Student Loan Blog : college loan

Sen. Schumer Calls for Government to Protect Student Loans Amid Passage of $700 Billion Bailout Bill

Student Loan Girl — Tue, 14 Oct 2008 20:17:00 GMT

Concerned that students who are eligible to go to college won’t be able to pay for their education costs in light of the current credit crisis and a steadily worsening economy, Sen. Charles Schumer is urging the federal government to make sure student loans are still available, according to an Associated Press article (“Schumer Wants Student Loan market to Be Protected” Oct. 6, 2008).

Schumer recently wrote Secretary of Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke, advising them to keep tabs on the student loan market as the government implements a $700 billion bailout plan for the financial sector. The senator fears that the deteriorating credit market might burden college students with higher interest rates on loans or may prohibit borrowers from qualifying for student loans all together.

“The price we’ll pay will be that of a generation,” Schumer said.

Over 100 third-party lenders in the Federal Family Education Loan Program have suspended their participation in the federal student loan program, which is responsible for nearly half of all public and private student loan money, or about $60 billion. Students can access these federal student loan funds either through private lenders in the FFEL program, or through the government itself using the Direct Loan Program.

Schumer recommends that all colleges allow students to get loans through the government’s Direct Loan Program, instead of through a middleman, FFELP lender. The senator says he will be drafting letters to encourage New York college presidents and the American Council on Education to pursue a similar course of action.

Just last month, Congress passed legislation that will enable students who rely on loans to continue their education, regardless of the difficulties in the private credit market. The legislation is effective through the 2010 academic year.

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Governor Launches Website to Help Massachusetts Families Find Student Loans

Student Loan Girl — Thu, 07 Aug 2008 11:32:00 GMT

Massachusetts Gov. Deval Patrick has set up a financial assistance website to help the 40,000 families who were previously served by the Massachusetts Educational Financing Authority to find a new student loan provider for the 2008–09 academic year, following MEFA’s announcement on July 28 that it was suspending its private student loan program.

The news that MEFA would no longer be offering private student loans came just weeks before fall tuition payments are due and a mere three months after the state agency suspended its federal student loan program, citing the troubled economy and continuing fallout from the collapse of the subprime mortgage market. MEFA’s announcement last week marks the first time in the lender’s nearly 30-year history that it won’t be able to provide any student loans, federal or private.

The governor’s new student loans website gives borrowers an overview of student loans and the different types of student loans still available, provides links for families to compare the interest rates being offered by certain private student loan lenders, and brings together information on scholarship resources.

“It is critical for our students to be able to pay for the colleges of their choosing,” said Gov. Patrick. “I have directed my team to make available a list of resources to help students and their families locate the information they need to finance education this fall and beyond.”

Late yesterday, Gov. Patrick also made a move aimed at restoring liquidity to MEFA, asking the Massachusetts pension fund to invest $50 million in the state student loan agency by buying MEFA bonds — MEFA would use the proceeds from the bond sale to finance new student loans. The governor intends to approach Boston College, Harvard, MIT, and the University of Massachusetts, among other schools in the state, about making similar investments.

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New York May Soon Have Its Own Low-Interest Student Loan Program

Student Loan Girl — Wed, 23 Jul 2008 19:33:00 GMT

New York is one of the few states in the country where college students do not have access to a low-interest, state-backed student loan program, according to a report by the New York State Commission on Higher Education (“Final Report of Findings and Recommendations,” June, 2008).

The report, the result of a year-long study conducted by a commission appointed by former governor Eliot Spitzer, addresses a number of concerns related to New York's higher education system, including the lack of a state-backed student loan program.

Students enrolled at more than 1,000 public and private postsecondary institutions in New York — including the State University of New York, the largest public university system in the country, and the City University of New York, the nation's largest urban college network — have fewer low-cost financing options than students in many other states across the country.

One commission member estimates that students attending schools in New York pay an average of 9 to 12 percent interest on their loans while those in Texas, for example, pay only 6 percent (“Paterson Set to Embrace Student Loan Plan,” The New York Times, July 21, 2008).

If New York governor David Paterson has his way, the state’s college students may soon be able to complete their degree without being burdened by excessive student-loan debt. Paterson intends to heed one of the report’s chief recommendations, the institution of a low-cost state student loan program, with a petition to state legislators to implement such a program.

Paterson will also consider several other recommendations from the report:

Hiring 2,000 new faculty members
Establishing a $3 billion research fund
Expanding articulation agreements for seamless transfers between colleges by 2011

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Colleges Experiencing Surge in On-Campus Housing as Economy Sags

Student Loan Girl — Fri, 11 Jul 2008 22:37:00 GMT

At colleges across the country, it won’t be long before students will start flocking back to campus, and with on-campus housing demand far exceeding supply, many school housing officials aren’t sure where all those students are going to live, according to an article in Inside Higher Education (“Look Who’s Living on Campus,” June 27, 2008).

John Carroll University in Ohio has residence halls that are over capacity for the first time in 10 years, according to Tonya Strong-Charles, director of the school’s media relations. Bryant University in Rhode Island reached capacity for the first time three years ago, says J. Thomas Eakin, vice president for student affairs.

The Massachusetts State College Building Authority is experiencing 105 percent occupancy at the nine on-campus housing facilities it manages, according to its executive director, Ed Adelman. The extra 5 percent represents spaces like study lounges that have been converted into large sleeping rooms.

Adelman says that the on-campus housing shortage is national in scope, and may be related to an increase in students, particularly upperclassmen, who tend to live off campus, needing to save money by moving back on campus.

“Reasons we’ve heard from upperclassmen are cost and budgeting,” said Doreen Riley, vice president for university advancement at John Carroll University. She notes that the rising costs of off-campus living may be responsible for bringing some students back to campus. “With utilities, gas prices and rising food costs, by the time you pay rent, that’s a lot of money,” Riley said.

Vickie Hawkins, director of university housing at Georgia Southern University, believes that rising utility costs have greatly contributed to the influx of students back to campus. “Students have said that with gas prices at $4-a-gallon, [they] are going to rethink how they’re using their vehicle,” she said.

To address this increase in demand, some colleges have offered financial incentives to freshmen to add a third roommate to double- occupancy rooms. Others, like Georgia Southern, have gotten more creative: they purchased and renovated an off-campus building for upperclassmen that was filled even before construction finished.

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GMAT Cheating Scandal Causes Students to Sweat Their Future

Student Loan Girl — Wed, 02 Jul 2008 23:37:00 GMT

Over 6,000 MBA students have been implicated in a huge cheating scandal involving the website Scoretop which illegally provided “live” prep questions to students taking their Graduate Management Admission Test, or GMAT — the test that many MBA programs require for admission to graduate school, according to an article in Business Week (“GMAT Cheating Controversy Grows,” June 27, 2008).

Contrary to authorized test preparation companies like Kaplan or Manhattan GMAT which legally purchase retired test questions from GMAT to help prepare their member students, Scoretop extended 30-day VIP service to students who paid the $30-fee to access questions that were actively being used on GMAT exams.

On June 23, the Graduate Management Admission Council, the owner of the GMAT, won a lawsuit against Scoretop for copyright infringement, since Scoretop published the “live” GMAT questions online without permission. The judgment allowed the court to seize Scoretop’s hard drive, which contained payment and other data, and to identify more than 6,000 individuals who had paid for the website’s service.

GMAC originally said it would cancel the scores of all students who cheated on the exam, make sure they could never take the GMAT again, and notify the respective business schools of students who had cheated on the exam.

Robert Burgoyne, GMAC’s legal counsel recently said, however, that GMAC probably wouldn’t cancel the scores of all 6,000 Scoretop VIP members who took the test, just those who knew using the questions was illegal. “We'll look for something that actually links people to conduct they should have known was improper,” Burgoyne said.

MBA students across the country are justifiably nervous. Those who have applied to business schools and used the Scoretop website may have their scores cancelled and may not be able to apply to an MBA program in the future. And currently enrolled students may be thrown out of their MBA program.

“I am extremely stressed out,” one GMAT test-taker who used Scoretop questions commented in response to BusinessWeek.com's original story about the cheating scandal. “I am so upset and worried right now."

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