of higher education altogether.” DuBois summarized his position and stated that, “We have a reality in Virginia where at least in three or four of these public institutions, you have to be graduating at the very top of your high-school class,” he said. “Now there’s another way to get there, guaranteed.”

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 Tuesday for my next blog about this week in student loans.

Student Loan Girl

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