Paying for College Blog

Colleges Adapt to Difficult Economic Times With "Value" Options

Christian Science Monitor article ("Colleges offer no-frills degrees") describes how several colleges are offering no-frills education to keep the costs of attendance to a minimum:

Kaileen Crane was hardly interested in the hefty price tag that comes with the traditional college experience. So she's paying $10,000 a year for the Advantage Program offered by Southern New Hampshire University (SNHU), a private college.  Forget about campus housing. Or a meal plan, or a gym with a climbing wall. This program is about the basics – core courses at a bare-bones satellite campus. But the price is less than one-third of what it costs for tuition and room and board at the main campus in Manchester. "It's close to where I live, it's close to where I work, and the cost is just so much cheaper than a lot of other places," says Ms. Crane during a break from classes in an office building in Salem.

A Sign of the Times: SimpleTuition Adds Debt Settlement and Savings Account Partners

Given the challenges in the private loan markets and the uncertainty surrounding the future of FFEL, it should not be surprising to see SimpleTuition seeking to diversify the services they offer.  With student loan defaults accelerating and the savings rates in the U.S. jumping in recent months, these partners seem to make sense but I was still surprised to see them on a student loan site. 

• Debt Rescue USA provides the following marketing pitch about their services:

"In just minutes, Debt Rescue USA will match you up with trustworthy & experienced debt settlement professionals who have helped thousands of people in your exact situation. If you have $10,000 in credit card debt or higher, find out how you can actually settle for less than you owe and get debt relief in as little as 12 to 36 months!"

Financial Aid Directors: In Their Own Words

This week's quotes focus on the state of the economy and its implications for the financial aid office:

• "CSN [College of Southern Nevada] Financial Aid Director Peter Hurley says their applications are up 82-percent from this same time last year.  If this trend continues, they're expecting 35,000 students to apply for help for next year putting a strain on their work study programs and grants.  "It can only go to so many people and make a difference. I can't give everybody $5 and expect to have a positive impact on enrollment," said Hurley."

International Student Loan Program For MBA Students Goes Live

The Financial Times is reporting that the International Student Loan Program (ISLP) developed by the Graduate Management Admission Council (GMAC) has gone live at the University of Chicago's Booth MBA program.  This program was originally announced in February and was focused on providing loans for international students at 40 top MBA programs in the U.S. and Europe.

Here are details that appeared in the FT article:

From the Trenches: Trends in Private Loans

I received the following update today from a financial aid administrator at a public university:
 

Our 3rd quarter private [loan] approval rates were down about 5% overall from this time last year, with overall private volume down about 35% from this time last year. Only one private lender partner approved over 50% of loan applications, and one lender only approved 15% of applications. These figures and trends certainly don't bode well for students relying on private funding for summer, and consequently then trying to register for fall while still scrounging to get approved for a private student loan to cover a prior year balance.

 

I think the increased undergraduate Stafford borrowing limits and increasing utilization and awareness of Grad PLUS account for a good share of the volume drop (which is great for the borrowers), but approval rates are worrisome since I think "students" are just now starting to truly "feel" the credit crunch in terms of private student lending.

Anyone else have experiences they wish to share? 

NY Times Education Life: Saving for College and A Peek Behind the Curtain of the Financial Aid Office

Here were two stories that caught me eye in the NY Times Quarterly Education Life:

"18 Years In the Making" provides tips on saving for a college education at various stages of a child's life, but first explains a tip from a financial planner:

• Financial planner Kevin McKinley suggests a "20/20/20 approach":

Take the current average cost of attending four years at a public university: roughly $60,000. Save $20,000 before your child begins college by putting aside $50 a month starting at birth and assuming a 6 percent annual return. Then, pay $20,000 out of current income while the student is in college. Finally, have your child take out $20,000 in federal student loans over four years. The $200 monthly payments afterward are not a horrible burden for people in their 20s to bear, and they’ll be debt free once the 10-year payback period is over.

Struggling With Student Loan Repayment? Advice from NY Times

NY Times article today highlighted several student loan borrowers struggling with repayment as well as cohort default trends recently released by the Department of Education which increased to 6.9% for 2007 from 5.2% in 2006. 

Here is advice the article provided for students struggling with repayment of their federal loans:

SLA Flash Survey Confirms Difficulty of Finding Private Loans For International Students

The basic takeaway from this survey is that private loans for international students without a co-signer are incredibly difficult to find (I wish I had better news to report).  Here is a link to the survey results from the 158 responses:  Download International_Students_Private_Loans_FINAL

Here is a summary of the key findings:

• Only 6% of survey respondents have found private student lenders for international students WITHOUT a U.S. co-signer.  Almost all of these examples have been chronicled on this blog already and involve graduate institutions: 
  
  • Harvard University graduate schools partnered with Chase
  • MIT Sloan School of Management program partnered with MIT Federal Credit Union
  • Wharton MBA program partnered with Digital Federal Credit Union
  • Deutsche Bank will be funding the GMAC proposal which would cover international students at 40 MBA programs worldwide
    

Financial Aid Directors: In Their Own Words

The focus of this week's column is how financial aid offices are assisting students who have seen their financial situation change during this recession: 

• Karen Rice, associate director of financial aid at the University of California at Berkeley, says you also should not hesitate to ask questions of the financial aid office of the college your child decides to attend if your financial situation worsens during the aid process.
  • The Department of Education recently provided guidance to aid officers regarding their use of professional judgment to account for such financial situations.  

FAFSA Filings Rise 20.8% To 6.6 Million In First Quarter of 2009

Here is a link to the data provided today by the Department of Education.  Here is a summary of the data as analyzed by Student Lending Analytics:

	1Q 2008		1Q 2009	Change
Dependent Students
Original	1,584,420		1,806,812	14.0%
Renewal	1,611,887		1,912,395	18.6%
Other	4,999		3,879	-22.4%
TOTAL Dep. Students	3,201,306		3,723,086	16.3%
Independent Students
Original	821,741		1,076,171	31.0%
Renewal	1,402,405		1,770,006	26.2%
Other	24,322		16,744	-31.2%
TOTAL Indep. Students	2,248,468		2,862,921	27.3%
All Students
Original	2,406,161		2,882,983	19.8%
Renewal	3,014,292		3,682,401	22.2%
Other	29,321		20,623	-29.7%
TOTAL All Students	5,449,774		6,586,007	20.8%

Note: 1Q08 data reflects period from 1/1/08 to 3/30/08 while 1Q09 data reflects data from 1/1/09 to 3/29/09. 
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