September 24, 2009
The global economic recession of 2008-2009 has had an impact on seemingly every aspect of life, especially large expenses like college tuition. There has been much speculation about the economy's effect on college financial aid, and as the fall semester gets underway at colleges across the nation, information is starting to emerge that helps paint a picture of paying for school in a recession. So far, the results are mixed.
While a poll by Gallup and Sallie Mae showed fewer students borrowing for college this year, a survey conducted by NASFAA, the National Association of Financial Aid Administrators, shows more students applying for and receiving federal student financial aid this year than last year. Additional data from the Department of Education also backs this up, showing 25 percent more borrowing in federal student loan programs this year.
The NASFAA survey of nearly 500 financial aid offices shows that in comparison to the same time last year, 61 percent of colleges and universities are seeing an increase of 10 percent or more in financial aid applications, with 63 percent of institutions also seeing a significant increase in Pell Grant awards this year. Only 8 percent of institutions saw no increase in aid applications, with only 5 percent reporting no increase in Pell awards. Also, despite 65 percent of schools seeing an increase in financial aid appeals by 10 percent or more, 51 percent saw an increase of 10 percent or more in the number of students with unmet financial need.
Additionally, the majority of colleges have increased institutional aid (such as scholarships and grants), with 74 percent of four-year colleges and universities offering some increase in aid. Community colleges were the majority of institutions not increasing aid, with many citing a lack of available funding as the reason for this decision.
Many of the changes found by NASFAA and the Department of Education can be attributed to the federal response to the economic downturn. The increased borrowing is most likely due to the increases in loan limits, with larger unsubsidized Stafford loans being made available to both undergraduate and graduate students in the last two years. Financial aid administrators speculate that the increased aid awards are likely due to a combination of the increasing unemployment rate, changes in rules for adjusting financial aid awards, and nationwide awareness campaigns to let those collecting unemployment benefits know they are eligible for increased financial aid for college.
November 11, 2010
With the typical six-month grace period on student loans right around the corner, recent college graduates across the country will start making monthly payments whether they’re ready to or not . If you’re one of those students, or just starting your college career, here are a few suggestions from the Project on Student Debt, an initiative of the Institute for College Access & Success, a nonprofit independent research and policy organization, on how to manage your loans.
December 31, 2010
Ladies and gentlemen, prospective and current college students, I (or the federal government, rather) give you the 2011-2012 Free Application for Federal Student Aid (FAFSA). Hooray!
Vacuum up the confetti because it’s time to get down to business. January 1st marks the first day college-bound seniors, continuing undergraduate and graduate students, and their parents can begin filling out the FAFSA online. Completing the FAFSA is a vital part of the college process: The Department of Education uses it to determine eligibility for federal student financial aid for college. This aid includes federal grant programs (such as the Pell Grant), federal work study, and federal student loans; it is also used by states to determine eligibility for their college aid programs, such as state grants. Colleges also use the FAFSA to determine eligibility for the need-based aid programs they administer and, finally, many scholarship opportunities request FAFSA information as part of their application processes. Even if you think that you won’t qualify for free money in the form of need-based college scholarships and grants, you should still apply. At the minimum, the vast majority of students qualify for Stafford Loans, low-interest federal student loans that represent one of the best deals in borrowing and paying for school.
Submission deadlines vary by state (verify yours sooner than later here) so, as with any sort of college funding, we recommend you complete the FAFSA as early as possible because funds do run out. For more information, visit the official FAFSA website or review our federal aid pages. Happy filing (and New Year)!
March 14, 2012
Recent reports suggest that student loan debt has surpassed credit card debt for the first time and will reach $1 trillion this year. The average college student leaves owing $25,000 in loans, putting them at risk of having to significantly delay moving on to different life stages such as buying a house, getting married and even having children. Curious as to how the government has responded in aiding and relieving students of insurmountable debt? By possibly doubling the interest rate of the most popular federally subsidized loans, of course.
On Tuesday, college students delivered more than 130,000 letters to congressional leaders at the Capitol to protest the increase. Unless Congress takes action, the interest rate on subsidized Stafford loans is set to double from 3.4 percent to 6.8 percent on July 1, increasing the average debt by $2,800 for more than 7 million students receiving the loans, according to a spokesman for the Democratic members of the House Committee on Education & the Workforce. Why is Congress considering the increase when so many students are already in debt? In 2007, Congress voted to cut the Stafford interest rate, which in turn cost an estimated $7.2 billion from 2007 to 2012 and, according to the Congressional Budget Office, that burden was shouldered almost entirely by lenders and loan-guarantee agencies. "We all want to promote efforts that will reduce college costs, but the era of empty promises has to end," said John P. Kline Jr., a Republican from Minnesota who is the committee's chairman. "The interest rate hike students face is the result of a ticking time bomb set by Democrats five years ago," Mr. Kline said. "Simply calling for more of the same is a disservice to students and taxpayers." (For more on this story, click here.)
Soon-to-be college graduates, do you fear crippling student loan debt? What steps are you taking to prevent becoming a statistic?
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