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College financial aid system ‘in crisis’

Posted by gradefund on January 30, 2009

College financial aid system ‘in crisis’

http://www.usatoday.com/news/education/2009-01-24-financial-aid_N.htm

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 Finaid.org, 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 Collegeboard.com and Princetonreview.com.

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 Finaid.org. “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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Posted in Alternative Payment, Financial Aid, Rising Tuition | 1 Comment »

Data Show College Endowments Loss Is Worst Drop Since ’70s

Posted by gradefund on January 30, 2009

Data Show College Endowments Loss Is Worst Drop Since ’70s

 

Published: January 26, 2009
The value of university endowments fell about 23 percent on average in the five months ended Nov. 30, according to two newly released reports.

Multimedia

Graphic

The steep declines are forcing colleges and universities across the country to contemplate wage freezes, layoffs and a halt to construction projects.

The drop found by the reports is the biggest in the value of college and university endowments since the mid-1970s, said John S. Griswold Jr., executive director of the Commonfund Institute, which manages money for educational institutions and other nonprofits.

“It’s been very sudden in some ways,” Mr. Griswold said. “There were people predicting the decline a year ago or more, but I don’t think anyone could claim to see the extent of this. These are unprecedented numbers.”

The reports, prepared for the National Association of College and University Business Officers by the financial services company TIAA-CREF and the Commonfund Institute, drew on data from 796 institutions for the 2008 fiscal year, which ended June 30, and on additional statistics gleaned from a follow-up survey with 435 for the period from July 1 to Nov. 30.

They found that while endowments gained in value by about 0.5 percent in the old fiscal year, they lost nearly a quarter of their worth in the subsequent five months, a period in which the financial markets sank.

“It’s a rolling contagion that hit us,” Mr. Griswold said.

The pain was spread among institutions large and small, private and public. When endowments were categorized by size, even the least affected — those worth more than $1 billion — were found to have lost an average of 20 percent. Those of $500 million to $1 billion saw the biggest decline, about 25 percent. Public institutions lost an average of 24 percent, private institutions 22 percent.

“Both public and private institutions are going to be very challenged, just in different directions,” said P. Brett Hammond, chief investment strategist of TIAA-CREF. “States are in trouble themselves, and the downturn in state support comes along with declines in investments. In the private sector, at the same time endowments have declined students need more help than ever.”

Cornell is facing a 10 percent budget shortfall for the current fiscal year because of a 27 percent decline in its endowment over the last six months, a drop in state financing and alumni giving, and students’ need for more financial aid, according to a report issued this week by the university’s president, David J. Skorton. To close the gap, the university plans to freeze campus construction and draw on $150 million in reserve cash and $35 million more from the endowment than was planned.

Syracuse University has already announced layoffs, and Dartmouth, whose endowment lost 18 percent of its value from July 1 to Dec. 31, has said they are inevitable.

“We continue to fund approximately 35 percent of the college-only operating budget through endowment distributions, and we do not have additional revenue sources that can replace this level of support,” Barry P. Scherr, Dartmouth’s provost, and Adam Keller, executive vice president, said in a statement issued last week.

“We anticipate that some of our endowment investments will continue to show losses,” they added, “and that many of our generous donors will be unable to give at the same levels for some time to come.”

Charles L. Schearer, president of the private Transylvania University in Lexington, Ky., said the endowment there, which finances about a quarter of the operating budget, had lost 28 percent of its value since June 2007. Transylvania has cut back on staff travel, declined to fill job vacancies, frozen overtime and halted all construction projects. The university is planning a major fund-raising push in the next year to help make up for the endowment losses.

“We’re going to have to capture some of that money back,” Dr. Schearer said in an interview. “We’re not looking at this as if there will be a rapid recovery. We’re anticipating a slow and gradual recovery.”

Sixty percent of the institutions responding to the follow-up survey said they did not expect to change the amount they draw from their endowments in the current fiscal year.

Mr. Griswold thinks that wise.

“People aren’t making snap decisions, decisions that seem based on a panic reaction,” he said. “That’s terrific. They should keep a steady hand on the helm.”

Posted in Economy and School, Rising Tuition | Leave a Comment »

Students Covering Bigger Share of Costs of College

Posted by gradefund on January 22, 2009

Students Covering Bigger Share of Costs of College

 

Published: January 15, 2009

http://www.nytimes.com/2009/01/16/us/16college.html?_r=1&ref=education

College students are covering more of what it costs to educate them, even as most colleges are spending less on students, according to a new study.

The study, based on data that colleges and universities report to the federal government, also found that the share of higher education budgets that goes to instruction has declined, while the portion spent on administrative costs has increased.

It describes a system that is increasingly stratified: the smallest number of students — about 1 million out of a total 18 million students — attend the private research universities that spend the most per student. The largest number of students — 6 million — attend community colleges, which spend the least per student, and have cut spending most sharply as government aid has declined.

“Students are paying more, and a greater share of the costs, but are arguably getting less,” said Jane Wellman, the executive director of the Delta Project on Postsecondary Education Costs, Productivity and Accountability, which drafted the study.

The Delta Project, a nonprofit, nonpartisan organization, seeks to increase college affordability by controlling costs, a goal it says can be accomplished without sacrificing quality. The study is a rare effort to look inside what researchers call the black box of higher education: the question of why it costs so much and where the money goes.

Colleges have justified rising tuition, in part, by saying that it does not cover anywhere near the full cost of educating a student. That is still true, but less so; the study found that students are contributing a greater share of the cost of their education at all kinds of institutions, even after accounting for scholarships and other tuition discounts.

In 2006, the last year for which data is available, students at public colleges and research universities paid about half the cost of their education — defined as the cost of instruction, student services and a portion of spending on operations, support and maintenance. That is up about 10 percentage points since 2002. At community colleges, students covered about 30 percent of their education, up from 24 percent.

At private institutions, the increases were less steep, but students cover a greater share: at private colleges that offer bachelors degrees — essentially, liberal arts colleges — the student share went to 63.5 percent in 2006 from 61.1 percent in 2002. At those that offer masters’ degrees, it went to 83.6 percent in 2006 from 80.4 percent in 2002.

At public institutions, spending on instruction declined from 2002 to 2005, and increased in 2006, but the increases did not make up for earlier reductions.

Spending on instruction decreased at private institutions, as well, except for private research universities, where it rose slightly.

“The institutions whose primary mission is teaching — the masters and community colleges and bachelors colleges, are slowly disinvesting in the teaching function,” Ms. Wellman said.

And the percentage of the budget going to instruction declined everywhere between 1995 and 2006 — to 63 percent from 64.4 percent at public research institutions, to 50.2 percent from 52.8 percent at public community colleges, and to 38.9 percent from 40.7 percent at private bachelors colleges.

The biggest decline occurred at private research universities, where the percentage of the budget devoted to instruction went to 57.9 percent in 2006 from 62.3 percent in 1996.

Meanwhile, the share spent on administration and support increased everywhere. At public research universities, those costs consumed 28.3 percent of the budget in 2006, up from 27.7 percent in 1995. At private research institutions, they accounted for 32.9 percent of the budget, up from 30.1 percent, and at public community colleges, 37.7, up from 35.9 percent.

Tuition increased faster than spending on education, with students at public institutions taking on the biggest increases, as states contributed less per student.

Had tuition increased only to match spending, the report’s authors calculate, it would have increased only 2.5 percent at public research universities, where it went up 29.8 percent. At private colleges, it would have increased 1.9 percent, rather than 12.5 percent. And at state and community colleges, tuition would have declined, by 2.1 percent and 5.8 percent. Instead, it rose 29 percent and 18.1 percent.

As state revenues decline, Ms. Wellman predicted, the problem will only get worse. “We see the picture ahead being more of the same, but dramatically more of the same,” she said.

 

This article has been revised to reflect the following correction:

Correction: January 19, 2009
An article on Friday about a study that found that college students are paying a higher proportion of the cost of their education included incorrect preliminary data provided by the authors of the study, the Delta Project on Postsecondary Education Costs, Productivity and Accountability. At private colleges that offer master’s degrees, the portion of education costs paid by students rose between 2002 and 2006 to 83.6 percent from 80.4 percent, not from 75.5 percent. At private institutions that offer bachelor’s degrees, the percentage rose to 63.5 percent from 61.1 percent, not from 57.7 percent. At private research universities, the percentage declined to 55.8 percent from 57.6 percent; it did not rise from 55.3 percent.

Posted in Education Incentives, Rising Tuition, Student Loans | Leave a Comment »

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

http://www.usnews.com/articles/education/2008/12/24/6-rules-that-can-help-you-afford-a-private-college.html

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.

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

Private Colleges Worry About a Dip in Enrollment

Posted by gradefund on December 26, 2008

Private Colleges Worry About a Dip in Enrollment

 

Published: December 21, 2008

First came the good news for St. Olaf College: early-decision applications were way up this year.

Now comes the bad news: the number of regular applications is way down, about 30 percent fewer than at this time last year.

“To be quite honest, I don’t know how we’ll end up,” said Derek Gueldenzoph, dean of admissions at the college, in Northfield, Minn. “By this time last year, we had three-quarters of all our applications. The deadline’s Jan. 15. If what we’ve got now is three-quarters of what we’re going to get, we’re in big trouble. But if this turns out to be only half, we’ll be fine.”

Not all private colleges are reporting fewer applications this year. Even in the Midwest and Pennsylvania, where most colleges seem to have dwindling numbers, some are getting more applications than ever. Still, in a survey of 371 private institutions released last week by the National Association of Independent Colleges and Universities, two-thirds said they were greatly concerned about preventing a decline in enrollment.

Getting exactly the right enrollment — always a tricky proposition — is especially crucial for small colleges with tuition-driven budgets. One case in point came last month, when Beloit College in Wisconsin announced it would eliminate about 40 positions because 36 fewer students than expected had enrolled. The college has about 1,300 students and gets three-quarters of its $55 million budget from tuition.

Admissions officers nationwide point to several possible reasons for the drop in applications. Some students have pared their college lists this year. Many more are looking at less-expensive state universities. Many institutions accepted more students under binding early-decision programs, and each such acceptance drains off an average of 8 to 10 regular-decision applications. And some experts suspect that students are delaying their college plans.

The deadline at most colleges is still a few weeks off, so a last-minute flood of applications could raise the numbers to last year’s level. But admissions officers say they are not counting on that.

“I’ve been doing this a long time, and I don’t remember a year when applications started out behind and didn’t end up behind,” said Steve Thomas, director of admissions at Colby College in Waterville, Me., where early-decision applications were higher than usual but regular applications are running about 14 percent behind.

At Gettysburg College in Pennsylvania, where early-decision applications were up, regular applications are down about 15 percent, said Gail Sweezey, the director of admissions.

“One thing that’s happened this year is that there’s all this talk, and one-sided media stories, about how private colleges are unaffordable,” Ms. Sweezey said. “It’s become almost viral that there’s no loans, that schools are having problems. The truth is that a lot of private colleges have more financial aid available this year, but there’s lots of misinformation out there. And my guidance counselor friends tell me students may be applying to fewer places and turning to their state university, which will be at capacity.”

If some private colleges are grappling with the specter of too few applications, public universities and community colleges are having the opposite problem — more students at a time when their state financing is being slashed.

In California and Florida, some public institutions have been forced to cap enrollment. And even in states like Pennsylvania, where the number of high school graduates is declining, applications to public universities are growing.

“We have 47,971 applications as of now, compared to 45,760 at this time last year,” said Anne Rohrbach, executive director of undergraduate admissions at Pennsylvania State University. “We’ve been making offers since October, and we’ve already had 1,638 students say yes, compared to 1,096 at this time last year.”

Generally, Ivy League universities with generous aid packages to low- and middle-income families have as many applicants as ever — and even more applying for financial aid.

“We had 27,462 applications last year, and we’ve been running almost exactly on last year’s pace,” said William Fitzsimmons, dean of admissions at Harvard College, which has eliminated early decision. “More students are applying for financial aid. It’s a significant increase, four full percentage points ahead of last year.”

Yale received 5,556 applications this year, 14 percent more than last year, for its nonbinding single-choice early action program, said Jeffrey Brenzel, the dean of admissions, who added that regular applications were running higher, too.

Dartmouth has more applications than ever, early and regular, as do Duke University, the University of Denver and the University of Rochester.

Jonathan Burdick, the dean of admissions and financial aid at Rochester, said the school’s reputation for generous merit aid helped draw applicants.

“This is a time when families may be looking at options that are less costly,” Mr. Burdick said. “There are a lot of families who may make $180,000 to $200,000 but can’t afford $50,000 a year and might apply to a Rochester, where merit aid this year can be as much as $14,000.”

Many selective private colleges say fewer applications are no problem.

“We’re down about 16 percent now, and I think we’ll be down 10 to 15 percent at the end, Jan. 1,” said Monica Inzer, the dean of admission and financial aid at Hamilton College in Clinton, N.Y. “If our acceptance rate goes up a little, that’s O.K.”

Mark Hatch, vice president for enrollment management at Colorado College, said he expected to have about 5 percent fewer applicants this year and took a similar view.

“We admitted 26 percent last year, and if it’s 31 percent this year, we’ll make more people happy,” Mr. Hatch said. “I think the economic uncertainty has families, even families of means, telling their children to round out their college lists with state universities. This year, families want two safety nets, one for the first hurdle, admission, and one for affordability. Anecdotally, I’ve noticed a lot of parents this year listing their occupation as unemployed.”

At many colleges, financial aid requests are up significantly. At Connecticut College, for example, 42 percent of the accepted early-decision students applied for financial said, compared with 34 percent last year — and 36 percent qualified for aid, compared with 24 percent last year.

This has been a particularly difficult year for small private colleges that accept a majority of their applicants.

Stephen MacDonald, the president of Lebanon Valley College in Annville, Pa., where applications are down about 15 percent, is taking steps to lure more students, including adding lacrosse for men and women and hiring a prominent coach, which he thinks will attract 20 to 25 students.

“We’ve also increased our scholarship award to children of alums, from $500, which is a nice gesture, to $2,500 a year, which is more than a gesture,” Mr. MacDonald said.

“We could still end up down 3 percent, which could sting,” he said. “This is a time when schools like ours, private liberal arts colleges that don’t have a big name, are in a potentially dangerous realm.”

Posted in Economy and School, Rising Tuition | Leave a Comment »

Obama, McCain Spar Over GI Bill’s Education Incentives

Posted by gradefund on December 12, 2008

http://www.foxnews.com/politics/elections/2008/05/22/obama-mccain-spar-over-gi-bills-education-incentives/

Obama, McCain Spar Over GI Bill’s Education Incentives

FOXNews.com

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.

Posted in Education Incentives, EducationalSpending, Financial Aid, Rising Tuition | Leave a Comment »

Putting College Tuition on Plastic

Posted by gradefund on December 12, 2008

http://www.time.com/time/nation/article/0,8599,1834160,00.html

Putting College Tuition on Plastic

College Tuition Credit Cards
Left; Rob Melnychuk / Corbis: Alan Schein Photography / Corbis

Credit cards. Retirement funds. Home equity. All should be last resorts for families seeking funds to pay for college. But amid the current credit squeeze, a new poll indicates many parents and students are making these less-than-brilliant financial moves to pay for tuition.

The nation’s biggest student loan company, Sallie Mae, and polling firm Gallup just released the results of a survey, conducted in May, of 1,400 undergraduates and their parents about how they plan to pay for college this year. One in five parents borrowing money reported either taking out a second mortgage of more than $10,000 or charging some portion of college expenses to a credit card. In a study released earlier this summer, consumer advocate U.S. Public Interest Research Group (PIRG) found roughly a quarter of students reported billing their tuition to a credit card. Such borrowing practices generally carry along with them much higher interest rates and fees than private student loans. “Using a credit card to pay for your education is absolutely the worst financial decision you can make,” says debt counselor Catherine Williams of Chicago-based Money Management International.

But many parents and students say they have little choice other than to deplete their savings or grapple with high interest rates down the road. Indeed, among respondents in the Sallie Mae/Gallup poll who said they were using credit cards to pay tuition bills, no parents and only 15% of students said they were doing so because they thought they’d get a better interest rate. Nearly half reported using Visa or MasterCard to finance their education because they had no alternative. Some 3% of survey respondents said they have resorted to withdrawing money early from retirement savings, which can carry up to a 10% penalty fee.

When deciding how to pay for college, families should start by contacting their school’s financial aid office. About $130 billion a year is available in scholarships and grants. The first step in borrowing money for school is to max out on low-interest government programs such as federal Stafford loans. In the past, lots of families have turned to private loans to make up the difference, with borrowers taking out about $17 billion in such loans during the 2006-2007 school year. But as credit markets dried up last spring, many private lenders either went out of business or became much stricter about approving loans. And the people least likely to get a bank loan are often the same ones credit card companies are trying to reel in with low interest rates that quickly jump sky-high.

Also of concern from the Sallie Mae/Gallup poll is the finding that some 40% of families didn’t factor cost into the decision about which school their undergraduate should attend, which is astounding given the price difference among schools. Tuition at a private, four-year college averages about $24,000 a year, while a good public institution may be as little as $10,000, even for out-of-state enrollees, according to the College Board, the nonprofit that administers the SAT. “We eliminate homes and cars all the time due to price, but then don’t go through the same exercise for college,” says Tom Joyce, a Sallie Mae spokesman. “That’s got to change.”

Another troubling finding: some 70% of survey respondents said they didn’t consider what a student’s potential post-graduate income would be. This is bad news for today’s college students, who graduate with an average of some $9,000 in credit card debt, which will cost young wage earners more the longer it takes to pay back. Aggressive on-campus marketing by credit card companies “equates signing up for a new card to impulse shopping,” says PIRG spokesman Ed Mierzwinski. “No one tells students that if they don’t buy off the balance each month, the price of that pizza they just charged is going to compound steadily.” And if the price of a pizza can really add up over time, just think about four years of tuition.

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Undergrads on the Bread Line

Posted by gradefund on December 12, 2008

http://www.time.com/time/nation/article/0,8599,1847436,00.html

Undergrads on the Bread Line

The offerings at the food bank at Michigan State University include college favorites like chocolate chip cookie mix.
The offerings at the food bank at Michigan State University include college favorites like chocolate chip cookie mix.

College students have always scraped by on less-than-nutritious food — ramen noodles, pizza, Diet Coke — but as the price of grocery shopping climbs, more of them are struggling to find their next meal. With the economy tanking and a 5% increase in food prices this year, the highest in nearly two decades, college students are increasingly turning to a new kind of financial aid: food pantries.

“At first, I was like, ‘Oh, man, I hope no one sees me here, it’s embarrassing,'” says Jessica Makolin, 21, an advertising major who will graduate from Michigan State in December. Makolin says she eventually grew more comfortable patronizing Michigan State’s Student Food Bank, the only food bank in the nation run for students by students. The Lansing organization experienced a nearly 15% increase in traffic this past school year, with the number of visits topping out at more than 4,000 in 2007-2008. Students’ need for food assistance is on the rise around the country. For example, at Texas Women’s University in Denton, the food pantry for students noted a sharp increase in customers during the summer session; meanwhile, a Seattle food bank near the University of Washington has seen about a 25% increase in students’ visits compared to the previous calendar year, and demand for the food assistance program at the Community College of Denver has doubled in the last year.

At Michigan, where the food bank is supported by charitable donations and hosted in the health center cafeteria every two weeks, the offerings include staples —such as bread, canned vegetables and soup — in addition to a rotating list of college student favorites, including microwave popcorn and baking mixes. Each pick-up day 10 or 15 student volunteers help package food, stock shelves and serve customers. They conduct interviews to see how much food to give out — if a customer has a family to support, he or she gets more — but almost never turn someone away. “Someone who is not on a tight budget is probably not going to go through the hassle,” says Kristin Moretto, 34, an education graduate student and the director of the food bank.

The past couple of years, Moretto says, have seen a growing number of undergraduate customers. Makolin, for one, says she started going because of the economy and a tough situation at home. She drives home to Ann Arbor every weekend, which takes an hour each way, to help her mother care for her father, who has Parkinson’s disease. Even with a paid internship, Makolin says, it’s tough to pay for ever-pricier food on top of an increasingly expensive commute as well as her own housing and utilities bills. “My dollar box of mac and cheese isn’t a dollar anymore,” she says. Like many food bank patrons, Makolin says the food bank has enabled her to stay in school.

Despite the undergrad uptick, Moretto says about 60% of the Michigan patrons are graduate students, who often have families of their own to support. Jana Simmons, 26, a Ph.D candidate in biochemistry, started going to the food bank last summer shortly after her daughter was born. Simmons’ husband is a certified teacher, but in the state’s struggling economy, she says, he hasn’t been able to find a classroom job in over four years, working as a roofer instead. Simmons’ stipend, meanwhile, “isn’t enough to live on,” she says. Paying for day-care and diapers on top of a commute that was already growing more expensive as gas prices rose, she adds, “puts a big strain on the budget.” The food bank’s offerings include applesauce, one of her 21-month-old’s favorites.

No matter how much it may help, though, using a food bank is an adjustment for many students like Makolin. Back in 2004, when she was a senior in high school, Makolin was named Ann Arbor News Young Citizen of the Year — in large part because she volunteered at multiple food banks. “I find somewhat ironic that I am now on the other side of the counter,” she says.

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Downturn Expected to Drive Tuition Up

Posted by gradefund on December 12, 2008

http://www.nytimes.com/2008/10/30/education/30college.html?fta=y

Downturn Expected to Drive Tuition Up 

 

Published: October 29, 2008

Tuition costs rose slightly faster than the Consumer Price Index last year, and students received record amounts of financial aid, according to the annual reports on college pricing and student aid released Wednesday by the College Board.

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College Fees

But while financial aid is growing, average student borrowing is still going up, as well.

Moreover, many education experts said that the report’s findings of relatively stable college affordability, based on data gathered before the current economic downturn, might already be outdated. With the troubles in the stock market, they said, both public and private colleges may soon be in serious financial straits, forcing large increases in tuition.

“Given the economic strain on state budgets, the pressure on state governments to shift the cost of education to students and families may prove irresistible,” said Molly Corbett Broad, president of the American Council on Education, which represents 1,600 colleges and universities. “Private institutions, too, given the loss of endowment income and expected cutbacks in private giving, will likely be forced to increase tuition at the same time they struggle to increase institutional financial aid.”

For the current school year, the reports found, the average in-state tuition and fees at public four-year institutions increased by 6.4 percent — to $6,585 — not much more than the 5.6 percent rise in the Consumer Price Index. At two-year public colleges, average tuition and fees rose 4.7 percent, less than inflation, to $2,402. Private four-year colleges and universities’ average tuition and fees are $25,143, 5.9 percent higher than last year.

“College prices are doing what other prices are doing,” said Sandy Baum, a senior policy analyst for the College Board and a Skidmore College economics professor. “They’re not going up more rapidly; they’re just keeping pace. But then, we had an unusually high rate of inflation. And with the current economic crunch, we don’t know what will happen next year.”

Already, state cuts to university budgets have led to announcements of tuition increases in more than a dozen states, including some that will take effect in the spring semester.

But as the costs of college rise, so does student aid. Last year, the reports said, graduate and undergraduate students received more than $143 billion in financial aid, including grants, federal loans, federal work-study assistance and federal tax credits. In addition, they borrowed $19 billion from state and private sources.

Undergraduates received an average of $8,896 in financial aid, including $4,656 in grant aid and $3,650 in federal loans, an increase of about 5.5 percent over the previous year, adjusted for inflation, according to the report.

After holding steady at 5.2 million for two years, the number of Pell Grant recipients rose to 5.4 million last year.

“The Pell Grant scholarship, which Congress has significantly boosted in the past two years, is playing an increasingly important role in expanding college access, especially for low- and middle-income families,” said Representative George Miller, Democrat of California and chairman of the House Education and Labor Committee.

While the tuition report, “Trends in College Pricing,” covers this academic year’s costs of college, “Trends in Student Aid” is based on the previous academic year’s data.

Private loan volume declined slightly that year, but still represented almost a quarter of the total loan volume.

“In ’07-08, the full effect of the credit crunch wasn’t evident, but it was starting — credit was getting tighter,” Ms. Baum said. “We all expect that private loans will be down next year. More families are understanding that it makes sense to get all the government loans they can.”

For most families, net tuition — the discounted amount most students actually pay — is more important than a college’s published tuition.

At private four-year institutions, the average net tuition, after grants and tax benefits are subtracted, is about $14,900, some $10,200 less than the published price — and that net price has been growing more slowly than the published price.

At public four-year colleges, where the net price has been increasing faster than the sticker price, the net tuition is about $2,900, or $3,700 less than the published tuition.

And at public two-year colleges, the net price has steadily declined, and now is only about $100, or $2,300 less than the published tuition. Because of their higher prices, private colleges, especially second-tier institutions without large endowments, may have big problems next year.

“Private colleges face a real quandary,” Ms. Baum said. “Everybody’s going to have more people applying for financial aid, and it could really be that they’re going to lose enrollment if they can’t meet the need.”

Since the markets went into free fall last month, private colleges have been working to persuade worried families that their institutions may still be affordable.

“In these tough economic times, Job 1 of every private college and university will be keeping their student aid budgets in line with growing financial need, and working creatively to keep student out-of-pocket costs as low as possible,” David L. Warren, president of the National Association of Independent Colleges and Universities, said Wednesday in a statement. “Eighty-one percent of full-time, dependent students at private colleges receive institutional grant aid, averaging $10,011.”

With worsening economic conditions, public and private institutions alike may cut back the “merit aid” offered to attract particular students — often, those whose grades and test scores will improve their rankings — and use that money on aid to needier students instead.

According to the report, public four-year institutions give only 44 percent of their aid dollars to students with financial need. On average, 38 percent of the public universities’ aid goes to non-need-based merit aid, and 18 percent to athletic scholarships.

“There’s a real public policy question there,” Ms. Baum said.

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Even at Costliest College, Unease Over Downturn

Posted by gradefund on December 12, 2008

http://www.nytimes.com/2008/11/01/education/01college.html?fta=y

Even at Costliest College, Unease Over Downturn

 

 

Published: October 31, 2008

YONKERS, N.Y. — In the hypercompetitive world of higher education, a top ranking in national surveys is zealously sought. But during this moment of deep economic anxiety, Sarah Lawrence College finds itself No. 1 in an inopportune category: the nation’s most expensive school.

With students paying $53,166 per year for tuition, room and board, Sarah Lawrence, a liberal arts school of 1,200 with 42 acres of Tudor-style buildings, edged out George Washington University and New York University as the priciest school in America, according to a report this week by the College Board. They are among more than 100 colleges and universities costing above $44,000 a year.

Across the nation, college costs rose 6.4 percent this fall, the College Board report says, with the average price tag for private, four-year schools at $25,143, and public universities, $6,585.

On both the top and bottom ends of the spectrum, many of the pressures driving up costs are similar, particularly for liberal arts colleges. A look at Sarah Lawrence, which has been in the College Board’s top five in cost for several years, provides a window to better understand where all that money goes.

Located just north of New York City in Yonkers, the college, since its founding in 1928, has held as its guiding principle the importance of “individual education.” Since no two people learn in the same way, the philosophy holds, students are expected to largely design their own academic programs.

But such a system requires intensive interaction with faculty; Sarah Lawrence brags of a 6:1 student-teacher ratio. During the first year, students meet individually with a professor every week. So it should be no surprise that faculty salaries and benefits are the school’s greatest expense, 48 percent of its annual $80 million budget.

Karen Lawrence, president of Sarah Lawrence, said there is an increasing division among the top liberal arts schools between those with huge endowments like Harvard ($34 billion before this season’s economic crisis) and Yale ($23 billion) and schools that depend heavily on tuition to pay their bills. Sarah Lawrence’s endowment stands at $65 million — down from $77 million in May 2007, a 16 percent drop amid the market turmoil.

“The rich schools are increasingly functioning like public institutions,” she said. “They could go years with not a single student having to pay tuition.”

At Sarah Lawrence, 53 percent of the students receive some financial aid, the vast majority of them getting grants from the college itself, taking up 21 percent of the budget. (As of 2007, two-thirds of Harvard’s students received aid.)

Ms. Lawrence — no relation to the school’s founder — said that the school has not yet seen an uptick in requests for financial aid, but that she is worried about increasing pressures as middle- and upper-class families also deal with the market turmoil.

“It’s really hard to tell right now how much we are going to be impacted,” she said. “Some students are struggling more because their family finances are changing. We are trying to help them out. But the small endowment makes it hard.”

Rosie Young, 18, a freshman from Providence, R.I, said she feels lucky to have a trust fund to take care of her college education — it covers everything, including Plan 2, the meal plan required for freshmen, which brings the total cost to $53,454 (that’s $39,450 for tuition, $8,756 for a room and $4,348 to eat, plus $900 in assorted fees). “Half the kids here are loaded,” she said. “I am extremely lucky that my grandmother is wealthy.”

Ms. Young said that her grandparents had done well in the stock market, and that her parents had recently told her that as much as half their fortune may have disappeared in the recent downturn. “But I think I am pretty secure, since the college money is in a trust,” she said.

She was sitting next to another freshman, Kayleigh Salstrand, 18, from Lake Tahoe, Calif. The two had apparently not discussed money before; Ms. Young was surprised to learn that her friend was on financial aid.

Ms. Salstrand, the daughter of a bank employee and a stay-at-home mother, said she pays about $8,000 (she took out a loan to cover it); the rest is offset by a $39,000 grant from Sarah Lawrence and other aid.

“It is a little crazy that college should cost so much, but I am really happy with my experience here,” she said. “It is absurd, but it is what you have to do. Be in debt for the rest of your life.”

It was a sentiment commonly expressed — both by students on aid and those whose families can afford the tuition.

Max Teischer, 19, a sophomore from Westport, Conn., said that his parents — his father is a hedge-fund manager — looked at Sarah Lawrence as an investment and never blinked at the cost. But asked how the economic turmoil was affecting his father, Mr. Teischer said: “He is freaking out.”

Mr. Teischer remains unworried about his ability to stay at Sarah Lawrence, but says he is cutting back on some extravagances.

“One of my favorite restaurants is the Oyster Bar,” he said. “But I don’t go there as much. I will get a bagel for dinner instead.”

This article has been revised to reflect the following correction:

Correction: November 8, 2008
An article in some editions last Saturday about Sarah Lawrence College misidentified the city in which it is located. The error also appeared in the dateline. The school is in Yonkers — not in the village of Bronxville, N.Y., which the college uses as a mailing address.

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