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College financial aid system ‘in crisis’

Posted by gradefund on January 30, 2009

College financial aid system ‘in crisis’

CHICAGO (AP) — Finding financial aid for college this year promises to be tougher than any final exam.

The quest for money that begins for students and parents every January has taken on new urgency in 2009 amid fears that loans and grants will be scarcer than in the past due to the recession.

“The financing system for college is in real crisis,” said Barmak Nassirian, associate executive director of the American Association of College Registrars and Admissions Officers. “Every one of the participants in the system is experiencing hardship — higher education institutions, states, aid donors and families all are cash-strapped.”

Federal student loans remain readily available — with some funding even increased recently by Congress. But the prospect that grants and scholarships may be cut at many schools, combined with the shrinking availability of private loans, has fueled widespread angst at a time when more people than ever are seeking help. Applications for federal aid for the current academic year already are running 10% above last year’s record pace, according to the Department of Education.

Savings held in Section 529 plans — the state-sponsored investment funds for college that are popular for their tax breaks — have been depleted by the worst bear market in decades and home equity values have plummeted. That has sapped two sources most tapped by parents to fund their children’s higher education. Colleges’ endowments have been similarly walloped.

Administrators at Ohio State University see no big immediate impact on aid from the economy but are concerned about what may happen over the longer term, said Bill Shkurti, chief financial officer. The school’s endowment has fallen by as much as 30% from $1.5 billion a year ago but accounts for just 2% of operating revenue, he said.

The University of North Carolina at Wilmington, with a much smaller enrollment and endowment, similarly has taken a hit. In a scenario likely to be repeated on many campuses, financial aid director Emily Bliss says the school is bracing for unpleasant conversations with parents about next year as it relies more on loans in its aid packages and eliminates some of the “free” money.

“Grants and scholarships won’t all come through,” she said. “It’s difficult for us to tell families that, because our heart is breaking for them knowing what they’re going through.”

Private student loans are especially hard hit. Last year, 60 private lenders provided $19 billion to students. Now, 39 of those have stopped lending to students and the remaining firms have made it harder to borrow, according to, a website that tracks the industry.

“The stress level is high,” said Rod Bugarin, financial aid adviser for the New York-based college consulting firm IvyWise.

Numerous revenue-short states are likely to consider cutting aid in one way or another, and public colleges and universities are expected to raise tuition — in some cases by double digit percentages — as they set rates for next year.

Scholarships from civic groups and local companies across the country also are likely to decline, Bugarin said, although it’s too early to know the extent.

What it all means is that families and college counselors are having to hold difficult conversations about reduced savings and the need to take on more debt and lower sights to focus on more affordable schools.

“There are no sure answers because we’re in new territory,” said Bruce Hammond, a Washington, D.C.-based college admissions consultant and co-author of “The Fiske Guide to Getting into the Right College.” “But students with high need and lesser credentials are going to have to brace themselves for less aid.”

Jean Kliphuis, 46, of Huntington, N.Y., is concerned about the tightening vise of college costs and how to pay for them as she studies aid prospects for daughter Katie, a high school senior who has applied to six schools. Jean is a librarian and her husband Tim is self-employed in the office equipment business. As middle-income parents of three children, their tab for college could be overwhelming if they didn’t do all their homework on aid options.

“There is money out there, but you have to jump through a lot of hoops to get it,” Kliphuis said. “So my husband and I are jumping through the hoops.”

The key to success in the “convoluted” financial aid process is good information, she said, and there’s lots of it available through schools’ aid offices and online at such sites as and

Indeed, the news isn’t all bad. The federal government has authorized some $95 billion in grants, loans and work-study assistance to help almost 11 million students and their families pay for college this year, and its recent commitments mean that total will all but certainly be exceeded next year.

“It’s scary, but not as scary as people might think,” said Lauren Asher of the California-based Institute for College Access and Success, an independent nonprofit group.

Among the encouraging developments for parents and students:

• The government broadened student borrowing in the midst of the credit crunch, ensuring the continued flow of federal loans that families depend on ahead of costlier private ones. Among other changes, annual borrowing limits for unsubsidized Stafford loans, which students can take out regardless of income, were raised by $2,000 and parents can now defer repayment of federal loans until after their child leaves school.

Stimulus proposals that would give students more financial aid also are progressing through Congress.

“This certainly has been an unprecedented disruption in the student loan marketplace,” said Mark Kantrowitz, publisher of “But Congress and the Department of Education have acted quickly to avert a crisis.”

• No school is known to have withdrawn pledged financial aid this academic year despite financial setbacks that have prompted them to make cuts elsewhere. A number of top institutions, from Harvard, Yale and Duke to smaller institutions with large endowments, announced expanded aid last year and have insisted they will stick to those commitments.

Aid can make a huge difference in affordability. The average list price of tuition and fees for the current academic year is $6,585 for in-state students at four-year public universities and $25,143 at private colleges, with some costing far more. But grants and tax breaks lower the average net price to about $2,900 at public universities and $14,900 at private schools, according to the College Board.

• Some students will benefit from the turmoil, especially at colleges with high tuitions and scarce resources.

“These places continue to jack it up,” Hammond said of tuition increases, “so if you can pay the full outrageous fee in this economy, as long as you can walk and chew gum you will be admitted. And if you’re pretty good — average, even — you might get a $10,000 merit scholarship.”

Admissions experts recommend considering a range of fallback options, from lower-cost public schools to community colleges or even waiting a year to save more money. And colleges and parents alike are hedging their bets on next year and beyond.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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Financial Aid Applications Rise by 10 Percent

Posted by gradefund on January 22, 2009

Financial Aid Applications Rise by 10 Percent

Posted January 13, 2009
Like a Midwestern tornado, the economic downturn appears to be touching down and wreaking financial aid havoc for some colleges while leaving others unscathed. Financial aid officers at Boston College, the University of Central Florida, and Washington University in St. Louis all report no dramatic increase in requests for scholarships. But foot traffic and calls to the aid office have spiked 50 percent this January at Prairie View A&M University in Texas. And “the line is out the door” at Quinsigamond Community College in Worcester, Mass., says Iris Godes, assistant vice president of enrollment management. Enrollment is up by about 6 percent, but financial aid applications are up 23 percent so far in 2009. Godes, who has been working in college financial aid offices for 21 years, says people who have lost jobs and savings in the economic downturn are now scrambling for new money to pay for college. “I have never experienced in my life this anxiety level of parents,” she says.

Nationally, 1.4 million more students filled out the Free Application for Federal Student Aid (the most important aid application) in calendar year 2008 than in 2007, a 10.4 percent increase, the Department of Education reports. Likewise, the College Board says its scholarship database experienced a 30 percent jump in visitors in December 2008 compared with 2007.

The biggest federal aid programs guarantee Pell grants and Stafford student loans to all students who qualify, no matter how many people apply. And some colleges have announced that they are pouring more money into scholarships next year. Boston College, for example, has announced it will cut its overall spending by 2.5 percent to free up $3 million extra in financial aid. And the University of Toledo announced it will offer free tuition to low-income B students from many major Ohio cities.

But those increases don’t appear to be making up for the many smaller aid programs—including Federal Supplemental Education Opportunity Grants and Perkins loans, as well as school-based scholarships and charitable grants—that expect to have limited or reduced funding this year. As a result, many aid officials say demand is starting to outstrip supply for some kinds of scholarships, forcing some schools and charities to make cuts.

Arkansas State University-Jonesboro, for example, has been so swamped that it has already cut off applications for merit scholarships for next fall, says financial aid director Terry Finney. The state of Rhode Island is reducing the amount of grants it will hand out to needy students. And many charities have said the declines in their investments are forcing reductions in the size and number of scholarships they’ll award this year.

“Demand has never been greater and money never been lower,” worries Godes.


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6 Rules That Can Help You Afford a Private College

Posted by gradefund on January 9, 2009

6 Rules That Can Help You Afford a Private College

Posted December 24, 2008

Jackie Steffen separated from her husband and lost the family home to foreclosure just as her oldest daughter, Rhiannon, was applying to colleges. Steffen, who works as a legal secretary in Chicago, says that wiped out her savings and quashed any hopes of borrowing to pay her daughter’s tuition bills. Yet Rhiannon is now a sophomore at $42,000-a-year Illinois Wesleyan University and will most likely graduate with less than $30,000 in debt.

More than 2 million families have lost their homes to foreclosure in the past two years. And economists warn that 3 million more families could lose their homes in the next couple of years. Many struggling parents fear that such financial difficulties may crush the college dreams of their children. But as the Steffens discovered, college is still possible if everyone in an extended family pitches in with wisdom, hard work, sacrifice—and some good luck.

“I think many of the families facing foreclosure today are hardworking, but with the accumulation of housing expenses and medical bills, they just get in too deep,” Jackie Steffen says. “These families are not lazy. They are willing to make an effort to keep themselves afloat. I guess that’s why I feel families facing foreclosure will eventually see their situation turn around for the positive. And I think that most students in college, or approaching college, are not looking for a free ride. They just want a little assistance, which I think is out there,” she says.

Here are some of the hard lessons the Steffens learned about paying for college during hard times.

1. Keep close to family: Jackie Steffen’s credit was ruined. She couldn’t qualify for any kind of loan to help her daughter cover the gap between the aid and the cost of attendance. Luckily, Jackie had long had a good relationship with her parents. “My mom and dad are retired, and they are not rich,” but they want their grandchildren to succeed, she says.

“Family is very important,” Rhiannon agrees. Without the help of her family, she wouldn’t be able to afford college, she says.

2. Students should take responsibility and action: In hard times, parents can’t do it all. Jackie says it was important that her daughter request her grandparents’ help cosigning an education loan, since it really was for Rhiannon. “It helps if the student initiates the request,” she says. “She had to promise to pay it all back. It is her responsibility, ultimately.” The experience taught Rhiannon that she and her family couldn’t secure enough loans to pay for her school, so she was energized to apply for scholarships. It turned out to be “a lot easier to ask someone for a reference or help with a [scholarship application] essay than it is to get someone to lend you $40,000 to get through school,” she says.

3. Apply to several different kinds of colleges: Rhiannon applied to a local in-state public university as a backup, as well as several private schools. But after counting up all her scholarships, it turned out to be no more expensive to attend her first-choice private school. Studies show that students who give themselves lots of college choices—including cheap in-state public universities and generous private schools—receive more financial aid than those who have limited choices.

4. Tell EVERYONE that you need help paying for college: Rhiannon’s grandmother happened to mention to her accountant that her granddaughter needed scholarships. The accountant suggested she try a foundation whose finances he also happened to manage. Rhiannon did, and won $75,000 worth of scholarships from the foundation—enough to relieve her of most of her college debt worries. “I learned that scholarships and money opportunities could literally come from anywhere and end up meaning the world,” Rhiannon says.

5. Communicate with your schools financial aid office: After she figured out how much it would cost to go to each school she got into, Rhiannon wrote a letter to her first choice, IWU, explaining the family situation and asking for more aid. IWU boosted her aid. Students “shouldn’t be afraid to be aggressive” about explaining their true needs to a college, Rhiannon says.

6. Dont despair, and keep trying: Rhiannon worked hard, earned good grades, and applied for lots of scholarships. In the meantime, Congress passed legislation making it a little easier for parents with mortgage trouble to get educational loans. And Jackie found affordable housing for her family and started working herself out of her financial hole. “Sometimes it seems like things are never going to get better. But, slowly but surely, they do,” Jackie Steffen says.

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Obama, McCain Spar Over GI Bill’s Education Incentives

Posted by gradefund on December 12, 2008

Obama, McCain Spar Over GI Bill’s Education Incentives

Thursday, May 22, 2008

John McCain hit back against Barack Obama on Thursday, after the Illinois Democratic senator accused the presumptive Republican nominee of neglecting U.S. soldiers by opposing a Democratic-sponsored GI bill that would increase education funding for U.S. troops.The bill, proposed by Virginia Sen. Jim Webb, a frequently named potential vice presidential running mate for Obama, was approved by the Senate Thursday on a 75-22 vote. However, its fate is uncertain as it is part of a larger emergency Iraq war spending bill that President Bush has threatened to veto over additional spending in it.During debate on the GI bill, Obama said McCain, who is a Vietnam War veteran and comes from a long military family history, is parroting Bush for partisan purposes that only injure the troops. “Senator Webb and the leaders of both parties have introduced a 21st century GI bill that would give this generation of returning heroes the same chance at an affordable college education that we gave the greatest generation,” Obama said.  “I respect Senator John McCain’s service to our country. … but I can’t understand why he would line up behind the president in opposition to this GI bill. I can’t believe he believes it is too generous to our veterans. I could not disagree with him and the president more on this issue. There are many issues that lend themselves to partisan posturing but giving our veterans the chance to go to college should not be one of them,” he continued.  McCain, who was not in town for the vote, took issue with Obama’s assertions about his commitment to the troops.  “I will not accept from Senator Obama, who did not feel it was his responsibility to serve our country in uniform, any lectures on my regard for those who did,” McCain said in a written statement.  The Arizona senator has never said that he does not support the bill because it is “too generous.” He has stated concerns that offering education benefits as early as the Webb bill allows would discourage people from re-enlisting. That contention was supported in a Congressional Budget Office report released a couple weeks ago that stated Webb’s bill could cut retention rates by 16 percent.  “It would be easier politically for me to have joined Senator Webb in offering his legislation. More importantly, I feel just as he does, that we owe veterans the respect and generosity of a great nation because no matter how generously we show our gratitude it will never compensate them fully for all the sacrifices they have borne on our behalf,” McCain said in his statement.  “Perhaps, if Senator Obama would take the time and trouble to understand this issue he would learn to debate an honest disagreement respectfully. But, as he always does, he prefers impugning the motives of his opponent, and exploiting a thoughtful difference of opinion to advance his own ambitions. If that is how he would behave as president, the country would regret his election,” he said.  Webb’s bill costs an estimated $52 billion, a number that can grow in out years as more take advantage of the benefits. It would provide to service members returning from Iraq or Afghanistan up to 36 months of benefits — equivalent to four academic years — to pay for tuition, books and fees as well as a $1,000 per month living stipend for qualified veterans.  Twenty-five Republicans voted for the bill, including every member up for re-election and a few fiscal conservatives.  McCain’s version of the GI bill, co-sponsored with Republican Sens. Lindsey Graham and Richard Burr, offers a “sliding scale” of payment for educational benefits that increases in relationship to length of service. McCain’s bill would increase monthly education benefits to $1,500, eliminate $1,200 enrollment fees and offer $1,000 annually for books and supplies.  After the vote, Democratic National Committee Chairman Howard Dean accused McCain of preferring to keep the troops in Iraq for 100 years over taking care of them when they come home.  “While Senator McCain talks about supporting our troops and veterans on the campaign trail, his real record tells a much different story. While we honor his service to our country, Senator McCain’s double talk on veterans’ benefits is one more reason he is the wrong choice for America’s future,” Dean said.  Obama added that he does not believe the Webb bill will have an impact on retention rates and argued that “in the long term this will strengthen our military and improve the number of people who are interested in volunteering to serve.”  Senate Democratic Leader Harry Reid said that even if the president vetoes the Iraq war emergency supplemental, the GI bill will be re-introduced in any future supplemental.  And despite McCain’s opposition to the Webb legislation, retiring Republican Sen. John Warner of Virginia told FOX News: “This GI bill, one way or another, will be the law of the land.”

FOX News’ Trish Turner and Mosheh Oinounou contributed to this report.

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How I Got Into College: 6 Stories

Posted by gradefund on December 12, 2008’s_Most_Popular

How I Got Into College: 6 Stories

Many seniors in the Class of ’09 — that’s more than 3.3 million students — are now applying to college. For many, it’s a time fraught with paperwork, essays, interviews and road trips. And after all that work, it comes down to a letter or an email: In or out?

Theo Rigby for The Wall Street Journal

Told his chances of getting into Stanford were low, Matthew Crowley, above, applied anyway — and was accepted.

Admissions are expected to be as competitive as ever, and many schools say even the economic downturn has not slowed the onslaught of early applications. At Cornell University, early applications are up 9% from what they were this time last year; at Amherst College, they are up 5%; and at Barnard College, the rise is 8%. The acceptance odds are still long; many highly selective schools accept fewer than 20% of applicants.

Counselors, admissions staff and parents can all provide useful advice for getting in, but some of the best tips can come from the most recent veterans of the application frenzy: college freshmen. We’ve asked a range of students to share what they’ve learned.

Dare to Dream

Matthew Crowley was set on going to Stanford University last fall, but all the signs told him he wouldn’t make the cut. He plugged his grades and test scores into a computer program that tracked college-acceptance statistics and came out on the low end of a graph for Stanford. Guidance counselors at Kent Denver, a private school he attended in Englewood, Colo., did not include Stanford on a list of suggested colleges. And he says a college adviser his family hired for $2,800 told him not to bother applying.

But Mr. Crowley, who at age 16 started a company that built and tested skis, didn’t like being told what not to do. He remembered his father, who died when Matthew was 11, telling him, “What’s the harm in trying?” He sent in his application early, but also applied to seven other schools.

Soon he got the news that Stanford had put him on the wait list, meaning a slot for him could open up later. Then, while hanging out in the basement with his brother, he got the email from Stanford: accepted. Mr. Crowley ran upstairs with the news. “It was the greatest joy I’ve had as a parent other than giving birth,” says his mother, Melissa Crowley.

Now a freshman, he’s majoring in product design and was accepted to a small class led by Banny Banerjee, the director of Stanford’s design program. Prof. Banerjee once worked for IDEO, an innovation and design firm that Matthew had admired so much, he toured the company’s Boulder, Colo., office as a 9-year-old with his father. “I walk into his class and I can’t stop smiling,” Mr. Crowley says.

Advice: Have a backup plan, but don’t get scared off by long odds. “It pays off to keep on going for it even if you’re told you can’t do it,” he says. His mother says with the next kids, twin high-school juniors, she’ll seek advice that is realistic but still “gives them hope.”

Keep It Neat

When Dartmouth College rejected Ramond King last December, he blasted Radiohead’s “Let Down” and tried to figure out why he wasn’t at least put on the wait list. He had a 3.9 grade-point average his senior year, took five Advanced Placement courses and won the headmaster’s cup, an award to the student who showed the most personal growth at the Branson School in Ross, Calif.

A few weeks later, as he was finishing 13 applications, Mr. King’s college counselor called with a possible explanation. On his application, where he’d described his course load, Ramond had spelled chemistry as “chemestry” and literature as “literatre.” The errors appeared six times.

“When it happened, of course, I’m freaking out,” Mr. King says. Before he’d sent that Dartmouth application, his mother, father and sister had studied each word, scouring for mistakes. But the errors were on a page he filled out on his own and gave to the guidance office to complete with recommendations.

In his next round of applications, the errors were corrected. This time, he was accepted to five schools, including Cornell, where he is now a freshman. He says blatant misspellings can be fatal to an application: “I try and laugh about it now,” he says.

Advice: Check every section of an application immediately after finishing it, as well as before sending it. Many college counselors recommend printing out an online application and proofreading the hard copy.

Practice Makes Perfect

Three days after she received her first college rejection, Sophie Nunberg started a Facebook group for others who were turned down by their top choices. Over the next few weeks, the senior at the International High School of San Francisco returned to the online group as rejections and wait-listings arrived from eight of the 12 schools she had applied to, including Columbia, the University of Chicago, Vassar and Swarthmore. “I was very upset,” she says.

She started to look back over her applications to figure out what had happened. When she re-read her essay for Columbia, where she’d applied early, she sounded like she was posing as a kid who could only thrive in a city. Her applications to Swarthmore and Vassar emphasized her love of writing but revealed little else. But her essay for Wellesley, where she was accepted, really stood out — because it sounded like her.

Her ease came partly from her familiarity with Wellesley — her mother is a graduate — and partly from her impatience with twisting her essays to fit what she thought admissions officers wanted to hear. Her two Wellesley essays about working for Planned Parenthood and her mother’s influence on her life came naturally: “I just wasn’t afraid of being judged.”

She’s now a campus tour guide, touting Wellesley to prospective students. “If it hadn’t been for a hard year and very difficult admissions, I might never have come here, and I might not be as happy,” she says.

Advice: The more applications she filled out, she says, the better they got. So she advises students not to rush an application for the sake of applying early. College counselors recommend avoiding clichéd essay topics, such as community service, unless they’re essential to a student’s identity. Students can also consult how-to books to view sample essays.

Cast a Wide Net

Virat Gupta was at the top of his class at Detroit Country Day School, president of the student council, captain of the cross-country team, captain of a public-speaking team and secretary of the honors choir. So when he applied to about 10 colleges, including four Ivy League universities, he felt pretty confident.

Fabrizio Costantini for the Wall Street Journal

Virat Gupta, now at the University of Michigan, wasn’t accepted at the four Ivy League schools where he applied.

In December, Columbia University rejected his early application. In April, he was put on the wait list by Duke University, University of Pennsylvania, Georgetown and Rice. Rejections came from Yale, Cornell, Northwestern and Washington University in St. Louis. He got the news while on vacation in Paris. “I had a couple of breakdowns,” he says.

Last fall, Mr. Gupta was accepted at two in-state schools, the University of Michigan and Michigan State University, but he considered them “safeties” — schools he had a strong chance of getting into — and barely paid them any mind. Now he’s a freshman at the University of Michigan, where he says he enjoys working in student government and singing in the men’s glee club. “I really, really like it,” he says. He thinks less about transferring than he used to, though he still may send applications to some schools that rejected him. “It’s not the end of the world,” he says. “Everything will end up working out.”

Advice: Students shouldn’t just apply to dream schools and safeties, but schools in between as well. “And make sure that all the schools you apply to, you’re pretty sure you’d be willing to go there,” Mr. Gupta says. In his view, the pressure of college is nothing compared to the stress of getting in, he says. And he still has big plans. “I’ll do my best and get into a killer law school,” he says.

Just Do It

Mari Huessy says she was expected to be “the pride of the high school” in Essex Junction, Vt. But when December of her senior year rolled around, she was overwhelmed by the prospect of applying to 10 different colleges. “I totally freaked out,” she says.

Her approach: apply only to her top choice, Grinnell College in Iowa. An aspiring writer, she’d been hoping to attend the school ever since ninth grade because of its top English program. But she froze when it was time to follow through on her dream. She didn’t visit the campus or interview with the admissions office. She struggled with her essay about imagination. “It was really bad,” she says. Her rejection notice came on April 1, her birthday.

Instead of applying elsewhere, she took a year off after high school to teach English at a school in Germany, hoping the experience abroad would strengthen her bid. When application season came around the next fall, she spent nearly two hours speaking with Nancy Maly, Grinnell’s interim director of admission, describing the ways Germany had changed her.

Two days before Christmas, Ms. Huessy’s parents called to tell her she got in. “It was incredibly, incredibly wonderful,” she says. The 20-year-old freshman says the gap year didn’t just help her get into Grinnell; it also enabled her to make the most of college once she arrived. She’d given her major a lot of thought during her year off and gained confidence from living in a foreign country.

Advice: Had she visited a number of campuses, Ms. Huessy says, she probably would have gotten excited and applied to more schools. Many school counselors urge students to apply to at least 10 colleges, and some say seniors should apply to extra schools this year to give themselves some lower-priced options. Ms. Huessy also tells peers not to apply at only one school: “I got lucky,” she said.

Know Thyself

Caitlin Flood, the oldest of six children, turned down Georgetown, which costs about $50,000 a year. She also passed on Cornell, too, worried she’d feel timid in big classes at a school with more than 13,000 undergraduates.

After visiting 40 campuses, Ms. Flood of Bellerose Terrace, N.Y, discovered Lafayette College. The Easton, Pa., school offered $16,000 in financial aid, and she thought she’d thrive in a freshman class of 600 students.

The choice surprised some classmates at Mary Louis Academy in Queens, N.Y. “It was hard for me,” she says. “Most people hadn’t heard of Lafayette.” For three weeks, she questioned turning down two elite schools. But she also knew she didn’t want to worry about a mountain of student loans, and she didn’t want to go to a pressure-cooker school where she’d feel guilty if she left the library before 2 a.m.

Since starting her freshman year, she’s joined the College Democrats and the school’s law society. She’s also helping kids with educational projects at a local community center. She says she adjusted to college right away, while some friends at big universities still haven’t gotten comfortable.

Advice: Ms. Flood suggests setting limits on campus visits; touring dozens of colleges just ended up confusing her. To get up to speed on financial-aid options, students can use calculators found on the prospective schools’ Web sites. The National Association of Independent Colleges and Universities also has financial-aid resources at information on its site at

Write to Ellen Gamerman at

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Navigating the Murky World of Student Loans

Posted by gradefund on December 12, 2008,28804,1651473_1651472_1651495,00.html?iid=sphere-inline-sidebar

Navigating the Murky World of Student Loans

New York State Attorney General Andrew Cuomo
Richard Drew / AP

Nicole Gibson, 26, took out six private loans from 1999 to 2004 to finance her education at the Rochester Institute of Technology in New York. Like thousands of college students across the U.S., Gibson was steered to private loans by her school’s financial aid office and is now struggling to pay them off. Her monthly payments are $1,300 — almost exactly how much she earns each month as a graphic designer. With few places to turn to for help, Gibson contacted a number of lawyers to explore consolidation and payment-plan options, only to be told that nothing can be done. “One of them actually told me to marry a rich doctor,” Gibson says. “Had I known it would be like this, I wouldn’t have gone to college in the first place.”

That’s why Gibson was so struck by the findings of New York Attorney General Andrew Cuomo, whose office has been investigating the $85-billion-a-year student-loan industry since last November. Cuomo discovered that loan companies were bribing their way onto schools’ preferred lender’s lists, which students trust to lead them to the best deals.

Prompted by Cuomo’s findings, the Senate began its own investigation and released a 600-page report in June that revealed misconduct among lenders, regulators and universities was much more common than previously thought. Violations included lenders paying for access to students, using official school logos to market their loans and working out of college financial aid offices — acts as insidious as they are unethical. The report also uncovered what Senator Ted Kennedy called “inappropriate marketing practices” used by lenders to over-emphasize private loans by omitting information about unsubsidized federal loans, which have lower interest rates than private ones and are not need-based. Now Gibson, like a growing number of people, wonders who is looking out for students.

News of such misconduct is all the more troubling given how much and how quickly the private student-loan industry has grown in recent years. As federal aid stagnates, more students are taking out private loans — often in mortgage-size amounts. In the past decade alone, the private student-loan industry has grown 913%, with companies like Sallie Mae, Citibank and Bank of America cornering a large share of the market.

Almost everyone agrees that private loans are worse for students than federal ones. While federal loans have capped interest rates, private loans, like credit cards, have variable interest rates that can climb as high as 18%. Private lenders are also not required to provide forbearance or deferment payment options to students. What’s worse is there’s almost no debt forgiveness to speak of when it comes to this type of loan. In 2005, Congress passed a law giving private loans as much protection from bankruptcy as federal ones. This means that now, unlike nearly every other type of consumer debt, private student loans cannot be discharged in bankruptcy unless “undue hardship” is proven, the standards for which are nearly impossible to meet. “They will chase you down like a dog after a bone for the rest of your life,” said financial author Suze Orman in an interview with TIME.

Take Teresa Huber, who co-signed a Sallie Mae loan with her daughter, Sheena, to finance an education at Spencerian College in Louisville, Ken. Last January, Sheena, 22, died of lung disease just one semester before completing her degree. After sending her daughter’s death certificate to the loan company, Huber received a one-sentence letter in response, which stated that the loan must still be re-paid. Though she has taken her case to bankruptcy court, Huber knows the law is not on her side and worries that she will still be paying off Sheena’s loans by the time her 14-year-old daughter, Taylor, applies for college.

Conwey Casillas, Sallie Mae’s director of public affairs, acknowledges that the previous bankruptcy law, which allowed students to discharge their loans after seven years of active re-payment, might be more appropriate, adding that the company would support revisiting bankruptcy laws for students who act in good faith but still struggle to pay off their debt. Martha Holler, a company spokesperson, defended Sallie Mae, saying: “We don’t make the rules, but we do have to follow them.”

Private student loans come under the regulatory umbrella of a number of agencies, including the Comptroller of Currency, the Federal Deposit Insurance Corporation and the Federal Trade Commission. In addition, the Equal Credit Opportunity Act, the Fair Credit Reporting Act and other federal and state lending and consumer protection laws govern the industry. With so many watchdogs in place, one would think it impossible to break the law. In practice, though, this regulatory web seems to highlight the consequence of too much red tape. Testifying before the Senate banking committee in June, Cuomo called the agencies an “alphabet soup” in which responsibility became so diffused that none were doing the job. “They have the authority, but they didn’t use it,” he said. “Private loans are the Wild West of the student loan industry,” Cuomo told members of Congress.

Given their youth and inexperience, students are especially vulnerable to the loan industry’s fine print and confusing jargon. Kelly Bryan, 23, a graduate of Chicago’s Columbia College, says she still doesn’t fully understand how the process works. “It was like reading a foreign language,” Bryan says of the myriad forms and paperwork she had to fill out while applying for loans. And while some students are simply not doing their homework when it comes to financing their education, Harvard law professor Elizabeth Warren warns that financial illiteracy is not the problem: “It’s a little like mugging someone, and saying, ‘Well, you should have run faster.”

This lack of regulation cripples the country’s financial future while enriching a select few, Warren argues. She says that students are being bamboozled into risky private loans they don’t understand by an industry that “exercises influence as if it were part of the government, but collects profits as if it were a Fortune 500 company.”

Congress has launched a flurry of legislation in response to the ever-widening scandal. One bill, the Student Loan Sunshine Act, would require loan companies to tell students about federal loan options before they take out private ones. Another, known as the College Cost Reduction Act of 2007, just passed the House in July. If signed into law, it will mark the biggest increase in federal education aid since the GI Bill. The money would also mean a sharp blow to private-loan industry — it aims to slash nearly $19 billion in government subsidies to private lenders. But the bill might not survive the summer; President Bush is expected to veto the legislation because it asks for $3 billion more in cuts than the proposal he made earlier this year.

But because these bills are mostly sponsored by Democrats in Congress, some industry insiders are calling the entire scandal nothing more than political grandstanding in the prelude of a White House election year. And recent votes in Congress seem to suggest the issue does not transcend party lines. In July, Senate Republicans rejected an amendment to the Higher Education Act that would have created a federal loan program to compete with the private student-loan industry. Known as the Federal Supplemental Loan Program, these loans would have been dispensed through the Department of Education, entirely removing companies like Citibank and Sallie Mae from the equation.

Whether these bills become law or not, students like George Mallone feel their financial destiny has already been decided. Mallone, a junior at Columbia University, launched a blog last fall titled “I Will Be Paying Off My Student Loans With My Social Security Checks,” describing it as a place for students whose “loan repayment plans will terminate around the time we have flying cars and sentient AI killer robots.” Mallone received just one response, from a fellow Columbia student, who wrote: “Do you mean the social security checks that I will never see in this lifetime?”

Posted in Financial Aid, Student Loans | Leave a Comment »

An E-Mail Plea: Help Pay My Tuition!

Posted by gradefund on December 12, 2008,8599,1838738,00.html

Student entrepreneur, Max Stephenson

An E-Mail Plea: Help Pay My Tuition!

Student entrepreneur, Max Stephenson
Mike McGregor for TIME

The e-mail looks like a scam: “I have to come up with big-time cash,” writes Max Stephenson. The 18-year-old is headed for New York University, he explains, but his mom is on disability, his dad works three jobs, and all his grants and loans only cover half of the school’s $50,000 annual tab. So to cover the gap, he’s hoping 10,000 friends of friends of friends will each put $2.50 in the mail or send the money via PayPal. “If you’re worried I am one of those internet rip-off artists, call NYU’s admissions office at 212.998.4500,” his e-mail continues, “and ask for someone in international admissions — they handled my admissions as I was recruited to play ice hockey for Russia and spent last year there.”

The thing is, his plea is legit. And two weeks after Stephenson sent his e-mail to 300 of his friends and his parents’ business contacts — and asked them to forward it to anyone they could think of — he says he has already received close to $6,000 from more than 2,000 people. Only a dozen or so e-mail recipients have written to him asking if he’s a swindler. “Everybody’s been really nice about it,” he says. “As nice as I guess you can be to somebody you suspect to be scamming you. It hasn’t been, ‘Oh, you dirty bleep-bleep-bleep,’ but, ‘Don’t try to scam people.’ No curse words or anything.”

A recent high school grad from Glen Gardner, N.J., Stephenson is sending out his e-mail solicitation at a time when students’ financial needs are expanding and the loan market is shrinking. A slew of peer-to-peer lending companies geared toward the college set — including Virgin Money, GreenNote, Fynanz, and CapAlly — have sprung up in the past year. Borrowers create Facebook-like profiles detailing their backgrounds, interests, and financial goals, and lenders choose the students who seem particularly appealing — or appear most likely to pay back the loan. The companies play matchmaker, then keep track of who owes what to whom.

It’s too soon to tell whether this business model will work. Meanwhile, Stephenson is taking a slightly different route. Instead of promising to repay the money, the future sociology major is trying to motivate givers by offering them a souvenir. “If you will send me $2.50 in the next week or so, I will send you a piece of my graduation gown,” he promises, in a kind of collegiate variation on relics of the cross. “For $3.50, you get a piece of my cap.”

To help keep his end of the bargain in four years, he is keeping a spreadsheet with contact information for all of the donors who did not send money anonymously. Among them is Chris Sperry, a sponsorship manager in Atlanta who put $5 in the mail for Stephenson even though the two of them have never exchanged a single word. Like other donors, Sperry says he wants Stephenson to have an easier time paying for school than he did. “It’s a shame that you get saddled with [loans] right out the gate,” Sperry says, recalling that during his own years as an undergraduate, he worked three jobs to offset tuition costs. “It’s tough to get ahead when you have that anchor weighing on you.”

Stephenson’s solicitation explains that for safety reasons, he provides potential donors with a P.O. box instead of his home address. And the natural-born promoter also directs PayPal users to route the money using his e-mail address, “In case you’re interested, I have plans to use my college education to improve our environment,” he notes toward the end of his tuition plea, which explains that AccessHybrid is an organization he set up to help college and vocational students buy fuel-efficient cars. “I found the work incrediably [sic] satisfying,” he adds in what would have been a pitch-perfect letter, had he bothered to run a spell-check. (To see the evolution of the college dorm room click here.)

Posted in Alternative Payment, Cheaper Tuition, Economy and School, Financial Aid | 2 Comments »

The New Battle over Financial Aid

Posted by gradefund on December 12, 2008,8599,1838722,00.html?iid=sphere-inline-sidebar

The New Battle over Financial Aid

Harvard University, Cambridge, Mass.
Harvard University, Cambridge, Mass.
Fraser Hall / Robert Harding World Imagery / Corbis

In-state tuition. For decades, it was the one advantage big state schools had that even the Ivy League couldn’t match, in terms of recruiting the best and the brightest to their campuses. But these days, that’s no longer necessarily the case. Starting this September, some students will find a Harvard degree cheaper than one from many public universities. That is, of course, if they can get in.

Harvard officials sent shock waves through academia last December by detailing a new financial-aid policy that will charge families making up to $180,000 just 10% of their household income per year, substantially subsidizing the annual cost of more than $45,600 for all but its wealthiest students. The move was just the latest in what has amounted to a financial-aid bidding war in recent years among the U.S.’s élite universities as they try to ease concerns over staggering tuition bills.

Though Harvard’s is the most generous to date, Princeton, Dartmouth, Yale and Stanford have all launched similar plans to cap tuition contributions for students from low- and middle-income families. Indeed, students on financial aid at nearly every Ivy stand a good chance of graduating debt-free, thanks to loan-elimination programs introduced over the past five years. And other exclusive schools have followed their lead. Williams and Amherst colleges in Massachusetts, North Carolina’s Davidson College and Virginia’s William & Mary all replaced loans with grants and work-study aid starting last year. And several more schools are joining the no-loan club this fall, including Maine’s Bowdoin College and California’s Claremont McKenna College. “Applications were up 11% last year,” says Davidson president Tom Ross. “That tells us a lot more families now see Davidson as an affordable option.”

Even more schools have taken steps to reduce debt among their neediest students. Among them: Caltech, which this year began replacing loans with grants for American students with household incomes below $60,000, and College of the Holy Cross, which offers free tuition to students from its surrounding community in Worcester, Mass., if their family makes less than $50,000. And many public and private universities now offer similar packages to state residents who are at or below the federal poverty level of $21,000 a year for a family of four. “Students’ tuition, fees, food, books and a place to live are all covered in full,” says Rick Shipman, financial aid director at Michigan State, which has offered a loan-replacement plan since 2005. “All they have to think about is learning when they’re here.”

But experts caution that families shouldn’t expect to see most financial-aid packages rise to the level of Harvard’s largesse anytime soon. Over the past few years, Congress has gotten fed up with wealthy schools hoarding their enormous endowments — Harvard’s reached $35 billion last year — while still regularly raising tuition prices. The average tuition and fees at private four-year colleges rose 14% in the past five years, according to the nonprofit College Board; the increase was 31% at public schools. Fees themselves at many public universities are skyrocketing, even as tuition holds more or less steady. “It’s fair to ask whether a college kid should have to wash dishes in the dining hall to pay his tuition when his college has $1 billion in the bank,” U.S. Senators Max Baucus (a Democrat from Montana) and Chuck Grassley (a Republican from Iowa), the leaders of the Senate Finance Committee, wrote last January in a letter to the 136 American colleges with endowments of $500 million or more.

Although Harvard and other wealthy schools may appease legislators with more generous aid packages, the trickle-down effect might be minimal. Mark Kantrowitz, a financial-aid expert based in Pitsburgh, Pa., who runs the website, predicts that fewer than 5% of schools will do away with loans entirely. That’s because the vast majority of schools don’t have large endowments they can tap to supplement lower tuition revenue. Many still depend heavily on net tuition to pay for operating costs, including faculty salaries and facility maintenance. That may be especially true at public schools — which educate 75% of undergraduates in the U.S., compared with the Ivy League’s 1% — as funds decrease substantially during the ongoing economic downturn.

“All schools want more low-income students, a higher percentage of students who get grants instead of loans,” says Morton Schapiro, president of Williams College and an economist who studies financial aid. “But they simply can’t afford it.”

Indeed, pressure to keep up with the Ivies in this respect could end up being detrimental to less affluent schools. Michael McPherson, an economist and former president of Minnesota’s Macalester College, warns that some may choose to increase class size or skip prestigious faculty hires in order to offer more generous aid packages. In the end, “they risk sacrificing quality to mimic the big boys,” he says.

To avoid such an outcome, Davidson — whose $446 million endowment ranked 143rd in the U.S. last year — is tapping alumni and other private donors to pay for its loan-elimination program. The school has already raised $15 million of the $70 million needed to fund the initiative. And should Davidson have trouble getting alums to kick in enough cash, the school’s trustees have pledged to dip into operating reserves rather than raise tuition costs. “This is the right thing to do to make sure every kid, no matter what their family’s income, gets a first-rate education,” Ross says.

To pay for its loan-elimination program, Bowdoin will earmark approximately $22 million, or about 16%, of its $140 million operating budget. Claremont McKenna, which has 1,200 students, has said only that the school plans to increase its financial-aid-grant budget by $1 million.

Of course, the colleges that don’t offer such tuition breaks know they will likely lose students to those that do. But don’t expect state schools to start rushing in. Even public universities that have large endowments have yet to embrace no-loan programs. Take the University of California system, whose $6.4 billion endowment was the 12th biggest in the nation last year. The UC schools already educate more poor kids than their Ivy League counterparts, both in terms of absolute numbers and as a proportion of their student bodies. Even at the system’s flagship schools, UCLA and Berkeley, more than a third of students live in households making less than $40,000, compared with just 10% at Harvard or Yale. That means that replacing loans with grants at the California schools would cost significantly more. Add in political pressures to avoid increasing tuition and fees — a large percentage of which go to fund financial aid in California — and the idea of eliminating all loans is a nonstarter.

So for now at least, a student whose family earns $90,000 would have to pay as little as $4,500 to go to Harvard but would get little to no financial aid to help cover Berkeley’s annual cost of $25,000. A no-loan program “is not a sustainable solution for us,” says Berkeley chancellor Robert Birgeneau, who is heading a task force charged with examining how to keep college affordable for all families in the state. “We’d likely not be able to help the poorest students as well down the line.” (To see the evolution of the college dorm room click here.)

Posted in Cheaper Tuition, Financial Aid | Leave a Comment »

Graduates drowning in debt from high cost of college

Posted by gradefund on December 12, 2008

Graduates drowning in debt from high cost of college

College graduates are starting work with twice as much debt as in the mid-1990s. For many, the burden of loan payments — sometimes as large as mortgage payments — is constraining big decisions, from picking a career to buying a house.

Seattle Times higher education reporter

Tyson Hunter dresses sharply, works out most every day and can’t wait to make his mark on the business world.

Hunter, 23, also happens to owe $152,000 in student loans, accumulated in four years at Boston University. He graduated last year with a bachelor’s degree in business administration, and now earns $40,000 a year at a market-research company.

His loan payments soon will top $1,000 a month — the amount of a small mortgage, and about a third of his salary. If he makes the minimum payments, he will retire his student debt when he is 53 years old, having handed lenders some $300,000.

“Buying a house? That’s not even in the 10-year goals,” says Hunter, who has temporarily moved back into his mom’s Bothell condo to reduce expenses. “The next two years are going to be crippling. Hopefully, after that, it won’t be as crippling.”

At a time when deep uncertainty permeates the economy, graduates across the country are entering the workplace with staggering liabilities. The average student debt has doubled since the mid-1990s.

And that burden often has an effect on the most fundamental choices graduates are making about their lives — decisions about home, family and career.

Take Isiah Sandlin, 32, and Hollie Sexton, 26, who are studying medicine at the University of Washington. Sandlin already has $275,000 in student loans; Sexton, $100,000. When the couple graduate in two years’ time, they expect their combined student loans will top half-a-million dollars.

Each new loan helps cover the payments on the previous ones. At least one of them will likely need to work in a high-paying specialty to make the whole thing fly. Sexton’s dream of volunteering abroad seems a long way off.

“I couldn’t quit now if I wanted to. No way,” Sexton says. “Once you are on the train, you’ve got to keep going.”

Most students borrow

While Hunter and Sandlin have exceptionally large loans, more than two-thirds of all students now borrow money to finance their education, up from less than half in 1993. Among undergrads who borrow, the average finished school in 2004 with loans of $19,000, up from $9,000 a decade earlier, according to one analysis of federal data.

Debt is escalating the fastest in graduate schools.

Take the UW. By its own estimate, the average undergrad who borrows winds up owing a little more than $16,000 by graduation. Master’s students who borrow, however, finish with an average $36,000 in loans; law students with $66,000; medical students with $106,000; and dental students with $143,000.

At Seattle University, where 80 percent of undergrads now borrow, the average student graduates with $23,000 in debt. Because federal loan limits are rising this fall, Seattle U officials say this year’s freshmen can expect to graduate with debts averaging $27,000.

On a 10-year repayment schedule, at 6 percent interest, that will add $300 to a graduate’s monthly bills.

Educators and economists have argued for decades that higher education represents a great long-term investment, thanks to the higher wages graduates can command. Janet Cantelon, director of student financial services at Seattle University, points out that even $300 a month is manageable for most graduates — the equivalent of a car payment — and a good long-term investment.

Yet the payoff is simply not as good as it once was.

Workers with bachelor’s degrees do earn more — an average $51,000 a year, compared with $31,000 a year for high-school graduates, according to the U.S. Department of Labor. But the department also reports that college tuition now costs five times what it did in the early 1980s, and it is rising at more than twice the rate of inflation. Inflation-adjusted wages, meanwhile, have remained stagnant since 2002.

And experts say there are some worrying trends in the rising debt levels — particularly in the precipitous rise in private loans, at least until recent months. More and more of those loans are directly marketed to students, without any oversight or involvement from schools, and often at higher interest rates.

In 1997, the federal government financed almost all student loans, with private loans making up just 5 percent of the market, according to the College Board.

But with the government failing to keep pace with costs, the private sector last year wrote at least 22 percent of the loans. Put another way, the amount of money borrowed from private lenders rose tenfold to $17.1 billion over that decade. And those figures don’t take into account other ways students and their families are borrowing, such as tapping home equity or credit cards.

In recent months, the credit crisis has halted the rapid expansion in private lending, and experts say that may not be a bad thing. Some lenders have abruptly pulled out of community colleges and for-profit schools; others are demanding more documentation.

Treasury Secretary Henry Paulson told Congress the $700 billion economic bailout package it approved Friday will benefit student-loan companies — a result some claim will unfairly reward companies that have profited from writing risky loans to students.

Just how the economic upheaval will play out remains to be seen. For now, at traditional four-year colleges, most students still are able to access large loans.

Driving up college costs in recent years is the fact that states are investing less in public universities, putting more of the burden on students, says Jacqueline King, an assistant vice president at the Washington, D.C.-based American Council on Education.

With its professors and tutors, administrators and groundskeepers, education is labor-intensive, King says. The cost of employing skilled professors has risen sharply. And universities can’t keep costs in check the way big business can, she added, by outsourcing or manufacturing overseas.

To be sure, student loans do help hundreds of thousands of students each year make it through college and improve their prospects in life. And there are signs that parents are coming to grips with the new financial reality of college: Assets in so-called 529 college-savings plans grew from $15 billion in 2001 to $122 billion in 2007, according to the College Board.

But for students graduating now, large loan repayments are adding a significant financial burden at a time when they also face rising health-care costs, expensive housing options and a difficult employment market — not to mention an economy on the brink.

Choices and sacrifices

When Tyson Hunter chose to attend Boston University, he never imagined he would end up borrowing so much money. His parents were willing to pay the equivalent of in-state tuition, about $6,000 or $7,000 a year. He also took a part-time job at a campus Starbucks, earning, with tips, $11 an hour.

BU tells students they will need at least $51,000 per year to cover tuition ($36,500) as well as lodging, food and personal expenses. Add it up, and it costs more than $200,000 for an undergraduate degree — not uncommon these days at a well-regarded private school.

Hunter was in his freshman year when his dad lost his job. His parents later divorced. Those events turned the family’s financial situation upside down, and they could no longer help out.

For a few months, Hunter left BU and tried a cheaper option — classes at Shoreline Community College and Seattle University. But, he said, he missed the intellectual stimulation and “East Coast competitiveness” of BU.

“I thought ‘Screw it. I’ll go back, and I’ll just take on debt,’ ” Hunter said. He doesn’t regret the move for a moment, he added.

“I felt like I was striving to better myself and to reach my greatest potential, and that BU facilitated that,” he said. “I wouldn’t have been nearly as happy if I went to a local school.”

Hunter did receive some extra aid due to his family’s changed circumstances, but it wasn’t nearly enough. Now working as an account manager in Bellevue, Hunter has deferred principal payments on his largest student loan for a year, reducing his monthly bills until April.

“All I can do is offer him a place to stay for free and help him out that much,” said mom, Nancy Hunter. “And if I win the lottery, I can pay off his loans.”

Tyson Hunter said he appreciates his mom giving him a place to live, but he misses his independence. He has sketched out a financial plan that should allow him to move out in February.

Hunter seems confident he will be able to repay his loans. But he has no room for missteps.

For some students, loans can change a career path. That’s the case with Josh Bates.

“Once upon a time, I wanted to be an engineer,” Bates said. “But I didn’t want to take on any more loans. I was so in debt.”

Bates, 27, of Bothell, studied mechanical engineering at Montana State University. He slacked off for a couple of years, he says, partying too much and enjoying the perks of student life. After five years at MSU, he had accumulated nearly $50,000 in student loans, another $8,000 in credit-card debt, and he still didn’t have a degree.

So Bates moved back in with his parents in Bothell and took a full-time job with a Seattle marketing firm. He has been finishing his degree by taking after-hours Central Washington University courses, offered at the Edmonds Community College campus. Because there is no mechanical-engineering program available, Bates has switched his major to business.

“If I had the time to go back to Montana State, I’d go back and finish,” Bates said.

Student loans also are playing into the career decisions of Isiah Sandlin and Hollie Sexton, the couple studying medicine at the UW.

Sandlin accrued a lot of his debt while finishing a four-year degree in naturopathic medicine at Kenmore’s Bastyr University, before realizing his true calling lay in traditional medicine.

He and Sexton, who has accumulated most of her loans during her two years at medical school, say the amount they owe is a big concern.

“I’d be lying to say it didn’t color my specialty,” said Sandlin, who is looking into emergency medicine or a surgical specialty. “Some of the specialties I’m considering are of interest to me, but they also pay particularly well on the whole physician spectrum.”

On Sexton’s 2008-09 financial-aid statement, the UW outlines the expected cost of medical school: $50,500, including tuition, housing and personal expenses. The university subtracts “total resources” — zero — and offers a package that includes $3,000 in grants and $47,500 in federal loans.

Sexton is taking the full amount. She doesn’t feel like she has any other option.

Nick Perry: 206-515-5639 or

Copyright © 2008 The Seattle Times Company 

Posted in Financial Aid, Rising Tuition, Student Loans | Leave a Comment »

How to Get Scholarships in a Bad Economy

Posted by gradefund on December 12, 2008

How to Get Scholarships in a Bad Economy

Six tips for getting more grants as part of your college financial aid package

Posted October 21, 2008

Financial aid experts say the current economic troubles will very likely make the competition for scholarships more fierce than ever. They expect about half of all college students to receive at least a little free money to fund their education. To maximize your chances of getting aid in these tough times, experts recommend that students:

A freshman enters the admissions and financial aid building at Harvard University.

A freshman enters the admissions and financial aid building at Harvard University.

1) Be the early bird. Start applying for scholarships and lining up low-priced college options right now. “You want to make sure you are the first one in line,” says Cheryl Maplethorpe, director of financial aid for the Minnesota Office of Higher Education. Many grants are awarded on a first-come-first-served basis, she notes. And many low-cost colleges are cutting off applications especially early this season. College students who haven’t already filled out the Free Application for Federal Student Aid this year should do it as soon as possible. (High school seniors have to wait until January to apply for next fall.) You can search for nongovernmental scholarships by asking your high school counselor, your college’s financial aid office, and your college’s department for scholarship possibilities and advice. Many are also listed on websites like this one,, or the College Board.

While there aren’t many private scholarships still awarding money for this academic year, students can—and should—start applying now for private scholarships for next year, because some of the biggest and best private scholarships, such as those offered by the Coca-Cola Scholars Foundation, have October deadlines. And the most popular cheap four-year schools in California, including San Diego State University and Sonoma State University, will stop taking next year’s admissions applications for many types of students November 30.

2) Ask the boss. Check with the student’s and parents’ employers to see if they offer any kind of education or scholarship benefit.

3) Try low-cost colleges. Prepare applications (including transfer applications for students already in college) to some low-cost, in-state community colleges and public universities to provide a “financial safety school” option, says Eileen O’Leary, assistant vice president of student financial services at Stonehill College in Easton, Mass. That way, even if you don’t get any free money, your bills still will be much lower.

4) Become a catch. Prepare applications to at least two (or even more, to increase your chances of setting off a scholarship bidding war) public and private schools for which you’d be a catch because of higher-than-average grades or some special skill or talent. Students whose grades or test scores are higher than the school’s average have a good chance of receiving merit grants. “Put as much detail as possible into your college application,” says Sandra Bartholomew, dean of enrollment management at Green Mountain College in Poultney, Vt. “Colleges have money to award for lots of nonacademic credentials” like leadership, community service, environmentalism, visual and performing arts, etc., she adds.

5) Fill out forms in January. As soon as possible in January, fill out the Free Application for Federal Student Aid to qualify for aid next fall. While it is easier to complete the form if the student and parent have also filed their taxes, it is better to fill out the FAFSA with estimates (which can later be corrected) early than to wait past February 1. Students hoping to attend one of the approximately 300 schools that also require the College Board’s more exhaustive CSS/Financial Aid Profile application should also complete that before mid-February.

6) Appeal. Draft an appeal letter if the student has any financial difficulties not covered by the FAFSA, such as a parent’s job loss or mortgage problems. The student should send letters explaining the problem (with documentation, if possible) to any target schools and private scholarship programs, financial aid officers say. The letter to schools should request a “professional judgment review.”


Posted in Cheaper Tuition, Economy and School, Financial Aid, Student Loans | Leave a Comment »