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Articles: Financial Aid

Unless you live in a cave, you’ve seen the alarming headlines highlighting “exploding” college costs and “crushing” student loan debt. Because the media is trying to grab readers’ attention, these articles often use the most startling cases of these serious problems without providing context needed to fully understand the complexity of these issues. A simple internet search reveals the prevalence of these types of articles.

Here are just a few recent headlines:

In the midst of the debate in Congress over whether or not to double interest rates on Federal student loans in July comes another hot-button aid issue—states are running out of aid money altogether. At the end of March, the Illinois Student Assistance Commission (ISAC) announced it would need to suspend making Monetary Award Program (MAP) awards for FAFSAs filed on or after March 14.

Today’s financial aid director wears many hats: counselor, manager of budgets, supervisor, implementer of regulations, and keeper of data, to name a few. As the role of financial aid director has become increasingly complex and challenging, so has filling this position. A job posting could read something like a hybrid circus performer: juggler/tight-rope walker/magician with excellent communication, supervisory and financial management skills, and at least five years of experience in financial aid.

As new high school graduates anxiously await acceptance letters from their favorite colleges, many will start to plan for this new chapter in their lives by seeking student loans and financial aid to pay for it. After running the gauntlet of qualifying for loans and assistance, many will forget all about it.

The roughly 9 million students who rely on subsidized federal loans will see interest rates double from 3.4 percent to 6.8 percent on loans borrowed after July 1. It’s just the latest chapter in the nearly 50-year saga of the federal government trying to determine the appropriate rate for these loans.

The Obama administration has urged Congress to extend the 3.4 percent rate for one year, but an extension would cost an estimated $3.9 billion. Students and parents trying to plan and pay for college face confusion and uncertainty.

A new analysis of U.S. Department of Education data by the National Association of Independent Colleges and Universities quantifies the reliance on federal student aid by students in every state and congressional district.

Industry News

Heartland Payment Systems Campus Solutions division has been awarded a contract by the Tennessee Board of Regents System to manage financial aid disbursement and refund management to six universities, 13 community colleges and 27 technology centers. The TBR System manages more than $600 million in annual financial aid refunds.

Since the federal calculator mandate’s October deadline, Student Aid Services has announced that 678 campuses have selected the company’s net price calculators to help families plan how to pay for an education.

Stafford Loans

  • Subsidized Stafford loans are available based on financial need, and unsubsidized loans are available to everyone. 
  • For graduate students, the maximum annual loan limit is $20,500 (with up to $8,500 subsidized). The aggregate loan limit, including undergraduate debt, is $138,500, except for medical students, for whom the limit is $224,000. 

Student borrowing is going up. National Student Loan Data System data shows that cumulative borrowing per student participating in federal loan programs increased from about $3,943 in 1990 to $11,510 in 2000 and $13,856 in 2009. Much of the increase is attributed to funding for graduate education, and recent changes in federal student loan policies for graduate students will likely cause this to go higher.

A report by credit score analyst FICO shows growing concern for the stability of the student loan market, putting additional strain on the fragile economy. U.S. student loan debt now exceeds credit card debt, with an estimated $750 billion in outstanding student loans.More than two-thirds of bank risk professionals surveyed expected loan delinquencies to rise.

A student speaking with her advisor

Community colleges have always been a popular place for students to begin their higher education career. Often smaller, closer, and more affordable than their four-year counterparts, they can help students get accustomed to college-level work or simply save on tuition. The national goal of producing more college graduates has increased the focus on ensuring students actually transfer on. Keith Coates, a student services advisor at Columbus State Community College, Delaware Campus (Ohio), reports that they’re seeing a lot of students who want to transfer but may not know to where.

The time of unprecedented growth for the federal Pell Grant program couldn’t have come at a worse time for Congress. As lawmakers were looking to cut federal spending to address the growing national deficit, record college enrollments, the economic downturn, and expanded Pell Grant awards and eligibility criteria combined to triple the cost of the program over five years.

Given federal and state regulations­, especially now, there are many policies and procedures related to applying for, awarding, and disbursing aid that can’t be avoided. Still, in our travels, we often see aid offices making unnecessary extra work for themselves or students by clinging to outdated procedures or implementing policies for the entire student body because of concerns that impact only a select few. Scannell & Kurz has compiled this “hit list” of time—and money—wasting policies and procedures that should be reconsidered:

Student loan debt has been steadily rising for a number of years and has recently passed the $1 trillion mark, making it more than credit card debt. The issue has had attention all along, but there is more of a focus on it as recent graduates are having a hard time finding jobs that would enable them to repay those loans.

Many people probably only think about Napa when they’re thinking about wine. And while the Napa Valley of California does have world-class grapes, it’s also home to a huge population of Mexican immigrant laborers responsible for this wine behind the scenes—and their undocumented children looking for an education.

“Many of [these students] have been here the greater period of their life,” says Oscar de Haro, vice president for student services at Napa Valley College. “They reflect the values of Napa, the workforce of Napa.”