Blog

Newly confirmed Secretary of Education Arne Duncan responds to comments and ideas submitted to the Citizen's Briefing Book on Change.gov about the future of higher education under the Obama Administration. He focuses on FAFSA simplification, loan forgiveness and tax credits for public service, and increasing the Pell Grant.

Posted in

| Tagged

The Delta Cost Project recently released the study “Trends in College Spending: Where does the money come from? Where does it go?” which analyzed enrollment patterns, revenue trends, spending for education, and spending increases between 2002 and 2006 at 1944 colleges and universities. The report found that students are carrying a greater share of the cost of their education, even as institutions spend less on instruction.

Additional findings include:

  • The fastest growth in enrollment occurred at public community colleges with the least resources and with the greatest evidence of budget cuts.
  • At public institutions, spending on instruction declined from 2002 to 2005, and increased in 2006, but the increases did not make up for earlier reductions.
  • Private universities have increased spending through tuition and endowment increases. Total educational spending per student increased by 10 percent at $33,000, while spending at public universities remained stagnant and totaled less than $14,000 per year.

Read the report here.

Posted in

| Tagged

By Debbie Frankle Cochrane, Program Director

California is at the brink. Yesterday Governor Schwarzenegger stated that the state will "face insolvency within weeks." Come February, there simply won’t be enough money to pay the bills. Earlier this morning the California state controller released his plan for keeping the state operating, which includes painful measures like delaying financial aid payments to college students, and withholding the payments that the disabled, the elderly, the blind, and the very poor depend on.

These delays – right now for 30 days but contingent on a budget resolution – will have devastating effects for Californians. We’ve written before about how state budget delays gamble students' ability to go to college, and it’s getting hard to remember the times when the state has made good on its promise of college affordability in a timely way. But these delays take the gamble to a whole new level, putting Californians' futures, health, and lives in jeopardy.

It is not noble to adhere to rigid political ideologies when lives are in the balance. All sides need to compromise and resolve the budget crisis as soon as possible.

Posted in

| Tagged

The Obama transition Web site is sponsoring an online discussion on college costs — noting both the interest of many in the issue and the recent death of Claiborne Pell, who as a Democratic U.S. senator from Rhode Island led the fight to create the grant program named for him. Numerous comments deal both with policy alternatives and the personal situations of individuals trying to pay for college.

[via Inside Higher Ed]

Posted in

| Tagged

By Lauren Asher, Vice President

In Monday's New York Times article about a new state student loan program for New York, a spokesperson for Governor Paterson's budget office said, "One of the big problems in the student loan program is that it is drying up. People who were able to get loans last year can’t get them this year." This kind of misleading statement encourages students and parents – already rattled about how to pay for college – to believe they’ll have trouble getting the most common and affordable type of student loan: a federal loan. In fact, federal student loans remain fully available to all eligible students and parents.

The New York program will encourage undergraduates to borrow up to a stunning $50,000 in state loans, even though dependent undergraduates can already borrow up to a total $31,000 in federal Stafford loans. These federal loans have lower interest rates than the New York loans and come with significant borrower protections and guaranteed access to affordable repayment options.

While it is true that the availability of private student loans has declined due to changes in the broader financial markets, only 8% of the undergraduate class of 2007 used private loans, and an estimated 40% of them had not maximized their federal borrowing options first.

If the goal of the new loan program is to make college more affordable, it misses the mark. Nationally, more than two-thirds of students who graduate from four-year colleges already carry an average of about $22,000 in student loan debt – with similar numbers for New York state. Struggling students should not be burdened with more debt, which will leave them even less able to buy a home, support a family, or save for retirement when the economy picks up again. Instead, tough economic times require states and the federal government to invest in higher education in ways that reduce the need to borrow.

Posted in

| Tagged

We joined 12 other national organizations to send a letter to Congressional leaders urging that their economic stimulus bill include major new investments in college affordability. Our proposal includes a dramatic Pell Grant increase, a boost in funding for Federal Work-Study, more access to PLUS loans, and emergency federal loan funds for some students. Read the letter

Posted in

| Tagged

by Debbie Frankle Cochrane, Research Analyst

This morning, the National Center for Public Policy and Higher Education released their fifth biennial Measuring Up reports. This series details how well individual states are doing on important performance measures including preparation, participation, affordability, completion, benefits, and learning.

By Measuring Up’s standards, California received the highest grade (C-minus) in the nation for college affordability. In fact, it received the only non-failing grade in this category. Because of the way this category is measured, California has always performed relatively well: low fees at community colleges help the state appear more affordable than it is for many students.

This (barely) passing grade should not be overblown, as the report also points out that the affordability of California colleges is declining. For every federal dollar that goes to Californians in grant aid, the state itself puts in only 56 cents, relatively little of which goes to community college students. When considering total costs and taking financial aid into account, the lowest income students still need 58% of their family income to afford to attend a California community college. Thanks to higher amounts of financial aid available to them, those same students would need slightly less – 57% of family income – to attend a public four-year college in the state. So how exactly are community colleges the affordable college option?

Low fees are only part of the affordability puzzle. To stay afloat, California needs to increase its commitment to college affordability by increasing grant aid – which can cover all related costs, not just tuition and fees – for the students who need it most.

Posted in

| Tagged

U.S. Treasury Secretary Henry Paulson's plan to prop up private student loan providers as part of the $700 billion dollar economic bailout package is misguided and will be harmful to students and borrowers if it doesn't require new consumer protections for private loans. We need you to keep the pressure on and demand that any government bailout for lenders who make these risky, high-cost loans address the needs of borrowers as well.

Dear Secretary Paulson,

As representatives of students, consumers, colleges, administrators, and counselors, we write to urge you to reconsider the plan you announced last week to allocate funds from the $700 billion economic rescue package to private student loan providers.

Most students and families do not use private student loans to pay for college, nor should they. Private loans are risky and expensive, and lack the protections, oversight, and regulations of safer federal loans. Furthermore, providers of private student loans already receive special treatment in bankruptcy at borrowers’ expense. Billions of taxpayer dollars should not be spent enabling lenders to continue making these high-risk loans. Most students do not use private loans to pay for college.

  • The Project on Student Debt estimates that only about eight percent of undergraduates who graduated last year took out private loans.
  • Financial aid experts and lenders agree that private loans should only be used after all federal financial aid options have been exhausted. These include Parent PLUS loans that are available up to the full cost of attendance.
  • Federal student loans are as available as ever, despite the credit crunch. In fact, Congress increased the maximum federal student loan limits and has taken other steps to ensure the continued availability of federal student loans. If a parent doesn’t qualify for a PLUS loan due to an adverse credit history, his or her child is eligible for additional federal loans. Private loans are risky and expensive.
  • Private loans have high variable interest rates that are dependent on the credit scores of borrowers and co-signers. There is no limit to how high interest rates can rise – they are often two or three times as high as the fixed rate on federal Stafford loans. As with subprime mortgages, the lowest income borrowers are typically saddled with the highest interest rates and the worst terms.
  • Unlike federal loans, private loans have no real protections for borrowers who fall on hard times. In cases of unemployment, disability, periods of very low income, and even death, private loan borrowers and their families have few or no options for relief. This is not true of federal loans, which can be deferred or repayed in amounts based on the borrower’s income.
  • The only relief for struggling private loan borrowers actually plunges them deeper into debt. Lenders often charge fees to grant a forbearance – a temporary postponement of payments – on a private loan. Forbearances are only available for a limited amount of time, during which interest accrues and is added to the principle when payments resume. Private loan providers already enjoy powerful government protection.
  • Private loans are nearly impossible to discharge in bankruptcy, unlike other similar forms of consumer debt. Someone who racks up thousands of dollars buying jet skis on a credit card can get relief through bankruptcy, but a teacher with private loans who can't work because of a disability has no way out.
  • The special treatment of private loans in bankruptcy protects lenders’ investments at the expense of students and consumers. Lenders that are protected against losses in this way will continue to make risky loans to borrowers without strong prospects for repayment – that is bad for students and the economy. There is a real, but limited, demand for private student loans. Undocumented students, international students, and those who attend schools that don’t participate in the federal loan programs are not eligible for federal loans. Those students, and the small percentage of others who really do need to borrow more than is available federally – and for whom doing so is a sound investment – need safe and reliable options, not more of the same risky private loans. We would welcome an opportunity to work with you on solutions that use tax dollars appropriately and serve the best interests of students and consumers. If you continue with some form of the current plan, we strongly urge you to make receipt of taxpayer dollars contingent on lenders’ acceptance of provisions that increase protections for private student loan borrowers. Private lenders that receive federal rescue funds should be required to offer more affordable fixed interest rates, income-contingent repayment options, and discharges in cases of a borrower’s death or disability. There should be ways for current private loan borrowers – not only future borrowers – to renegotiate more reasonable terms for their loan repayment. Congress must also reconsider the treatment of these loans in bankruptcy. A bailout for the providers of usurious private student loans will not solve the college affordability crisis caused by the failing economy, and would actually be detrimental to many students and consumers. However, if you continue to pursue any form of rescue for private student loans, it would be unconscionable to do so without also providing better consumer protections. Ultimately, the best way to make college affordable and strengthen our nation’s economy is to increase federal, state, and institutional grant aid and reduce the need for students to borrow in the first place. Sincerely, American Association of Collegiate Registrars and Admissions Officers American Association of State Colleges and Universities Campus Progress Consumers Union National Consumer Law Center The Project on Student Debt National Association for College Admission Counseling U.S. Public Interest Research Groups United States Students Association

Posted in

| Tagged

Barack Obama and his administration will soon be making important decisions about the types of financial resources available to students and their families, as well as how easy those resources are to find out about, apply for, and use. We sent a letter to President-Elect Obama congratulating him on his election and urging him to focus on reforms that will make a real difference to college access and success. Read the letter.

Posted in

| Tagged

Pages

Subscribe to Blog