Student Loan Blog : college costs

Arizona Officials Respond to Students’ Need for Affordable College Options

Student Loan Girl — Mon, 11 May 2009 23:45:00 GMT

To combat one of the most severe budget crises in its recent history, the state of Arizona is considering opening a fourth major university or converting an existing community college into a four-year school, The Arizona Republic reports (“Regents’ Plan: A New College,” May 6, 2009).

State legislators and Gov. Jan Brewer are pressing the Arizona Board of Regents — the governing board of the state’s three public universities — to come up with suggestions, by June, for how to create new “low-cost” and “university-quality” higher education options for Arizona students who are looking for a more affordable alternative to a traditional four-year degree at a research institution.

Arizona lags behind other states in the percentage of its population that holds a four-year degree: Only 25 percent of Arizona adults over the age of 25 have attained at least a bachelor’s degree, compared with the national average of 28 percent.

And for the nearly 125,000 students educated through Arizona’s public universities each year, the state’s three-school system, consisting of the University of Arizona, Arizona State University, and Northern Arizona University, is much smaller compared to other states’.

Still, it wasn’t until recently, when the state started experiencing its budgetary problems and the three state universities started preparing for an additional round of steep tuition increases, that the Board of Regents felt the urgency to begin acting on proposed solutions that have been lingering for quite a while.

“Everything is on the table,” says Ernie Calderón, the Board of Regents incoming president.

And by “everything,” Calderón means the host of varied ideas that have been floated before the Board of Regents as possible courses of action:

Buy one of the schools in the Maricopa Community College system and turn it into a four-year institution

Convert one of Northern Arizona University’s remote campuses into a full-fledged, standalone university

Create a system of state colleges that award four-year degrees without a focus on research

Partner with a local municipality to develop an affordable four-year school system

The Maricopa Community College system has also been approached with the idea of creating a junior-senior college that would allow students who have already completed their two-year degree to finish their bachelor’s degree at a two-year school rather than at a four-year university.

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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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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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Students Reach Record-High Levels of Credit Card Debt

Student Loan Girl — Wed, 15 Apr 2009 23:00:00 GMT

College students are piling up alarming amounts of credit card debt, according to a recent survey by student loan company Sallie Mae, which suggests that not only are more students relying on credit cards to pay for their rising college costs, but that more students are charging more frequently (“Average College Credit Card Debt Rises With Fees, Tuition,” April 13, 2009, USA Today).

“The message is clear,” said Edmund Mierzwinski, consumer program director for the U.S. Public Interest Research Group. “Students are carrying more debt on credit cards, and more students are paying for education on credit cards.”

Sallie Mae’s survey of 1,200 private student loan applicants found that 84 percent of undergraduate students had at least one credit card, a 76-percent increase from 2004 when the survey was last conducted. The survey also revealed that students are carrying an average $3,173 in credit card debt — the highest level seen since the data was first collected in 1998.

Financial aid experts attribute these increases, in part, to the fact that college tuition and fees have increased 439 percent over the past 25 years and that the average median family income has not kept pace, rising only 147 percent by comparison, according to the National Center for Public Policy & Higher Education (“Study: Undergrads Relying on Credit at Record Levels,” Creditcards.com, April 13, 2009).

In fact, students in the survey cited not having enough “savings or financial aid to cover all the costs” of college as their number one reason for taking out a credit card, a problem that has been exasperated by the fact that private student loan lenders have scaled back lending and tightened their credit standards due to the waning credit markets.

Because lenders have severely limited students’ access to private student loans, students have more often been charging textbooks, room and board, and schools supplies to credit cards. In 2008, students charged an average of $2,200 in educational expenses on their cards, a 134-percent increase compared to four years ago.

Once considered the “lender of last resort,” says Kalman Chany, president of Campus Consultants, a college funding advisor, credit cards are now higher up in the hierarchy of students’ college funding sources. “If (students) can’t get private loans, they turn to credit cards.”

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College Unattainable for Undocumented Immigrants

Student Loan Girl — Thu, 12 Mar 2009 00:08:00 GMT

Judah Lakin, a Rhode Island high school teacher, spends much of his time trying to help his students prepare for college. But even if his students have what it takes to pursue a higher education, many of them are undocumented immigrants and will never step foot on a college campus because they don’t have access to federal financial aid or in-state tuition, The New York Times reports (“Longtime Residents Not Allowed In-State Tuition,” March 8, 2009).

Twenty-two percent of Rhode Island children live in immigrant families and, like immigrant students in 39 other states, they’re ineligible for in-state tuition. Because out-of-state tuition often costs three times as much as in-state tuition — a price difference of $16,000 at the University of Rhode Island for example — many undocumented students are priced out of a college education.

And since federal law prohibits undocumented students from qualifying for federal grants and student loans, these students have little to no means of finding college financial aid.

The lack of college prospects for undocumented students hurts the state, says Robert Carothers, president of the University of Rhode Island.

“It does no good to keep people who live here from an education by which they could make contributions back to the state. It perpetuates ignorance, which is not in our interest,” Carothers says.

Undocumented Students Naïve About the Effects of Their Non-Residency

Lakin’s immigrant students are often completely unaware of how easily their undocumented status can derail their college aspirations, he says.

One of his students is more than academically qualified to attend a Rhode Island college or university but can’t afford the out-of-state tuition fees she would be required to pay at a local college because of her undocumented status. Although the student has lived in the United States since she was a baby and her mother has a legal work permit and pays taxes, the student has not established U.S. residency.

“This student always assumed she’d go to a good college,” says Lakin, who has asked his school district to help educate students about all of their legal residency options. “She’s used to getting awards and internships, but nobody ever explained to her the gravity of what remaining undocumented would mean for her college prospects.”

To help undocumented students attain a college education, state legislator Grace Diaz has introduced legislation that would grant in-state tuition rights to undocumented students who’ve lived in the state for more than three years.

But even though the legislation has gained some support, it has received strong opposition from anti-immigration supporters, including Terry Gorman, executive director of Rhode Islanders for Immigration Law Enforcement, who feels it's “unfair to U.S. citizens to have to pay the tax burden for the college educations of illegals.”

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Citing the Economy, Students Transfer from Private to Public Schools

Student Loan Girl — Mon, 09 Mar 2009 22:29:00 GMT

Public colleges and universities are experiencing a greater influx of transfer applications from private school students as the flagging economy heightens students’ concerns about their ability to pay for college, Bloomberg reports (“Rutgers Sees 50% Jump in Transfers as Economy Sours,” March 5, 2009).

“Students seem to be price shopping,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “People are hedging their bets financially. There is a real economic motivation.”

According to the College Board, students at four-year private colleges pay, on average, $34,130 for tuition, room, and board, while students attending a four-year public school generally pay only $14,340 — a price discrepancy prompting more students to switch schools as the recession lingers.

Schools See Sizable Jumps in Transfer Applications

Rutgers University is just one of a growing number of public schools, including state universities in Texas, Indiana, and Florida, that is seeing more transfer requests coming from students attending private institutions; this year it has received 632 transfer student applications, which is a 52-percent increase from the 416 applications it received last year.

At Florida Atlantic University, a public school where state residents pay just $3,662 in tuition for a 30 credit-hour semester and are eligible for state scholarships that cover 75 percent of their college costs as long as they maintain a B average, transfer applications have increased 37 percent for the summer term and 22 percent for the fall semester. For its summer session starting in June, the school has already received 265 transfer applications from students at private colleges, a figure that will easily surpass last year’s total of 277.

“I’d love to take credit for it all, but I know the economy has to have some part,” said Barbara Pletcher, Florida Atlantic’s director of admissions.

While admissions officers have noticed that transfer applications have increased more than in past years and that a greater number of them have come from students at private colleges, they are quick to point out that applications don’t always translate into enrollments. Students often don’t realize they can’t afford to pay for school until they receive their tuition bills, by which time it’s too late to transfer and too late to take out additional student loans to cover the expenses they didn’t account for.

“After they get their tuition bill, you’re going to see a group scrambling and we will be full,” said Jason Langdon, director of admissions at Montclair State University in New Jersey, which has received 22 percent more transfer applications this year. “The earlier in the process they can get everything lined up, the better off they’ll be.”

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In a Recession, U.S. College Students Head to Canada

Student Loan Girl — Wed, 31 Dec 2008 20:15:00 GMT

College-age students who want a higher education without the hefty high price tag are heading to Canada, where a college education can cost nearly half of what it would cost in the United States, reports The Boston Globe (“Canada: Passport to Higher Ed, Lower Cost,” Dec. 25, 2008).

The number of Americans attending Canadian universities has grown to 9,000 students, double the amount of American students that crossed the Canadian border for college just seven years ago, according to the Canadian Embassy in Washington, D.C.

And this year alone — in which the U.S. economy continues to reach new lows — Canadian universities have seen a surge in U.S. interest: Dalhousie University in Halifax has received triple the amount of information requests from New England students than it normally receives, and McGill University in Montreal has already enrolled 100 Massachusetts students.

Affordable tuition rates at Canadian universities and a smaller gap between the U.S. and Canadian dollar allow Americans the opportunity to get a college education in Canada at a value. The average cost of tuition and fees for American undergraduate students attending Canadian colleges and universities is $14,487, far less than the cost of tuition and fees at four-year private institutions in the United States, which average $23,712.

“Students don’t usually come in and say ‘I want to go to Canada,’” said Joan Casey, an education consultant in Massachusetts. “But then they hear about the cost and think: ‘$18,000 for everything? That’s pretty amazing.’”

In addition to the cost differential, Canadian schools are appealing to American students because they may still be eligible for merit-based financial aid and can still use their U.S. federal student loans at Canadian colleges.

High school counselors also point out that American students are often enticed by the fact that Canada’s college admissions process, which often doesn’t include interviews and doesn’t require admissions essays, is far simpler and far less competitive than the U.S. admissions process. In fact, Americans may be able to get accepted to a better school in Canada than they would have in the United States.

“Students are willing to look more broadly geographically,” said Brad MacGowan, a college counselor at Newton North High School in Massachusetts, which has sent 10 students to McGill University over the past three years. “And Canadian colleges are looking for them.”

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New Southern California Law School to Offer Free Tuition

Student Loan Girl — Mon, 29 Dec 2008 23:15:00 GMT

The University of California Irvine will usher in its first class of law school students this fall, none of whom will have to pay tuition for their first three years, reports The National Law Journal (“Irvine, Calif., Law School Gets New Name, Offers First Class Full Tuition Scholarships,” Oct. 22, 2008).

Although the UC Irvine School of Law — the first new public law school in California in 40 years — has not yet determined the cost of tuition, it anticipates being able to offer full tuition scholarships to all 60 students in its inaugural class. UC Irvine estimates that the three-year tuition scholarships, which will only be available to the law school’s inaugural class, will be valued at $100,000; the school has already raised more than one third of the approximate $6 million needed for the scholarship program.

Dean Erwin Chemerinsky, a well-known constitutional law scholar, says he has high hopes that the UC Irvine School of Law, which will focus on public interest law, will rank among the top 20 law schools in the nation from the first time it is considered in the rankings.

Reaching that goal will be difficult, but not impossible, says Richard Morgan, the founding dean of the William S. Boyd School of Law at the University of Nevada at Las Vegas (“SoCal Law School Tempts Students With Free Tuition,” Associated Press, Dec. 25, 2008).

“It’s like trying to fly the plane, while you’re still building it,” Morgan said.

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Connecticut Credit Unions Begin Offering Low-Interest Student Loans

Student Loan Girl — Wed, 17 Dec 2008 00:04:00 GMT

To help ensure that Connecticut students continue to have access to higher education in today’s economy, Governor M. Jodi Rell recently announced a new $17.5 million initiative that will help students obtain college loans at interest rates as low as 5.75 percent, reports TheDay.com (“Lending a Hand,” Dec. 14, 2008).

The new program, a partnership between the governor’s office and the Credit Union League of Connecticut, enables both incoming and current college students to take out loans at rates between 5.75 percent and 6.0 percent from approximately 18 state credit unions, with funds partially guaranteed by the Connecticut Health and Educational Facilities Authority (“Governor Rell Announces New College Student Loan Program With State Credit Unions,” StamfordPlus.com, Nov. 18, 2008).

“Household budgets are already strained by the effects of our struggling national economy,” Governor Rell said. “Many families have seen the funds they set aside for college evaporate — and they are now hard-pressed to come up with tuition for their children.”

Rell said under the program, which is a first for the state, loans are made available to families who wouldn’t typically qualify for traditional student loans as well as those who have depleted their financial resources and are struggling to find a way to cover college costs.

Credit Unions Uniquely Positioned To Offer Student Loans

To participate in the program, which will run for a full year and may be further extended depending on demand and available resources, credit unions must have allocated a minimum of $100,000.

At Ledge Light Credit Union, one of the participating institutions, students may borrow up to $35,000, and in some instances, defer their principal and interest for several years while attending school, said Bruce Fafard, president and CEO of Ledge Light. Fafard pointed out that many of his customers who had previously expressed interest in student loans from his institution may now be able to get the financial help they need.

With many of the conventional sources of college student loans disappearing, said Jim Metcalf, Ledge Light’s vice president of marketing and business development, “There's a big need out there for exactly what we’re rolling out.”

The governor says helping Connecticut families obtain loans for college is one of the ways in which the state maintains one of the most educated labor forces in the nation, a factor that may ultimately help the state attract more business, create more jobs, and improve its economy.

“This program will be another financial resource for our families and it will serve important needs that in many cases are currently unmet by existing loan programs,” Rell said.

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College Tuition, Student Borrowing On the Rise In Down Economy

Student Loan Girl — Mon, 03 Nov 2008 08:50:00 GMT

A new report has found that last year’s increases in college tuition were more on pace with rises in the Consumer Price Index — the measure of the average price of consumer goods and services. But despite the relative steadiness of college affordability, students still received record amounts of financial aid and borrowed more in student loans, according to findings of the College Board’s 2008 Trends in Higher Education Series.

The 2008 Trends in College Pricing report, which covers this academic year’s college costs, found that while the CPI rose nearly 5.6 percent this year, the average in-state tuition and fees at public four-year institutions increased by 6.4 percent to $6,585. Average tuition and fees at two-year public colleges jumped 4.7 percent to $2,402, and increased 5.9 percent at private four-year colleges and universities to $25,143.

“College prices are doing what other prices are doing. They’re not going up more rapidly; they’re just keeping pace,” said Sandy Baum, a senior policy analyst for the College Board and a Skidmore College economics professor (“Downturn Expected to Drive Tuition Up,” The New York Times, Oct. 30, 2008).

Lagging Economy Could Spark Increased Demand for Financial Aid

The concern among education experts is that while tuition increases were milder and closer inline with the CPI this year, these numbers may already be out of date. Since the data was gathered before the economy began its downward spiral, students at both public and private institutions may be in for even larger tuition hikes and even more borrowing next year.

The current economic crunch has led many states to slash their higher education budgets. In order to compensate for the loss of state funds, public colleges and universities in more than 12 states have been forced to raise their tuition costs.

But the flagging economy hasn’t just affected state schools; private colleges and universities have had difficulties raising funds from private donors — their largest source of financing — and have had to push any increased costs onto students.

“Private colleges face a real quandary,” Baum said. “Everybody’s going to have more people applying for financial aid, and it could really be that they’re going to lose enrollment if they can’t meet the need.”

According to the 2008 Trends in Student Aid report, part of the College Board’s Trends in Higher Education Series, graduate and undergraduate students received more than $143 billion in federal financial aid last year, and borrowed $19 billion from state and private lending sources — figures that are expected to rise as the cost of college increases.

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Student Loan Crunch Affected Some Private Schools, But Crisis Largely Avoided

Student Loan Girl — Tue, 28 Oct 2008 20:59:00 GMT

The student loan crunch that began this past spring failed to become the widespread crisis that experts predicted, according to the results of a survey by the National Association of Independent Colleges and Universities. Still, the NAICU reports, some of the private colleges surveyed have had to scramble to help their students get the loans they need to pay for school (“Student-Loan Crunch Sets Back Some Private Colleges, but Most Manage,” The Chronicle of Higher Education, Oct. 22, 2008).

More than 500 NAICU member institutions responded to the survey, including 450 private colleges and universities that participate in the Federal Family Education Loan Program, the federal student loan program that relies on private, third-party lenders to provide the majority of federally backed loans to students. Of those schools, 85 percent found that their students were dropped by at least one private lender, and 27 percent of the schools said that their students had struggled to find a replacement lender.

Schools reported that their students who weren’t able to get a private student loan often had to take time off from school, drop down to part-time status, work additional hours, or use a credit card to make up the difference in their college expenses.

Three-quarters of the colleges surveyed saw an increase in demand for student aid, but 67 percent reported no negative impact on their enrollment. This is “a good sign,” said David Warren, president of NAICU, even though he speculates that many families may had not yet felt the full impact of the downturn when they were surveyed on Sept. 10., only days prior to the Lehman Brothers bankruptcy filing.

“On the one hand, we avoided anything we’d call a crisis,” Warren said. On the other, we see some clear signals of what may be in store for families right on the edge.”

Only 18 percent of respondents said they had fewer returning students than anticipated, while 19 percent reported having a smaller freshmen class than expected, which came as a surprise to Sarah Flanagan, NAICU’s vice president for government relations and policy. “I thought our sector was going to be OK.”

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Paying for College Gets More Challenging For Families

Student Loan Girl — Thu, 23 Oct 2008 00:42:00 GMT

Paying for college definitely isn’t getting any easier.

“It just seems like it’s really hard, because it is,” says Diana Jacobs, a mother of twin, college seniors, whose husband recently lost his job, forcing the family to go from borrowing modestly to maxing out their student loan amounts (“In Downturn Families Strain to Pay Tuition,” The New York Times, Oct. 16, 2008).

To meet her sons’ college expenses this year, Jacobs pressured the twins’ schools to increase their financial aid offers — each school offered $3,000 more in aid. And for the first time, Jacobs told her sons that she wouldn’t be able to assume their student loan debt, leaving the twins to take out their college loans in their own names.

“We all came to that consensus, but I hate it,” Jacobs said. “I hate for them to come out of school with $20,000 in student loans.”

The Jacobs family is not alone. The current economic conditions have made it even more difficult for families to afford the continually rising cost of college: unemployment is rampant, the cost of living is increasing, and home values are declining, making it more difficult for families to get home equity loans to help fund college expenses.

Slow Economy Causing Widespread Financial Challenges

Economic times have become so challenging that a recent survey of nearly 3,000 parents found that 62 percent of families plan to use student loans to help pay for college expenses this year, up from 53 percent just a year ago, according to Fidelity Investments’ College Savings Indicator.

The survey also revealed that parents may meet only 21 percent of the total cost of their children’s college education this year, down from 24 percent last year.

Families’ financial challenges have led to a 10-percent increase in financial aid applications this year. Aid administrators are concerned that this increased demand for federal financial aid — from 12.3 million applications last year to 13.5 million this year — may be too much for the government and schools to handle, now that more than 100 private, third-party lenders, citing reduced profit margins and increased difficulty finding investors, have left the federal student loan program.

Making the federal financial aid problem worse, states are facing widespread budget shortages and cutting back on the financial aid funding they give to colleges and universities, and schools’ own financial aid funds are dwindling due to disappointing returns on their endowments.

The economic downturn has also forced private student loan lenders who offer credit-based private student loans, which help families fill the gap between federal financial aid and the total cost of attendance, to rapidly adapt to changes in the credit markets. In recent months, these lenders, to avoid having borrowers default on their loans, have tightened their credit criteria, causing students who had previously borrowed on their own to need cosigners this year.

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State Higher Education Commission Urges Indiana Schools to Graduate 10,000 More Students a Year

Student Loan Girl — Wed, 10 Sep 2008 20:58:00 GMT

A new plan unveiled Monday by the Indiana Commission for Higher Education calls for the state-supported colleges and universities in Indiana to graduate 10,000 more students with bachelor’s degrees each year — an increase of 33 percent — and to graduate these students in just four years, according to the Associated Press (“Indiana Seeks 10,000 More College Graduates a Year,” Sept. 9, 2008).

Under the proposed plan, Indiana would rank among the top 10 states in the nation for college degree completion by 2012. Indiana is currently 10th in the nation for the number of its high school graduates who enroll in college — 62 percent — but 57 percent of the state’s college students take six years to graduate and only 36 percent graduate within four years.

“We want more degrees and we want them on time,” said commission member Gerald Bepko, former chancellor at Indiana University-Purdue University Indianapolis.

To motivate state schools to improve their four-year graduation rates — a move that the commission contends will reduce students’ college costs and student loan debt — the commission proposes that state funding be tied to a college’s degree completion rate rather than its enrollment growth.

“They used to say, ‘Give us more money and we’ll do a better job,’ ” said Stan Jones, state commissioner of higher education. “We’re saying, ‘Do a better job and we’ll give you more money.’ ”

The commission also hopes to build up the state’s community college system to make it easier, financially, for students to complete their bachelor’s degree in four years. The commission recommends that community colleges work to double their enrollment over the next 10 years and make the first two years of community college tuition free for students whose families earn less than $50,000 a year.

The plan would, in addition, make more families eligible for state financial aid by raising income limits.

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Number of Students Applying for Federal Financial Aid Goes Up Almost 20%

Student Loan Girl — Tue, 12 Aug 2008 23:21:00 GMT

While college enrollment is only expected to grow by 300,000 students this year, some 1.3 million additional college students have already applied for federal financial aid — an increase of 17 percent, according to an article in U.S. News World Report (“Financial Aid Applications Jump 17 Percent,” Aug. 11, 2008).

The U.S. Department of Education accepts the Free Application for Federal Student Aid (FAFSA) between January 1 and June 30 of every year. (Submitting the FAFSA is the only way undergraduates can apply for federal grants and student loans.) In the first six months of 2008, the Education Department received more than 9 million FAFSAs, up from 7.7 million in 2007.

Some financial aid experts are postulating that this increase is a sign that more students are unable to afford their school costs this year, as college tuition continues to rise, outpacing cost of living, and as high gas and food prices, along with the current credit crunch, leave families with tighter budgets and fewer financing options.

“What we are seeing is more people filling out requests for financial aid, and for those who do, more people are qualifying and the aggregate need is increasing,” says Richard Toomey, associate vice provost at Santa Clara University (“Student Aid Requests Soar as Economy Plummets,” San Francisco Chronicle, Aug. 11, 2008). “Students who haven’t needed assistance before are coming in. You had to expect that this was going to happen with all the news of companies laying off thousands of people.”

Donald Heller, director of the Center for the Study of Higher Education at Pennsylvania State University, has a different theory: He believes the surge in FAFSA submissions could simply mean that more eligible students are becoming aware of their federal financial aid options and are trying to take advantage of them.

Extensive press coverage of a potential student loan availability crisis and the news of elite institutions expanding their financial aid offerings to accommodate more low- and middle-income families may have helped encourage more students to apply this year, Heller says.

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Concerned About College Costs, Texas Board Considers Changes to State Financial Aid

Student Loan Girl — Wed, 23 Jul 2008 00:13:00 GMT

The Texas Higher Education Coordinating Board is considering restructuring the state’s financial aid programs amid growing concerns about college affordability.

Proposed changes would raise the academic standards students must meet to qualify for the Texas Grant program, which helps low-income students pay for college, and would merge two of the state’s lesser-known financial aid programs with the Texas Grant. The board would also consider raising the income level at which students qualify for the Texas Grant, according to an article in the Houston Chronicle (“Financial Aid Fix Raises Concerns About Poorer Students,” July 21, 2008).

The Texas Grant program currently serves students who come from families that earn $39,000 a year or less and who have completed the recommended high school curriculum for Texas students, which includes four years of English, math, and science.

Changes Could Negatively Impact Low-Income Students

Some legislators are concerned that if enacted, the proposed changes would benefit middle-income students and widen the financial aid gap for low-income students. They also say raising the academic criteria for students who hope to qualify for a Texas Grant — requiring students to earn a 1350 on the SAT or an 18 on the ACT — would be detrimental to the most financially needy students who the grant program is designed to help.

“The changes will effectively cut off many of these students,” said Max Castillo, president of the University of Houston’s downtown campus.

Even under the current criteria, only about half of the students who qualify for the Texas Grant program receive a grant because there isn’t enough money, says state Senator Rodney Ellis, one of the original sponsors of the Texas Grant. Texas ranks last in per-capita spending for college grants among the 10 most populous states, according to the National Association of State Student Grant and Aid Programs.

If approved by the education board, the new merit criteria would apply for students entering high school in fall 2009.

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