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Articles: Financial Aid

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Still, in our travels, we often see aid offices making unnecessary extra work for themselves or students by clinging to outdated procedures or implementing policies for the entire student body because of concerns that impact only a select few.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.”

One of the more dubious notions to attach itself to higher education is the brash “right to fail.” While the intent to demand maturity and accountability from college students is understandable, the reality, and certainly the wisdom of such an axiom, is another story.

First, the reality: Prior to World War II, the likelihood of attending college was reserved for the children of wealthy or near-wealthy families. These students were expected to succeed, whether they did or not. 

Are the financial aid award letters your institution sends to returning and prospective students clear, correct, complete, and comparable to other institutions’ award letters? The federal government thinks that too many are misleading and difficult to compare.

At one time, each of Connecticut’s 12 community colleges ran its own financial aid office by its own rules. Ten years later, the Connecticut Community College System has doubled the number of students. Now all 12 colleges use FAFSA alone to determine eligibility. All use the same “satisfactory academic progress” requirement for students who receive aid and those who don’t. Simplifying eligibility rules and centralizing some functions freed financial aid staffers to focus on helping students instead of pushing paper, Marc Herzog, the former chancellor, told the College Board.

Financial aid information is easy to find at Pierce College.

Working one’s way through college is the norm for community college students: 85 percent work part- or full-time. With an average tuition bill of $2,713 a year, only 13 percent turn to student loans.

But long work hours have a high cost, concludes a 2011 report by the College Board’s Advocacy & Policy Center. Only 21 percent of first-time, full-time community college students complete a degree or certificate in three years. The six-year completion or transfer rate is 31 percent. Part-timers, who make up 59 percent of enrollment, do even worse.

Very few colleges and universities have actually cut their tuition, according to a National Association of Independent Colleges and Universities survey of members released in June. Other measures have been taken, though. Some institutions have frozen or allowed buying of four years, including Catawba University (N.C.) and the Sage Colleges (N.Y.). Others have committed to lower tuition increases than in the past. For example, 2011-2012 tuition rates at these colleges have gone up modestly:

  • 360 Degrees of Financial Literacy: Free program from the American Institute of Certified Public Accountants to help Americans understand their personal finances through every stage of life
  • CashCourse: Free, noncommercial online educational materials from the National Endowment for Financial Education

Six years ago, when Ted Beck became president and CEO of the National Endowment for Financial Education (NEFE), a nonprofit dedicated to helping Americans become more financially capable, student financial literacy had been overlooked by colleges and universities for a number of years.

"When I would talk to university presidents, parent groups, and students, they all thought [financial literacy] was a very important skill, but it was lacking in the college setting," recalls Beck.

With college costs still top of mind for most families, financial aid is more important than ever. Community college leaders are especially challenged to communicate the importance of the Free Application for Federal Student Aid (FAFSA) to their student body, which appears to be less likely to apply for federal aid. According to the report "FAFSA Completion Rates by Level and Control of Institution," 58 percent of Pell-eligible community college students applied for aid, compared to 77 percent of four-year students in the 2007-08 academic year.

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