CollegeBasics.com Blog

It may be time for you and your parents…relatives, friends, etc. to write your Congress people.

Why?

The Obama administration wants direct control of student lending which would make the private loan industry essentially defunct. Its proposal is to expand the Pell Grant into an entitlement program much like Medicare.There is bipartisan Congressional support, but private lending firms are lobbying strongly against such legislation.

It’s time now for college students and their families to weigh in against private lender influence.

Student loan burdens are very high—to the point that it is questionable if education is worth it. In fact, the student loan industry has lobbied for and won some perhaps-too-favorable legislation for their own profit, profit that rivals the credit card industry.
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You’ve heard of on-line college degrees, but now you can be attending a college and supplement your learning with on-line programming that you can either watch as it’s streamed or down load to your iPod.
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The downturn in our economy and the resulting credit crunch has affected parents’ and students’ abilities to obtain loans, especially private loans. Some private lenders have actually closed shop, and the amount of private loans this past year has declined 29%.

Are there ways to still manage to have enough money for post-secondary education? Well…there is some help out there.
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The number of students who actually put down a deposit after being accepted to a college or university equals the acceptance yield. This figure could be important in a year that has been influenced by an economic downturn and have significant impact on overall acceptance to colleges and how colleges react.

As of May 8, Jacques Steinberg reports in The New York Times there has not been much variation in yields so far. Harvard anticipated a decrease of 5 percentage points in its yield rate, but there has been no such drop. They are at a 76 percent yield, the same yield rate they had in 2008. But, Harvard also will have 65% of its 2009 incoming first-year students using scholarship aid as compared to 58% of their present first-year class. This means a 7 percent increase to the Harvard financial aid budget.

Pomona and Wesleyan also report similar yields in 2009 compared to last year, and Yale’s yield is stronger than expected. On the other hand, the expected increase at public universities which offer less expensive education is not evident. The University Of Virginia yield is up only one percentage point, and the University of Wisconsin at Madison is actually two percentage points lower.

So far it doesn’t look like the downturn in the economy means there will be any breaks for wait-listed applicants; but Georgetown University, Providence College, and Hartwick College say they still have openings for incoming students.

We will have to wait until June 1 for the final results to come in.

Based on 2006 data, the most recent data available, students paid about half their education costs at public and research universities, up about 10% since 2002. Students covered even more of their education costs at community colleges, about 30%, up about 24% from 2002. At private colleges students actually paid a higher percent of their education costs, about 55.8%, but their increase in costs was only up .4% since 2002.
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By May 1 most know where they are going to college this fall. Some of you were probably disappointed.
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If you’re a new graduate or are approaching graduation, you may already be hearing that drumbeat of financial responsibility building. A new job, student loans, bills, yikes! One of the best things that you can do right away for yourself is put a financial plan in place. Even if you don’t consider yourself a financial expert, there are still some very simple things that you can do immediately to get you off and running and started on the right foot.

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According to the Kiplinger Report there are still dollar deals at private colleges and universities for students and their parents. For example, Kiplinger lists Pomona College as the best value among private colleges and California Institute of Technology as the best value in private universities. Why? It is because for the quality of education these two private institutions are still affordable and provide generous financial aid.
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A college education is good, but debt incurred by a college education is BAD. Student debt has increased due to both credit card use and college loan debt. 80% of college students have at least one credit card with an average credit card debt of $2,100, according to 2004 figures. Also, if you borrow just $5,000 per year for college over four years, your debt will be $20,000, more when you figure in the interest on your loans. The average college student debt is $21,000.
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