February 13, 2007

Merit aid – on the defensive

Posted in Student Loan News at 2:59 PM by Joe From Boston

There have been a lot of articles stressing the need for need-based aid and attacking merit based aid.   Here is a very interesteing article with the opposite point of view.  Personally, I think there has to be some middle ground.  I had merit-based aid in college ,and it’s the only reason I was able to attend my top-choice school.  Without it, I would have ended up somewhere much different (and never met my husband) ; with two working parents, we didn’t qualify for much need-based aid.  I’d be very curious to see any articles that talk about balancing the two.

I certainly agree that need based aid is important – very important- but I also think that merit-based aid is important too as it seeks to help a different group of people.   Also, I’m curious as to why no one is calling those huge sports scholarships into question…  There is a lot of money in sports aid packages that could help an awful lot of people.

Merit Aid on the Defensive (Publicly)

It’s clear from the data regarding the use of merit-based financial aid — showing hefty increases in its use over the last decade at most types of institutions — that many colleges really like it. And in one-on-one conversations about the practice, many college leaders say they favor institutional scholarships based on merit, either because it allows them to recruit different sorts of students or because it actually bolsters their financial coffers, by drawing students who can pay large tuition bills over and above the grants.

But you get a very different sense about the subject from the public discourse surrounding financial aid, from the slew of reports in the last year criticizing the practice to discussions like the one held Monday at the annual meeting of the American Council on Education in Washington. Panelists at the session largely criticized the practice, with a mild counterpoint offered by David Longanecker, executive director of the Western Interstate Commission for Higher Education, who said, “Things are not as bad as some might think.” Audience members, including many college presidents whose institutions offer such aid, offered nary a peep to defend merit aid.

The panel led off with comments by the moderator, William E. (Brit) Kirwan, chancellor of the University System of Maryland, who argued that colleges have forgotten about poor students. “Too many states and institutions have lost balance and are subsidizing students who are already college bound,” he said. He pointed out that the rise of “Hope-like scholarships” — Hope is the Georgia scholarship program financed by the state lottery — have created a regressive tax on low income families to pay for the education of the middle class. Studies have found that the vast majority of people playing the lottery come from low-income households, while most of the beneficiaries of the state grants come from middle-income families.

Citing her own research and those of others, Sandy Baum, professor of economics at Skidmore College, said that only about 40 percent of institutional aid at public colleges and universities is now need-based. “The primary goal doesn’t seem to be to help those who can’t afford college,” she said.

Lucie Lapovsky, a professor of economics and former president of Mercy College, who co-wrote the College Board study with Baum, pointed out that public colleges have been giving more and more merit aid, but that the majority of federal aid is still handed out to students in the lowest financial quartile. Private institutions, she noted, have the most progressive policies on the financial support as more of their discount rate goes to support need-based grants.

However, Longanecker offered some contrary statements. He pointed out that worries over the rise of merit-based aid are mostly overblown as many states, such as Georgia, never really gave much in the way of need-based grants. Prior to the Hope Scholarship, Georgia spent around $3 million on need-based aid, but the scholarship has allowed the state to spend $50 million today on students with need, about 20 percent of the annual funds spent on the scholarships.

“It’s not untoward for states to try something a little different,” he said. Longanecker also argued that Hope-like scholarships allow legislatures to build state support for higher education. He also said that these scholarships may create more buzz about higher education and spur more high school graduates to consider college.

Finally, he argued that some of the underlying perceptions about the success of need-based aid may be wrong. He pointed out that many of the students who get into college because of need-based grants never make it to graduation. “We used to think that if we gave them some money, they would go and complete their education,” he said. “But that doesn’t seem to be the case.”

He acknowledged, however, that students on need-based scholarships may not be able to graduate because they must work long hours to pay for their educations.

Paul D. Thacker

February 12, 2007

Troubles brew at for-profit University of Phoenix

Posted in Student Loan News at 9:23 AM by Joe From Boston

 The University of Phoenix, the largest for-profit university in the United States is facing more and more accusations of shoddy practices.  Read the beginning of the article below, for more information.  The entire article can be found here.

Note: The vast majority of college in the United States are non-profit institutions.  Only a small percentage are for-profit.  The difference between the two is that for-profit schools, as the name implies, must continue to turn a profit for their investors.   Traditional universities do not have investors and do not have stocks traded on Wall Street.

Troubles Grow for a University Built on Profits

Published: February 11, 2007

PHOENIX — The University of Phoenix became the nation’s largest private university by delivering high profits to investors and a solid, albeit low-overhead, education to midcareer workers seeking college degrees.

But its reputation is fraying as prominent educators, students and some of its own former administrators say the relentless pressure for higher profits, at a university that gets more federal student financial aid than any other, has eroded academic quality.

According to federal statistics and government audits, the university relies more on part-time instructors than all but a few other postsecondary institutions, and its accelerated academic schedule races students through course work in about half the time of traditional universities. The university says that its graduation rate, using the federal standard, is 16 percent, which is among the nation’s lowest, according to Department of Education data. But the university has dozens of campuses, and at many, the rate is even lower.

In an interview, William J. Pepicello, the university’s new president, defended its academic quality and said it met the needs of working students who had been largely ignored by traditional colleges.

But many students say they have had infuriating experiences at the university before dropping out, contributing to the poor graduation rate. In recent interviews, current and former students in Arizona, California, Colorado, Florida, Michigan, Pennsylvania, Texas and Washington who studied at University of Phoenix campuses in those states or online complained of instructional shortcuts, unqualified professors and recruiting abuses. Many of their comments echoed experiences reported by thousands of other students on consumer Web sites.

The complaints have built through months of turmoil. The president resigned, as did the chief executive and other top officers at the Apollo Group, the university’s parent corporation. A federal court reinstated a lawsuit accusing the university of fraudulently obtaining hundreds of millions of dollars in financial aid. The university denies wrongdoing. Apollo stock fell so far that in November, CNBC featured it on a “Biggest Losers” segment. The stock has since gained back some ground. In November, the Intel Corporation excluded the university from its tuition reimbursement program, saying it lacked top-notch accreditation.

It adds up to a damaging turnaround for an institution that rocketed from makeshift origins here in 1976 to become the nation’s largest private university, with 300,000 students on campuses in 39 states and online. Its fortunes are closely watched because it is the giant of for-profit postsecondary education; it received $1.8 billion in federal student aid in 2004-5.

“Wall Street has put them under inordinate pressure to keep up the profits, and my take on it is that they succumbed to that,” said David W. Breneman, dean of the Curry School of Education at the University of Virginia. “They seem to have really stumbled.”

In the interview, Dr. Pepicello shrugged off the bad news. Many top corporations still pay for employees to attend the university, he said, and the exodus of top officials has resulted from a healthy search for new directions. “We are reinventing ourselves,” Dr. Pepicello said.

The government measures graduation rates as the percentage of first-time undergraduates who obtain a degree within six years. On average across all American universities, the rate is 55 percent. Dr. Pepicello said this was a poor yardstick for comparing other universities with his, which serves mostly older students who started college elsewhere. Alongside the 16 percent rate, the university Web site also publishes a 59 percent graduation rate, but that is based on nonstandard calculations and does not allow comparison with other universities, he said. The official rates at some University of Phoenix campuses are extremely low — 6 percent at the Southern California campus, 4 percent among online students — and he acknowledged extraordinary attrition among younger students.

“We have not done as good a job as we could,” he said, adding that the university was creating tutoring and other services to help keep students.

Read the remainder of the article here.

February 9, 2007

Sen. Clinton re-introduces Student Bill of Rights

Posted in Student Loan News at 1:44 PM by Joe From Boston

Here’s an interesting article – Sen. Hillary Clinton is re-introducing a bill she introduced in the last session of Congress. Please note that during the 109th Congress, two provisions from the Student Borrower Bill of Rights were enacted into law enabling borrowers to choose lenders with acceptable income-sensitive repayment terms when consolidating student loans.

February 7, 2007 — Washington, DC – Senator Hillary Rodham Clinton today reintroduced the Student Borrower Bill of Rights, a bill that gives rights to student borrowers trying to repay their loans. The bill provides student borrowers with basic rights to ensure that loan payments are affordable, to allow students to shop for loans in a free marketplace and to give students timely information about their loans.

“There are too many students in New York State and across the country that are overly burdened with loan payments or treated unfairly as they repay student loans. This bill makes it easier for students to repay their loans by putting in place a basic set of rights, including the right to borrow without exploitation and the right to real loan choices,” said Senator Clinton.

Students are borrowing now more than ever to pay for higher education. Today two-thirds of college graduates face loan repayments. At the same time, college costs continue to grow and need-based grant aid remains idle. Over the past decade, the average debt burden for college graduates has increased 58 percent, after accounting for inflation. And today, the average borrower graduating from a public four- year institution owes $15,500, while one in ten students owe $33,000 or more. The Student Borrower Bill of Rights will make it easier for students to repay loans by giving borrowers rights that are enforceable. Often, too many students see their costs go up after they think they’ve already budgeted for what they can pay. The bill provides borrowers the right to fair, monthly payments that do not exceed a certain percentage of their incomes as well as fair interest rates and fees.

When student loans are burdensome, borrowers may avoid important but low-paying professions, such as public health workers, social workers, and teachers. The burden of student loans also prevents college graduates from pursuing a higher degree. According to studies by the Nellie Mae Corporation, 40 percent of college graduates who do not go to graduate school, blame student loan debt. The prospect that student loans will be a great burden may also prevent successful high school students from going to college. Twenty percent of low-income high school graduates qualified for college, do not go to college. Senator Clinton has worked tirelessly to provide accessible and affordable education to all students. During the 109th Congress, two provisions from the Student Borrower Bill of Rights were enacted into law. These provisions enable borrowers to choose lenders with acceptable income-sensitive repayment terms when consolidating student loans.

Source: Senator Hillary Clinton

KY Students protest high tuition prices

Posted in Student Loan News at 10:49 AM by Joe From Boston

About 200 Kentucky college students protested in teh Kentucky capital’s rotunda yesterday. Read this great article here. 

By Nancy C. Rodriguez
nrodriguez@courier-journal.com – The Courier-Journal

FRANKFORT, Ky. — Chanting “Not on our backs” and “Give us some money,” about 200 students from the state’s public universities packed the Capitol Rotunda yesterday to urge state leaders to keep higher education affordable.

“We want more attention paid to higher education. We want a commitment from our state legislators and the governor’s office that higher education is going to remain a top priority in the budget,” said Jonah Brown, the University of Kentucky’s student body president.

A strong contingent of University of Louisville students also attended the rally. Many carried signs and pamphlets critical of the amount of funding that U of L received in the current budget.

“Students are going to have to make up for it in tuition dollars,” said Ashley Howarth, a biochemistry major from Louisville.

The students found an ally in Gov. Ernie Fletcher, who acknowledged that affordability is an issue.

“I don’t like the fact that tuition has increased 145 percent over the last 10 years,” said Fletcher, who during his State of the Commonwealth address on Tuesday called for the legislature to add $25 million in fiscal year 2007-08 for need-based financial aid.

The money would come from the state’s projected $401 million surplus.

“Without the ability to go to college, you can’t be all that you can be,” Fletcher said at the rally.

Many students said there is also a need to give universities bonding authority, which they say would give them more flexibility to fund projects such as residence halls and health centers.

“These are all projects that each university had a strong need for, but we have been basically held back by the state,” Brown said. “Every year we have to come and lobby.”

February 8, 2007

Money for Graduate students – there’s just less of it

Posted in Graduate Students, Grants, Scholarships, Stafford Loans at 8:30 AM by Joe From Boston

There is simply less money available for graduate students than undergraduates according to a recent article from the Wall Street Journal. A paid subscription may be required to view the entire article.

Money for Grad Students

By Diana Ransom

When the U.S. House of Representatives recently voted to halve interest rates on some student loans, it left out an entire class of borrowers: graduate students.

Twentysomethings considering going to grad school should also know that there is less federal grant money available than for undergraduates.

Still, there are various types of financial assistance available:

According to 2006 data from the College Board, graduate and professional students use loans to fund 69% of their education costs, while undergraduates rely on loans for 52% of their funding. Students who received master’s degrees in 2004 graduated owing an average $27,000 in debt, …

February 7, 2007

Greater Scrutiny on Colleges and Ties to Lenders

Posted in Student Loan News at 2:43 PM by Joe From Boston

The state of New York is taking a closer look at how colleges pick schools for their preferred lender lists. Here’s an interesting article about what’s going on.

Greater Scrutiny on Colleges and Ties to Lenders
By JONATHAN D. GLATER Published: February 3, 2007

Colleges and universities from Massachusetts to California began receiving formal requests for information yesterday from the New York attorney general’s office as part of an investigation of financial relationships they or individual college officials have with student loan companies.

The inquiry by the attorney general, Andrew M. Cuomo, shows a sharpening focus by government officials on the often undisclosed relationships between loan companies and colleges and universities, particularly as tuition has soared and private student loans have become a lucrative, fast-growing business.

Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Senate education committee, is taking aim at so-called preferred-lender lists, which college financial aid offices compile to recommend loan companies to students. Because students tend to rely on advice from those offices, getting on the list is crucial, and lenders use various tactics to curry favor with colleges and universities.

Mr. Kennedy is pushing a bill that would require the disclosure of such arrangements; ban gifts and services worth more than $10 to college employees; and require lenders to tell students that they might be eligible for low-interest federal loans.

The federal Education Department, which until recently paid relatively little attention to such practices, is now weighing whether to regulate preferred-lender lists, perhaps by requiring colleges and universities to include a certain minimum number of loan companies as options; some institutions have just one or two on their lists.

These combined efforts could pose a peril to some loan companies, which have flourished as private student loans, not guaranteed by the federal government, have grown at an average rate of 27 percent annually since 2001. Private loans now make up 20 percent of total education loan volume; students took out more than $17 billion in such loans last year, according to the College Board.

But the most aggressive action so far is by Mr. Cuomo, who has demanded information from eight loan companies, including Education Finance Partners and Sallie Mae, the nation’s largest student lender, and plans to query more than 60 colleges and universities.

“My office is seeking to ensure that students are being steered toward lenders offering the most competitive rates, not those who offer the best perks to schools or financial aid administrators,” Mr. Cuomo said in a statement.

In an interview, Tamera Briones, the chief executive of Education Finance Partners, defended her company, which has arrangements with several institutions in which it sends money to a college based on the amount students borrow, with payments increasing with loan volume. Ms. Briones said loan terms did not change based on whether an institution received such payments.

“What I believe will occur is, a thorough investigation will be done, and at the end of the day, I don’t believe that the attorney general’s office will find any significant wrongdoing,” Ms. Briones said.

She added that her company had cooperated with Mr. Cuomo’s office.

You can read the rest of the article here.

February 6, 2007

Helping families with the FAFSA

Posted in FAFSA at 8:50 AM by Joe From Boston

Kudos to my co-worker Chris Penn for helping out families with the Financial Aid Process!  Here’s a great article about Chris and the eastern Massachusetts College Goal Sunday.

The Experiences Of A College Goal Sunday Volunteer

Experiences from the 2007 Massachusetts College Goal Sunday (CGS) event were chronicled on Monday by CGS volunteer Christopher Penn, the host of the Student Loan Network’s Financial Aid Podcast. Monday’s edition was #458 in Penn’s series and is available via the podcast’s Web site.

Penn joined a cadre of volunteers at the Jan. 28 state-wide event where families could get free, on-site professional assistance filling out the Free Application for Student Aid (FAFSA) and talk with financial aid professionals about available student aid and how to apply for it. Similar events are held as part of a nationwide College Goal Sunday program which is funded through the Lumina Foundation for Education and managed by NASFAA.

Among Penn’s observations during his “rewarding, eye-opening, and educational” experience was the fact that many families became very frustrated while attempting to fill out the FAFSA.

“I’ve argued that you don’t need a financial aid consultant to figure out how to pay for college, but now I understand why people hire consultants and why there is a market for it,” Penn said.

He observed many families become frustrated with the process because it had never been explained to them.

“If you feel frustrated, it is not your fault,” Penn assured listeners.

Fortunately, the approximately 90 families attending College Goal Sunday in Framingham, Mass. were helped by “some of the most knowledgeable, enthusiastic people,” according to Penn. He was especially impressed with the depth of expertise that financial aid administrators from neighboring schools brought to the event.

After helping a number of families at the event, Penn noted several weaknesses in the online FAFSA process, including th inability to save the application in steps, seven, eight, and nine. He said families he worked with lost countless applications because the save button disappeared after step six.

Penn advised students and families to complete the 1040 tax form before attempting to complete the FAFSA. He also urged applicants to be as accurate as possible when filling out forms, noting that families can miss out on money when they use rough estimates instead of accurate numbers.

Penn felt the inspiring and motivational aspect of the day was observing families from all walks of life striving for the same goal, a bright future for their children. They were all doing their best to get their children a college education so they could have a better life, he said.

By Haley Chitty
NASFAA Assistant Director for Communications

February 3, 2007

Katrina fraudster also filed false student loan applications

Posted in Misc at 9:01 AM by Joe From Boston

How’s this for an odd news item.  I gotta say,sometimes I wonder that the human race has survived as long as it has!

A Bloomington man pleaded guilty Wednesday to collecting nearly $44,000 in funds meant to help Hurricane Katrina victims and $105,000 in fraudulent student college loans, federal authorities said.

Alan King, 29, was charged with theft of government money, loan fraud, false use of Social Security numbers and student financial aid fraud.

Federal investigators allege that King collected 12 separate government payments totaling $43,972 after claiming that he and a family member lived at two different addresses in New Orleans and one in Biloxi, Miss., at the time of the hurricane and flood in September 2005.

King, who federal officials say was actually living in Bloomington, claimed that their housing and two vehicles were destroyed. He also submitted false leases, rental receipts and other documents to back up the claims, according to a news release from Susan Brooks, U.S attorney for the southern district of Indiana.

King also is accused of submitting at least 14 fraudulent student loan applications to The Education Resource Institute, a nonprofit organization that partners with federally insured financial institutions to issue the loans.

The loan applications were submitted between 2004 and 2006, Brooks said. Seven of them, totaling $105,000, were granted.

Brooks said King, who was not a college student, used the money for personal expenses.

Also, King is accused of trying to use false Social Security numbers to get $60,000 in car loans, which he used to buy a 2005 Mercedes-Benz. Less than a year later, he created a fictitious letter from the lender that stated the vehicle was paid for, then took it to the Indiana Bureau of Motor Vehicles to obtain clear title to the car.

King also is accused of using other people’s Social Security numbers to get credit cards.

King, who was being held Wednesday at the Marion County jail, faces a possible maximum sentence of 50 years in prison and a $1 million fine. The maximum sentences are not often imposed.

February 2, 2007

AP Courses do benefit students

Posted in Student Loan News at 1:44 PM by Joe From Boston

Here’s an interesting article regarding two studies which show that AP (advanced placement) courses really do benefit students.

Studies Find Benefits to Advanced Placement Courses:
Good Scores on AP Exams Correlate With Better College Grades and Graduation Rates, Data on Texas Students Show

By Jay Mathews

Washington Post Staff Writer
Monday, January 29, 2007; Page B02

In the midst of a national debate over whether Advanced Placement courses place too much pressure on U.S. high school students, a team of Texas researchers has concluded that the difficult courses and three-hour exams are worth it.

In the largest study ever of the impact of AP on college success, which looked at 222,289 students from all backgrounds attending a wide range of Texas universities, the researchers said they found “strong evidence of benefits to students who participate in both AP courses and exams in terms of higher GPAs, credit hours earned and four-year graduation rates.”

A separate University of Texas study of 24,941 students said those who used their AP credits to take more advanced courses in college had better grades in those courses than similar students who first took college introductory courses instead of AP in 10 subjects.

“Both of these papers are home runs. They definitely settle a lot,” said Joseph Hawkins, an AP expert and senior study director for the private research firm Westat in Rockville.

The new studies run counter to an unpublished Harvard University and University of Virginia study that casts doubt on the worth of AP science courses and contradict some critics who say that high school courses, even with an AP label, cannot match the depth of college introductory courses.

The new studies constitute the largest mass of new data on AP since participation in the College Board program began to skyrocket a decade ago. The College Board, which paid for both studies, is expected to announce next week that nearly 2.3 million AP tests for 37 courses were given in 2006, a 200 percent increase since 1995. Some college admissions experts speculate that the college-level exams, written and graded by independent experts, will eventually supplant the SAT and ACT as the country’s most important tests.

Read the remainder of the article online.

February 1, 2007

Possible Pell Grant Increase

Posted in Grants at 11:42 AM by Joe From Boston

Here’s a cool article from the NY Times about a possible increase to Pell Grants- the first in four years!

WASHINGTON, Jan. 30— The maximum federal grant for middle- and low-income students to attend college would increase for the first time in four years under a catchall spending bill that House and Senate Democrats agreed to on Tuesday.

The measure would complete budget issues left over from 2006.

The increase, announced by the chairmen of the House and Senate Appropriations Committees, would raise the maximum grants, under the Pell program, to $4,310 a year from $4,050. The last substantial increase in the grants was in 2001.

Senator Edward M. Kennedy, Democrat of Massachusetts and chairman of the Senate education committee, called the increase “an important down payment by Democrats on our commitment to help families with high college costs.”

The move follows a vote by the House, under the Democrats’ agenda in the new Congress, to cut interest rates on some subsidized loans for middle- and lower-income students.

Although the rate cut passed with overwhelming bipartisan support, that bill was criticized by House Republicans and the Bush administration as benefiting just college graduates faced with repaying loans, rather than broadening access to college for low-income students.

With the announcement on Tuesday, days before President Bush is to release his 2008 budget, Democrats appeared to answer that criticism, part of a broader effort to claim the issue of college affordability.

Even if the president asks for an increase in Pell Grants, as the White House has indicated is likely, Democrats will have already acted to increase the grants.

Republicans generally appeared to support increasing the grants.

Each year, 5.3 million students with family incomes less than $40,000 a year receive the grants. Although the grants have remained steady, the cost of attending college has outpaced inflation, lowering the buying power of the grants.

The budget bill would increase federal grant money by $615.4 million, to $13.6 billion for this year.

An advocate for the U.S. Public Interest Research Group Higher Education Project, Luke Swarthout, said the increase was significant, though students had hoped for a much larger increase.

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