Archive for ‘financial aid’

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.

July 24, 2014

Loans overtook grants as the main source of college financial aid in 1982

by Grace

In the early 1980s loans begin to exceed grants as the primary form of college financial aid.

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Figure 3 shows the amount of financial aid provided in each major category since 1980, in constant dollars (institutional grants are excluded, as they are treated as a discount off of tuition). In the early 1980s, federal, state, and private grants were the largest form of financial aid. But beginning in 1982, loans began to outpace grants, and since then they have remained the largest form of aid available to students to help them pay their costs of attending higher education.

The federal government had first stepped up its role in college financial aid in the 1960s.*

… The United States has long had financial aid for students, awarded in different forms (loans, grants or scholarships, government-subsidized jobs on college campuses, and tax benefits) and from different sources (federal government, state governments, higher education institutions, and private entities). The federal government first began provision of broad-based financial aid in the forms of grants and loans to students with the passage of the Higher Education Act of 1965. This Act also had a provision, the State Student Incentive Grant program, which encouraged states to create their own grant programs. These programs, along with the continued expansion of institutionally-funded scholarships, have helped to subsidize the price paid by students for attending college and have also served to lessen the impact of rising “sticker” prices, or the amount charged by universities before any discount is provided.

*The G.I. Bill began offering federal education benefits to veterans in 1944.

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Geiger, Roger & Heller, Donald. “Financial Trends in Higher Education: The United States” (Working Paper), Peking University Education Review, January 2011.

July 16, 2014

Don’t fall in love with a college you can’t afford

by Grace

Should I apply to colleges I don’t think I can afford?

Michelle Kretzschmar of Do It Yourself College Rankings answers that question.

No–with a big assumption. The assumption is that you already know approximately how much you can afford and how much financial aid a college is likely to give you. That means that you have already used a calculator such as the FAFS4caster to estimate your expected family contribution (EFC) and the college’s net price calculator.

Searching for merit money could be a reason to apply to colleges that are otherwise unaffordable.

There is a situation where you might apply to colleges that you don’t think you can afford. These are lessor known colleges where your test scores put you in the top 25% of applicants and makes you a candidate for substantial merit money.

But you have to stand firm.  Don’t fall in love with a school you can’t afford.

However, this still requires that you have firmly established what you can afford and be willing to turn down those schools that don’t become affordable even after merit money is awarded. Definitely, do not fall in love with a school you if you don’t know you can afford it.

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Michelle Kretzschmar, “Should I apply to colleges I don’t think I can afford?”, Do It Yourself College Rankings, October 22, 2012.

July 14, 2014

College tuition discounts continue to climb

by Grace

The college tuition discount rate – the amount of financial aid as a percentage of tuition and fees – is “again at an all-time high”.

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College continue their “high tuition, high discount” policy.

Private colleges are continuing unabated their strategy of setting high sticker prices while giving most of their students steep discounts, according to the latest survey of private colleges by the National Association of College and University Business Officers.

The colleges, many of which are struggling to meet enrollment goals, are taking in only 54 cents for every $1 they claim to charge in tuition.

The “high tuition, high discount” business model is often confusing to students and parents, but it’s how things are done at most private colleges: the colleges charge high prices and then offer students they want huge discounts. The discount comes in the form of need-based aid for low-income students and “merit” aid for students with characteristics that make them desirable to a college. At wealthy colleges, endowments may have actual funds to replace lost tuition revenue, but most colleges are just waiving the chance of getting more.

Is steep discounting a desperate, short-term strategy?

“If you do too high a discount, then perceptions of desperation creep in,” says Rao. People start to ask: “Are they going out of business? Is this product a dud?”

Mitchell Hamilton is an assistant professor of marketing at Loyola Marymount University. He says deep discounts are a short-term strategy at best. “When you’re looking at discounts of half off or more, or buy one get one free, those are for businesses that need immediate results,” he says. “Private universities are hoping that this is just a strategy to stay afloat until the economic situation gets better.”

Most observers seem to agree that if this trend becomes a race to the bottom, the losers will be ‘”smaller-sized, ‘no-name,’ tuition-driven schools.”‘  Top ranked colleges will continue to thrive.

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Ry Rivard, “Discount Escalation”, Inside Higher Ed, July 2, 2014.

Anya Kamenetz, “How Private Colleges Are Like Cheap Sushi”, NPR Ed, July 12, 2014.

July 7, 2014

Student debt and net worth

by Grace

College-educated young adults with student loans have a lower net worth than those who did not graduate from college.

Nearly four-in-ten U.S. households headed by an adult younger than 40 currently have student debt and a median net worth of just $8,700.

That’s a stark contrast to the median net worth of $64,700 that young college graduates without student debt have accumulated. Additionally, consumers without a degree and without student debt have a net worth of $10,900, once again greater than that of degree holders with debt.

While student loan debt does play a large role in the low median wealth of college graduates with student loan obligations, Pew found these consumers were more likely to take on other debts that contributed to the wealth gap.

College graduates are making more money.

… College-educated student debtors typically have a household income of $57,941, nearly twice that of homes in which the heads do not have bachelor’s degrees.

And their debt load is greater.

… Among the young and college educated, the typical total indebtedness (including mortgage debt, vehicle debt and credit cards, as well as student debt) of student debtor households ($137,010) is almost twice the overall debt load of similar households with no student debt ($73,250)….

It is reasonable that college-educated young adults, with their higher incomes, are able to take on more debt.

Though student debtor households tend to have larger total debt loads, indebtedness needs to be assessed in the context of the household’s economic resources. In other words, households with greater income and assets may be able to take on more debt. Using the conventional total debt-to-income ratio, where debt is measured as a share of income, college-educated student debtors are by far the most indebted.2 The median college-educated student debtor has total debt equal to about two years’ worth of household income (205%). By comparison, college-educated households without student debt and less educated households with student debt have total debts on the order of one year’s worth of household income (108% and 100%, respectively).

The hope and expectation are that their income will keep pace with inflation, and continue to grow at a rate that will enable them to manage their debt.

These young adults should also start saving for retirement, since the “power of compounding is a reason to start saving for retirement as early as possible”.

Saving “$5,000 per year only from ages 25 to 35 (10 years)” will generate a larger retirement nest egg than saving “$5,000 per year, but from ages 35 to 65 (30 years)”.

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Ashlee Kieler, “College-Educated Consumers With Student Debt Have Median Net Worth Of Just $8,700″, Consumerist, May 14, 2014.

Richard Fry, “Young Adults, Student Debt and Economic Well-Being”, Pew Research Center’s Social & Demographic Trends, May 14, 2014.

July 1, 2014

Student debt: not a crisis but certainly a growing problem

by Grace

A recently published study by the Brookings Institution, supported by David Leonhardt’s commentary in the New York Times, downplays the growing student loan problem.  But other commentators have raised issues about the study’s data, and even questions about conflicts of interest have surfaced.

The Brookings report asked “Is a Student Loan Crisis on the Horizon?”, and the authors found that “the impact of student loans may not be as dire as many commentators fear”.  Fair enough, but criticisms about the study’s sloppy data analysis include:

  • The statistic that only 7% of borrowers have student debt balances greater than $50,000 is challenged by findings from the New York Fed.
  • Measures of student debt exclude borrowers living in households “led by anyone over 40″, effectively missing young borrowers living with their parents.
  • Borrowers who were not making payments on their student debt were also excluded from the findings.  Interesting, since this would include cases where loan payments were postponed as a way to avoid defaulting.

The role of the Luminara Foundation’s donations to Brookings and to the study’s authors looks a little suspicious to Malcolm Harris .

… When the Obama administration nationalized 85 percent of higher education lending in 2010, executives like the ones who now sit on the Lumina Foundation board were the big losers. Since then, college costs have continued skyrocketing, but the tens of billions in profits have gone to the Department of Education instead of private lenders. If you were them, and you were angling to get back in the game, the first step would be to edge the government out, either by getting the feds to withdraw or by keeping costs rising faster and higher than DoE loan limits. Graduate loans are a great place to start in a divide-and-conquer strategy, so it’s no surprise that Delisle concludes in favor of shrinking the government’s role. Nor is it surprising that Akers and Chingos can’t find a cost crisis, even though theirs is a fringe minority opinion among higher education analysts and investors.

Most people probably agree that the student loan issue is a not a crisis, but is a slowly growing problem.

… The student debt bubble isn’t going to explode like the housing bubble. Instead, it’s going to fill slowly as it grows over decades, burdening borrowers further and further into the future….

It’s certainly worth paying attention to it, and trying to find ways to diminish its negative effects on college costs and on the economy in general.

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Beth Akers and Matthew M. Chingos, “Is a Student Loan Crisis on the Horizon?”, Brookings Institution, June 24, 2014.

Choire Sicha, “That Big Study About How the Student Debt Nightmare Is in Your Head? It’s Garbage”, The Awl, June 24, 2014.

Malcolm Harris, “The college-cost denial industry”, Al Jazeera America, June 27, 2014.

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