By Jen Lynch
Many Americans have been weighing out the positives and negatives of a college education, how to finance for it and how to adapt to the overall cost in today's struggling economy. Although most only see negatives and increasing costs in the future, there are some positive changes and opportunities concerning tuition, financial aid from colleges, private loans, federal loans, and government grants.
Every year tuition expenses seem to increase, and more people struggle to meet the costs. State budgets will most likely be forced to trim some college funding, putting more pressure on student tuition, the institution itself and government. However, the stimulus bill should help relieve some of this added pressure by aiding in necessary costs while colleges work to cut spending.
In regards to universities themselves, the average endowment is down one-fourth. Can you imagine how much money that is at an institution like Harvard? Not saying its endowment is down that much, but... you get the picture. A drastic drop in contributions, most of which supplied scholarships for incoming students. The National Association of Independent Colleges and Universities recently surveyed about 200 institutions and found they planned average tuition increases of 4 percent but aid increases of 9.8 percent. So it seems like state universities will be offering more aid, and only increasing costs slightly, while private institutions may not be receiving as much help from state budgets may be increasing tuition more.
Hopefully the stimulus package will give enough financial aid to colleges so that they can provide more government assistance to incoming students. However, increased limits for federal programs such as Stafford loans have lessened students’ need for private ones. Government loan programs are usually more concentrated in four-year public universities with lower default rates, while private lenders cater to a higher percentage of private schools with higher default rates. Reasons for default on loans is clear, the economy is slow, and students aren't getting hired after graduation because there aren't any jobs. According to the Project on Student Debt, the average debts of students graduating with loans rose from $18,796 in 2006 to $20,098 in 2007.
The federal government has bought student loan securities worth approximately $25 billion, in the past year, in order to provide lenders with capital for new college loans. This is to work against the high number of lenders who have left the market, unable to continue to support and supply college loans successfully. The government is also working to increase college aid, especially for low-income students who have been hit hardest by the economy. On July 1, 2010-2011 the maximum Pell Grant will rise from $4,731 to $5,350. Although it doesn't seem like much, it is a large improvement and will help about 800,000 students annually will paying for college. Affording college is difficult, but the government is taking steps to try and help students and families afford the pursuit of higher education.
Glimmer of hope for student aid in a bad economy
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