05.31.07
Rate changes and consolidation
So we have the info on the new rate changes – what does that mean to people who want to consolidate?
Well, it means we probably won’t have the crush of consolidations leading up to last July 1 because the rate increases are quite small. Which, I admit, is good for my sanity. 
But what does it mean for the you all? We’re at a rather unique occurrence in terms of student loans, historically speaking. The rate increase is so minuscule that, depending on your situation, consolidating may or may not be in your best interest
Lets start with “time to repay”. What do I mean by that? Federal student loans have a repay term of 10 years. So each of those Stafford Loans you have or your child has must be repaid within 10 years of when you start repayment, barring any forbearances or deferments. If you can’t afford to repay them all now, you can consolidate and it will roll all those loans into one consolidation loan that can have up to a 30 year loan repayment term.
+ You have longer to pay it back – if you’re broke this could be a godsend
- You have longer to pay it back, so you’ll end up paying more money in the log run
+If you’ve used up all your forbearances and deferments on your federal loans, they renew when you consolidate and you can go into forbearance or deferment again if you qualify
-/+You’ll be dealing with a new company – that could be scary or could be wonderful!
More to come later…
05.30.07
Variable Student Loan Interest Rates Rise Slightly July 1, 2007
Student loan interest rates for federal loans disbursed between July 1, 1998 and June 30, 2006 will rise slightly when the rates are reset on July 1, 2007.
The interest rate for Stafford loans in repayment will change from 7.14 to 7.22 percent. Stafford loans in an in-school, grace or deferment status will change from 6.54 to 6.62 percent.
PLUS loans will increase from 7.94 to 8.02 percent. The U.S. Department of Education will officially announce these changes in the near future.
For Stafford loans disbursed on or since July 1, 2006, the interest rate remains fixed at 6.8 percent and PLUS loans disbursed on or after July 1, 2006 remain fixed at 8.5 percent.
To read more, visit http://www.treasurydirect.gov/RI/OFBills and http://www.financialaidpodcast.com/2007/05/30/fap544-new-student-loan-rates-set-latinos-and-financial-aid-military-student-loans-sophia-ramos/
05.29.07
Elite Colleges Open New Door to Low-Income Youths
Here’s a great article from the New York Times.
Elite Colleges Open New Door to Low-Income Youths
AMHERST, Mass. — The discussion in the States of Poverty seminar here at Amherst College was getting a little theoretical. Then Anthony Abraham Jack, a junior from Miami, asked pointedly, “Has anyone here ever actually seen a food stamp?”
To Mr. Jack, unlike many of his classmates, food stamps are not an abstraction. His family has had to use them in emergencies. His mother raised three children as a single parent and earns $26,000 a year as a school security guard. That is just a little more than half the cost of a year’s tuition, room and board, fees and other expenses at Amherst, which for Mr. Jack’s class was close to $48,000.
So when Mr. Jack, now 22 and a senior, graduated with honors here on Sunday, he was not just the first in his family to earn a college degree, but a success story in the effort by Amherst and a growing number of elite colleges to open their doors to talented low-income students.
Concerned that the barriers to elite institutions are being increasingly drawn along class lines, and wanting to maintain some role as engines of social mobility, about two dozen schools — Amherst, Harvard, Princeton, Stanford, the University of Virginia, Williams and the University of North Carolina, among them — have pushed in the past few years to diversify economically.
They are trying tactics like replacing loans with grants and curtailing early admission, which favors the well-to-do and savvy. But most important, Amherst, for instance, is doing more than giving money to low-income students; it is recruiting them and taking their socioeconomic background — defined by family income, parents’ education and occupation level — into account when making admissions decisions.
Amherst’s president, Anthony Marx, turns to stark numbers in a 2004 study by the Century Foundation, a policy institute in New York, to explain the effort: Three-quarters of students at top colleges come from the top socioeconomic quartile, with only one-tenth from the poorer half and 3 percent from the bottom quartile.
“We want talent from across all divides, wherever we can find it,” President Marx said. Amherst covered the full cost of Mr. Jack’s education beyond what he earned in work-study. The only debt he says he owes is the $41 it cost to make copies of his 107-page honors thesis.
Amherst also provides its low-income students important support, from $400 “start-up grants” for winter coats and sheets and blankets for their dorm rooms, to summer science and math tutoring. At the same time, low-income students are expected to put in at least seven hours a week at $8-an-hour work-study jobs.
But they get to use $200 a month in their work-study earnings as spending money to get a haircut, for instance, or go out for pizza with classmates so they don’t feel excluded.
Mr. Jack, who is black and had never been on a plane until he flew to Amherst for his first visit, arrived as an A student, and with a steely focus.
His mother, Marilyn, 53, had guided her son from Head Start to a gifted program in elementary school to a magnet middle school and, in his final year of high school, to the private Gulliver Preparatory School on a full scholarship. But she never had to push Tony, she said. “He was on a mission from Day 1,” she said.
Mr. Jack’s high grades and test scores — a respectable 1200 on the SAT — won him a full scholarship to the University of Florida. But the median score for his Amherst class was 1422, and he would have been excluded had the admissions office not considered his socioeconomic class, and the obstacles he had overcome.
“Tony Jack with his pure intelligence — had he been raised in Greenwich, he would have been a 1500 kid,” said Tom Parker, the dean of admission. “He would have been tutored by Kaplan or Princeton Review. He would have had The New Yorker magazine on the coffee table.”
“Tony Jack is not an anomaly,” he added.
Mr. Jack, Amherst officials say, would likely not have benefited under traditional affirmative action programs. In their groundbreaking 1998 study of 28 selective universities, William Bowen, the former president of Princeton, and Derek Bok, now the interim president of Harvard, found that 86 percent of blacks who enrolled were middle or upper middle class. (Amherst was not included in that study.) The white students were even wealthier.
“Universities have prided themselves on making strides in racial diversity, but for the most part they have avoided the larger issue of class inequality,” said Richard D. Kahlenberg, a senior fellow at the Century Foundation.
For Mr. Jack, there were adjustments at this college, where half the students are affluent enough that their parents pay tuition without any aid from Amherst. He did not let it bother him, he said, when wealthier classmates blithely inquired about the best clubs in Miami — as if he would know, Mr. Jack said dryly — before flying off to his hometown for spring break. Mr. Jack could afford to go home only at Christmas, and the end of the year, when Amherst paid his plane fare.
Mr. Jack is 6 foot 7 and built like the football player he used to be. In his freshman year, he said, he was walking to his dorm one night when a police car seemed to be following him. He recalled showing the officer his Amherst ID and explaining, “I’m a student here.”
In Mr. Jack’s class of 413, 15 percent, or 61, students, are from families with incomes of less than $45,000 a year; about two-thirds of those are from families earning less than $30,000. He was amazed to discover how much preparation wealthier students had.
“People are groomed for the SAT,” Mr. Jack said. “They take Latin to help them with their vocabulary.”
He seized every opportunity Amherst offered — the pre-freshman summer program in science and math, help from the writing center and faculty office hours. “They didn’t just invite me in,” he said. “They prepared the way.”
For his freshman year, he chose the most challenging classes, including Chemical Principles, even though he had no chemistry in high school. “I didn’t feel like I was in over my head,” he said. “I just felt like I was being pushed to the boundaries of my ability.”
He got all A’s and B’s his first year, except for a C-plus in chemistry. Sophomore year he plunged in even deeper, taking Organic Chemistry I and II. He got a B the first semester, and an A-minus the second.
“Organic chemistry was the happiest time of my life,” said Mr. Jack, who tends to gush about Amherst. “Everything started clicking.”
David Hansen, who taught Organic Chemistry II, called Mr. Jack’s improvement remarkable: “He had the motivation and the desire and the discipline to take advantage of the support that was here.”
Mr. Jack, who is as gregarious as he is studious, found time to mentor other students, serve on committees — and earn an A-plus in calculus last year, one of only 10 A-pluses the professor, David Cox, said he has given out in calculus in 30 years of teaching. This year Mr. Jack was Amherst’s nominee to be a Rhodes scholar at Oxford.
Squeamish about blood, Mr. Jack switched his major from pre-med to religion and gender studies. He said he intended to go to graduate school. For now, he loves Amherst so much, he is staying around as an “alumni fellow,” organizing events on campus. He says he thinks about teaching, or becoming a lawyer so that he can help his community. As for money, he says he just wants to be able to take care of his family.
At Amherst’s commencement on Sunday, Mr. Jack wept — and his classmates gave him a standing ovation — when President Marx awarded him the annual prize for the senior who has “shown by his or her own determination and accomplishment the greatest appreciation of and desire for a college education.”
Thanks to Amherst, Mr. Jack said, he has rewritten the narrative of his life. It isn’t about “a poor black student” going “from the bottom to the top,” as he once believed, he wrote in an essay about his family and all they have done for him. His mother, his older brother, his younger sister and his two nieces were here at graduation, having driven up in a rented van from Miami.
“Being a senior at Amherst is only one step along my journey through life,” he wrote. “You want to know Anthony Abraham Jack, then look behind the man you see walking around campus today. And you, in doing so, surely will never say that he came from the bottom and is now at the top.”
05.25.07
Congratulations, graduates!
To all graduates of the class of 2007, congratulations! I wish you all the best of luck, particularly with your loans. Today I’d like to offer you a little something different Originally written by Mary Schmich of the Chicago Tribune, it was made into a Top-40 song by Baz Luhrman the year I graduated, and my husband and I used it as one of the readings at our wedding. I implore you, read the text below and ponder it for a few minutes. 10 years from now, you’ll be surprised by how right Mary was.
Ladies and Gentlemen of the class of 2007… wear sunscreen.
If I could offer you only one tip for the future, sunscreen would be IT.
The long term benefits of sunscreen have been proved by scientists whereas the rest of my advice has no basis more reliable than my own meandering experience. I will dispense this advice now.
Enjoy the power and beauty of your youth. Never mind. You will not understand the power and beauty of your youth until they have faded. But trust me, in 20 years you’ll look back at photos of yourself and recall in a way you can’t grasp now how much possibility lay before you and how fabulous you really looked.
You are NOT as fat as you imagine.
Don’t worry about the future; or worry, but know that worrying is as effective as trying to solve an algebra equation by chewing bubblegum. The real troubles in your life are apt to be things that never crossed your worried mind; the kind that blindside you at 4pm on some idle Tuesday.
Do one thing every day that scares you.
Sing.
Don’t be reckless with other people’s hearts, don’t put up with people who are reckless with yours.
Floss.
Don’t waste your time on jealousy; sometimes you’re ahead, sometimes you’re behind. The race is long, and in the end, it’s only with yourself.
Remember compliments you receive, forget the insults; if you succeed in doing this, tell me how.
Keep your old love letters, throw away your old bank statements.
Stretch.
Don’t feel guilty if you don’t know what you want to do with your life. The most interesting people I know didn’t know at 22 what they wanted to do with their lives, some of the most interesting 40 year olds I know still don’t.
Get plenty of calcium.
Be kind to your knees, you’ll miss them when they’re gone.
Maybe you’ll marry, maybe you won’t, maybe you’ll have children, maybe you won’t, maybe you’ll divorce at 40, maybe you’ll dance the funky chicken on your 75th wedding anniversary. Whatever you do, don’t congratulate yourself too much or berate yourself, either. Your choices are half chance, so are everybody else’s. Enjoy your body, use it every way you can. Don’t be afraid of it, or what other people think of it, it’s the greatest instrument you’ll ever own.
Dance. Even if you have nowhere to do it but in your own living room.
Read the directions, even if you don’t follow them.
Do NOT read beauty magazines, they will only make you feel ugly.
Get to know your parents, you never know when they’ll be gone for good.
Be nice to your siblings; they are your best link to your past and the people most likely to stick with you in the future.
Understand that friends come and go, but for the precious few you should hold on. Work hard to bridge the gaps in geography and lifestyle because the older you get, the more you need the people you knew when you were young.
Live in New York City once, but leave before it makes you hard; live in Northern California once, but leave before it makes you soft.
Travel.
Accept certain inalienable truths, prices will rise, politicians will philander, you too will get old, and when you do you’ll fantasize that when you were young prices were reasonable, politicians were noble and children respected their elders.
Respect YOUR elders.
Don’t expect anyone else to support you. Maybe you have a trust fund, maybe you’ll have a wealthy spouse; but you never know when either one might run out.
Don’t mess too much with your hair, or by the time you’re 40, it will look 85.
Be careful whose advice you buy, but, be patient with those who supply it. Advice is a form of nostalgia, dispensing it is a way of fishing the past from the disposal, wiping it off, painting over the ugly parts and recycling it for more than it’s worth.
But trust me on the sunscreen.
05.23.07
Consolidation Season
Tis’ the season – for consolidation that is!
Now that you or your child has graduated, it’s time to start looking into consolidation. Here are some reasons why it’s a good idea for most people:
- If you have loans from before July 1, 2006 those loans are variable interest rates and those rates will most likely rise this July 1st. I’ll post when I learn what the new rates are.
- Consolidate while in your grace period – this could save you thousands of dollars because consolidations are simply a weighted average of all your federal loans and their interest rates. For example with Stafford loans, during your grace period your rate is 6.543% while once you enter repayment your rate is 7.143%. Consolidate before your rate rises and you will save a LOT of money!
05.22.07
California to become first state to spend more on jails than higher education
Well, here’s a distinction that California did not want! Read the excerpt below or the whole article from the San Francisco Chronicle here.
Prisons’ budget to trump colleges’
No other big state spends as much to incarcerate compared with higher education funding
As the costs for fixing the state’s troubled corrections system rocket higher, California is headed for a dubious milestone — for the first time the state will spend more on incarcerating inmates than on educating students in its public universities.
Based on current spending trends, California’s prison budget will overtake spending on the state’s universities in five years. No other big state in the country spends close to as much on its prisons compared with universities.
But California has all but guaranteed that prisons will eat up an increasingly large share of taxpayer money because of chronic failures in a system that the state is now planning to expand.
Under a new state law, California will spend $7.4 billion to build 40,000 new prison beds, and that is over and above the current annual operating budget of more than $10 billion. Interest payments alone on the billions of dollars of bonds that will be sold to finance the new construction will amount to $330 million a year by 2011 — all money that will not be available for higher education or other state priorities…
According to the May revisions of Gov. Arnold Schwarzenegger’s budget, the state will spend $10 billion on prisons in fiscal 2007-08, a 9 percent increase from last year.
Higher education spending will come to $12 billion, a nearly 6 percent increase. Moving forward, the legislative analyst says, spending on higher education probably will grow around 5 percent a year, while prisons spending will grow by at least 9 percent annually.
Steve Boilard, a legislative analyst, said that actual spending on the state university systems is already at about parity with prisons spending. The budgets, he said, for the University of California, the California State University and the community colleges come to $10.5 billion in fiscal 2007-2008. The rest of the higher education budget includes financial aid for student and other noninstructional programs.
Read the rest of the article here.
05.18.07
Do Perkins Loans need to be re-paid?
Here’s a question I’ve heard a lot recently:
Do Perkins loans have to be repaid?
And the answer is an overwhelming YES! It’s a loan therefore it must be repaid. The Perkins loan is a low-interest rate loan for undergraduate and graduate students which exceptional need. Most people will not get a Perkins loan.
All loans must be repaid – you are borrowing money from someone else (in the case of Perkins loans, you borrower from the U.S. government) and must pay it back. That is why I highly recommend you find as many grants and scholarships as you can. Grants and scholarships are free money and do not need to be repaid.
Student loan consolidations will bottle neck this summer because lendes have been locked out of the governement’s student loan database
Student loan consolidations will bottle neck this summer because lenders have been locked out of the governement’s student loan database.
Lenders need to verify the correct amount of a prospective borrower’s loans because if they’re off by too much on the initial application, the lenders need additional signed paperwork from the borrower, which extends the time to funding even further.
Student loan logjam
Thursday, May 17, 2007
Borrowers who are trying to consolidate their college loans before rates change July 1 might encounter some holdups because lenders have been temporarily banned from a government database of loan information.
Fortunately, the rates on variable-rate government guaranteed loans (those issued before July 1, 2006) won’t go up much, if at all, July 1. And even if the database snafu causes a processing delay, most lenders say they will give borrowers today’s rate if they get their applications in before July.
On April 17, the U.S. Education Department blocked all lenders and guarantee agencies from accessing the National Student Loan Data System after the Washington Post reported that some lenders might have been using the database improperly to gather information they could use to market loans. Access by authorized college financial aid officers and borrowers was not restricted.
The department had previously blocked almost 250 users from the student loan industry for inappropriate use of the system.
The database contains information on people who have obtained government-guaranteed Stafford, Plus and Perkins loans, and Pell grants.
By entering a borrower’s Social Security number, a user could get the borrower’s name, date of birth and loan data such as outstanding balance and payment status.
The database does not provide the borrower’s address, e-mail addresses or phone number. Nor does it include sensitive information students must enter on the federal financial aid applications, such as income or assets.
Lenders or others might have improperly gained borrower information by entering thousands of actual or random Social Security numbers into the database, then combined that with information from credit bureaus or other sources to target customers for consolidation loans, says Mark Kantrowitz of Finaid.com
On May 2, the department restored access to the system for 35 guaranty agencies, which are state agencies or nonprofits that act as middlemen for the federal government.
It also added beefed up security by requiring users to enter a series of numbers and letters in a text box and provide the borrower’s date of birth and first name, in addition to Social Security number.
The department has not said when it will restore access to lenders. In the meantime, that’s causing headaches for lenders who want to process consolidation loans.
After they leave school, borrowers can combine existing college loans into a single consolidation loan with an existing lender or a new one.
On the application, borrowers must list the existing loans they want to consolidate and their balances.
In the past, lenders could help borrowers fill out an application, or do it for them, by looking up that information in the database. They also could use the database to verify information borrowers provided.
With access restricted, borrowers must fill out the applications themselves.
“Most borrowers have no idea what their balance is and who the loan servicer is,” says Frank Ballman, executive vice president of Educational Direct, which makes consolidation loans.
“The borrower can go into the NSLDS themselves and get that information, but they need a PIN number. Even if they once had their PIN they’ve forgotten it. It creates a major barrier to consolidation that, unless the borrower understands how valuable consolidation is, many times they are not motivated to move forward.”
Ballman says his firm is still processing loan applications, but it’s taking longer than usual.
Christopher Chapman, president and chief executive of All Student Loan, says that if applicants have access to the database while they are on the phone, “We help them walk through it and figure out what parts they need to put on the application.” Alternatively, applicants “can print it out and we’ll talk to them later or they can mail us a copy.”
Chapman says his firm is not attempting to verify information on the loan application before sending a request for payoff to existing lenders. However, if there is an error on the application, the existing lender will kick it back, delaying the completion of the loan.
A Sallie Mae representative says that if current customers want to consolidate their loans with Sallie Mae, “we will automatically prefill their consolidation application for them with the relevant Sallie Mae loan information. Those who apply to consolidate loans from non-Sallie Mae lenders must now ’self serve’ by looking up their loan information on NSLDS and entering that information on the consolidation loan application.”
Most lenders say they will give borrowers the rate that is in effect when their loan application is submitted. “As long as you have a substantially complete application with us, we will honor the rate,” says Tim Bornemeier, a managing director with Nelnet.
For a variety of reasons unrelated to the database, the rush to consolidate college loans before July 1 is expected to be much less frenzied than in recent years.
For starters, many students who have variable rate loans have already consolidated them.
Stafford and Plus loans issued before July 1, 2006, have variable rates that change once a year on July 1. The rate is tied to the yield on three-month Treasury bills at the last auction in May.
Consolidation loans, on the other hand, have fixed rates. The rate is a weighted average of the loans being consolidated, rounded up to the nearest one-eighth.
In years past, many students were eager to convert their variable rates loans into a fixed-rate loan by consolidating them.
On July 1, 2005, and again on July 1, 2006, rates on student loans shot up by almost two percentage points and the rush to consolidate before those deadlines was fierce.
Over the past year, however, short-term interest rates have been stable. Come July 1, the rates on variable-rate loans are likely to be no more than one-eighth of a percentage point higher than today.
What’s more, all Stafford and Plus loans disbursed since July 1, 2006, have fixed rates, which eliminates one of the big reasons to consolidate.
Another impediment: Before July 1, 2006, students could consolidate while they were still in school. Today, they must wait until they have left school.
That said, there are still some reasons to consolidate.
One, it’s easier to make one payment per month than several.
Two, six months after students graduate or stop attending school at least half time, the rate on their variable-rate Stafford loans goes up by 0.6 percent. If they consolidate before the end of that six-month grace period, they can lock in the lower in-school rate. (This does not apply to fixed-rate loans disbursed since July 1, 2006.)
Students who graduated in December are approaching the end of their grace period and should move quickly if they want to consolidate their variable-rate loans.
A final consideration: The standard repayment period for Stafford and Plus loans is 10 years. Consolidation loans generally allow repayment over 20 or 30 years, which is a blessing and a curse.
Moving from a 10-year to a 20-year repayment period “cuts your monthly payment by one-third, but more than doubles the total interest paid over the life of the loan,” says Kantrowitz.
If possible, it’s better to choose the shortest repayment period. However, if a borrower also has higher-rate private loans or credit card debt, it would be better to pay that off quickly and stretch out payments on lower-cost government loans by consolidating, says Kantrowitz.
05.17.07
It’s official – Higher Education is a hot-button issues for the 2008 campaign
We’d already seen the rumblings, but with the events of the last month or so, it’s official. Higher Education is one of the big issues of the 2008 campaign/election. Check out this interesting article from Inside Higher Ed.
Yay – just what we need – even more mudslinging!
Higher Ed and 2008
In the last week or so, higher education appears to have arrived as a 2008 campaign issue. Democratic candidates are vying to be the boldest defender of student loan borrowers and one in particular — John Edwards — has issued proposals that are unusually detailed for this early in a campaign. And in a sign that Edwards’s move was noticed, Barack Obama followed Tuesday with a plan of his own.
At the same time, several efforts have recently been announced to assure education generally and higher education in particular a prominent role in campaign discussions. To be sure, higher education has not overtaken the war in Iraq as the issue receiving the most attention. And it’s much easier to promise to do something on college costs, for example, than to actually do something. But experts said that the flurry of discussion is a positive sign for academe that its issues can capture public and political attention.
“I think higher education doesn’t win elections, but no candidate wants to be accused of ignoring the issue of college access,” said Robert Shireman, president of the Institute for College Access and Success. “It is important to have something in your list of policies that is relatively catchy, simple and credible,” said Shireman, who was an education policy adviser in the Clinton White House and is not working for any of the 2008 candidates.
If the last few days are any indication, the idea Democratic candidates believe will meet such criteria is overhauling the student loan system, which has been facing an unprecedented scandal in recent weeks over allegations that colleges were steering their students to lenders that favored the institutions or their employees with inducements of various kinds.
On Friday, Edwards — the former North Carolina senator and vice presidential nominee — formally proposed that the guaranteed student loan program be abolished and that all students borrow through direct lending — in which colleges, not banks, pass loan funds to students. Edwards said that by eliminating subsidies to lenders, $6 billion a year would be saved — funds he would direct to new grant programs for students. On Tuesday, Obama, the Illinois senator, held a conference call with student journalists to formally offer his pledge to eliminate all lender subsidies and convert borrowing to direct lending.
In the crowded Democratic field, Edwards and Obama are considered the top challengers to the front-runner, U.S. Sen. Hillary Rodham Clinton of New York. Direct lending was an educational priority of her husband’s administration and she has backed it as well, although thus far in the 2008 campaign, she has not focused on eliminating the guaranteed program but on urging the adoption of a “Student Borrower Bill of Rights,” which would assure students certain information about loan options, a choice of loan options, and income-based limits on their monthly repayment schedule.
Shireman said that the recent loan scandals have made lending a hot issue — and that major changes in the program are “much more likely than I would have thought six months ago. Even I am surprised at the level of the scandal.”
The Democratic coalescing around the issue of student loans is attracting attention from the lenders as well. Officials at Sallie Mae declined to comment on the proposals. But Henry Howard, CEO of U.S. Education Finance Group, issued a statement denouncing Obama within hours of his plan being released Tuesday. “As a lifelong Democrat, I am disappointed with Senator Obama’s proposal to take away Americans’ right to choose their own lender, abolish competition, and push everyone into a one-size-fits-all, inefficient, student loan monopoly. Such a proposal would result in increased borrower interest rates and mandate that the government serve as the only preferred lender.”
A spokeswoman for Howard elaborated that all of those criticisms applied to the Edwards plan, too.
Where Edwards and Obama differ in emphasis is what to do with the billions they would save by eliminating loan subsidies. Obama’s plan calls for using the funds for larger Pell Grants. Edwards wants to create a new “College for Everyone” program, which would provide 2 million students with scholarships to cover one year at a public college if they agree to work part-time in college and to take college preparatory courses in high school. The Edwards plan also calls for simplifying the process of applying for federal aid, new incentives for states to keep public tuitions low, and a new program to support the hiring of more guidance counselors at poor high schools.
The “College for Everyone” idea is being tested with a pilot project Edwards created with philanthropic funds at Greene Central High School, a high school that serves low-income students in a rural part of his home state where the textile and agriculture industries have suffered. Students at the high school receive the same offer Edwards wants to propose nationwide: a year at a public college paid for in return for meeting those basic requirements. Students at the high school are also receiving special counseling, trips to colleges, and detailed explanations of financial aid options (so they can receive aid after their first year).
Thus far, results have been impressive. Two years ago, before the program, about 40 percent of graduating high school seniors went on to college. This year, when high school seniors can see the first cohort already enrolled, 133 of 179 graduating seniors have been accepted for enrollment in the fall.
“The impact has been tremendous in helping our students to see that there are opportunities available for them, and that there are people willing to help them get to college,” said Randy Bledsoe, principal of the high school.
The Edwards higher ed platform has a strong populist theme — and he likes to talk about being the first in his family to attend college (North Carolina State University is his alma mater) and about having worked his way through. Four years ago, he called on colleges to eliminate admissions preferences for alumni children — calling them “a birthright out of 18th-century British aristocracy, not 21st century American democracy” — and early decision programs. A spokeswoman confirmed that he still maintains his opposition to those admissions policies.
Obama has been less detailed than Edwards on higher ed thus far, but numerous reports from campuses suggest high degrees of enthusiasm among students for his campaign. He’s also doing well with campaign contributions from professors. He is also receiving plenty of scrutiny because of his racial background. While Obama has been a strong supporter of affirmative action, in an interview Sunday with ABC’s “This Week,” he suggested that factors other than race and ethnicity need to go into college admissions policies that favor any groups. He said that white students who are from disadvantaged backgrounds deserve extra consideration. And asked if his daughters will deserve affirmative action when they apply to college, he said that they “should probably be treated by any admissions officer as folks who are pretty advantaged.”
Quieter on the GOP Side
To date, education has been more prominent in the Democratic than the Republican campaign. Rudy Giuliani’s education platform is brief and doesn’t mention higher education, but talks about his work reforming the New York City public schools and favoring “school choice.” Mitt Romney, the former Massachusetts governor, has a series of education statements calling for tougher standards and more accountability, and also calls for increased research support, but his emphasis has been on K-12. John McCain has said relatively little about higher education, but has called for fiscal restraint and the end of federal earmarks for special projects, many of which end up in higher education.
Several Republican policy experts on higher education said this week that they haven’t been consulted by campaigns yet, and expected that there would be more detailed proposals down the road, possibly when the Republican field is smaller.
William D. Hansen, who held senior posts in the Education Departments of the current and former President Bush and who has also headed a group for nonprofit lenders in the guaranteed loan program, has had some discussions with the Romney campaign. Hansen said Tuesday that he does not play any official role in the campaign and that it would be premature to say anything more. Herb Allison, chairman and CEO of TIAA-CREF, is close to McCain. Federal Election Commission records show that Allison gave Straight Talk America, McCain’s political action committee, $5,000 in October 2005 and another $5,000 in May 2006. (A spokesman for TIAA-CREF said that Allison’s duties there are full time and that he is not playing any formal role in the McCain campaign.)
While some college officials are trying to influence specific campaigns, others are trying to influence all of the campaigns — with the idea of making education a more central issue.
One such campaign is called “What’s Your Plan?” and is sponsored by a coalition of chapters of the Public Interest Research Group, the American Federation of Teachers, the Association for the Advancement of Sustainability in Higher Education, and other groups. While the groups are generally associated with a liberal take on education issues, the group is nonpartisan and aiming its activity — pressing candidates to answer a series of questions — on Democrats and Republicans alike. The idea is for students to attend as many campaign events as possible, identifying themselves as part of the “What’s Your Plan?” project, and then to ask for specific plans on four issues of concern to young voters: global warming, college affordability, financial security and health care.
“What we want is for all the candidates to talk directly to young people and outline their plans for how they are going to make the dream of a college education more affordable,” said Dave Rosenfeld, one of the organizers. “We want to ask the candidates over and over again, at every town hall meeting, pancake breakfast and event. We want the candidates to know that students care about these issues.”
Another campaign has deep pockets. Ed in 08 — sponsored in part by the Bill and Melinda Gates Foundation — is a new group that will aim to spend $60 million between now and the 2008 election to encourage all candidates to pay more attention to education issues. The group also plans to criticize candidates (as a group) when education is ignored. For example, it issued an analyis Tuesday night noting that education was ignored in the evening’s Republican presidential debate — and the previous debates of Republican and Democratic candidates.
Roy Romer, who has served as governor of Colorado and superintendent of schools in Los Angeles, is leading the effort and has already been meeting with campaign staffs. The emphasis is on elementary and secondary education, but he said that the issues of interest to the group — such as rigor of courses in schools and finding top teachers — relate directly to higher education as well.
Romer said that in talking with campaign officials in Republican and Democratic campaigns, he sees a link in their interests in K-12 issues and the costs of college. “Candidates for political office want to address people where they are in the real world. Many people are very concerned when they send their child to college and find them doing remedial work,” Romer said. “Now a family is paying a lot of money to send a child to college and they are going to be very concerned if the child is doing catch-up work — that’s the kind of work a candidate senses that people want to address.”
It’s not surprising to Romer that student loans are emerging as a top issue in the campaign. “It’s part of the issue of costs,” he said. “Parents and students are concerned about coming out of colleges with unmanageable debt, so there is substantial interest.”
05.16.07
We’re all in the same boat – college cost rise felt worldwide – but US politicians are ignoring this fact!
It’s not just us, but our government isn’t acknowledging that. Here is a very interesting article from CNN.com that shows how other countries are responding to the crisis, and how the US government isn’t learning any lessons from these other countries. Did you know that in communist countries, students take out student loans? I’ll bet your Senators and Representatives didn’t mention that.
College cost crunch felt worldwide, not just in U.S.
• A college cost crunch is bearing down on governments worldwide
• In former Communist countries students pay fees and many take out loans
• The U.S. has the world’s most expensive higher education system
WASHINGTON (Reuters) — A college cost crunch is bearing down on governments worldwide — not just in America — and some innovative approaches to student loans are being taken overseas, although you wouldn’t know it on Capitol Hill.
As another round of debate gets going in Congress on how to help debt-burdened university students, aides said lawmakers were largely ignoring how other countries do it.
One approach being taken in Australia and New Zealand, for instance, is the wider use of “income-contingent” loans that base post-graduation repayments on a borrower’s income. Most U.S. student loans still base repayments on the loan size.
Britain makes income-contingent loans as well, with students repaying them through the tax system to The Student Loan Co. Ltd., a government organization.
In Canada, student loans have been centralized under the government, which hires a services provider, largely removing banks from the picture, said Leesha Lin, operational policy and research director at the Canada Student Loans Program.
“The service was not very good with the banks. A lot of students complained,” Lin said in an interview.
Norway monitors student performance and rewards diligence by converting portions of loans into grants that need not be repaid upon satisfactory completion of a course of study.
“Very useful and important things are happening in other countries,” said Robert Shireman, executive director of the Project on Student Debt, a group that aims to improve America’s labyrinthine and politically sensitive student loan system.
But getting U.S. lawmakers to look abroad for ideas is hard. “It’s fascinating how insular Americans are. Discussions of what happens in other countries fall flat,” Shireman said.
In the private sector, of course, that is not the case. Just ask Sallie Mae, the largest U.S. student loan group and a major target of congressional reformers’ zeal.
The company last week announced its first foreign venture — a loan program targeting British post-graduate students.
“We’re watching these markets very carefully,” said Lynn Ross, vice president of international lending for Sallie Mae.
As in America, higher education costs are hammering other developed nations, forcing a reassessment of who pays and how.
In much of Europe, a “free” university education — meaning one paid for by taxpayers and not students or their families — was seen for decades as a basic right. No longer.
Britain in the late 1990s became the first European country to impose more than a nominal university tuition fee. Today, UK tuition is capped at about $6,000 a year for full-time students who started school last autumn. That is still cheap by U.S. standards, but costly compared to most systems.
Following the UK example, tuition is being imposed for the first time in other countries, including in Germany this year.
German banks — including Dresdner Bank and Deutsche Bank — have begun offering student loans meant to supplement loans from government-owned banks.
“Student loans are becoming more and more important in Germany,” said Markus Langer, a project manager at German university consultancy CHE Consult.
Even in China and former Communist countries where a free college education was once politically sacred, students now pay fees, and many take out loans to make ends meet.
U.S. tops in college costs
With the world’s most expensive higher education system, America asks students to pay an average of $5,800 a year in tuition to attend a four-year public university; or an average of $22,200 a year for a private four-year school, according to the College Board, an educational testing and services group.
America’s decentralized and competitive higher education system is a global leader, with many of the world’s best and brightest students beating a path to U.S. universities.
But for middle-class U.S. voters, college costs are a major anxiety, especially this time of year with college admission letters arriving and financial aid application deadlines near.
U.S. students must navigate a bewildering array of financial aid programs. Besides scholarships and grants that don’t have to be repaid, students can borrow directly from the government; from banks through federally guaranteed private loans; or, increasingly, from banks with no federal guarantee.
Income-contingent repayment is available to some U.S. students with federal government loans, but Shireman’s group has said the program is too limited and too complex.
Concern is growing about student debt. Typical undergraduates leave school today owing about $20,000 — a burden that can limit a young person’s choices in life.
Especially worrying to some is students’ increasing reliance on bank debt, which now accounts for 20 percent of student loans, up from 7 percent just 10 years ago.
Congressional Democrats have introduced legislation that would cut college loan interest rates, raise grant funding, and steer more students toward direct government loans, which they argue save money for students and taxpayers.
The banks and Sallie Mae dispute this, arguing that their loans are cost-efficient and bring student and schools an array of helpful financial services.
The two sides have been fighting over the issue for so many years now that some of the latest thinking in student loans has already moved on, particularly overseas.
“The debate does suffer in that way,” Shireman said.
