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Changes in Student Loans

Finally, students and parents can celebrate a little good news: It’s getting a little easier and cheaper to borrow for higher education. click here to read complete story

College Money for Music Minds

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Kathleen Johnson-Certified College Planning Specialist

DECREASE IN PELL GRANTS…

“DECREASE IN PELL GRANTS CAUSES ADMISSION
OF FEWER LOW-INCOME STUDENTS”
Content in this article is contributed by Karin Fischer,
The Chronicle of Higher Education

A Chronicle analysis of federal Pell Grant data showed a decrease
in the number of undergraduates attending elite colleges. Seventy-
five of the wealthiest private colleges in 2006-07 averaged giving
only 13.1 percent of their undergraduates Pell Grants. Pell Grants
are given to college students from families with annual incomes of
less than $40,000. In 2004-05, 14.3 percent of undergraduates at
these colleges received Pell Grants, which have endowments of over
$500 million.

There was a drop in low-income students attending the 39 best-endowed
public universities from 19.6 percent in 2004-05 to 18 percent in
2006-07.

Efforts have been made by 40-some public and private institutions
to increase financial aid for low-income students, but the decline
is still happening. On a good note, Congress has put more effort
towards improving its study of spending money, and policy change of
colleges with endowments that are over $500-million.

Financial need of college students is growing, but will policy change
be enough to change the makeup of the student body of these public
and private institutions? Thomas G. Mortenson, a senior scholar at
the Pell Institute for the Study of Opportunity in Higher Education,
says he is afraid selective colleges are becoming “class segregated.”
Also Mortenson states, “We have to ask if they’re pulling their load
when it comes to enrolling needy students.”

These efforts will take time, according to administrators at these
colleges. Two new classes of students were admitted during the time
period examined by The Chronicle. The 2004–5 academic year was the
first year they reported on the share of Pell Grant recipients at colleges.
Even if those two classes had much greater numbers of students with
Pell Grants, the change to the overall student body would still be
seemingly small.

“More importantly,” says Robert M. Shireman, director of the nonprofit
Institute for College Access and Success, “we should be looking at the
trend of wealthy colleges in the context of the college population as
a whole.” For example, between 2004-05 and 2006-07, Pell Grant’s power
for purchasing stood still and students that needed the money only went
to two-year or for-profit colleges. And in this case, the students who
received Pell Grants at all public and private colleges decreased to
about seven percent.

Amherst, Holy Cross, and Williams Colleges; Princeton University; and
the Universities of Richmond and Texas at Austin were among a few colleges
that were surveyed that have made small increases in the fraction of
low-income students they enroll.

For example, some colleges make it a priority to award Pell Grants to
low-income students. At Florida State University and Smith College,
Pell Grants are awarded to a quarter of their students, 35.2 percent
at the University of California at Los Angeles, and for 77.4 percent
at Berea College.

The University of Delaware’s recipients of Pell Grants declined from 9.8
percent in 2004-05 to 7.3 percent in 2006-07. This decline was inconsistent
with prior years. In 2006-07 there was not only a decline in Pell Grant
recipients, but also a decline in the number of students admitted.

The 2006-07 case with the University of Delaware makes it hard for
researchers to really study the data of how well colleges are serving
low-income students. When cases like these happen, only once in a 5
year term, the data can sometimes be misleading. For example, students
who are not eligible for Pell Grants, such as adults and foreign students,
are included in the institutions numbers and could easily distort the number
receiving the awards.

Colleges and universities have different ways of reporting how they disperse
the awards. Fourteen percent of students were awarded Pell Grants in 2006-07
at Pennsylvania State University on the flagship University Park campus.
Pennsylvania has calculated the Pell percentage as going to 21 percent of
undergraduates across a multi-campus system.

Sarah E. Turner, an associate professor of education and economics at the
University of Virginia, says Pell eligibility tends to be far higher among
non-traditional students than those dependent on their families for financial
support. Institutions such as the University of Cincinnati, with a large
amount of non-traditional students, will look far better using Pell ratios,
even if they possibly don’t provide better job opportunities for recent high-
school graduates.

Ms. Turner also notes that in some states, colleges will have higher numbers
of high achieving students that need the money. In such instances, their Pell
numbers may reflect demographics as much as institutional policy.

“Using one factor to determine how well a university serves low-income students
is like trying to diagnose an illness by taking someone’s temperature,” says
Stephen M. Farmer, assistant provost and director of undergraduate admissions
at the University of North Carolina at Chapel Hill. “Pell, by itself, is not
enough to make a diagnosis.”

Overall, Pell Grant numbers remain more consistent. Even those who differ over
methodology agree that low-income students continue to be underrepresented at
elite institutions.

“No, we have not seen transformation change,” Ms. Turner says. “It’s not like …
well, we’ve solved this problem–on to poverty in Africa.”

Time is what it will take to increase numbers with the competition for high-
achieving, low-income students. Princeton is a prime example. In 2001, Princeton
announced that it would rid loans for undergraduates and award grants instead.
When this announcement happened, it took time for the number of students to
increase, says Robin A. Moscato, the university’s director of undergraduate
financial aid. Ms. Moscato says the numbers increased gradually from 6.9
percent then to 10 percent in the current academic year.

“Colleges have to be more proactive than just implementing a financial aid
program and waiting for people to show up with application in hand,” says
Donald E. Heller, a professor of education at Pennsylvania State University
at University Park.

Colleges such as the University of Virginia, Harvard and Amherst are putting
their efforts toward doing more than just providing more money. For example,
the University of Virginia hired a social worker to navigate low-income families
through the student-aid process. Harvard has contacted community activists
to aid in recruiting students in rural and inner-city neighborhoods. Amherst
has recently built an addition to its admissions offices to make room for new
staff members hired to help diversify its student body, says Thomas H. Parker,
dean of admissions and financial aid.

Due to the credit crunch happening now, Yvonne B. Hubbard, director of financial
aid services at Virginia, is concerned that recruiting needy students might be a
challenge with the lack of student loans.

“We’re still fighting the ‘I can’t afford’ it battle,” Ms. Hubbard says. “For
some of these kids, applying to a place like UVA is like taking a leap of faith.”

What They Do When You Ask for More by Kim Clark

What They Do When You Ask for More

A look at how one state school handled three aid appeals

By Kim Clark

A faltering economy, rising tuition, and a growing militancy by parents are combining to turn 2008 into a banner year for appeals for more financial aid. Shocked by the average $5,300 gap between what the government estimates they can afford to pay for college and the bill left after the college’s financial aid offer, more students and parents are calling, writing, and even visiting campuses this spring to request more aid.

Unfortunately, financial aid officers say about half of those pleas will be denied. A recent appeals committee meeting at the University of Maryland-College Park showed why. Financial aid officers at public universities like UMD are bound by the federal government’s stingy rules and toughened by hundreds of wealthy parents’ attempts to squeeze extra aid out of the school’s meager budget. The office’s 19 staff members deal with nearly 26,000 undergraduates, so they have little patience for those who fail to file on time, march entire families into the office to make personal appeals, or even attempt to jolly up the aid officers with boxes of chocolates.

Sarah Bauder, Maryland’s financial aid director, who permitted U.S. News to observe an early April meeting of the appeals committee, says her officers are more likely to approve a student’s personal appeal, however. “We are much more impressed when the student takes ownership.” They also increase aid for students the school wants to recruit and for deserving students who prove they really need help.

CASE 1

The Recession victim. Five case managers lug files and calculators into Bauder’s turtle-decorated office. (Motto of the UMD Terrapins: “Fear the Turtle!”) Bauder kicks off the meeting by reading one letter: A parent claims that the falling dollar is wiping out the family’s import business. That means they’ll have less income to pay their children’s college bills than reported on their Free Application for Federal Student Aid, or FAFSA.

Dan Beaty, a senior financial aid counselor, jokes, “If they switched from importing to exporting, they’d be golden,” but then the discussion turns serious. Typically, UMD tells appealers who say their income has declined to wait until July 1 and document the first six months of the year’s finances to avoid making rash judgments based on a blip. The vast majority of the time, the university discovers that the parent has exaggerated the decline, and the university awards less aid than the family requested, Bauder says. But Bauder thinks this family’s claim is probably valid and pressing. “I think we should do something more. Waiting until July 1 may impact the student’s willingness to come to us,” she says. The family name seems familiar to her, so she checks her computer. A sibling is attending, increasing the likelihood that the family is committed to the school.

Decision: Bauder will ask for last year’s tax return and a July 1 update on the business. A moderate decline would switch the student from an unsubsidized to a subsidized Stafford loan. That will reduce the student’s interest rate from a flat 6.8 percent to 0 percent while the student is in school and 6 percent after graduation, saving nearly $2,000 in interest on a $3,500 freshman loan over 10 years. It would take a very dramatic decline to qualify the student for a grant, however.

CASE 2

The Mortgage reset. Associate Director Monique Boyd reads a letter from an out-of-state single mother who says her mortgage has jumped so high she can’t pay it, let alone anything for her child’s tuition. The mother lists her many bills, including some from a hospital.

The FAFSA doesn’t qualify students for financial aid based on their families’ actual expenses. Instead, the FAFSA subtracts a standard cost of living from each applicant. So families with above-average housing, car, or parental debt are often shut out. Colleges are allowed to adjust the FAFSA for job loss, emergency, or other unavoidable costs, however. “We can deal with the medical payments,” Bauder notes, and the committee members punch their calculators to see whether subtracting those bills would qualify the student for aid. No. “The problem is she bought a house that costs too much,” Bauder says.

Bauder returns to her two-screened computer. A few clicks bring up the student’s entire file: Test scores and grades are just average for UMD. Bauder also notes that the student, who does not live in Maryland, had a FAFSA sent to several colleges in the family’s home state. She notes that the student listed UMD seventh on the FAFSA, which she believes means it is almost a last-choice school. “It’s subliminal,” she explains. “I know my kid put the school he wanted first on that list.”

Decision: Bauder will call the admissions director to see if there’s any reason to make an exception for this student. If not, Bauder will call the mother and deliver the bad news that UMD won’t offer any additional aid. “This would be the wrong school. She can’t afford it. I think the student should go in-state.”

CASE 3

The Independent Student. Aid counselor Sharon Hollingsworth asks what to do about a local student who wants to be declared “independent” and receive financial aid based solely on her own meager earnings, rather than her parents’ higher income.

Since many families try this gambit to shield the parents’ income, the federal government has set out strict rules limiting independence generally to students who are at least 24, or orphans, or veterans, or married, or parents themselves. Colleges can make exceptions in extraordinary circumstances, but because Bauder suspects that in most cases, the parents really are supporting the child, she rejects about 80 percent of independence appeals.

A letter from a pastor, however, confirms that the student lives with a relative because both parents are gone. One appears to have abandoned her completely. The other has returned to an overseas homeland.

Unfortunately, federal rules require aid officials to count the free room and board the student receives from her relative as a resource. That, plus her several hundred dollars a month in wages, puts her over the Pell grant threshold. “There is a disincentive for working,” Bauder laments.

Decision: Hollingsworth will call the student to get more information about the parents to see if staying as a dependent might actually qualify the student for more aid. Bauder will also consider awarding the student a maximum University of Maryland grant of $3,800.

For hardworking, needy students like this one, Bauder increasingly phones the university’s fundraising office. “I call to see if they have any donors” interested in helping out individual students.

She’s hopeful that such calls will enable her to ease the burden for more students in the future. “The public has really heard the cry” and is ponying up more donations for financial aid, she says.

New Bill for College-Missouri

Check out this story on the state of Missouri assisting families with the increasing costs for college. I don’t know if this will become a trend across our great nation, but we can only hope. This benefit plus saving ahead can be the answer you need to send your children to college.

Students Feeling Effects Of Credit Crunch-KOAT.com

As the economy continues to worsen, its effects are being felt everywhere — from the home to the classroom.

Now, thousands of college students who are looking to borrow money for school are feeling the strain. Ashley Teupell is a student at Central New Mexico Community College and a mother.

She said financial aid is the key to a better life.

“If I wasn’t able to get financial aid,” Teupell said, “I wouldn’t be able to continue my schooling and provide for my family and kids.”Not only does financial aid cover the costs associated with education, but it also pays for things outside of the classroom, like transportation and even food.Kori Garcia, who also goes to school at CNM, said, “I use it for books, anything that we need for our everyday lives.”But a nationwide credit crunch and slowing economy are forcing many private lenders to stop offering student loans, leaving some students searching for a new lender.Lee Carrillo is the director of financial aid at CNM.”The Bank of America dropped out of the program from New Mexico, so we’re having to shuffle students to use other lenders,” Carrillo said.Carillo also said other private lenders are now requiring borrowers to have a co-signer with excellent credit.The new requirements are causing headaches for many students.Teupell said, “You have to keep going to different resources and they keep just turning you down.”According to officials at Central New Mexico and the University of New Mexico, not too many students have been affected so far.

However, Carrillo said if the economy continues to worsen, “We’re going to see a lot more lenders probably drop out, that will affect the institutions in the state of New Mexico.”

Officials say the number one thing students can do to secure financial aid is to apply for it early.

see the video report here

PASS AROUND THE CAP

“PASS AROUND THE CAP”
by Kim Clark, U.S. News & World Report

The tides of chance will splash everybody with a little bad luck
from time to time.  But a tsunami of economic troubles and
unfortunate demographics is deluging the nation’s 3.3 million high
school seniors.  The class of ‘08  may well be the unluckiest group
of high school grads in modern history.  They are certainly the
largest senior class ever, which means they face far worse chances
of getting into a selective college than their older — or younger
– brothers and sisters.  Indeed, they are opening a record number
of thin college rejection letters right now.

And the joy of thick acceptance letters is increasingly soured by
record-high tuition prices, while unprecedented collapses in real
estate values and credit markets have diminished the funds that many
families expected would cover their costs.

“Honestly, I’ve been through a few peaks and valleys, but it has
never been tougher” for seniors, says Bill McClintick, president
-elect of the National Association of College Admissions Counselors
and director of college counseling at Mercersburg Academy in
Mercersburg, Pa.

The teens and parents suffering through this spring of heartbreak
have much stronger words:  ”I think we’re screwed,” says Beatriz
Rodrigues-Wade, whose daughter Monica Wade has a 4.0 grade-point
average, plays on the varsity tennis team, and interns at a biotech
lab.  Monica was rejected by many of her top choices, including
Harvard, UCLA and the University of California – Davis.  Most of
the other schools that admitted her gave her so little financial
aid that her parents can’t sleep at night because of worries about
how much her education will cost the family.  ”She did everything
right.  She worked really hard and got really good grades.  And now
we have to say:  ’Sorry, we can’t pay for your school’?  Your heart
breaks.”  That misery has plenty of company.  After bottoming out at
about 2.5 million in the early 1990s, the number of high school seniors
has been climbing and peaked this year at 3,340,235.  It should start
dropping next year and continue to decline through the class of 2014.

Those numbers have made this college application season the most
brutal on record.  In 1986, Ohio State accepted any Ohio high school
graduate.  This year, it probably will reject half of its 21,657
aspiring freshmen.  Meanwhile, Harvard accepted an all-time-low 7.1
percent of its 27,462 hopefuls.

Tuition increases.
And when today’s seniors do get into a selective college, they have
to confront unexpected financial worries.  True, several of the
nation’s most elite schools have announced increases in financial
aid to lure the best students.  And the government will increase
the maximum federal Pell grant (aimed at families earning $50,000
or less) by a healthy $421 this fall.  But aid hasn’t kept up with
tuition increases.  At the same time, dropping home values have
eliminated equity that many parents had planned to tap.  And lenders
have pulled back from private educational loans. So the majority of
‘08ers face higher tuition bills with fewer funding options.  ”There
is no easy answer anymore,” says Linda Taylor, a private financial
aid consultant in Camarillo, California.

So what can they do?  Pinch pennies.  Work hard. And compromise.
That’s how Suzanne and David French of Leesport, Pa., will manage
in September when three of their four children will be in college.
David will keep working for a landscaper during the week and at
Sam’s Club at night and on weekends.  Suzanne may supplement her
job as support staff for a local school with a second job as well.
They may also take out another PLUS loan.

But the Frenches are careful not to sacrifice too much. They won’t
touch their retirement savings.  And they make sure their children
don’t mortgage their futures with debt.  ”I don’t have a problem with
them paying their part.  I have a problem with kids graduating with
$40,000 in debt,” Suzanne says.  Her kids take summer and campus jobs
to cover their own books, clothing, and personal expenses- about $4,000
a year.  They also take the maximum in Stafford loans, contributing
an additional $3,500 to $5,500 a year to tuition.  Any school with a
price tag that would require more sacrifices is out of the question.
“I don’t understand why parents feel guilty about having children
going to a cheaper school,” Suzanne says.

In fact, some studies have found that smart kids do well no matter
what college they attend.  The college Class of ‘12 may have worse
luck than previous classes.  But many are embarking on a better,
if more painful, education.  Many will graduate with the equivalent
of two diplomas.  One will be from the school of hard knocks.

Costs climb steadily at private colleges

“Ninety-five percent of our students receive financial aid,” read this article to gain more insight on the difference between the listed costs for education and what is awarded to the average prospected student looking to attend a private university.