Archive for October, 2011

October 31, 2011

Follow-up on Obama student loan initiative

by Grace

A roundup of not so positive commentary on the Obama administration’s student loan relief initiative that was announced last week  —

There’s no free lunch . . . kicking the can down the road . . . the higher education bubble keeps expanding.

October 28, 2011

Net Price Calculator – a helpful first step in the college search

by Grace

Starting October 29, all colleges are required to provide a Net Price Calculator (NPC) showing the ‘net price’ (defined as tuition, fees and indirect expenses minus grant and scholarship aid) for individual students based on their personal status.   For more details you can go here.

I created three fictional student profiles and ran them through the calculations of a dozen colleges.  In all three cases the student was a top scholar with high test scores who resides in New York State.  The only difference between the three profiles was the family’s financial situation.  The earned income for the three different families were $50,000 (low), $80,000 (medium), and $150,000 (high).  Here are the net Cost of Attendance (COA) results.  [UPDATE:  Harvard figures have been updated to correct a mistake.]

Some initial observations:

  • A low- to middle-income student enjoys a tremendous bargain at many top-ten schools, if he is admitted.  With acceptance rates in the single digits for some of these schools, that’s a big “IF”.
  • At most schools ranked below top ten, a low-income student will pay at least $20,000 a year to attend.  (Note that all these were out-of-state schools for our fictional student.  I plan to run in-state examples later.)
  • Quick comparisons can be made based on NPC results.  For example, with similar COA figures, it appears that UVA offers more need-based aid for low-income students than Denison does.  The detailed report generated as part of the NPC confirms this, indicating the next step might be a request for more detailed information from the college admissions staff.
  • Merit scholarships may be the biggest unknown factor.  I would be careful about relying on NPC figures for this, even for schools that explicitly state that they include merit in their calculations.  Further research will usually be required.

Bottom line:  Families should run NPC reports for all schools on a student’s initial list as a useful first step in comparing affordability among the various options.

….•  Rank:  USNWR ranking; NR = not ranked nationally
….•  COA:  Cost of Attendance
….•  Net COA:  Income Categories are Low = $50,000; Med = $80,000, High = $150,000
….•  Merit Aid:
……….1 – NPC does not consider merit aid.
……….2 – NPC considers at least some merit aid.
……….3 – Unclear if merit aid is considered.
……….4 – School does not offer merit aid.

** This NPC non-resident COA is at odds with the information on the college website.  According to the UNM website, it appears the NPC COA should be increased by approximately $13,000 a year.  Since it’s unknown how that change would affect the net price, I would consider all these UNM numbers to be unreliable.

October 27, 2011

Net Price Calculator for all colleges mandated by October 29

by Grace

Starting October 29, all colleges will be required to offer a Net Price Calculator (NPF).

Under the requirements of the federal NPC mandate, colleges must post a calculator on their Web sites that computes ‘net price’ (defined as tuition, fees and indirect expenses minus grant and scholarship aid) for individual students based on their personal or family financial status.

The resulting “net price” is the amount a student would pay, from savings, family income, loans, student jobs or other sources,  to attend that school.  The NPC can be a quick way to see how much financial aid a particular college would offer a particular student.

What about merit aid?  It may not be included.

Institutions that grant merit aid, as opposed to need-based scholarships,  require more information from students – thus complicating the calculator – and will be unlikely to provide precise aid estimates. A merit aid determination might be based, at least in part, on the strength of an applicant’s G.P.A. or SAT score relative to the scores of fellow applicants − an unknown until deadlines pass and applications are in.

Some colleges will not be providing estimates of merit aid at all in their NPC numbers.  Others will give merit aid estimates with the warning that all scholarship sources are not included in the final calculation.

What about other factors in enrollment management?  It’s complicated.

… the design of this calculator and the issues that colleges will face in deciding what to reveal in their calculator are many and multifaceted. The awarding of financial aid has gotten very complex, and the tactics that institutions use to maximize net revenue may have overtaken the basic value structures of the institution — such as providing aid differentially by gender or providing meager aid to very poor students and aiding middle-income students more generously. …

Gender may be one variable that a college uses in calculating its financial aid awards — aiding men and women differently.

Next up:
Tomorrow I plan to post some NPC examples for various schools and student profiles.

October 26, 2011

New York SAT cheating scandal is expected to lead to more arrests

by Grace

A former FBI chief is coming in to help clean up the SAT cheating mess.

Gaston Caperton, president of the College Board and a former governor of West Virginia, said that in addition to bringing in the former F.B.I. chief, Louis J. Freeh, as a consultant, the College Board was also considering additional safeguards over the next year, including bolstering identification requirements for students taking the SAT and taking digital photographs to ensure they are who they say they are.

Some educators think this action is long overdue and are calling for harsher penalties.

“The procedures E.T.S. uses to give the test are grossly inadequate in terms of security,” Bernard Kaplan, principal of Great Neck North, testified at the hearing. “Furthermore, E.T.S.’s response when the inevitable cheating occurs is grossly inadequate. Very simply, E.T.S. has made it very easy to cheat, very difficult to get caught.”

While the new security measures represent a change of tone for College Board and Educational Testing Service officials who previously insisted their system was adequate, some superintendents and principals said they did not go far enough. These officials have called for fingerprinting students, increasing stipends for proctors and imposing real consequences on those who cheat. Currently, if the testing service suspects cheating, the students’ scores are canceled and they are permitted to retake the test — with no notification to either their high school or colleges where they apply.

Educational Testing Service is already spending about 10% of its budget on security for College Board testing, but whatever they’re doing may not be adequate.  Bernard Kaplan, principal of the high school where the cheating occurred, says this about the problem.

“It is ridiculously easy to take the test for someone else” 

Many young people have fake IDs, which are commonly  “being bought in bulk from vendors in China” and “nearly undetectable by bar employees”.  I imagine SAT test proctors also find it hard to spot them.

Related:  Student cheating – the SAT, the Internet, and Ted Kennedy

(Cross-posted at Kitchen Table Math)


October 26, 2011

Obama administration offers student loan relief

by Grace

President Obama is expected to announce two initiatives aimed at easing the burden of paying back student loans.

1.  Earlier start date for enhanced Income-Based Repayment Plan

The way it works now is that graduates who enroll get charged 15% of their monthly discretionary income to pay off loans, with debt forgiven after 25 years.

Congress passed a law set to go into effect in 2014 that would drop the monthly payment to 10% of discretionary income and would forgive all debt after 20 years. The Obama administration would improve on the law by fast-forwarding the new terms to take effect in 2012, sources say.

The bright spot for the unemployed is that the monthly payments are based on any income above 150% of the poverty line. For a graduate living alone, the payments would be on 15% of any dollars made above $16,335, based on the 2011 poverty line.

And unemployed graduates with no income would owe no monthly payments on their student loans, education experts say.

2.  New provision to allow loan consolidation 

The proposal would impact students with both direct loans and federally backed loans, allowing students to consolidate loans held by private banks into direct loans.

Both kinds of loans are offered at the same interest rate. But having all federal loans consolidated into direct loans could give graduates a chance at forgiveness programs if they work in public service or at nonprofits for a decade.

October 25, 2011

529 plans react to investor concerns

by Grace

Some 529 plan sponsors are reacting to parents concerned about recent market volatility and losses in their accounts.

Several states are making changes to their college-savings plans, hoping to keep parents from making a market-driven exodus.

Arizona, Delaware, Massachusetts, Nebraska, and New Hampshire are adding investment options.  Some of the new funds have higher than average fees, a reminder that simply adding more choices is not necessarily better.

“The bottom line is more choice at the potential cost of more confusion,” says Joe Hurley, founder of, which tracks 529 plans.

The Wall Street Journal

October 24, 2011

High school teachers seem clueless about college readiness of their students

by Grace

Considerable disconnect between high school teachers and college professors . . .

Related:  Fewer Westchester County high school graduates are ready for college

From Newton Infographics

HT Joanne Jacobs 

October 21, 2011

Why I switched my major from English to geology in my third year of college

by Grace

Well, this partly explains why I switched my major from English to geology in my third year of college.

From Dilemmas of an Expat Tutor

October 20, 2011

Record student loan amounts creating ‘a generation of wage slavery’

by Grace

USA Today:  The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.

Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Boardreports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what’s owed on home loans and credit cards.

Taxpayers and other lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can’t be shed in bankruptcy.

The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.

“Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children,” says Mark Kantrowitz, publisher of

“It’s going to create a generation of wage slavery,” says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers.

Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What’s happening:

•Defaults. The portion of borrowers in default — more than nine months behind on payments — rose from 6.7% in 2007 to 8.8% in 2009, according to the most recent federal data.

•For profit-schools. The highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation’s largest, got 88% of its revenue from federal programs last year, most of it from student loans.

“Federal student loans are like no other loans,” says Alisa Cunningham, research chief at the Institute for Higher Education Policy. “The consequences are so high for making a mistake.”

October 19, 2011

Some basics on how colleges use financial need in admissions decisions

by Grace

Here are some terms used to describe the ways in which colleges may incorporate student financial need into admissions decisions.  This generalized information can serve as an introduction to a topic that comprises many shades of gray and is often confusing to families.

NEED-BLIND ADMISSIONS  —  Students are evaluated and admitted without regard to their financial need.  Virtually all public schools fall into this category and many private schools are mostly need-blind, but may use financial need to decide the fate of  borderline, wait-listed, international, or transfer students.  Additionally, this explanation by Mark Kantrowitz shows how the waters can be muddied by a school’s preference for wealthy students.

Need-blind admissions also doesn’t mean that the admissions is wealth-blind. A college might ignore financial need for low-income students, but then grant an admissions preference for high-income students. Most colleges define need-blind as meaning that financial need has no role in the decision to deny admission to low-income students. As such, financial need is not treated as a negative characteristic for low-income students. But colleges can treat a lack of financial need as a positive characteristic for high-income students and still consider themselves to be need-blind. For example, some need-blind colleges will admit full-pay but borderline candidates or grant wealthier students more attractive financial aid packages.

NEED-AWARE, NEED-SENSITIVE, OR RESOURCE-AWARE ADMISSIONS  —  A student’s financial need is typically considered in the school’s acceptance decision.  Enrollment management techniques are employed as a way to make sure the student body generates a sufficient  level of income for the school.  If you can pay your own way you are more attractive than a needy applicant, at least on that basis.  Consequently, a student who does not need financial aid may have an edge in getting accepted over an otherwise equally qualified student.  (“Need-aware” and similar terms are increasingly being used to describe many colleges that self-identify as “need-blind”, in the belief that only schools that ignore financial factors for ALL applicants are truly need-blind.)

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.

GAP STUDENT  —  Student whose financial needs are not fully met by the college.  The gap student is at higher risk for dropping out.

ADMIT-DENY ADMISSIONS  —  What “need-blind” actually means to a student unable to afford the college to which he was admitted.  If the school offers insufficient financial aid to cover the gap between the COA and the EFC, the student is effectively “denied” admission.

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