Elite institutions are keeping tuition increases to a minimum while increasing financial aid by double digits. Here were just a few of the announcements over the past few days:
Georgetown to increase tuition by 2.9% for 2009-10, financial aid to rise by 18% to $88 million
Northwestern University will increase tuition, room and board by 3.6%, while increasing financial aid by 10% to $86 million
Stanford University to increase tuition, room and board by 3.5% while increasing need-based scholarships to $110 million, a 47% increase over 2007-08 figures
Related articles:
New York Times: To keep students, colleges cut anything but aid
Well, now that the shock has worn off somewhat, I thought it would be interesting to think about the major questions raised by President Obama's budget blueprint which details a shift to direct lending by the 2010-11 academic year. Remember that this blueprint needs to work its way through Congress, and as such, is subject to change. Since few details are available at this time, I thought it would be more useful to think about questions raised by this announcement.
Here is the section in the budget blueprint under the Department of Education pertaining to Pell Grants:
Expands Pell Grants and Puts the Program on Sure footing. Because the Administration is committed to making college affordable for all Americans, the 2010 Budget builds on the recovery Act by supporting a $5,550 Pell Grant maximum award in the 2010-2011 school year. But it is not enough just to make Pell Grants more generous and to put on a short-term patch. Fourteen times since 1973, the maximum Pell Grant has failed to increase even in nominal dollars. To make sure that we have a highly-educated workforce and that the opportunity to go to college is not determined by how much money you have, we need to put the Pell Grant program on sure footing. The Administration will index Pell grants to the Consumer Price Index plus 1 percent in order to address inflation. In addition, the Administration proposes to make the Pell Grant program mandatory to ensure a regular stream of funding and eliminate the practice of “backfilling” billions of dollars in Pell shortfalls each year. Finally, while expanding student aid, the Administration will also simplify the student aid application process.
The description of the FY2010 budget for the Department of Education includes the following section:
Stabilizes the Student Loan Program for Students and Saves Billions of dollars for Taxpayers. Right now, the subsidies in the Government-guaranteed student loan program are set by the Congress through the political process. That program has not only needlessly cost taxpayers billions of dollars, but has also subjected students to uncertainty because of turmoil in the financial markets. The President’s Budget asks the Congress to end the entitlements for financial institutions that lend to students. The Administration will instead take advantage of low-cost and stable sources of capital so students are ensured access to loans, while providing high-quality services for students by using competitive, private providers to service loans. The approach in the Budget, originating all new loans in the direct lending program, saves more than $4 billion a year that is reinvested in aid to students. The Budget also makes campus-based, low-interest loans more widely available through a new modernized Perkins Loan program, overhauling the inefficient and inequitable current Perkins program. -----------------------------
Hartwick College is now offering a three year degree, according to a story in the New York Times, resulting in over $40,000 in savings. This story in combination with President Obama's speech yesterday which noted the low levels of college persistence ("half of the students who begin college never finish") got me wondering about current trends.
Kaplan's Higher Education division grew 25% in 2008, according to the 4Q earnings announcement today from its parent company, Washington Post. The division's results include Kaplan's domestic and international
post-secondary education businesses, including fixed-facility colleges
as well as online post-secondary and career programs.
The company also provided the following commentary about the availability of private loans:
