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Vol. 18 No. 6
February 2004
Tightening Financial
Aid Options
AS COLLEGES AND UNIVERSITIES
begin admitting applicants for fall 2004, college-bound students
and their families across the U. S. are facing a difficult financial
aid situation. Elements which contribute to the challenging aid
picture include ongoing annual increases in tuition, a continuing
soft economy, state budget cutbacks which have forced tuition
rates up and little likelihood that federal loan limits will
be increased.
That's why this month, CB takes a closer look at financial
aid problems.
There are some bright spots, however. Data indicates, and
the experts CB interviewed confirm, that there's plenty of aid
money around to finance students' postsecondary choices, although
competition for those funds may be tougher than in years past.
And while students and their families are creatively coping with
financial problems in both new and traditional ways, paying for
a college education remains troublesome. Moreover, in many cases,
a student's choice of college is increasingly being influenced
by cost.
RECORD LOW INTEREST RATES
Another plus for college-bound students and their
families is the low level of interest. "New interest rates
on student loans are now the lowest in history," points
out Jacqueline E. King, director, Center for Policy Analysis,
the American Council on Education. "Rates vary, but they're
generally around 3 percent," she says. "Various discounts
can reduce payments even more. For example, you make your payments
electronically, after you've made a certain amount of payments
on time. Private lenders are also offering new loan products
so it pays to shop around for the best deal."
PRIVATE LOANS INCREASE
Alisa Federico Cunningham, director of research for
the Institute of Higher Education Policy in Washington, D.C.,
urges students and their families to hunt for the best loan.
"There's been an increase this year in private or alternative
loans," she says.
"These are not guaranteed by the government, of course,
and the terms are all over the place, but they're very competitive."
Cunningham adds, "It's a good idea to shop for deals online.
Most colleges and universities have a list of preferred lenders
they work with that are listed on their websites."
College financial aid officers confirm the importance of alternative
or private loans as a significant source of tuition financing.
"But I always caution families never to pay money for obtaining
financial aid information," says Dan Goyette, director,
office of student financial aid, Marquette University.
"Start looking for information on the Internet,"
advises Goyette. "Finaid.org is a good place to begin. But
there are dozens of other websites just like it and very helpful."
Parents are becoming more astute at securing financial aid and
the Internet has helped because there's so much information out
there, according to Goyette.
High school financial aid counselors also report that private
and alternative loans are playing a bigger part in bankrolling
higher education. Marybeth Kravets, a financial aid counselor
at Deerfield High School in Illinois, has observed a shift away
from government loans to private lenders among the students and
families with whom she works.
"There is always a frantic search by families for financial
aid...and parents don't want to disappoint their child by restricting
their college choice," Kravets says.
But there is often a disparity between a parent's budget and
the cost of education, she explains, and a poor economy with
job loss and poor stock market performance has not helped. A
student's choice of college or university, therefore, is often
influenced by cost.
Kravets also cautions parents to be wary of "more 'questionable'
financial services sprouting up to offer help," and she
advises, like other experts, never to pay for advice on financial
aid that may be obtained free from other sources.
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TUITION PRESSURES
One factor driving increased student borrowing from
private lenders is the relentless rise in tuition costs. Tuition
and fees for resident students at 41 percent of public four-year
colleges and universities are still below $4,000, says two recently
issued reports from the College Board ("Trends in College
Pricing 2003" and "Trends in Student Aid 2003").
Financial aid from grants reduces the average cost of tuition
and fees for a typical student at a public four-year school to
less than $1,700. On average, tuition and fees at public colleges
and universities rose $579, and $513 at institutions that are
members of the American Association of State Colleges and Universities.
Three elements have combined to cause tuition increases, according
to the College Board reports. First, there was a decline in state
funding over the past two years of from $3 to $4 billion. States
also have been spending a smaller percentage of their total revenue
on colleges and universities. At the same time the states cut
spending for higher education, enrollment at public colleges
and universities increased.
The third factor in rising costs is the increased expense
of funding state employee health benefits and rising expenditures
for maintenance and technology.
But even as tuition increases nationwide, many institutions
have implemented innovative methods to put a cap on costs. Several
state universities have introduced reduced rates for classes
scheduled in less desirable or "low demand" times of
the day or week. Other schools have offered year-round and accelerated
study options to help students get through college faster and
thereby reduce tuition and other expenses. These are options
students should explore to save on expenses.
TOLERABLE STUDENT DEBT
Along with rising costs, student debt also has increased.
"But all research says that in general student debt is within
tolerable limits," says ACE's King. "For some students,
of course, it's overly burdensome. Low rates, however, mitigate
that somewhat. The data is never as up to date as we want. We're
waiting now for some Department of Education data on the class
of 2000, to look at their experience in 2001, their first year
out of school and in a down economy."
Goyette says the average undergraduate senior at Marquette
carries about $23,000 in debt. "We're about in the middle
of the pack on that," he says.
COSTS LIMITING CHOICE
Although low interest rates on loans may alleviate
somewhat the burden of student debt, the money crunch has definitely
influenced a choice of school, these experts told CB.
"Federal loan limits are a big factor in the choice of
schools," says Goyette. Families with financial need have
limited options, he points out. "Even families who don't
have financial needs, have perceived needs, whether or not they're
able to demonstrate that according to the federal formula."
No matter what their financial situation, in most cases families
need help financing a child's higher education and choosing an
affordable school is essential. "As far as I'm concerned,
most families have need," Goyette asserts.
"From the evidence I've seen," says Cunningham at
the Institute of Higher Education Policy, "increased tuition
costs are forcing students to go to less expensive schools. And
these decisions are not just based on tuition. Lodging, food,
books, fees and incidental expenses must also be calculated into
the costs."
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ALTERED ADMISSIONS DECISIONS
While tuition costs are a major factor in selecting
a school, King points out additional factors influencing choice.
"There's another piece of this picture that is probably
having even more of an impact. Many institutions because of their
budget crises and cuts in state appropriations have had to alter
their admission policies. They just aren't able to accommodate
all the growth in student enrollments that we've seen."
"So you have community colleges in states such as California
and Florida, for example, having to restrict admissions,"
says King. "You also see restricted transfer admissions.
So choice of school is not only related to affordability, but
also to restrictive admissions policies, especially in high growth
states that have had both budget cuts and tremendous growth."
Kravets at Deerfield High School reports that her students
and their parents are opting for what she calls "best buy"
schools to limit tuition and incidental expenses. "Others
are attending two-year community colleges to keep costs down
and then transferring to four-year schools." In their hunt
for "best buy" schools and financial aid, "parents
and students are definitely partnering to research this aspect
of their search," says Kravets.
STATES TRYING TO HELP
As students and parents hunt for affordable schooling
they might do well to examine options in their home states, and
especially in at least 11 large-population states that a recent
report shows to have increased state-funded aid.
Those states, according to the report, "Accounting for
State Student Aid: How State Policy and Student Aid Connect,"
from The Institute for Higher Education Policy, include California,
Florida, Illinois, Minnesota, New Jersey, New York, Ohio, Pennsylvania,
Texas, Vermont and Virginia.
Most of these states have seen growth in their merit or special
purpose aid programs, not in need-based grants. California and
Texas, however, have substantially increased their need-based
programs, while Minnesota and Illinois have not kept pace with
the big increases of the leading states.
AN ODD PARADOX
There's an odd paradox that Cunningham at the Institute
of Higher Education Policy points out. "Although the total
amount of funding available from all sources seems to be increasing,
there's been cutbacks in many areas," she says. "Many
states now face structural budget and revenue deficits and have
cut their financial support of state colleges. In turn, colleges
have had to cut their costs and raise their tuition."
Thus, while many states provide increased student financial
aid, aid to state colleges declines and tuition and incidental
costs increase.
"There's also some sense that parents are unable or unwilling
to pay the increased costs of college tuition," Cunningham
adds. "Contributing to this is the high number of layoffs
and bankruptcies."
To make up the cash shortfall, a growing number of students
are working while attending school, according to King. Some are
working part time and taking a full load of classes, while others
are cutting down on class hours to work at full-time jobs.
ADVICE FOR AID SEARCHES
In this difficult financial environment, "Students
are going after scholarships with a vengeance," says Goyette.
"Applying for a scholarship is like applying for a job or
trying to sell something-the more you do it, the better you do
it every time. Don't spill coffee on the application, meet all
deadlines. Persistence and repetition are the keys to success
when applying for scholarships," Goyette advises.
Kravets cautions students and parents applying for scholarships
not to pay for information or assistance. "You should never
have to pay a cent for this type of information, because there
are so many free websites which provide it.
"When the economy turns around and state revenues increase,
these problems will be mitigated somewhat, but the problems are
structural, not purely cyclical," says King. "With
the federal government running such a huge deficit, there's concerns
about restrictions on federal financial aid to the states for
higher education and a good economy won't solve this problem."
With these factors in mind, Cunningham expresses concern "about
the growing inability of low-income and disadvantaged students
being able to attend quality colleges. They'll have to go to
community colleges, which are still affordable but not equal
in the job market."
But Goyette sounds a more optimistic note. "I've been
in financial aid for more than 30 years. Although we're dealing
with families with lots of need, we still have lots of resources.
The names may change, but financial aid is here to stay."
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Private Loans
Soar
More private, non-governmental student loans are being
used to finance tuition costs at higher-priced colleges and universities,
according to a major new national study of the fast-expanding
private student loan market conducted by the Institute for Higher
Education Policy.
"Private Loans and Choice in Financing Higher Education,"
produced by the Institute for Higher Education Policy, concludes
these loans are becoming a critical factor for students deciding
where to go to college.
According to the report, federal student aid cannot keep pace
with increasing college costs. Federal aid programs, therefore,
are now focused on whether students can attend college at all.
Other sources of financial aid, private loans particularly,
have become a significant resource allowing students more choice
in selecting a college. A large number of students who have gone
to private lenders have also borrowed the maximum annual amount
permitted by federal loan sources.
Fastest Growing Sources of Loans
Private student loans at more than $5 billion annually are
now the fastest growing source of financial aid. The U.S. government,
however, still provides the majority of funding with more than
$40 billion in federal student loans, says the report.
"But private loans now account for more than the total
amount awarded by the federal government under the Supplemental
Educational Opportunity Grant, Work-Study and Perkins Loan programs
combined," says "Accounting for State Student Aid,"
which can be downloaded from the Institute for Higher Education
Policy's website, www.ihep.org or by contacting the institute
at 202-861-8223.
New Loan Products
As the market for private loans has increased in recent years,
lending institutions have developed a number of new products
to meet the different requirements of a diverse customer base.
Private loan products, according to the report, have increased
by 244 percent since 1997, from 79 to 272. Many offer competitive
rates, terms and conditions that may be more beneficial to the
borrower than federal loans.
Affirming the importance of private loans, Jamie P. Merisotis,
president, the Institute for Higher Education Policy, said, "We
now know that private loans play a pivotal role in the decision-making
of many students and families, and they need to be elevated in
the discussion of how to pay for college.
"As Congress undertakes the reauthorization of the Higher
Education Act, the private loan market is likely to be a key
point of discussion and debate."
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THE COUNSELOR'S CORNER
Short Takes
WHAT'S NEW ON COLLEGE CAMPUSES?
This month, Dick Jones takes a look at some of the programs that
can impact the college experience and the success, let alone
retention, of students.
FACULTY LIVING ON CAMPUS
While college faculty mold young minds during their
classes each day, just imagine what impact they'd have if they
lived with students on campus. At a growing number of schools,
that's becoming a reality. Jim Sodt, for example, a professor
of communications at Susquehanna U. in Selingsgrove, Pennsylvania,
has been residing with students for almost nine years. During
the week he lives in a former fraternity house turned Scholars'
House. On weekends, he travels home to his family.
Likewise, Father Rene Kollar, professor and chair in the history
department at Saint Vincent College in Latrobe, Pennsylvania,
has taught at the college since 1981 and last year volunteered
to live in the newly-built freshmen resident hall. And at the
University of the South in Sewanee, Tennessee, about 95 percent
of faculty live on the 10,000 acre campus.
KEEPING STUDENTS ON CAMPUS
Colleges and universities are paying attention to
keeping students on campus happy and involved. They've rediscovered
that closer ties to the campus pays off in the form of lower
transfer and dropout rates. Millsaps College in Jackson, Mississippi,
several years ago, for example, created a "seven-day college
experience" and saw the retention rates improve from 89
percent to 96 percent. The college provided more activities for
students so they were inclined to stay on campus on weekends.
Millsaps also created Major Productions to enhance campus life
and keep students on campus Fridays and Sundays. The events range
from performances to active games such as "human fooseball"
and "bouncy boxing." The school also imposed no-alcohol-at-Thursday-night-events
to force the Greek organizations to rethink how they were running
events.
Texas Christian University in Fort Worth decided to provide
juniors and seniors what they were going off campus to find:
new residence halls with affordable apartment-style living. Campus
life improved when older students stayed on campus, administrators
found.
Wartburg College in Iowa built Knights Village, townhouses
for upperclassmen with campus meal options. The townhouses are
for seniors only, but provide independent living, with meal plan
options.
Hope College in Holland, Michigan, has consistently ranked
among the top schools nationally with its campus activities,
according to the National Association for Campus Activities.
Its dance marathon annually attracts over 1,000 of the 2,900
school's students to participate and raise money for a local
children's hospital. But the Hope staff also hosts activities
almost every night over the first six weeks of the new academic
year. The goal is to help students build relationships on campus.
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SERVICE LEARNING A PLUS
Most colleges and universities now encourage students
to do service learning. But what makes it meaningful for students?
The University of Denver, which requires students to do community
service projects, has developed the PLP (Pioneer Leadership Program)
with four levels of engagement.
Students are required to do community service projects but
move from indirect service (seesaw-a-thon to raise money for
charity, for example); to direct service (filling sandbags to
hold back floodwaters or helping in a soup kitchen); to service
plus (organizing the effort to fill sandbags or supervising the
soup kitchen); to transforming service (creating a conflict resolution
training program for a local high school or a literacy program
in a children's center.) When the PLP is complete, students can
receive an academic minor in leadership studies.
The U. of Denver also has an International Living and Learning
Community where students can live with international roommates.
Students take a common two-credit course together and participate
in common social and cultural activities and seminars.
RESIDENCE HALL PROGRAMS
Successful living experiences in residence halls is
a mission at Roger Williams University in Bristol, Rhode Island,
where students are prepared for the "real world" with
Team C.A.R.E. (Community Assistants for Residence Education).
C.A.R.E. is a program in its eighth year that focuses on issues
that promote healthy, respectful living in residence halls. The
issues: drug/alcohol awareness, depression/homesickness, diversity/multiculturalism
or campus safety. One hundred and one student leaders work together
to provide peer counseling. To stress teamwork they sponsor events,
rope courses, bake-offs, debates, human chess matches, flag football
and lectures. The goal is to create a safe and respectful learning
environment.
Roger Williams also coordinates "Superstars," a
semester-long competition among the various residential communities
to create a sense of student community. The program began in
1996. Activities include scavenger hunts of over 100 items to
find, a banner challenge, cheer competition, lip synch contest
and a college bowl tournament. The point is to see more students
overall receive recognition.
QUEST FOR DOLLARS
And the University of Richmond sponsors a year-long
series of campus-wide events aimed at asking and answering a
"big" question such as "Is Truth in the Eye of
the Beholder?" One undergraduate can earn a year's tuition,
room and board by submitting a winning question that becomes
the basis of campus-wide activities. Speakers focus on the question
and faculty weave the question into their classes.
Dick Jones is head of Dick
Jones Communications in State College, Pennsylvania.
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The Counselor's
Bookshelf
Several interesting items came to our attention over
the winter break:
"An Educated Choice: How to focus on a college that's right
for you," two-part video with workbook and guidebook, Intrepid
Films, 2003, ISBN 1-929931-09-3, www.intrepidfilms.com(.)
Shakespeare, Einstein and the Bottom Line: The Marketing
of Higher Education, David L. Kirp (Harvard University Press,
2003), ISBN 0-674-01146-S, $29.95.
Liberal Education in a Knowledge Society, edited by
Barry Smith (Open Court) ISBN 0-8126-9508-9, $39.95.
Connection: The Journal of the New England Board of Higher
Education, Annual Directory of New England Colleges and Universities
2004, Vol. XVIII, Number 3, #20.
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NEWS YOU CAN USE
Early Decision Trends. According to the National
Association for College Admission Counseling (NACAC), only 19
percent of colleges and universities offer early decision programs.
A recent survey found that early decision is used at 25 percent
of all private colleges and just 10 percent of public institutions.
Additionally, NACAC found that 53 percent of colleges that admit
fewer than 40 percent of applicants use early decision, and colleges
with lower yields are more likely to employ early decision options.
NACAC also concluded that the percent of students admitted under
early decision is not statistically different from the percent
admitted under traditional deadlines.
Good PR. Washington U. in
St. Louis is basking in the glow of a recent New York Times
front-page praise (12/22/03). The Times reported that
the elite school once known as a "streetcar college"
not only has penetrated the top 10 of U.S. News & World
Report rankings, but it now attracts 15 times the number
of applicants it can accept.
How did it do it? A "stately campus," top teaching
and research programs, a high quality student body attracted
by generous financial help based on merit aid and "Midwestern
charm" are just a few of the ingredients of success. But
the bottom line? "We've raised a lot of money," Chancellor
Mark S. Wrighton confided to the paper. Wash U.'s $3.5 billion
endowment is the nation's eleventh largest.
Minority Programs Cut. According
to a Wall Street Journal front-page article (12/30/03),
the June Supreme Court ruling on affirmative action has led colleges
and universities to scale back or eliminate special programs
aimed at recruiting minority students or recalculate how they
admit new students. The Court ruled that race may be used as
a factor in admissions decisions, but again ruled out quotas
or separate minority admissions tracks. The Journal cited
the renaming of minority scholarships and opening them to all-race
competition at Williams College and at Carnegie Mellon and Indiana
universities as examples of visible changes. The Journal also
noted that many other race-sensitive scholarships are being re-examined
or challenged in court by conservative activists who want all
admission and scholarship opportunities to be race neutral. Currently,
two-thirds of all colleges offer at least one scholarship reserved
for minority students. CB will keep you updated.
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Where the Girls Are. The
Academic gender gap is growing, according to statistics from
the U.S. Department of Education. Even though there are slightly
more men in their demographic group, women make up 56 percent
of the nation's 15.3 million college students. Women earned 400,000
more Bachelor's degrees in 2001-2002 than men.
Over the past decade the number of women receiving Bachelor's
degrees jumped by 26 percent, while it grew by only 8 percent
for men. The number of women receiving Master's degrees soared
by 55 percent, twice as fast as for men. And the number of women
earning Ph.D.'s jumped 42 percent, while it only rose a meager
3 percent for men.
Now more women attend grad school in veterinary medicine,
optometry and pharmacy, and last year more women applied to medical
school than men. About 49 percent of law students are women,
up from 8 percent in 1970.
Nationally, there are 115 first-year college women for every
100 men. Delaware has the highest ratio of women to men, 148
for every 100 males. Kentucky has 133 women for every 100 men;
Maryland 132, Louisiana and South Carolina 131, Mississippi 128,
Alaska 127, Massachusetts and Virginia 125.
Hunting for Dollars. The
hunt for scholarship money can begin on the Internet. One good
site is www.WiredScholar.com, which lists available scholarships
along with required qualifications. Another way to search for
scholarship money is to go the target school's website and see
what's available. There are numerous other useful and free websites
and links, including www.college-scholarships.com and the 101
Top College University and Scholarship website at www.colleges-scholarships.com
(.) For a broader look at what's available, type in: College
Scholarships on the Google search engine.
Aid Help. The U.S. Department
of Education has launched a new web site to help students and
families with the college and financial aid search. Go to www.studentaid.ed.gov
for information about federal financial aid programs, tax credits
and links to private scholarship sites; online financial aid
applications; a calculator to project education costs; and information
on student and parent repayment options.
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Upcoming Deadlines
| College |
Date |
| Coe C. |
March 1 |
| Creighton |
March 1 |
| The Evergreen State |
March 1 |
| Florida State U. |
March 1 |
| Franciscan U. |
March 1 |
| Hampden-Sydney |
March 1 |
| U.S. Naval Academy |
March 1 |
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COLLEGE BOUND's Publisher/Editor: R. Craig
Sautter, DePaul University; Chief Operating Officer: Sally
Reed; Contributor: Marc Davis; Circulation: Irma
Gonzalez-Hider; Illustration: Louis Coronel; Board
of Advisors: Rosita Fernandez-Rojo, Choate-Rosemary Hall;
Claire D. Friedlander, Bedford (N.Y.) Central School District;
Howard Greene, author, The Greenes' Guides to Educational
Planning Series; Frank C. Leana, Ph.D., educational
counselor; Virginia Vogel, Educational Guidance Services;
M. Fredric Volkmann, Washington University in St. Louis,
Mary Ann Willis, Bayside Academy (Daphne, Ala.).
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