Archive for ‘financial aid’

October 13, 2014

Student debt doubled for high-income families

by Grace

Borrowing for college among high-income families increased from 24% to 50% over the last twenty years.  Similar increases occurred among middle-income families.

… A new Pew Research Center analysis of recently released government data finds that the increase in the rate of borrowing over the past two decades has been much greater among graduates from more affluent families than among those from low-income families. Fully half of the 2012 graduates from high-income families borrowed money for college, double the share that borrowed in 1992-93.1.

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These numbers show how college affordability is no longer just an issue for low-income families, but now affects families across the income spectrum.

What has changed over the course of roughly two decades then is the pervasiveness of student borrowing across income groups: In the early ’90s, only among graduates from low-income families did a majority of graduates finish college with student debt. Now, solid majorities of graduates from middle-income families (both lower-middle and upper-middle) finish with debt, and half of students from the most affluent quartile of families do the same.

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Richard Fry, “The Changing Profile of Student Borrowers”, Pew Research, October 7, 2014.

October 9, 2014

Colleges want students who ‘can pay full price’

by Grace

Here’s a sobering reminder for students working on their college applications now.  It’s number 8 on the list of “10 things the college admissions office won’t tell you”.

We’d rather admit someone who can pay full price

All other things being equal, a full pay student often has a better chance of admission than a student who needs financial aid.

According to the College Board, 10% of college freshmen in 2013 were foreign students. One reason colleges woo these international scholars: Many are wealthy enough to pay the full price of tuition.

At publicly funded state universities, higher tuition for out-of-state students often helps subsidize education for state residents. For example, for an undergraduate at the University of California at Berkeley, in-state tuition is about $13,000 a year; for an out-of-state or foreign student, tuition is about $36,000 a year.

Full pay can be an admissions boost for marginal students.

The interest in full-pay students is so strong that 10 percent of four-year colleges report that the full-pay students they are admitting have lower grades and test scores than do other admitted applicants.

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Daniel Goldstein, “10 things the college admissions office won’t tell you”, MarketWatch, Oct 4, 2014.

October 8, 2014

The problem of student loans that don’t deliver on jobs

by Grace

Kevin Carey in the New York Times writes about how vocational training programs over-promise and under-deliver on their promise to train students for well-paying jobs.  He highlights the problems with medical assistant training programs.

Many people who graduate from such programs struggle to find work. Those who do find work often make little money — too little to repay their debts from the program. Despite the happy poster images, the market for medical-assistant education is actually an allegory for the problems in the parts of higher education that tend to attract low-income and middle-class students: little regulation and uneven — often mediocre — results. The same problems afflict many community colleges, lower-tier four-year colleges and training programs in fields like office management and culinary arts.

According to the Department of Labor, the median annual salary for medical assistants in 2011 was $29,100. Yet most recent graduates of medical-assistant training programs earn much less, which suggests the programs are not reliable routes to good jobs as assistants. Among the 100,000 students who earned a medical-assistant certificate in 2008 or 2009, roughly 94 percent attended a program where graduates typically earned less than $20,000 in 2011, the data show. More than 50 percent attended a program where typical graduates earned less than someone working full time at the federal minimum wage would — $15,080. That can only mean many were not working full-time in any job.

Clearly the return on investment is painfully insufficient for many trained medical assistants, as well as for many other graduates of our faltering higher education system.  Carey attributes the problem to false advertising, noting that “it’s nearly impossible to find an employer who explicitly requires a certificate”.  He calls for increased regulation as the solution.

The medical-assistant education market is inefficient because the American higher education system is largely unregulated. Every year, the federal government gives students $150 billion in grants and subsidized loans to attend any program offered by any accredited college. The assumption is that the free market will take care of the rest. But college is what economists call an “experiential good” — something you can’t entirely understand until after you purchase and experience it, at which point it may be too late.

Inadequate loan underwriting creates “distortions and useless degrees”.

I actually agree with Carey’s general point that new regulations are needed to curb abuses arising from the haphazard distribution of billions of dollars of taxpayer funds with very little accountability.  But my take on the problem is closer to how this highly-ranked comment frames the problem, with a need for the federal government to do a better underwriting loans.

It is amazing how this article and most others on the the subject never mention the elephant in the room.

It is the Federal Government’s policy to dump money, in the form of grants or loans and loan guarantees, for virtually any degree, any college, to anyone, that creates these distortions and useless degrees.

Do you think any private bank without the Federal Student Loan guarantees and laws would ever lend $18K in unsecured loans to 18 year olds with no assets and no income attending these programs?

Do you think many parents or family would be writing actual checks of $18K for people to attend without making sure they lead to actual jobs?

Of course not. The Federal Government policies inflate the cost of higher education and preserves the existence of thousands of non-viable programs of higher education.

Until we address that, these distorted results will continue to be with us.

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Kevin Carey, “When Higher Education Doesn’t Deliver on Its Promise”, New York Times, Oct. 4, 2014.

October 3, 2014

Tough way to lose a college scholarship

by Grace

During last weekend’s Ohio State football game, student Anthony Wunder ran onto the field and was spectacularly body-slammed by one of the coaches.  Alcohol may have been involved.  This photo made the rounds on social media.

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Unfortunately, it looks like he may lose his full-ride scholarship.

Fourth-year Ohio State student Anthony Wunder was suspended from all Evans Scholars activities, but remains on scholarship pending the outcome of an internal investigation, according to an official statement from the Western Golf Association Evans Scholars Foundation.

On Wednesday, Mark Collins, Wunder’s defense attorney, said that the officials began removing Wunder from the program, which covers tuition and housing for former golf caddies.

“We are disappointed in Mr. Wunder’s actions,” the release read. “Each Evans Scholar, upon receiving the Scholarship, agrees to abide by the policies laid out by the Foundation.”

Among the scholarship requirements are “excellent academics” and “outstanding character”.

September 23, 2014

Which colleges meet full financial need?

by Grace

Only 62 colleges will meet 100% of a student’s demonstrated financial need.

Schools that meet 100 percent of need can use a combination of loans, scholarships, grants and work-study to fill the gap between the cost of attendance – tuition, fees, room, board and other expenses – and the expected family contribution, a number determined by the information you provide on the Free Application for Federal Student Aid, including tax data, assets and family size. ​

Of the 1,137 colleges and universities that submitted financial need data to U.S. News, just 62 of them cover full need.

Many of these schools rank high, with about one-third placing in the top 10 in their categories.

Among them are Princeton University and Williams College, ranked No. 1 among National Universities and National Liberal Arts Colleges, respectively.

Just three public schools are included on the list that meet full financial need.

  • University of North Carolina—Chapel Hill
  • University of Virginia
  • United States Merchant Marine Academy

Here’s an explanation of how “full financial need” is defined:

FULL-NEED SCHOOL — One that claims to meet the student’s full financial needs, defined as the Cost of Attendance (COA) minus the Expected Family Contribution (EFC). It is worth noting that many families are surprised to learn that the school’s determination of financial need is often lower than the family’s own assessment. Also, the school may decide that a loan “award” will be used to meet all or part of the student’s need.

The complete list of schools can be viewed at the U.S. News website.

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September 16, 2014

Posse Foundation boasts a 90% graduation rate

by Grace

The Posse Foundation makes college more accessible for students who may be overlooked by top schools because they do not meet their traditional admissions measures.  Although the program does not screen based on need, many Posse Scholars come from low-income areas.  Students are chosen based on a rigorous selection method, and graduate from college at a 90% rate.

What Is Posse? Posse is a college access and youth leadership development program that identifies, recruits and selects student leaders from public high schools and sends them in groups called Posses to some of the top colleges and universities in the country. A Posse is a multicultural team made up of 10 students. It acts as a support system to ensure that each Posse Scholar succeeds and graduates from college. Posse Scholars receive four-year, full-tuition leadership scholarships from Posse partner colleges and universities.

How Did Posse Get Its Name? In 1989, Posse Founder and President Deborah Bial was working with talented urban young people. She watched these students go off to college, only to see them return within a semester having dropped out. Knowing that these students were bright and capable, she couldn’t understand what was making them leave college. When she asked them what happened, one student replied, “If I only had my posse with me, I never would have dropped out.” That simple idea, of sending a group—or posse—of students together so they could “back each other up,” became the impetus for a program that today has sent hundreds of students to top colleges and universities throughout the United States.

Why Posse? The Posse Foundation has three goals: 1) to expand the pool from which top colleges and universities can recruit outstanding young leaders from diverse backgrounds; 2) to help these institutions build more interactive campus environments so that they can become more welcoming institutions for students from all backgrounds; 3) to ensure that Posse Scholars persist in their academic studies and graduate so that they can take on leadership positions in the workforce.

Does Posse Work? Since 1989, Posse has recruited and trained 4,884 students who have won $577 million in leadership scholarships from Posse partner colleges and universities. More than 70 percent of Scholars have either founded or become leaders of campus organizations. Scholars act as change agents on campus, significantly contributing to the influence and longevity of student organizations. Most important, Posse Scholars persist and graduate at a rate of 90 percent. Posses help the retention of non-Posse students who are not part of the majority culture by fostering an inclusive campus community.

Posse recruits students from Atlanta, Boston, Chicago, Houston, Los Angeles, Miami, New Orleans, New York, and Washington, D.C.  It works with 51 partner colleges and universities across the country.

September 15, 2014

Which top colleges are most welcoming to low-income students?

by Grace

Which top colleges are most welcoming to low-income students?  The Upshot used the percentage of students receiving Pell grants along with net price of attendance for low- and middle-income families to find the most economically diverse top colleges.

Most Economically Diverse
Vassar
Grinnell
U.N.C.-Chapel Hill
Smith
Amherst
Harvard
Pomona
St. Mary’s (Ind.)
Susquehanna
Columbia

The biggest theme to emerge from our analysis is that otherwise similar colleges often have very different levels of commitment to economic diversity….

Similarly, by looking at schools on the list like Barnard and U.N.C.-Chapel Hill, it’s clear that otherwise dissimilar colleges show similar economic diversity.

How many low-income students actually graduate?

An additional data point that would be informative is the graduation rates for Pell grant recipients at these schools.  That’s a significant measure of how well a college serves its low-income students.

Low-income families can look at these lists and search out other information to help them understand how welcoming a particular college would be for their child.  Schools that partner with the Posse Foundation, a support program for that enjoys a 90% graduation rate for its participants, should be considered.

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David Leonhardt, “Top Colleges That Enroll Rich, Middle Class and Poor, New York Times, Sept. 8, 2014.

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August 27, 2014

Step-by-step planning for college is one way to reduce the stress

by Grace

Families are stressed out about getting into college.

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They’re also stressed out about paying for college.

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All this is not breaking news to most families with teenage children.  However, since these survey results are from readers of  Princeton Review’s “Best Colleges” guidebook and users of their website, they are not really representative of the general population.  These survey respondents are more likely to be overly obsessed with the college application process than the average person.

Most families believe providing a college education for their children is very important, but are probably not “extremely” stressed out about it.

It is important to plan for college, but it’s unhealthy to become obsessed with the process.  Here’s some advice from parents and children on dealing with the stress.

Don’t spend too much time comparing notes with others going through the process. Makes people crazy. …

Make sure to take the college process in steps and you won’t feel so overwhelmed….

Don’t freak out. College is not the end of your life. Everything will be OK….

Have fun with it! If you enjoy the process along the way, the outcome will hopefully be more beneficial….

Thoughtful planning is good, and deep breaths can also help.

August 21, 2014

Should the government enable every kid to go to college?

by Grace

If college is supposed to represent some sort of advanced or more demanding level of education, why has it become a national priority to send every kid to college?

Jim Geraghty asks this question in an article questioning the wisdom of our government’s expansive student loan policy.

Is it really in the country’s best interest to enable every aspiring college student to attend college? Right now the federal government is in the business of loaning money to young people to attend college, only to watch significant numbers — 600,000 or so last year — fail to pay the money back. College students are defaulting on federal loans at the highest rate in nearly two decades, with one in ten defaulting on their loans in the first two years. This is not merely one late check; to meet the Department of Education’s definition of default, a borrower’s loan must be delinquent for 270 days — nine months.

The college gets its money, the taxpayer loses theirs, and the deadbeat student can be left with all kinds of frustrating consequences — seized tax refunds, garnished paychecks or benefits, or a lawsuit. (Though the deadbeat student is often in this situation because their college education failed to prepare them to find a job in a mediocre-at-best economy and make a living, so there may not be much money in their wages to garnish.)

How many of those students really should go to college? If college is supposed to represent some sort of advanced or more demanding level of education, why has it become a national priority to send every kid to college? Wouldn’t the nation be better off if at some point it said to these young people, “you can go to college if you want, but we’re not paying for it”?

Remember the burst of the housing bubble?

 “If nothing else, the recent financial crisis should have taught us that it’s not in the country’s best interest to enable every aspiring homeowner to buy.”

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Jim Geraghty, “The American Dream Peddlers”, National Review Online, April 23, 2014.

August 18, 2014

Are you eligible for a college tuition discount?

by Grace

How do you know if a particular college is likely to offer you a discount on their tuition price?  Before you even apply, you can get an estimate by running your specific profile data through a Net Price Calculator (NPC), a tool that can be found on every college’s website.

Forbes ran a Net Price Calculation for five schools using several hypothetical scenarios.  The results show discount rates (financial aid) that would be awarded given specified parameters.

… two types of students, one from a family with an annual income of $300,000 and another from a single-earner family making a mere $12,000 a year. We tested two different academic scenarios: a supersmart kid scoring 1540 on his SAT, with a 4.0 GPA and in the top 10% of his class, and a “B” student scoring 1250 on the SAT, with a GPA of 3.0 and in the top 50% of her graduating class.

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The biggest surprise is that RPI gives more financial aid to English majors than to engineering students.

As you can see all the top institutions except well-endowed Amherst offer discounts or “merit” aid. Only Rensselaer Polytechnic Institute (RPI) differentiates its aid on its calculator by the student’s intended major as well as by income and ability. RPI clearly wants more poets and is willing to pay for them. President Nixon’s alma mater, Whittier College in southern California, clearly isn’t eager to attract lower-income students. In our test it offered an additional grant of only $1,334 to the low-income overachiever. Even after its ample discount, the needy student’s family still has to come up with half the cost of attendance.

This illustration is a reminder that a Net Price Calculator can help guide your college search.

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Lucie Lapovsky, “What’s Your Tuition Discount?”, Forbes, 7/30/2014.

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