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by Emily

Last week, we blogged about states and loan companies making cuts to student loan forgiveness programs.  The New York Times initially ran a piece on these budget cuts and has followed up this week with a chart of state loan forgiveness programs and their current financial status.  If you're planning on using one of these programs to cancel some of your student debt after college, you can head over to their website to see if your program is among those facing potential budget cuts.  If you don't see it listed, The New York Times is encouraging people to contact state and local loan forgiveness programs and report back with details.

While many state programs are facing cuts, federal loan forgiveness programs have expanded in recent years. New federal options include a public service loan forgiveness program and a repayment plan set to debut next month that will forgive students' remaining balances of federal student loans after 25 years of income-based payments. Congress has also approved more funding for Americorps, which can help volunteers pay for school. Cancellation programs for Perkins Loans may also become more popular if an expansion to the Perkins Loan program is approved in the 2010 federal budget.

Regardless of the state of your loan repayment and forgiveness options, keep in mind there is free money out there.  Grants and scholarships are available for virtually every student based on any number of characteristics and criteria.  For example, many groups offer nursing scholarships and education scholarships, among other major-specific awards.  To find out more, do a free college scholarship search.

by Agnes Jasinski

Although need-based financial aid has remained steady at most colleges, some schools are looking at their merit-based scholarship programs as the next place to cut if budgets continue to shrink. Merit-based scholarships, which do not usually consider need, rely on GPA and standardized test scores as measures of students' academic achievement and potential for excellence on the college level.

A criticism has been that the awards go disproportionately to students of wealthy families who may have the resources to better prepare for tests and assistance outside of the classroom. However, cuts in merit-based scholarship programs may also affect the middle class, a group of students who may receive some funding, but due to their parents' combined incomes will receive far more in student loans than scholarships and grants compared to lower-income applicants. Perhaps that's how it should work, but middle-class families with steady incomes don't always have the resources left over to contribute much to college savings accounts like 529 Plans, especially in a tough economy.

Should merit-based scholarships then also consider some degree of need before disbursement? An article this week in The Chronicle of Higher Education described several schools looking to trim their merit-based scholarship programs, especially those that rely on state funding to exist. In Florida, the Bright Futures Scholarship Program will stop funding full public-college tuition in favor of a set amount based on credit hours. In West Virginia, Promise Scholarship awards will max out at $4,750 rather than the former full rides. In Michigan, a state that has been hit particularly hard in this economy, their own Promise Scholarship program may be cut entirely. The University of Texas recently announced it would no longer be sponsoring National Merit, a popular national scholarship program that students qualify for based on standardized test scores. Students there had been able to receive $13,000 over four years. The university promises an increase in need-based financial aid to assist those students who had been receiving National Merit aid but who also qualified for many of the federal need-based financial aid programs.

>With a limited amount of funding coming from both the state and federal level, schools have to decide how best to approach financial aid. The trend has been to place a higher importance on need, as the rationale is that many students who had been receiving merit-based scholarships would be able to afford college anyway, or be eligible for outside academic scholarships. And those who would have applied for need-based financial aid before the recession are only in need of more aid today.

One school is taking the Good Samaritan approach. At Pennsylvania State University's Schreyer Honors College, parents and the college bound who did not fill out financial aid forms but received the school's $3,500 merit-based scholarships for gaining admittance to the honors college are being asked to consider allocating that money instead to accepted students with a higher level financial need. In short, the money goes to students who really need it. Should it be more complicated than that?

by Emily

Loan forgiveness programs have been helping encourage students to enter careers in fields like education and nursing for years.  Such programs are typically offered by state student loan agencies or non-profit organizations, and are often well-publicized to prospective college students.  In many cases, students have borrowed liberally, banking on having a substantial portion of their student loans forgiven after five or ten years of work in their field.  But budget cuts and stock market woes have been forcing agencies to make cuts to their loan forgiveness programs, in some cases almost entirely eliminating them.

Kentucky, Iowa, California, and New Hampshire are some of the states that have made changes to loan forgiveness programs, according to The New York Times.  Even if you don't live in one of these states, if you're banking on having your student loan debt forgiven after you graduate college, you may want to see what guarantees there are that your state's program will still exist in its present form.  Make sure you know how much of what you borrow you can expect to repay, even in a worst case scenario.

Regardless of repayment and forgiveness options, it's still a good idea to minimize your borrowing by finding scholarships and practicing good money management.  Nursing scholarships and education scholarships are out there, as are numerous other scholarship opportunities.  There are also several federal loan forgiveness programs for teachers, nurses, and other public service employees.

by Emily

Early reports suggest that summer enrollment is up at colleges across the country, likely due at least in part to the recession.  Since summer jobs are harder to find and some summer internships have also been taken off the table, more students are looking to summer classes as a way to stay productive between spring and fall semesters.  Dwindling college funds and other economic difficulties may also be pushing students to try to finish college as quickly and cheaply as possible.  Most state colleges and community colleges offer summer classes, as well as many private schools.

Summer classes are a great way to keep yourself on track for graduation, as well as to get required courses out of the way as quickly as possible.  While more time might be spent in the classroom at once, summer terms are shorter than regular semesters, so that class you've been dreading won't seem to drag on quite as much.  Summer classes often come with smaller class sizes and more support from the instructor, in addition to longer class times, so they can also be a good way to master subjects that might otherwise be a struggle.

One problem that comes with summer enrollment is finding financial aid, however.  Often, schools award fewer summer scholarships and depending on the school's approach to summer aid awards, students may have already used up their federal aid for the academic year, or may have to reduce the amount they receive the following fall and spring in order to pay for summer.  Some schools are working to make it easier to pay for school in the summer, though, as a piece in Inside Higher Ed reports.  Several have instituted summer payment plans similar to those available during the regular academic year, while others are offering tuition discounts and summer scholarship awards.  You may also be able to apply other college scholarships towards your summer tuition, or even still win scholarships this summer.

by Emily

Penn State University's Schreyer Honors College offers admitted students $3,500 per year merit scholarships, a common practice among state colleges that want to entice the best students to attend. Students at Penn State and their parents are doing something unique with these scholarship awards, though: they're giving them to other Schreyer students.

Parents of scholarship recipients who did not apply for need-based financial aid receive a letter asking them to consider making a donation in the amount of the scholarship their children received. The letter, penned by the parents of other Schreyer students, emphasizes the amount of unmet financial need some of their children's classmates face and asks them to consider whether they need the extra $3,500 in order to pay their tuition bill. If not, they are asked to give the money to students for whom the extra money could make the difference between attending college at Penn State and staying home.

The university stresses that students are not being asked to give up their academic scholarships in this campaign. Rather, they ask that parents who can spare the extra money because their child received a scholarship would consider donating to help other deserving students who last year had more than $1 million in unmet financial need.

Honors colleges, even at large state universities, tend to be relatively close-knit communities of top-performing students who are engaged in their studies and their campus communities. It's not surprising, then, that parents of Schreyer Honors College students hit upon an idea to help their children's struggling classmates last year when the economy first began to sink into recession. The campaign was initiated by parents and supported by the university, which sends the letters on the parents' behalf.

Last year's appeal raised around $228,000, with over $120,000 of that going directly to 34 students who needed help paying for school. The remaining $100,000 went towards establishing an endowed trust to ensure that this effort continues helping students in the future. So far this year, the campaign has raised $13,000 from 11 donors.

by Agnes Jasinski

As the number of returning and adult students continues to grow in an economy where advanced skills are necessary to not only land a good job but keep that job, it was only a matter of time when we'd start seeing more students in school at the same time as their parents.

We've already written about growing community college enrollment. The numbers speak for themselves—nationwide, full-time enrollment at community colleges is up 24.1 percent since 2007, with overall community college enrollment increasing 16.9 percent over the same period, according to the American Association of Community Colleges. Many of those enrolled are returning adult students who want to amp up their skill sets or start on a path toward a new career, perhaps due to a recent layoff or desire to go into a more desirable field. Community colleges have also always been an affordable option for traditional students either looking for a two-year start before transferring to a four-year university, or a two-year associate's program that will get them out onto the market faster. It's only natural then that there would be some overlap, with students and their parents taking courses at the same time.

In Illinois, college students who are 40 and older make up about 23 percent of the community college populations. A recent article in the Chicago Tribune looks at mothers and daughters taking community college courses together, such as Diana Gudowski, a 52-year-old attending Prairie State College in Chicago Heights with her 19-year-old daughter Marissa. The two found themselves on the same campus when the family decided collectively that they could not afford Marissa's first choice, the $30,000 per year St. Mary-of-the-Woods College. Marissa plans to complete her prerequisites at the community college and then transfer to Northern Illinois University. Meanwhile, her mother is taking classes toward a bachelor's of fine arts in photography; she already has an associate's from Prairie State in photographic studies. Although their courses don't overlap, their schedules do—the two carpool to campus, as the family shares one car.

"When I got out of high school, I thought ‘Cool. … Now I can take my first class at noon.' But four out of five days, my Mom starts at 8 a.m.," Marissa said in the article.

The article's focus is on mothers and daughters because the female population has been hit harder by the struggling economy. Despite some upturns, there are still more than 15 million people out of work across the country, and many of those are older women with limited educations, according to the Tribune. Are you (or your parents) interested in the community college option? Try our free college search or look through our library of resources for more information.

by Emily

Student financial aid programs in several states may soon fall victim to sweeping budget cuts necessitated by the recession.  Ohio, Florida, Michigan, and California are all considering proposals to reduce or eliminate some state student aid programs, including popular grants and scholarships.

Ohio and Florida are both making slight changes to rules in existing aid programs, resulting in less aid for some students, but mostly leaving financial aid intact.  Florida is capping their Bright Futures scholarship so it no longer covers all of students' tuition or tuition increases, while Ohio is changing rules in their Ohio College Opportunity Grant to focus aid towards tuition and fees at public schools.

California and Michigan, however, are making far more sweeping cuts.  California has proposed eliminating CalGrants, a popular state grant program, for incoming college freshmen and cutting CalGrants for current college students.  Michigan may eliminate the Michigan Promise scholarship and make sweeping cuts to several other state financial aid programs, including work-study.  Students in both these states could find themselves suddenly thousands of dollars short on college financial aid.

While federal stimulus money has mitigated some of the damage in many states, in Michigan it has also played a large role in the proposed cuts to financial aid, according to The Detroit News.  Since a provision in the stimulus legislation prevents states from drastically reducing funding to higher education institutions, Michigan may be forced to turn to cutting state grant and scholarship programs to make up some of their budget deficit.

While some state aid and loan forgiveness programs are being reduced or eliminated, financial aid is still available.  Many college are actually increasing their budgets for university scholarships, and private foundations are still offering scholarship aid, as well.  Federal student financial aid has also seen some increases in the last two years.  Money is still out there if you know where to look, and a great place to start is doing a free college scholarship search.

If you're planning to enroll in a community college sometime in 2009, be sure to plan ahead.  While in the past, late registration may have resulted in students not getting a class or two they wanted, increased interest in two year schools may produce an even more pronounced effect.  Community colleges across the country are receiving more applications and admitting more students for the 2008-2009 academic year than ever before, with some institutions reporting percentage growths in the double digits.  Many schools are seeing enrollment increases so dramatic that they lack the money and space to adequately accommodate the students turning up on their doorsteps.

Community colleges and four-year state colleges are contending with state budget cuts, declining endowments, and less fruitful fundraising efforts in the face of the worst economic situation in decades.  Meanwhile, the cash-strapped and the frugal are flocking to the least expensive educational options available, which are community colleges.  Community colleges are also seeing an uptick in nontraditional students, as the unemployed return to school for job training and certification to get back to work.  All of this adds up to a situation where more students need seats in classes, college services, and student financial aid than ever before, yet fewer resources are available to accommodate these needs.

While schools are doing their best to find space, add courses and sections, and increase campus-based aid where possible, budgetary difficulties are an unfortunate reality.  The economic stimulus bill currently in the works in Congress may help relieve some of this stress, but students should still be aware of potential snags in their college plans.  If you plan to enroll in a community college this summer or fall, here are some steps to take:

1. Research costs and payment options now.  Do a scholarship search.  Many scholarships are available to community college students and some are awarded specifically to students at these institutions.
2. Apply for admission and financial aid as early as possible.  While most community colleges have rolling admission, students who wait until the last minute to get in may find classes full and aid exhausted.
3. Whether you're a new or returning student, register for classes as soon as you can and be sure to pay your bill on time, or early if possible.  If you get dropped or prevented from registering due to late payment, there's no guarantee a seat will still be there when you get your finances in place.
4. Complete the FAFSA soon, even if you're not sure if or when you'll start college in 2009. FAFSA applications are up this year, as are most varieties of financial aid applications.  This could mean a lengthier processing time, both at the Department of Education and in your college's financial aid office.  The FAFSA is worth doing--many community college students don't apply for aid, even though they qualify.  Applying is free and having one on file can't hurt, even if you don't go to school right away.
5. If your employer helps with tuition, find out beforehand whether they pay up front or reimburse you after the fact.  The earlier you know whether you need to come up with money on your own or the more warning they have before they need to pay, the better your chances are of being able to register on time.

by Suada Kolovic

Over the course of decade, an Iona College nun known as Sister Susie allegedly embezzled more than $1.2 million from the Catholic college in Westchester County. Sister Marie E. Thornton, a former vice president of finance for Iona College and nun, allegedly diverted college funds for her own use by turning in phony vendor invoices for reimbursement and having the college pay credit-card bills for “personal expenses.”

Officials wouldn’t say where the funds went but, according to Talk of the Sound, a former men’s basketball coach at the school hinted that Thornton may have gambled away at least some of it. In October, the college’s president, Brother James Liguori, publicly acknowledged the loss of only $800,000 but insisted that it had “recovered a major amount.” And in a statement issued Thursday evening, Iona said they had taken swift action after discovering the missing funds a year and a half ago, had conducted a follow-up investigation and put preventative procedures in place to avoid similar fraud.

Thornton was released without bail after waiving indictment and pleading not guilty to a single felony count of theft involving a federally funded program, but if convicted Thornton could face up to 10 years in prison for her unholy scam. I guess the vows of poverty, chastity and obedience don’t apply when you’re on a hot streak at the craps table.

by Emily

With President Obama's proposal to end the bank-based Federal Family Education Loan Program, there has been much speculation on what role would be left for banks in student loans, as well as which banks would be allowed to play that role.  An announcement made yesterday by the Department of Education indicates that at least four banks will remain involved in federal student loans for the forseeable future.

The Department of Education has selected four companies to service loans made through the federal Direct Loans program.  Sallie Mae, Nelnet, American Education Services/Pennsylvania Higher Education Assistance Agency, and Great Lakes Education Loan Services will all be awarded contracts of five to ten years to manage the increasing volume of student loans the federal government owns.

The servicers selected will be responsible for the student loans currently in the Direct Loans system, as well as loans the federal government has purchased as part of the federal rescue plan.  If all federal student loans are moved into Direct Loans, these agencies will also service them.  For now, what this means for student borrowers is that you may be dealing with different people if you have questions about your Stafford loans next year.  However, if Congress eliminates FFEL, this news could become more significant.