Student Lending Analytics Blog

Advice From The Trenches: Get FAFSA Filed ASAP!

Here is some advice I picked up off the web from financial aid administrators recently: 

Caveat Emptor: Cautionary Tale About Scholarship and Grant-Finding Services

Given the economic times, more students and families are anxious to find "free money", such as scholarships or grants to finance a college education (see results of SLA Flash Survey on Financial Aid Counseling).  Perhaps that is why services purporting to "find" these scholarships and grants will be "coming to a college near you" if they are not marketing on your campus already. 

Here are the contents of a bulletin put out by the Better Business Bureau: 

One High-School Senior Reflects on Lessons Learned In College Selection Process

She hoped to attend University of New Haven but ended up at East Los Angeles College.  Here is how she got there.  Here is her advice, which might be worth sharing with others:

Syracuse's Solution For Some Overburdened Student Borrowers: Swap Some Debt For Grants With A Healthy Dose of Financial Literacy

After coming across this article in the Chronicle of Higher Education "To Get This Grant Students Have to Take Personal Finance 101", I reached out to Syracuse University to get some additional details about this innovative program.  Here was a brief description from the Chronicle article:

"Syracuse's new Money Awareness Program, or MAP, is aimed at students with a high debt burden. It's a way for the university to make sure upperclassmen who are struggling with their finances are able to make it to graduation."

Thanks to Kaye DeVesty, Director of Financial Aid and Scholarship programs, at Syracuse for answering my follow-up questions about their MAP program:

1.  Can you talk about how this idea came about at Syracuse; what was the main driver?  Was it concern about amount of private loans students were taking on?

House Bill To Create Roosevelt Scholars Program

I received this email this morning from Congresswoman Anna Eshoo (CA-14):

"I just signed on as a cosponsor of H.R. 3510, the Roosevelt Scholars Act of 2009. The bill would create a new, elite scholarship program to fund graduate level study in exchange for a civil service commitment to areas across the federal government. H.R. 3510 would also establish a foundation to administer the application process, selection of scholars, and ongoing support activities associated with these scholarships. The scholarship would provide full tuition, support for room and board, and a stipend for graduate study. In exchange, the scholars will complete an internship with a federal agency and, upon graduation, complete a minimum of three years of civil service.

H.R. 3510 would provide the much needed pipeline of professional talent for the federal government which is facing a workforce crisis.  The Government Accountability Office (GAO) estimates that in approximately five years, the government's top scientists, engineers, physicians, mathematicians, economists, and other highly specialized professionals will be retiring.  The bill will initiate a major recruitment effort that utilizes our nation's expansive network of colleges to meet vital government staffing needs and serve the American public."

Here is a summary of the bill provided by CRS:

How Are Families Paying For College?

A nice simple question for a Friday afternoon. 

I often get this question asked that follows along the lines of:  "Given the drop in the stock market (still 30% below its peak in 2007), the drop in home values (down 30% from its peak in 2006), the drop in the availability of private loans, how are students and their families managing to pay for college?

• I can cite the 25% increase in federal loans, which amounts to about a $16 billion increase year-over-year, based on this chart from the Chronicle of Higher Education.  

• Pell Grants increased by about $3.5 billion over the past year. 

• What about college discounting?  Earlier this week, Inside Higher Ed had an article about one school bucking the discounting tide.  The article cited this amazing statistic that "Between the early 1990s and 2007, average tuition discounts for first-time freshmen grew from 27 percent to 39 percent, according to the National Association of College and University Business Officers."  I knew college discounts were common but 40% was higher than I would have imagined.  The article goes on to note that "many college presidents say they offered even larger discounts this year -- convinced that it was necessary to double down at a time when affordability was such a concern for families.  With college endowments imploding this is not a long-term solution. 

What are the folks in the trenches seeing?  How did families manage this fall? 

Update:   Here were comments from one reader:

"Most of us baby boomers were only in the stock market for retirement funds, so that was never part of the plan to pay for college.

The drop in home values did affect us, but we took a 15 year mortgage when our son was 3, and the house is now paid off.  So we have enough equity (even with the drop in value) to help pay the tuition bill if we need to borrow, and money that was our mortgage payment is now going to the college to pay our family contribution.

We never planned on a private loan  - it would be home equity or PLUS if we needed it.  The son took the full sub Stafford and  a Perkins loan, so he is doing a good share of the borrowing.

The biggest hit we took was on the son’s 529 account.  Even invested conservatively, it dropped 35% of its value.  The change in the student aid rules, to count it as a family rather than a student asset, played a big role in our ability to get enough financial aid to cover what we could not afford. 

Hooray for colleges that can commit to meeting full need, and to those using the federal methodology to determine that need – which today is a more realistic view than including homes and other children’s assets like the other need analyses  currently in play!  The transparency of the methodology allowed us to determine if our financing plan was realistic at a private college, but public colleges were an option as well.

The bottom line – planning – even with a multiplicity of financial setbacks (loss of job, single worker for many years, and loss of employer provided tuition support), it appears that we will make it possible for the son to be at the best college for him."

What's Behind Sharp 23.7% Increase In Pell Grants In 2008-09?

The short answer:  more recipients getting larger grants.  I ran some numbers off of the FSA Data Center site to analyze Pell Grant trends over the past three years:

Academic Year	Recipients	Disbursements	$/Recipient
2008-09	6,259,471	$18,139,589,869	$2,898
2007-08	5,684,582	$14,666,078,963	$2,580
2006-07	5,289,141	$12,791,917,984	$2,419
Year-Over-Year Growth
2008-09	10.1%	23.7%	12.3%
2007-08	7.5%	14.7%	6.7%
School Mix	2008-09	2007-08	2006-07
Public	62.1%	63.6%	64.8%
Proprietary	23.5%	20.9%	19.3%
Private	14.4%	15.5%	15.9%

--------------------------
Insights: 

• The 23.7% increase in Pell Grant disbursements for 2008-09 was driven by a 10.1% increase in recipients to 6.3 million and a 12.3% increase in the average grant size to $2,898. 
• Proprietary schools saw the sharpest increase in Pell Grant disbursements over the past three years, rising from a 19.3% share of Pell Grants in 2006-07 to 23.5% in 2008-09. 

SLA Flash Survey on Financial Aid Counseling: Students and Families In Search of "Free Money"

Given the current state of the economy, I thought it would be worthwhile to understand what financial aid administrators are experiencing on the front lines today.  By counseling students and families, financial aid administrators gain insights as to what matters to their "customers."  The list below indicates that families are focusing on "free money" first by asking about scholarships/grants and work study/job opportunities. 

Here is a summary of a recent SLA Flash Survey on Financial Aid Counseling (Download available here:  Download SLA_Flash_Financial_Aid_Counseling_062209.)  Results are based on responses from 178 financial aid administrators in mid-June:

NYT: Scholarships Harder To Come By

This headline, "Scholarships for College Dwindle as Providers Pull Back Their Support," caught my eye since a recent SLA Flash Survey (full results out on Wednesday) found that Scholarships/ Grants ("free money") were the #1 item that families wanted to discuss in counseling sessions. 

Here are some highlights from the article:

• While scholarships are most needed due to the weak economy, that same weak economy has led to their reduction:  

"The recession has led foundations, corporations, state governments and colleges themselves to reduce their support of providers of scholarships, and in recent months programs have been reduced or canceled outright. The cuts come as economic conditions make it harder for families to pay for college and as more unemployed people look for financing for retraining."

Cool Scholarship Opportunity at DC Comics

Thanks to Calie Shackleford for bringing this opportunity to my attention: