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Private student loans may soon come under increased federal regulation as Congress takes up legislation that would create a consumer financial protection agency. The bill moved out of the House Financial Services Committee yesterday and will soon go to a floor vote.

Lenders fought the legislation, but the proposed amendment to exempt student loans from the agency's oversight was defeated in committee. A brief but heated debate also arose over whether the agency should also regulate "gap loans" made by private for-profit colleges directly to students to help cover tuition and other expenses. Ultimately, the panel sided with the schools who argued that new Truth in Lending restrictions already offered students sufficient protection in regards to borrowing from schools.

Student loans are only one of several aspects of lending that would be regulated by the new agency. They'd be accompanied by mortgages, credit cards, and other bank-based loans. This comes in addition to legislation that's already been passed that will limit lenders' ability to market credit cards to college students. However, auto financing plans offered by car dealers were exempted and the agency's role in regulating smaller banks and lending institutions was also limited by amendments.

Backers of the proposed regulatory agency hope that its creation will offer greater protection to consumers, including college students, who find themselves overwhelmed by risky debt or deceptive lending practices. They hope that they will be able to limit the extremely high interest rates and confusing terms that accompany some private loans.  Student lenders have previously come under fire for questionable lending practices and have paid out large settlements and agreed to new codes of conduct governing their practices of marketing loans to students and offering incentives to colleges to promote their services on "preferred lender" lists. Private loans have also seen increased regulation this year, with previous student aid legislation requiring them to disclose terms up front, among other steps taken to make their lending practices more transparent.

As the wrangling over proposed healthcare legislation drags on in the Senate, progress on other bills has stalled, including a piece of legislation that would impact federal student financial aid programs.  The Student Aid and Fiscal Responsibility Act, passed by the House of Representatives in September, has yet to see its counterpart taken up for debate in the Senate.  Yet the debate over student loan reform is heating up again as the Department of Education and lenders both attempt to press their agendas forward.

Student loan reform has been a topic of contention since President Obama announced his 2010 budget proposal at the beginning of the year.  Among them was doing away with the Federal Family Education Loan Program, which subsidizes private banks to make and service federal student loans, such as Stafford Loans and PLUS Loans. Students would borrow directly from the Department of Education through the Direct Loans Program. The money saved from the subsidies would then be channeled into Pell Grants and Perkins Loans, among other education funding priorities.  The proposed changes would go into effect on July 1, 2010 necessitating a quick switchover to direct lending for all colleges still participating in FFELP.

After the bill passed the House, the Department of Education began urging schools to voluntarily make the change to Direct Loans, which concerned some financial aid administrators and most lending agencies.  Concerns have been expressed over the efficiency of direct lending, the loss of choice in eliminating FFEL, the feasibility of making the switch, and the continuation of services such as financial aid counseling that some lenders currently provide.  Many of these were aired at a recent meeting of a panel of financial aid experts in Washington.  Representatives of student lenders were also there to champion an alternate plan that would bring some of the savings proposed by SAFRA, but would maintain a role for banks in student lending.

It's widely expected that the Senate will ultimately pass a version of the bill similar to what was passed by the House, but when that will happen remains uncertain.  Procedural regulations and concerns over support are currently preventing the bill from progressing until the issue of healthcare is settled.  In the meantime, it appears debate, analysis, and lobbying will continue on both sides of the issue.

For students used to syncing just about every website they visit with Facebook, the amount of manual data entry involved in applying for financial aid can seem completely alien and unnecessary. In fact, many students who would qualify for aid either fail to complete the FAFSA or do so incorrectly, due to the confusing and time-consuming nature of the application process.

Members of the higher education community were concerned about this, as well, so when Congress renewed the Higher Education Act last year, they included a provision to update the FAFSA to make it easier for families to complete. The proposed changes will go into effect in 2010, and some students could be seeing a simpler FAFSA as soon as January.

Under the new system, students completing the FAFSA on the Web will be able to automatically fill in their FAFSA with relevant information from their previous year's tax return. Starting in January, select users who click on "Fill Out Your FAFSA" will be asked if they'd like to access the IRS Data Retrieval Tool to do so. From there, they can enter their Federal Student Aid PIN then be taken to the IRS website where they can retrieve their tax information and click "Transfer Now" to automatically fill in the applicable lines on the FAFSA form. Dependent students will have to repeat this process for their parents' information.

While it still involves multiple steps and websites, the new process is a significant improvement over the current process of hunting for your tax return, begging your parents for their tax returns, sorting through pages of numbers and instructions, and carefully transcribing numbers from one form to another each year. The Department of Education hopes that the more automated and streamlined FAFSA will reduce errors and encourage more students to apply for federal student financial aid.

Only a small group of students who are filing a FAFSA for the current academic year will see the new FAFSA completion options in January. The option will be available for all FAFSA filers for 2010-2011 in July. Although you may be stuck filling out your FAFSA the old way next year, you can at least take some comfort in the knowledge that this will be the last time.

As January gets underway, college students across the country are waiting eagerly for that spring financial aid disbursement. While a variety of students will encounter processing delays and unexpected errors this spring, one group may be particularly likely to see problems: student veterans.

The Post-9/11 GI Bill, which went into effect August 1, offers expanded education benefits to veterans who have served their country since 2001. GI Bill benefits include money for tuition and fees, a stipend that covers living expenses, and the option of transferring education benefits to their family members. However, many veterans who applied for this aid faced a months-long backlog in processing as the Veterans Affairs administration struggled to develop and streamline procedures for handling the new claims.

The delay caused a variety of problems for over 68,000 veterans who applied for the new GI Bill benefits in the fall. Over 26,000 veterans were still waiting for checks at the end of the fall semester, and thousands are still waiting to receive their first check. The VA issued emergency advances of $3,000 in October to veterans still waiting for their first disbursements, but for many that money ran out long before benefits checks arrived.

Some students have had to put tuition or food and rent on credit cards, while others faced problems stemming from still owing their universities for fall tuition. While schools pledged not to drop veterans with unpaid bills, some have prevented veterans from receiving their transcripts and diplomas or registering for spring semester while waiting for benefits checks to arrive, according to the Associated Press.

As of late December, the VA reported a remaining backlog of only 5,000 claims, but an Army Times story lists the number of pending claims as of January 4 at 48,000, many of which are for spring semester. Given the popularity of the bill and the continued delays, members of Congress have begun exploring ways to simplify the procedures for processing GI Bill benefits claims. In the meantime, the VA has pledged to have all claims received by January 15 processed by February 1, but given the number of pending claims and the speed at which processing moved in the fall, veterans may once again find themselves waiting months to receive their financial aid.

While state universities are held up as examples of high-quality college educations at affordable prices, not everyone who wants to go to college can afford them. A new report by the advocacy group The Education Trust looked at this concern and found that despite heavily publicized campaigns enacted in the last few years, public flagship universities still are not doing enough to enroll and assist low-income and minority students.

Public flagships tend to be relatively large, research-oriented universities and are typically considered the most academically challenging and highly respected public schools in the country. Contrary to private colleges, a central part of the mission of public universities is to educate the students of the state, including the ones who cannot afford to pay full freight. Concerns have repeatedly been raised that the makeup of public flagship universities has looked less and less like the makeup of their states over time, suggesting a failure to uphold their public mission.

The Education Trust published a report in 2006 that provided support for these concerns, showing that low-income and minority students were underrepresented at state flagships when compared to the states’ overall college-going populations. The new report, entitled Opportunity Adrift, revisits this issue and winds up reprising the initial report’s criticisms, saying that while universities have put more money toward recruiting and funding low-income and minority students, they still have a lot of room for improvement.

Between 2003, the year their first report analyzed, and 2007, the source of the current report’s data, minority students became slightly better represented at the nation’s 50 public flagship universities. However, the improvement was only slight and disparities continue.  Similarly, average financial aid has increased sharply for students in the bottom income quintile, while holding more or less steady for other income levels from 2003-2007. After adjusting for inflation, students with the lowest income received an average of 23% more institutional grant aid in 2007 than they did in 2003. However, about $750 million of flagship universities’ $1.9 billion total institutional aid goes to students with family incomes over $80,400, students who probably have significantly less financial need.

Despite the shift in aid priorities from merit-based awards to need-based awards, public flagship universities actually enroll a higher percentage of high-income students and a lower percentage of low-income students than they did in 2003. Budget woes of the last two years are likely to drive this gulf even wider as schools find themselves needing to enroll more tuition-paying students and states are forced to cut funding to aid programs that may help low-income students enroll in public universities.

Individual institutions have made marked improvements in enrolling and funding low-income and minority students and the report takes care to highlight their achievements. However, the main conclusion of the report's authors is that more needs to be done to ensure that high-achieving students from disadvantaged backgrounds continue to be able to access higher education that can help them improve their lives. Research has shown that low-income students are less likely to attend colleges that challenge them and are more likely to opt not to go to college or to drop out before completing their degrees. A growing body of work, including this latest report, suggests that recruiting and retaining low-income and minority students should be a primary concern for public flagship universities that want to uphold their missions of providing an affordable college education to their states' populations.

Immediately on the heels of an announcement that President Obama would be calling for additional assistance to college graduates struggling to repay student loans, the administration also unveiled a proposal to hold federal discretionary spending to current levels for the next three years, a move that could potentially have serious implications for colleges and students.

Currently, most federal education spending, including student financial aid, is discretionary, not mandatory, so it would fall under the umbrella of the budget freeze. This makes it possible that students will see limited increases to federal grants, work-study, and subsidized student loans in the coming years. The White House has pledged to make education a funding priority, but with states and colleges also struggling financially, it’s quite possible that financial aid programs will see an end to the boost in financial support they’ve received in the last few years.

It’s possible one federal aid program, at least, may be spared from the budget freeze. Last year, President Obama proposed making the Pell Grant an entitlement, putting it in the category of Medicare and other programs that would be exempt from the budget freeze, but the bill to do so still has not passed the Senate. If the bill passes, Pell funding will be mandatory and increases in Pell Grants will be tied to inflation, guaranteeing students a small, but steady, increase in available aid. If not, it’s up to Congress to allocate limited resources for any increases in grant amounts, and with increases in the numbers of college attendees, applications for financial aid, and Pell Grant recipients, it may be all Congress can do to hold funding levels steady for the next three years.

As details of federal and state budgets emerge, and emergency legislation that temporarily boosted funding to schools and student aid begins to be revisited and possibly phased out, exact changes to college funding will become clearer. Already, though, many families are finding paying for college increasingly challenging, even with the aid of college scholarships and grants. There’s a possibility that a federal budget freeze could mean that students in the next few years will see a situation similar to the one that faced students at the start of the last decade, where tuition increased rapidly while federal aid held steady and more and more students came to rely on private student loans.

Current high school and college students are probably too young to remember when MTV actually played music videos. It was a glorious time for sure but after hearing this next announcement, I think they will like the network’s new direction just fine.

The NYT’s The Choice blog revealed that instead of launching another mind-numbing reality show, the music channel and the College Board have joined forces for the Get Schooled College Affordability Challenge. The contest – which is being underwritten by the Bill & Melinda Gates Foundation – is open to current and potential college students interested in creating an innovative digital tool that will help more students obtain funds for school. The prize for the winning individual or team? A cool $10,000, as well as a $100,000 budget to bring their idea to life.

A statement released yesterday stated the contest was created to make it easier for students “to navigate what can be a confusing financial aid maze.” This metaphorical roadmap will definitely be a useful one: Each year, countless students are forced to postpone or abandon their dreams of higher education because they cannot pay for school but the Get Schooled creators hope their program will play a role in raising college completion rates.

The contest will run through December 17th so if you think you have what it takes to win, submit your idea here. Best of luck to all who enter!

The financial aid process can be a daunting one but if you’re planning on attending college any time soon, you should know that there are tons of federal student aid options out there – from Pell Grants to Perkins Loans to FAFSA – but your eligibility to receive aid depends on your level of need and, subsequently, how much aid you are eligible to receive. So, to the folks right in the middle: How does a tax credit sound? The American Opportunity Tax Credit, created in the 2009 economic stimulus bill, expires in 2010, but President Obama has proposed making it permanent, with a price tag of $58 billion over 10 years.

Now what does this mean to you? Because the Opportunity Tax Credit is more generous than its predecessor, the Hope Tax Credit, it provides a credit of up to $2,500 rather than $1,800 and it phases out at a higher income level – $160,000 for married couples filing jointly instead of $100,000. According to a report by the Department of Treasury, it’s also partially refundable so students and families with little or no tax liability can receive up to $1,000 of it as a tax refund. The report comes as lawmakers are debating a bill to extend several expiring tax credits. Recent versions would not extend the American Opportunity Tax Credit, but President Obama hopes lawmakers will reconsider.

"The president obviously feels strongly that this is an important relief for middle-class families," said Gene Sperling, counselor to the Treasury Secretary.

The U.S. House of Representatives passed legislation Wednesday to give undocumented students who’ve graduated from high school, completed two years of college or military service and have no criminal record a shot at citizenship. The bill, known as the Dream Act, passed by a 216-198 vote after heated debates stemming from the fact that said students would also be eligible for federal financial aid.

The legislation is backed by President Obama who, according to the Huffington Post, called it “an important step” toward comprehensive immigration reform. In a statement, Obama said, "This vote is not only the right thing to do for a group of talented young people who seek to serve a country they know as their own by continuing their education or serving in the military, but it is the right thing for the United States of America.” Republicans, on the other hand, have slammed the bill and repeatedly referred to the Dream Act as a “nightmare act.” Rep. Dana Rohrabacher (R-Calif.) described the bill as nothing more than “mass amnesty that will undoubtedly encourage millions more to illegally immigrate into our country.”

Today, the Senate is scheduled to vote on whether to begin debate on a slightly different version of the bill...though it’s unlikely Democrats can muster the 60 votes needed in the 100-memeber chamber to advance it.

The VSA arts Playwright Discovery Award invites middle and high school students to take a closer look at the world around them, examine how disability affects their lives and the lives of others, and express their views through the art of playwriting. Playwrights may write from their own experience or about an experience in the life of another person or fictional character. Scripts can be comedies, dramas, or even musicals — be creative! Young playwrights with and without disabilities are encouraged to submit a script. Entries may be the work of an individual student or a collaboration by a group or class of students.

The winning play will be professionally produced or staged at the John F. Kennedy Center for the Performing Arts. The winning playwright receives $2,000 and a trip to Washington, D.C., to view his or her work on stage. All submissions must be received by April 15th for consideration.

For more information on this scholarship and other scholarship opportunities, conduct a free scholarship search today!