Student Loan Blog : undergraduate

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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Availability of Federal Perkins Student Loans Is Dwindling

Student Loan Girl — Sun, 13 Apr 2008 09:28:00 GMT

A growing shortage of funds in the federal Perkins student loan program could affect as many as 50,000 students in the upcoming academic year, according to a recent article in U.S. News & World Report.

Students who would have been eligible to receive a low-cost Perkins loan last year may not be offered one this year due to the limited availability of funds.

And the students who do manage to get a Perkins loan will likely see the size of their award shrink, writes U.S. News reporter Kim Clark (“Why Perkins Loans Are Harder to Get This Year,” March 25, 2008).

Schools Struggle to Replenish Limited Perkins Funding

Federal Perkins loans, which carry a fixed interest rate of 5 percent and are subsidized by the federal government, are reserved for undergraduate and graduate students who are considered to be “exceptionally needy.”

Financial aid officials at the nation’s colleges and universities are attributing the scarcity of Perkins loans to a combination of factors: the failure of federal funding for the Perkins program to keep pace with what has been a steady increase in college enrollment, and Perkins borrowers who are taking longer to repay their loans.

Schools are each assigned a fixed pool of Perkins funds from which to lend. Unlike other federal college loans, which are paid back directly to the government or to lenders in the federal education loan program, Perkins funds are payable to the school, with schools dependent on that repayment money to generate new Perkins loans for incoming and returning students.

The longer alumni take to repay their Perkins loans, the less money is immediately available to current students eligible for these loans.

Many Perkins borrowers, faced with rising interest rates over the last few years on everything from private student loans and federal consolidation loans to credit cards and home loans, have focused on repaying their higher-interest student loans and other debt, steering away from paying off their Perkins loan early and opting instead to take the full 10-year Perkins repayment term.

Adding to the problem, says Rick Shipman, director of Michigan State University’s financial aid office, is the fact that some students are able to discharge their Perkins loan if they go into the military or teaching.

“Their debts are forgiven by the federal government but the federal government doesn’t necessarily reimburse the school,” explains Shipman (“Credit Crunch Alarms Student Loan Lenders,” MSU State News, March 26, 2008).

Colleges and Universities Scaling Back on Perkins Awards

With less Perkins repayment money coming in and no government funds being added to expand the federal Perkins pool, schools are being forced to scale back their Perkins awards.

At Ohio University, Perkins funding is so limited, Clark writes, that officials anticipate a 12 percent decline in the number of Perkins student loans the school will be able to issue this fall.

Also expecting to make cuts to its Perkins student loans is the University of Maryland at College Park, which has seen its Perkins funding shrink this year to just half of the $2.3 million it had available last year.

At Michigan State University, where the Perkins pool has dropped from $7 million to $5 million in the last year alone, financial aid officials plan to eliminate over 2,000 Perkins awards in the fall and cut the average award from $1,200 to $1,000.

MSU expects to award about 4,400 Perkins loans to undergraduates in the upcoming academic year, down from the 6,600 it issued in 2007–08. The school already eliminated Perkins loans for its graduate students last year.

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By the Numbers: Top 10 Undergraduate Business Schools

Student Loan Girl — Fri, 11 Apr 2008 18:53:00 GMT

Are you a future MBA who sees yourself building the next Trump–like empire or heading up the new 21^st-century tech giant that will finally unseat Microsoft?

If you’re planning on joining the 20 percent of college students who major in business and you’re on the hunt to find the best business school for undergrads that could give you your head start on mega-mogul success, here’s some help.

We’ve got the vitals on the 10 best from BusinessWeek’s list of the country’s Top 50 Undergrad Business Programs for 2008.

The Wharton School of the University of Pennsylvania
Philadelphia

The world’s first collegiate business school, established in 1881, and BusinessWeek’s number-one program for the third year in a row.

Previous Rank: 1
Tuition: $35,916
Full-Time Enrollment: 2,519
Undergraduate Admission Rate: 16%
School Mascot: the Quakers

McIntire School of Commerce at the University of Virginia
Charlottesville, Virginia

Previous Rank: 2
Tuition: $8,690
Full-Time Enrollment: 652
Undergraduate Admission Rate: 34%
School Mascot: the Virginia Cavaliers

Mendoza College of Business at the University of Notre Dame
South Bend, Indiana

The Mendoza College offers undergraduate degrees in accountancy, finance, marketing, and management (with your choice of management track in consulting, entrepreneurship, or information technology).

Previous Rank: 7
Tuition: $35,187
Full-Time Enrollment: 1,626
Undergraduate Admission Rate: 29%
School Mascot: the Fighting Irish

Cornell University
Ithaca, New York

Previous Rank: 10
Tuition: $19,291
Full-Time Enrollment: 708
Undergraduate Admission Rate: 37%
School Mascot: the Big Red Bears

Goizueta Business School at Emory University
Atlanta

Previous Rank: 4
Tuition: $34,336
Full-Time Enrollment: 622
Undergraduate Admission Rate: 44%
School Mascot: Dooley, the Spirit of Emory

Ross School of Business at the University of Michigan
Ann Arbor, Michigan

Combining a liberal arts and business education, the three-year Bachelor of Business Administration program allows you to apply during your freshman year of college and begin the BBA program as a sophomore. If you’re a high school senior, you may be still be able to apply for the Ross BBA program through the Preferred Admissions process.

Previous Rank: 5
Tuition: $12,585
Full-Time Enrollment: 1,069
Undergraduate Admission Rate: 49%
School Mascot: the Wolverines

Marriott School of Management at Brigham Young University
Provo, Utah

Earn your Bachelor of Science in accountancy, management, or information systems.

Previous Rank: 8
Tuition: $3,840
Full-Time Enrollment: 1,616
Undergraduate Admission Rate: 74%
School Mascot: Cosmo the Cougar

New York University Stern School of Business
New York

Previous Rank: 9
Tuition: $36,524
Full-Time Enrollment: 2,335
Undergraduate Admission Rate: 24%
School Mascot: the Bobcats

Massachusetts Institute of Technology Sloan School of Management
Cambridge, Massachusetts

Previous Rank: 6
Tuition: $34,986
Full-Time Enrollment: 246
Undergraduate Admission Rate: 12.5%
School Mascot: the Beaver

McCombs School of Business at the University of Texas at Austin
Austin, Texas

Choose a major in accounting, finance, international business, marketing, management information systems, management, supply chain management, or engineering route to business for your BBA.

According to the McCombs website, more current CEOs in the S&P 500 have graduated from McCombs than from any other public business school.

Previous Rank: 13
Tuition: $8,908
Full-Time Enrollment: 3,969
Undergraduate Admission Rate: 52% (in 2006)
School Mascot: Bevo the Longhorn

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