October 30, 2008

Presidential Candidate’s Higher Education Plans

Posted in Parent PLUS Loans, Saving for College, Stafford Loans, Student Loan News, The Financial Aid Process at 2:16 PM by Joe From Boston

With the election only days away, here is a very interesting article from the New York Times outlining both Obama and McCain’s plans for higher education.

Here’s an excerpt:

He is calling for a $4,000 tax credit for tuition, which would mostly benefit middle-class families rather than low-income students who struggle the most with tuition increases and loan repayment. Recipients of the tax credit would have to perform 100 hours of community service. And it is not clear if Congress, in the current economy, would have the desire to enact the tuition tax credit, which would cost the Treasury an estimated $10 billion.

“Whoever wins will not have any money to do anything new,” said Thomas G. Mortenson, a longtime independent analyst of student financial aid programs.

As president, Mr. McCain would take a bully pulpit approach to student aid, aides say. Rather than propose any new federal money, he would jawbone and publicly try to coax colleges to slow their rate of tuition increases, using the federal tax exemptions they receive as leverage. He also would press for a more robust student loan market, with flexible payment options and more competition in the hope of lowering interest rates.

Mr. McCain is also calling for the Pell Grant, which assists low-income students, to be high enough to cover in-state undergraduate tuition. The maximum Pell Grant award is $4,731 a year; average in-state tuition and required fees in 2007-8 was $5,749.

Mr. McCain, however, has not proposed any new money for the Pell program; Mr. Obama has proposed an additional $1.5 billion in Pell Grants. The program now receives about $16 billion a year.

“I have a feeling that for both candidates, their proposals will be a work in progress, and the best road ahead won’t be clear until the dust settles on the credit market situation,” said Becky Timmons, who helps oversee federal student aid issues at the American Council on Education, an umbrella group of colleges. “Given the economic situation, we assume there will be a lot more demand for aid and loans.”

October 28, 2008

Student Loan Consolidation – nowhere left to turn?

Posted in Consolidation at 7:05 AM by Joe From Boston

Just a few years ago, consolidating your student loans was almost a right of passage.  Six months after graduating your grace period ends, and students scrambeled to consolidate the Federal student loans at the last minue while retaining that lower grace=period interest rate.

That’s just not happening any more.  Private companies aren’t offering consolidations for federal loans any more.  Only the Department of Education is left.

The Chicago Tribune has a great article chronicling why this is and how you can get yourself consolidated.  Here’s an excerpt:

“This time of year, millions of college graduates face a reality of life after academia: With the six-month grace period on student loan repayment coming to an end, it’s time for them to start making good on their debt.

But this year, one popular option–student loan consolidation–is harder to come by.

Consolidation loans are a type of refinancing for student debt. Graduates can lump all their college loans together, merging multiple bills into one and potentially lowering the interest rate.

Lenders used to eagerly consolidate student debt.

Not anymore.

The credit crunch has made it expensive for many lenders to raise the funds they need to create new loans. In addition, a law passed last year by Congress reduced the subsidies on federal loans that lenders receive from the government.

Virtually no private lender will consolidate federal student loans anymore. But there is another option: You can consolidate your loans through the U.S. Department of Education’s Federal Direct Loan Program.

The government has become, in a sense, the lender of last resort, but the consolidation loans are the same as those offered from private lenders. You even receive a 0.25 percentage point discount on your interest rate if you pay your monthly bill with automatic debit.”

October 23, 2008

Tuition hikes in hard economic times?

Posted in Student Loan News, The Financial Aid Process at 12:37 PM by Joe From Boston

According to Michael Dannenburg, that’s what you should be worried about, not the difficulty in getting a loan.

Here’s an excerpt from the USA Today opinion piece:

“More than 100 banks have stopped issuing student loans, but about 2,000 continue to originate federal
student loans. The government maintains two “fail-safe” systems. To date, not a single student has been
unable to get a federal Stafford Loan. Every family, regardless of income and credit history, is able to borrow
at least $57,500.
The real danger during bad economic times is that tuition often skyrockets. Here’s why: A bad economy
depresses state tax revenue. To meet state balanced-budget requirements, states cut funding for higher
education. To make up those cuts, public colleges hike tuition. Competing private colleges see the increases
and feel empowered to increase their tuitions markedly as well.”

October 20, 2008

Colleges facing financial trouble too

Posted in Student Loan News at 11:58 AM by Joe From Boston

Here are some follow-up articles to the post on 10/3/08.  It’s becoming more and more apparent that colleges are also getting hit by the financial crisis.

Crisis Shakes the Foundations of the Ivory Tower – from the Wall Street Journal

Colleges Brace for Drop in Corporate Giving – Chronicle of Higher Eductaion

Financial Crisis Could Give Jolt to Strategic Planning on Campuses – Chronicle of Higher Education

Big Trouble, Potentially, for Little Colleges – Inside Higher Ed

October 15, 2008

Community, public college enrollment up due to bad economy

Posted in Student Loan News at 11:56 AM by Joe From Boston

In what is probably not a surprise to anyone trying to pay for college at the moment, the Boston Globe is reporting that:

“Undergraduate enrollment at [Massachusett’s] public universities and colleges climbed more than 4 percent this fall as a slumping economy sent thousands of students searching for lower tuition costs.”

Enrollment is up 7% over last fall, reaching an all-tiome high of 176,314.

“Community colleges saw the greatest surge, with enrollment at the 15 two-year schools rising more than 5 percent. The increase continues a decade-long climb, with overall enrollment rising 30 percent over that time.”

Ironically, the schools are facing a major budget cut (along with nearly every other state department) as Gov. Deval Patrick scrambles to balance the budget and keep the state solvent.

October 7, 2008

Why you should be angry

Posted in Misc, Student Loan News at 11:54 AM by Joe From Boston

The mortgage/financial crisis is again rolling over to affect student lenders, as the whole system is linked.  It’s a domino effect.

So you should be very angry at the irresponsible practices in major banks.

This link talks about how Lehman brothers was awarding its executive officers millions of dollars in bonuses while lobbying Washington for help:

Or this article which talks about AIG execs spending $440,000 on a party after the government loaned them billions of dollars to stay afloat! http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/meltdown_aig

And those articles don’t even mention the Washington Mutual executive that started working September 19th with a $7,000,000 signing bonus.  He was then let go at the end of the month with a $6,000,000 severance package.  That’s 13 MILLION dollars for 11 days of work.

That’s why you should be angry.  Your tax dollars are bailing out these idiots who feel entitled to huge sums of money while their staff lose their jobs and their investors lose their money and YOU can’t afford to pay for school because you can no longer get a student loan.

October 3, 2008

Even Colleges are being hit by the current financial crisis

Posted in Student Loan News at 2:29 PM by Joe From Boston

Here’s an insightful article from teh Chronicle of Higher Education detailing what higher educational institutes have been going through the past few months.    I’ve got an excerpt below, or you can click here to view the whole article.  A paid subscriptions may be required.

“When the stock market plunged 778 points last week, losing almost 9 percent of its value in one day, higher education responded in an uncharacteristic way: It began to buckle.

Colleges have often considered themselves recession-proof. But last week’s events compounded an already-difficult year for many institutions, which have suffered from declining state support, tightening credit, and losses on endowment earnings. As a result, the financial meltdown—with its promise of a prolonged economic downturn—prompted some institutions to take radical steps and wreaked havoc on the way colleges do business.

Boston University’s president announced he would freeze hiring and stop all building projects that had not already been approved. Colorado Gov. Bill Ritter tabled all taxpayer-supported construction, stalling several campus building projects. And Wachovia bank froze the accounts of nearly 1,000 colleges, leaving those institutions unable to access billions of dollars they depend on for salaries, campus construction, and debt payments. Some colleges are concerned they may not be able to make payroll.

Even as Wall Street rebounded a bit from its historic loss, campus leaders told The Chronicle they were considering other responses to the crisis: Public institutions talked about increasing tuition as other  revenue falls, while private colleges said they would dip into their endowments to increase student aid and counter a growing scarcity of private student loans. Campus leaders discussed offering classes in the evenings and on weekends to maximize campus efficiency. And they said they would consider hiring more adjunct instructors instead of tenure-track faculty members and look for ways to boost cash flow by borrowing money from auxiliary operations like stadiums and bookstores.”

October 1, 2008

Presidential Campaigns Differ on How to Pay for College

Posted in Student Loan News at 10:31 AM by Joe From Boston

Both Obama and McCain agree there’s a problem.  But they have different views on how to solve it.  The Associated Press has a great article that breaks down exactly what each candidate has pledged.

Read the whole article here which has a detailed break down by type of funding, or see the excerpt below:

Democrat Barack Obama and Republican John McCain have offered similar campaign pronouncements: A college education should be affordable to anyone, and the process of getting federal aid is more complicated than it should be.

But there are differences in how each would tackle the problem.

Obama’s proposals are more detailed — and more expensive. They reflect an assumption that government should do more to help students pay for college.

McCain’s proposals are more general and emphasize streamlining the aid system — improving but not necessarily expanding it. He calls for making more information available to parents and eliminating wasteful spending on pork-barrel university research projects.

Both candidates pledge to simplify financial aid.”