Student Loan Blog : federal grants

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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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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House Dems Get Second Crack at Higher Education Appropriations Bill

Student Loan Girl — Wed, 25 Feb 2009 23:23:00 GMT

Just days after President Obama signed a $787 billion economic stimulus bill into law, House Democrats have reintroduced a $410 billion overdue appropriations measure that would finance dozens of federal agencies and programs, including many related to higher education, whose budgets went unapproved during the last session of Congress, reports The Chronicle of Higher Education (“Delayed Appropriations Bill Would Increase Pell Grant and Research Funds,” Feb. 24, 2009).

During the tail end of the Bush administration, democratic lawmakers chose to put the original appropriations bill on the back burner after President Bush threatened to veto any measure that would exceed his fiscal budget. Instead, legislators passed a “continuing resolution” to fund the budgetless organizations at fiscal 2008 levels through March 6, so that legislators could revisit the appropriations bill under a new administration.

Lawmakers, after being delayed by work on the stimulus bill, are finally taking a second look at the appropriations bill just days before the continuing resolution’s termination date and President Obama’s scheduled release of his fiscal year 2010 budget.

The proposed spending bill will “keep the government running and finish last year’s business,” said David Obey D-Wis., head of the House Appropriations Committee, as wells as complement the Obama administration’s economic recovery package.

While the proposed budget measure will provide expanded funding to a variety of agencies and programs, it currently offers few specific financing details. The Fund for the Improvement of Postsecondary Education could get $133.7 million to fund projects intended to model improvements to college education and accessibility, the Gear Up program could get $313.2 million to help financially needy middle and high school students prepare for college, and the government’s student financial aid programs could get a $19.2 billion boost.

The House Appropriations Committee bill would also expand research funding for the National Institutes of Health by $938 million, and provide an additional $347 million in funding to the Federal Pell Grant Program, drawing on the budget previously allocated for the underutilized, and Bush administration-supported, Academic Competitiveness and National Science and Mathematics Access to Retain Talent grant programs.

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Note to Families: Financial Aid More Competitive, But Not Out of Reach

Student Loan Girl — Tue, 27 Jan 2009 00:09:00 GMT

With more families applying for financial aid — applications are already up 10 percent above last year’s record — and lending for private student loans drying up, families’ ability to find available financial aid is becoming more difficult, reports the Associated Press (“College Financial Aid System Facing Stiff Test,” Jan. 25, 2009).

Traditional sources of college funding are no longer available: Home values are dropping, making it difficult for families to get a home equity loan, college savings accounts are dwindling, and private lenders are leaving the student loan market.

Currently, only 21 of the 60 third-party student loan lenders who issued $19 billion in federal and private student loans last year are still lending, and most of the lenders still issuing loans have severely tightened their credit criteria, according to Finaid.org, a college funding resource site.

Families face limited financial aid options at a time when state funding shortages have forced numerous state colleges to cut their financial aid budgets and replace grants and scholarships with student loans in their financial aid offers. Colleges are also increasing tuition, in some cases, by double digits.

“There are no sure answers because we’re in new territory,” said Bruce Hammond, a college admissions consultant based in Washington, D.C. “But students with high need and lesser credentials are going to have to brace themselves for less aid.”

Financially Needy Students Should Know Their College Funding Options

While the financial atmosphere for college students and their families may seem more dismal this year, things “are not as scary as people might think,” says Lauren Asher of the non-profit California-based Institute for College Access and Success.

Students and parents can take advantage of expanded federal financial aid offers. The U.S. Department of Education has already made $95 billion in grants, loans, and work-study assistance available to nearly 11 million students and families and Congress has increased annual borrowing limits for unsubsidized Stafford student loans, which are not tied to financial need, by $2,000. And President Obama’s proposed stimulus package could offer families even more financial aid.

Cash-strapped families and students could consider attending lower-cost public schools and community colleges to avoid taking on large amounts of debt. On average, tuition and fees at a two-year public school cost about $2,300, while tuition and fees at a four-year public school cost about $6,000, according to the College Board.

And while a number of the nation’s top colleges and universities, including Harvard , Yale, and Duke, have seen their endowments take a huge hit this year, none of these schools have gone back on their commitment to offset their high tuition costs by extending financial aid offers to a greater number of low- and middle-income families.

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Enrollment Up at For-Profit Colleges Despite Economy

Student Loan Girl — Tue, 16 Dec 2008 17:30:00 GMT

While numerous nonprofit colleges have halted construction and are undergoing hiring freezes and other cutbacks due to the declining economy, for-profit colleges are seeing higher enrollment numbers and higher profit margins (“Economic Downturn Is a Boon for For- Profit Colleges,” The Chronicle of Higher Education, Dec. 10, 2008).

Enrollments at nine major publicly traded college companies grew faster than average for the past three years, The Chronicle of Higher Education reports, and profit margins for the current year are projected to be the highest they’ve been since 2005.

Many of the negative trends impacting the economy — state budget cuts, widespread layoffs, and a projected unemployment rate of 10 percent — may mean for-profit institutions will see even greater growth as laid-off workers return to school to gain new job skills.

Influx of Students Presents Opportunities for For-Profits

By contrast, many public and private schools have been negatively affected by state budget cuts and are struggling to accommodate new students. The California State University system, for example, recently announced that it plans to cap enrollment for the fall 2009 semester, and could turn away as many as 10,000 new students because it doesn’t have the financial resources to handle them.

For-profit institutions, on the other hand, are well positioned to benefit from the influx of new students, suggests The Chronicle. Recent changes to federal financial aid policies have made federal grants and subsidized student loans more widely available to students at for-profit schools.

And some for-profit institutions are doing so well financially they have created their own loan programs that enable them to lend directly to their students. Students who need additional funds to cover their college costs, including those with poor credit, can apply for unsubsidized private loans directly at their school, a new practice that many schools, including Corinthian Colleges, have recently initiated.

Although for-profit schools welcome the influx of new students, college administrators are concerned that the economy will not recover quickly enough for their job-seeking graduates.

To ensure that students land the positions they need, career experts like Rene Champagne, chairman of the Career College Association, say its best to begin the search process as early as possible, preferably prior to graduation.

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Government Warns: Pell Grant Program in Trouble

Student Loan Girl — Mon, 22 Sep 2008 21:47:00 GMT

Without additional taxpayer funds next year, the government’s “most important” federal financial aid program may be unable to provide Pell Grants to millions of eligible low-income students, likely pricing these students out of a higher education, according to an article in The New York Times (“Pell Grants Said to Face a Shortfall,” Sept. 17, 2008).

In a memorandum issued last week, the Department of Education warned that it predicts a $6 billion shortage for the federal Pell Grant program next year, stemming from continuous budget shortfalls and compounded by the record-high number of students qualifying for the federal Pell Grant program.

Rising tuition costs, shrinking state aid to colleges and universities, and a growing number of adults who are reenrolling in college are all putting a strain on federal financial aid resources, particularly on Pell Grants, which don’t have to be repaid. This school year alone, six million students out of the nine million who applied for federal financial aid received Pell Grants, some of the highest numbers the program has seen since its inception in 1972.

“It’s the mother of all shortfalls,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “There’s more unmet need than anyone predicted.”

Last year Congress appropriated nearly $14 billion for the Pell Grant program, but as the troubled economy continues to force adults out of the workforce and back into the classroom, the Department of Education said it will either need to allocate more taxpayer money to the Pell Grant program or decrease the grant award amounts students can receive next year.

Should the Education Department decide to reduce Pell Grant awards, it would make an announcement detailing its decision sometime in February 2009, according to the memorandum.

“If [the Pell Grant program] is threatened, you’ll hear about it,” said Edward M. Elmendorf, senior vice president of the American Association of State Colleges and Universities. “The decibel level will be deafening.”

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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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New Report Details Federal Grant, Student Loan Trends

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

During the 2005–06 academic year, 75 percent of the 2.7 million full-time undergraduates pursuing a program certification or a bachelor’s degree for the first time received one or more types of financial aid, according to a new report on enrollment in postsecondary institutions by the National Center for Education Statistics.

The report focused on data supplied by Title IV institutions, schools that must comply with government-mandated rules regarding federal financial aid. Authors of the report found that 37 percent of undergraduates received federal grants, 28 percent received state or local grants, 29 percent received institutional grants, and 46 percent had taken out student loans.

The pattern of aid distribution varied depending on the type of school students attended.

At private nonprofit four-year colleges and universities, 60 percent of undergraduates took out college loans and 75 percent had institutional grants. Some 44 percent of students at public four-year schools took out student loans and 34 percent had institutional grants. While at public two-year colleges only 18 percent of undergraduates borrowed student loans and 11 percent received grants from their schools.

NCES researchers found that borrowing was highest at for-profit institutions, where 67 percent of undergraduate students at four-year colleges and universities and 73 percent of those at two-year schools took out student loans.

The NCES report was compiled using data from the Integrated Postsecondary Education Data System, which collects data from all schools that receive federal funds.

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Grant Process Closed on Strengthening Institutions Program

Student Loan Girl — Wed, 31 Jan 2007 21:55:00 GMT

Grants are an important source of funding for any institution and organization in need of money. Not only do grants help students defray the cost of attendance, they also help colleges keep their tuition costs in check because awarded funds can help strengthen developing academic programs.

According to a Jan. 30, 2007 article written by Elyse Ashburn titled “Education Dept. Won’t Open Grant Process This Year for Program Serving High-Need Institutions” that appeared in The Chronicle of Higher Education, “The U.S. Department of Education announced on Monday that it would not take new applications this year for the Strengthening Institutions Program, which provides grants to institutions that predominantly serve students from low-income families.”

With all the talk on Capitol Hill about slashing student loan interest rates and raising Pell Grants in a bid to help more low-income students achieve the dream of a higher education, this move by the Department of Education seems somewhat counterintuitive.

Grants Still Being Awarded

It is to be noted, however, the Department of Education will still award grants this year. It is just the “process” of accepting new applications that is being nixed. Ashburn reported, “The department instead will award grants to 2006 applicants that were of high quality but did not make the cut last year.”

Basically the thinking is that by not opening the review “process,” all monies available will be awarded as grants, with none going to pay for the manpower to review the applications. However, Ashburn goes on to report, “advocates for community colleges, which are the primary beneficiaries of the program, questioned the fairness of that approach and said that a new application process should be held.”

Ashburn quoted David S. Baime, vice president for government relations at the American Association of Community Colleges, as saying, “Community colleges across the country will be disappointed to learn that the department is not holding a new competition for this program.” Baime explained, “Simply dusting off last year’s applications and going down the list seems quite unsatisfactory from a good-government point of view.”

Where the Funds Go

So, in the long-run there, institutions that did not receive grants from the Strengthening Institutions Program last year, will be receiving funds this year, which although might not seem fair to all, is at least helping the community the grants were intended to help. Ashburn wrote, “Grants from the program can be used for a variety of projects, including improving faculty development, establishing endowments, and strengthening academic programs. The program received about $80-million in the 2006 fiscal year. Congress has not finalized its 2007 allocation.”

To find out more about free money, check out NextStudent’s Scholarship Search Engine: http://www.nextstudent.com/scholarship_search/scholarship_search.asp. And remember, the key to finding free money to help fund your college education is to search early and search often.

It is important to keep up to date on the effects of legislation and news on student loans and education. What goes on in government and in your state can have a great impact on your student loans and your college education.

For all the information you need about student loans, go to www.nextstudent.com.

Be sure to tune in next Wednesday for my next blog on student loan legislation in the news.

Student Loan Girl

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Credit Cards Not the Best Way to Spread Holiday Joy

Student Loan Girl — Fri, 15 Dec 2006 22:38:00 GMT

College students across the country are breathing a collective sigh of relief as they pack their bags to head home or shift gears from the pressures of finals to the excitement of winter break.

This is the time of year when many students examine their finances and suddenly realize they need precious cash to go out with old friends at home, or buy gifts for others to celebrate the holidays. One cash crunch solution that most are privy to is selling their used books back to the college campus bookstore, or one of the many off-campus alternatives.

Another is to rely on that familiar student credit card. Remember the one that had no yearly fees — 0% APR (for the first six months only) — and if you were lucky rewarded you with points for airline ticket and CD purchases, and discounts at the online MTV store?

‘Fashionable’ Does Not Mean Maxed Credit Cards

If you were wise and did not splurge when you first arrived on campus, intent on impressing new friends with your newfound style and fashion panache, you still have an available balance. Perhaps you really did NEED that 56-in. HDTV to watch movies based on the books that were required reading for your Modern Lit class. Maybe now the card is maxed and instead you are cash poor, with little left in your checking account. That is OK, too.

But the question remains: What is a college student to do for money during winter break? The answer is simple: Spend only what you have or can afford. If you budgeted, you may have the cash you need. That always is your best bet, and using your debit card is an easy and painless way to control your spending.

Tips for Using Credit During the Holidays

· If you have it, and absolutely must use it, do so sparingly. Remember, credit cards do not mean FREE money, and they do have to be repaid. But if you must, spend only what you reasonably can pay off by the end of January.

· Gifts are great, but be reasonable. Getting that wonderfully expensive present that you just know really would impress your boyfriend or girlfriend and take your relationship to new heights probably is not the best idea.

· Decide ahead of time what you will spend. Set up budget parameters for going out with friends, buying gifts for others and any other expense you anticipate, and then stick to them.

· If you are down to zero, get help. Some students may have maxed credit cards and a negative checking balance. Let your parents know, if applicable. Get with them or a trusted advisor to set up a spending plan. Then, go after a better-paying part-time job and/or check with your financial aid office for grants and scholarships.

Chances are you always will have a handful of wonderful memories from your college years. From your spring bash in Cancun to winter break with the family, campus escapes are wonderful times to unwind. Whatever your situation, you probably could not get through without a student loan.

The Education Finance Advisors at NextStudent can help you figure in all your college expenses so that you get the student loan that best suits your needs. Don’t get caught short. Go to www.nextstudent.com for all your student loan needs.

Check back here next Friday for my next blog on Campus Life.

Student Loan Girl

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