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by Emily

If you're planning on attending college, chances are you're also planning on one day graduating.  Depending on which school you choose, getting out in six years or less could be anything from a long-shot to a near certain bet.  A new study has been published by the American Enterprise Institute comparing graduation rates among colleges based on selectivity ratings as part of an overall push for more accountability and transparency in higher education.  In addition to discussing the gaps in graduation rates among schools, the study also lists some of the best and worst performers in each category by name.  If you're a high school junior or senior just beginning to compare colleges, this could be good information to have.

Overall, the data show that about 53 percent of first-time college students at four-year universities graduate from the school they enrolled in as freshmen with six years. The study does not include non-traditional students or transfer students.  Not surprisingly, students at the most selective schools, such as elite private colleges, were among the most likely to graduate from the school at which they initially enrolled.  Six-year graduation rates at individual schools ranged from the single digits to nearly 100 percent across the whole spectrum of schools, with the most competitive category graduating nearly 88 percent of students on average, and the least competitive schools graduating only 35 percent of students.

Graduation rates also varied greatly within selectivity categories.  Two schools in similar locations with similar ratings could have vastly different graduation rates.  This is where the study becomes particularly useful for students choosing between schools.  If you have a roughly equal chance of getting into two colleges, and one graduates a significantly larger percentage of students then the other, it's not hard to imagine that having this information might influence your decision of which school to apply to or attend.  You can read more over at Inside Higher Ed, which also includes a link to the full study. Along with things like available financial aid and quality of on-campus housing, graduation rates are definitely something to consider incorporating into your criteria for your college search.

by Emily

As college affordability continues to be a major issue for many Americans, more states and colleges are implementing policies to save students money.  Three recently unveiled programs tackle different aspects of the college cost dilemma confronting different groups of students, parents, and graduates.

A partnership between the University System of New Hampshire and businesses in the state could pay up to $8,000 of New Hampshire residents' student loan debt.  The program is set to take effect this fall and the University System of New Hampshire hopes to recruit at least 30-40 businesses to participate in its first year.  Students will be eligible to receive payments of $1,600 per year for the first two years of employment and $2,400 per year for the next two if they graduate from a New Hampshire college and remain in the state to work for four years.

Meanwhile, in New York, one college is formalizing a program to save students one year of loan debt by offering a clear three-year path to graduation.  Hartwick College has long offered students the option of taking more classes per semester and graduating in 3 years, but now the practice has been turned into an official academic program for high-performing students.  Students must have a strong high school GPA to qualify, and will be expected to take 18 credits in the fall and spring, plus four credits during a J-term each year, finishing with 120 credits in three years.

Three Nebraska state colleges are also trying to minimize student loan debt, but are targeting a group of low-income students to receive more university grant funding.  Wayne State College, Peru State College, and Chadron State College have announced plans to pay freshman year tuition and fees for all students eligible to receive Pell Grants.  Students would still be responsible for room, board, and books, but removing the worry of paying tuition and fees may encourage more low-income students to attend college in Nebraska, as well as enable them to stay enrolled past the first year.

by Emily

Paying for college can be a struggle.  Nobody wants to repay student loans forever, not everybody is going to land a full-tuition scholarship, and federal student financial aid seldom takes care of all college costs.  If you're a parent or relative looking ahead to cover college costs for a child, finding scholarships is a great step now, but you may also want to consider college savings plans.

Read below for information on 529 savings plans, which are one of the most popular and diverse options for college savings.  If this is not for you, check back tomorrow for more information on other savings options.

529 Savings Plans While 529 plans have sustained average losses of 21 percent in the last year, they can still be a good idea, especially if you choose your plan carefully and have plenty of time to save.  Many 529 plans allow you to move your savings into a much more conservative portfolio when the student nears college, an option they're sure to publicize based on the recent behavior of the stock market.  While there are limits on how many changes can be made to a 529 plan per year, the plans are otherwise quite flexible and varied, so it's easy to find one that works for your situation. Plus, 529 plans can be taken out in the parent's name, rather than the student's, so they will only minimally affect a student's financial aid eligibility.

Additionally, contribution limits are high, income limits are nonexistent, minimum contribution requirements tend to be low, and many states offer a variety of incentives for residents who contribute to their plans.  As an added bonus, many 529 plans can accept contributions from anybody anywhere, not just the people named on the account, and several programs have been created to take advantage of this.  For example, some plans allow a portion of credit card purchases or purchases at certain stores to go towards a particular student's 529 plan.

Prepaid Tuition Savings Plans If you're hesitant about sticking money for college in the stock market with uncertain returns, another type of 529 plan is also gaining popularity.  Prepaid tuition plans allow families to contribute a fixed amount now in exchange for a certain portion of tuition being covered in the future.  Many states do this for their state colleges and universities, and the Independent 529 plan, which is accepted by over 200 private colleges, also fixes contributions to portions of future tuition.  Both of these varieties eliminate worries about tuition inflation, though if tuition actually goes down between now and when the student starts college, a prepaid plan might not be the most lucrative option.

The Down Side 529 plans do have drawbacks and limitations.  Money must be spent on education, and the expenses that qualify are limited to undergraduate tuition, fees, educational expenses like books, and now computers. However, if the student is enrolled at least half-time, money from a 529 plan can also go towards room and board, so even if your student earns a full-tuition scholarship, it's possible to still take advantage of 529 savings.  Money must stay in a plan for at least 3 years, so if you're saving for a college sophomore, you're out of luck with these.  However, you can transfer the unused portion of a 529 plan to another family member without incurring the heavy withdrawal penalties, and it may also be possible to use the funds towards graduate or professional school.

Plans also vary from state to state, so your state's plan might not have the best benefits for you, or might not offer as sweet a deal in terms of tax breaks or low fees as the next state over offers its residents.  Luckily, you can shop around among a variety of plans, including ones offered by several other states.

529 plans are not the only college saving option, though they remain the most popular and perhaps the most well-known.  Check back tomorrow for information on the rest of the pack.

by Emily

Continuing our theme from yesterday, today's blog post centers on more options for saving for college.  Yesterday, we discussed 529 plans, popular college savings vehicles that have been battered by recent financial troubles.  If you're considering saving for college but are not sold on a 529 plan, the most common alternatives are discussed below.

Coverdell ESA. Coverdell Education Savings Accounts are similar to 529 plans in most respects, but do have their own benefits and drawbacks. Rather than being sold by a state, they are sold by banks and brokerages, which can charge their own management fees. Because there aren't any state ties, there aren't any residency limitations, though there also aren't any state tax breaks for enrolling in a Coverdell ESA.

Coverdell accounts allow more flexible investment options and unlimited changes to investments. They can also be used to pay for high school and elementary school expenses, in addition to college costs. Otherwise, the expenses Coverdell and 529 plans can be used for are roughly the same: tuition and fees, books and supplies, room and board if over half-time, and other qualified educational expenses.

One major limitation to the Coverdell ESA is the $2,000 annual contribution cap. This is the limit per account holder, not per contributor. Additionally, individuals must have an adjusted gross income of $110,000 or below to contribute, and $95,000 or below to contribute the full $2,000. Coverdell accounts are held in the beneficiary's name, so they can hurt the student on the FAFSA. They also must be used or cashed out by the time the beneficiary turns 30, and they go to the beneficiary no matter what, while 529 plans can be given back to the parent in charge of the account if the student chooses not to go to college.

Roth IRA. The Roth IRA, typically used as a retirement account, can also be used to save for school. As long as you're withdrawing contributions, rather than earnings, there is no penalty if you are using the money from your IRA for educational expenses. However, a college savings plan might be the better way to go if you're setting up an account specifically for your student (especially since contributions to a Roth IRA must come from income the beneficiary earned from working), and dipping into your retirement funds to pay for college is widely regarded as a less than ideal choice by financial experts. But if you choose to take it, the option is there.

UTMA. The Uniform Transfer to Minors Act allows assets to be given as gifts to minors without the establishment of a trust. While the options explored up to this point have been savings accounts or investments, UTMA covers everything, including property. An adult manages these assets in a custodial account until the owner reaches the age of 18 or 21, depending on the state. In the meantime, the funds in the account can be used to benefit the child, including taking care of educational expenses. Once the owner reaches the age of majority, the assets are theirs to use as they please. This can mean paying for school, or it can mean making less desirable financial choices.  Since these assets belong to the student, they would count against them for student financial aid.

Government Bonds. While typically regarded as the province of grandparents, government savings bonds (Series EE is the most common) are also an option for paying for college. Bonds can be purchased online or at banks, and redeemed later for cash. As opposed to stock market-based savings plans which can lose big during crashes, government bonds are going to continue to grow as long as there's a government to honor them. And if there's no longer a United States government, well, you might have more to worry about than paying for college.

Also, since no rules state that a savings bond must be redeemed for college costs, the money can be used towards paying off student loans, covering college living expenses...or partying it up during spring break in Mexico.

While EE Savings Bonds grow at a steady rate, they do grow very slowly. You're also limited to a purchase of $5,000 per calendar year. Since they're such a safe bet, they can be great gifts for high school students, but a market-based option might be a better way to grow savings and maximize returns for younger children.

by Emily

To make up for budget cuts and other difficulties caused by the recession, many state colleges, including some prestigious research universities, have begun admitting more out-of-state students, who typically pay more in tuition than in-state students. While this could make getting into a top school in your own state more challenging, this shift does present some unique opportunities. If you're starting your college search, you may want to consider applying to state colleges in neighboring states. You can get a bargain on tuition compared to private colleges, and there may even be tuition discounts and scholarship opportunities to further help you further bring down costs.

University systems and state higher education agencies offer tuition discounts for certain out-of-state students, bringing down your tuition costs to anywhere from 100% to 150% of in-state tuition: as much as a 50-75% discount on the regular out-of-state rate. High-achieving students, children of alumni, and residents of neighboring towns or states may qualify for programs at specific universities or for certain state scholarships.

If you have specific schools in mind, look to see if they offer discounts for students in your situation. Many large public universities will have some program in place to offset costs for out-of-state students. State colleges and universities near borders may also offer a discounted rate to students living just across a state line.

State-wide tuition discounts also exist. Students in Minnesota, North Dakota, South Dakota, and Wisconsin can take advantage of a wide-ranging tuition reciprocity agreement: Minnesota's public colleges and universities charge in-state tuition for students from the Dakotas and Wisconsin, and schools in those states return the favor for Minnesota residents. Minnesota also has similar agreements with Manitoba and some community colleges in Iowa.

The Southern Regional Educational Board offers the Academic Common Market for students in the southeastern United States pursuing specialized degrees at schools out-of-state. Students who qualify to participate in ACM are able to pay in-state tuition at the school they attend, provided their degree program is not offered by any colleges in their home state.

Other regional tuition exchange programs offer students a chance to go to school out-of-state at a special discounted rate. The two largest of these programs are the Western Undergraduate Exchange and the Midwest Student Exchange Program. Both allow students to attend participating state colleges for 150% of in-state tuition, and MSEP also allows students to receive a 10% discount on tuition at participating private colleges.

If you want to attend school out-of-state, you may also be able to qualify for in-state tuition by becoming a resident of the state. Check the residency requirements of the state and the school where you want to attend college--while some will not allow college students to apply for resident tuition, others happily grant residency to students. A recent article by Kim Clark in U.S. News gives some other tips for how to get in-state tuition at out-of-state schools.

by Suada Kolovic

Ah, college graduation. It’s a time filled with incredible hope, fear and potentially – depending on your college’s tradition and its willingness to pony up the cash – a famous celebrity commencement speaker. But paying for commencement speakers won’t be happening in Jersey for long: Last week, New Jersey lawmakers proposed a bill that would bar the payment for commencement speakers at public colleges.

The bill comes weeks after Kean University paid John Legend $25,000 to speak and sing two songs at their commencement ceremony on May 12, while Rutgers University paid Nobel Prize-winning author Toni Morrison $30,000 for her speech on May 15. John DiMaio (R-Warren), one of the bill’s sponsors, said he objects to public institutions paying celebrities at a time when student costs are rising and state funding is shrinking. "We’re in very, very difficult times," DiMaio said. "Tuitions are up. The amount of aid we have to offer is down."

The legislation proposes that if a state-funded college or university pays for their commencement speakers, the amount paid will be deducted from the school’s state aid. How did the schools react? Rutgers and Kean officials insist they paid speakers to give their students the best graduation possible and Rutgers officials added they planned on having their attorneys review the proposed bill. To those of you who just graduated, do you think it’s appropriate to pay commencement speakers? Should institutions charge a cover or increase ticket prices for graduation ceremonies in order to offer big-name celebrities without the risk of losing state aid? Let us know what you think.

by Emily

Attending community college is a great way to save money on the first two years of higher education, but for many students, paying for school after they transfer to a four-year college or university can still be difficult. Now, transfer students in Alabama will get help with their last two years of school, thanks to a new state scholarship.

Alabama has launched a new scholarship program for graduates of the state's two-year community and technical colleges that will allow them to receive a bachelor's degree for free. Alabama State University and Alabama A&M will each award 250 two-year full-tuition scholarships starting this fall, with the number of available scholarship awards to double to 500 apiece next year.

Initial funding for the scholarship program comes from the state's Education Trust Fund, and is part of the settlement in the 28-year-old Knight v. Alabama segregation lawsuit.  Knight, the lead plaintiff in the suit, is now a state representative and vows to do what he can to ensure continued funding for the program as long as he's serving in the state legislature.

Initially, 50 students have been awarded the scholarship, but the state is working to identify more eligible students. Students in Alabama who are planning to attend a community college then transfer to one of these two state schools will want to keep this scholarship in mind. Other local, state, and national awards are also available to students who are attending community college and planning to transfer to a four-year college or university.  More information on these and other scholarship opportunities can be found by conducting a free college scholarship search.

by Emily

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.

by Alexis Mattera

$24,000. To a recent graduate, that five-figure number could be 1. their starting salary at their first entry-level job or 2. the amount of student loan debt they have accrued while in school.

We’re going to talk about the second choice this morning, as a study by Peterson’s and the Project on Student Debt just revealed it was the average amount owed by graduates of the class of 2009. The study broke down debt levels by state and school (D.C. graduates had the highest while Utah students had the lowest) but did not include debt levels for graduates of for-profit schools because of a lack of data.

Arriving at these tallies didn’t come easy for the Project on Student Debt, which adjusted the averages initially recorded by Peterson’s ($22,500 and 58 percent of students who borrowed) because it felt they were too low when compared to the statistics recorded last year by the National Post Secondary Student Aid Study ($22,750 and 65 percent).

You may be one of the lucky students who scored enough scholarships and grants to have a degree in hand and no debt in sight or you may be flipping couch cushions in search of change to put toward your next payment but what do you think of these findings? A college degree certainly doesn’t come cheap these days!

A new book is shedding light on graduation rates at state colleges, and also causing a stir with its findings and recommendations. The book, Crossing the Finish Line: Completing College at America's Public Universities, was written by William G. Bowen, a former president of Princeton University, Michael S. McPherson, a former president of Macalester College, and Matthew M. Chingos, a graduate student at Harvard University. It shows many of the nation's top public schools are coming up short when it comes to graduating students in four years, especially low-income and minority students.

The book analyzes the four-year and six-year graduation rates of students at 21 flagship universities and 47 four-year public universities in Maryland, North Carolina, Ohio, and Virginia.  Among the findings, the authors reveal that flagship universities, typically the most competitive and prestigious in their state university systems, graduate only 49 percent of their students in four years, with other state colleges having even less success.  The six-year graduation rates for both sets of schools are better, but vary widely based on several factors discussed in the book.

Disparities by common demographic factors, namely race and socioeconomic status, were found in the research for the book, and were most pronounced among male students. However, the most striking differences come in terms of schools' selectivity. Some of these disparities include:

• Graduation rates of 82-89% for the most selective and second most selective categories of schools and most competitive category of students (3.5+ high school GPA and 1200+ SAT score), but graduation rates of only 59% for the same category of students at the least selective schools.
• Graduation rates of above 70% for all students at the most selective schools, regardless of GPA or test scores.
• The disparity between the graduation rates of the most and least competitive students at the least selective schools was only 11 percentage points, while the disparity between students of similar ability at schools of different selectivity ranged 21 to 30 percentage points.
• The least competitive group of students (GPA of less than 3.0 and/or SAT of less than 1000) did better at the most selective schools (71% graduation rate) than the most competitive students did at the least selective schools (59% graduation rate).

These results have many questioning the effectiveness of academic scholarships and other merit-based aid, especially in light of the University of Texas at Austin's recent decision to stop sponsoring the National Merit Scholarship Program. More so, though, they have experts, including the book's authors, wondering what is causing this disparity in graduation rates.

Price plays a huge role for students of low socioeconomic status, pushing them to attend the least expensive (and often least selective) schools or to opt out of four-year colleges entirely. Rising costs also could play a role in dropout rates among poorer students, so the availability of financial aid for all four years is crucial to graduation.

One of the biggest problems identified in the book is a phenomenon dubbed "under-matching." Highly qualified students are aiming low in the college application process, attending less selective schools with lower graduation rates when they could easily be accepted to and graduate from more selective schools with higher graduation rates. Students most likely to under-match are low socioeconomic status students whose parents did not attend or did not graduate from college. The higher a student's income and parents' level of education, the less likely the student is to under-match.

Based on this information, the authors suggest that schools focus their efforts on encouraging students to graduate in four years and to remain in school until they graduate. Keeping tuition low is a part of this, as are readjusting requirements to make graduating in four years more doable and, above all else, making it clear that students are expected to graduate in four years.

Graduation rates are gaining attention from other corners, as well. Washington Monthly included graduation rates in their recently released college rankings, and another study published this summer by the American Enterprise Institute compared graduation rates at colleges.The Education Department is also doing its part to make information on graduation rates available to students who complete the FAFSA on the Web.