Student Loan Blog : expected family contribution

Stanford School of Medicine Won't Follow Harvard's or Yale's Financial Aid Initiatives

Student Loan Girl — Sat, 10 May 2008 18:04:00 GMT

Students at the Stanford School of Medicine will not be offered the same type of tuition breaks students attending rival medical schools Harvard and Yale will see next year.

Harvard Medical School and the Yale School of Medicine recently announced they are eliminating the expected family contribution for households that earn less $120,000 and $100,000, respectively.

Charles Prober, Stanford’s senior associate dean of medical student education, told The Stanford Daily that there are no plans to extend such an offer to Stanford medical students (“No Change in Store for Med School Aid,” May 5, 2008).

Stanford a Leader in Minimizing Medical Students Loan Debt

However, he pointed out that Stanford is already a leader in medical school affordability. Stanford graduates have less student loan debt than those who graduate from competing schools, he said. Stanford’s 2007 graduating class had a debt of $78,000 in student loans, compared to $98,953 at Harvard and $115,385 at Yale.

The median medical school debt is $140,000, according to the Association of American Medical Colleges.

Stanford also sets a cap on the amount of federal student loans that can be borrowed each year, which this year is $13,500. If students have remaining tuition costs after the estimated parental contribution is determined, the school covers up to $30,000 of a student’s remaining costs with a need-based grant.

Student Loans Aren’t the Only Option

Students must cover any remaining costs with private student loans or other sources but Stanford, Prober said, offers its students a number of alternatives to student loans.

Medical students can earn up to $72,000 in Stanford’s Medical Scholars research Program by doing health-related research projects. Students can also offset their tuition costs by working as teaching assistants, a job in which they can earn about $18,000 per quarter. After 13 quarters, Stanford drops its tuition costs by 80 percent.

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Lowest-Income Students Need More Pell Aid, Authors of New Report Find

Student Loan Girl — Mon, 05 May 2008 23:35:00 GMT

To help low-income students attend college, larger Pell Grants should be awarded to the most “financially needy” college students, according to a new report (“Window of Opportunity: Targeting Federal Grant Aid to Students With the Lowest Incomes”).

In the report, researchers from the Institute For Higher Education Policy urged lawmakers to increase Pell Grant aid by up to $750 for students who have an expected family contribution (or EFC) that is a negative number. Currently, such students are awarded the same Pell amount as students whose EFC is zero.

The report’s authors concluded that raising the minimum and maximum Pell Grant awards could provide additional aid to the neediest students while ensuring that students with family incomes bordering the eligibility cutoff do not lose their awards.

The proposal to raise Pell Grant awards is gaining traction in the U.S. Senate, according to an article in The Chronicle of Higher Education (“Report Calls for Directing Federal Aid to Neediest Students,” April 28, 2008).

Sen. Edward Kennedy, D-Mass., is backing a proposed measure to boost Pell aid to the lowest-income students as part of a broader bill aimed at dealing with the effects of the credit crunch on the student loan industry.

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The New Financial Aid Landscape

Student Loan Girl — Sat, 26 Apr 2008 19:41:00 GMT

In the last few months, the media has been drawn to the potential student loan crisis, focusing on how students will be able to weather accessibility issues to get the funds they need for college next fall.

At the same time, many of the country’s top colleges and universities have been revamping their financial aid programs to better assist parents and students in covering their college costs.

Schools Modifying Financial Aid Programs

To date, about 50 schools have made substantial changes to their financial aid programs, writes Anne Marie Chaker of The Wall Street Journal (“The New Math of College Financing,” April 21, 2008).

Several schools have chosen to replace student loans with grant money that won’t need to be repaid, effectively lowering their tuition. Others have waived tuition costs altogether for families that fall below a specific income. Some have capped the amount of money a family is required to contribute toward college costs at a certain percentage of the family’s yearly income.

Student Loans Being Replaced with Grants

Undergraduates attending Stanford, Dartmouth, Harvard, M.I.T., Yale, or Cornell next fall now have a better chance of graduating with less debt from student loans, thanks to a significant shift in the financial aid programs at these schools.

Under pressure from Congress, with legislators questioning growing student debt levels and skyrocketing tuition costs that outpace inflation even as the wealthiest schools report endowments of $500 million or more, colleges and universities with sizeable endowments are tapping into those endowments to replace student loans with grants in their financial aid awards.

Although Harvard is using grant awards to eliminate student loans from its financial aid packages entirely, other schools are reserving these loan-replacement grants for families at qualifying income levels, Chaker notes.

Cornell, for example, in the 2009–10 academic year, will only replace student loans with grants for families making less than $75,000 annually. (The threshold was $60,000 for the current school year.) Students from families earning between $75,000 and $120,000 a year may still be awarded student loans, but those loans will be capped at $3,000 for 2009–10.

Tuition Waivers for Middle-Income Families

A handful of the nation’s top schools have also implemented programs that eliminate tuition charges completely for middle-income and even upper-middle-income families, with qualifying income levels as high as $100,000.

At M.I.T. and Dartmouth, families who make less than $75,000 a year will be able to send their children to college at zero tuition cost (although they may still have to cover room and board, books, and other living expenses). At Stanford, the income cutoff for a tuition waiver is $100,000 (with assets typical for that income level).

Family Contribution Capped Even for $100K+ Incomes

Last year, Harvard announced “one of the most ambitious [financial aid] plans out there,” writes Chaker, allowing families earning between $120,000 and $180,000 a year, with standard corresponding assets, to put just 10 percent of their annual income toward their child’s cost to attend — in other words, paying only between $12,000 and $18,000 of the 2008-09 sticker price of roughly $50,000.

Yale followed on Harvard’s heels with its own 10-percent policy that went even further up the income bracket, applying to families who make up to $200,000 a year.

As part of these new financial aid plans, both Yale and Harvard require that students contribute between $2,500 and $4,000 of their own funds, earned through a part-time or summer job or both, in addition to their parents’ 10-percent contribution.

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