Higher Education in Congress

Higher education is a hot topic in Congress lately.  Last May we blogged about President Obama’s proposal to eliminate the Federal Family Education Loan Program (FFELP). Since then, this proposal has passed the House of Representatives, and is now in the hands of the Senate. Discussion on the bill in the Senate is not expected to begin until the health care reform debate is wrapped up next month. In the meantime, lenders, colleges, and students seem to be on both sides of the fence. Some fear the elimination of FFELP will lead to a lack of choice in loan providers, potential disruptions to funds and services, and a loss of 35,000 jobs. Others are encouraging the potential increase in educational aid funding that will result from the redirecting of funds away from FFELP.

Another bill that aims to lower the fees that colleges pay when students use credit cards to pay for tuition, fees, and books was recently proposed in the House of Representatives. These fees, which average around 2%, are often passed on to consumers in the form of higher prices or “convenience” fees. According to the Chronicle of Higher Education, college bookstores paid $85 million in credit card swipe fees in 2003, and are lobbying hard for a change. Provisions in the bill would also set minimum transaction amounts for card purchases and allow lower prices for customers who pay in cash. This is not the first time legislation to reform credit card usage has affected students.  Last spring a bill was passed which prohibited students under the age of 21 from obtaining a credit card.

How Does America Pay for College?

Last month, Sallie Mae and Gallup released the 2009 results of their second annual survey, “How America Pays for College,” which found that a majority of families are paying for college the smart way: by limiting borrowing and taking advantage of scholarships and grants. In fact, 58% of families paid for college without borrowing at all, and 51% of students received grant and scholarships funding to assist with costs.

The study found that students were more cost conscious than parents when considering the value of college. Only 53% of students indicated they would rather take a loan than not attend college, as opposed to 67% in last year’s study. Contrarily, 58% of families who took a loan said they did not take the student’s expected starting salary into consideration when choosing how much to borrow. Even more worrisome, 100% of students who borrowed had no idea or greatly miscalculated how much monthly payments would be upon repayment.

Other findings from the survey include:

• Hispanics and African-Americans borrowed loans more frequently
• Higher-income families paid 40% more in college costs
• Middle-income families received the least amount of grant and scholarship funds
• Students who attended community college borrowed the least

Complete details from the survey are available at: http://www.salliemae.com/NR/rdonlyres/52D9FB57-D14A-46EA-A6D9-AECB284D13FD/11500/GCR1979_2009_PAYS_survey_final_0916091.pdf.

What are the Keys to Student Satisfaction?

A recent study conducted by Dr. Laurie Schreiner of Azusa Pacific University and Noel-Levitz, a higher education consulting firm, attempted to analyze whether a high level of student satisfaction lead to an increase in student retention. In addition to proving this correlation, the study also revealed that the factors that determine a student’s satisfaction level differed depending on the student’s year in school. Below are the findings from the study by class level:

• “Satisfaction with the campus climate is especially crucial for first-year student retention. First-year students are also most likely to persist when they are satisfied with their advisor’s availability, are impressed with the course content in their major, believe that student fees are used wisely, and feel that the campus is a safe place.
• For sophomore students, satisfaction areas that are most predictive of next-year persistence include campus climate, instructional effectiveness, advising, course content in their major, the variety of courses offered, feeling that faculty are fair and unbiased in their treatment of students, career services, and having a comfortable place to spend time in between classes.
• For juniors, the odds of returning for the senior year are improved as satisfaction increases in areas such as advisors knowing graduation requirements, faculty availability outside of class, ability to experience intellectual growth on campus, and having a comfortable place to spend time in between classes.
• By the senior year, retention is less connected to student satisfaction factors and more strongly linked to institutional characteristics and grade point average.” *

*This information was obtained from the NASFAA news at http://www.nasfaa.org/publications/2009/anretention082709.html. Complete findings from the study are available at www.noellevitz.com/retentionlink.

How do I get my loans?

Are you a new student? Or a returning student who has never borrowed a federal loan? Read below to find out what steps you need to take to make sure your loan funds get deposited to your student account for the fall term.  

Federal Loan Entrance Interview This is not really an “interview” but more of an interactive counseling session. This quick on-line questionnaire provides useful tips and tools to help you develop a budget for managing your educational expenses and helps you to understand your loan responsibilities. To complete the Loan Entrance Interview, log into myNEU and click on the link available under the Self-Service tab.

Master Promissory Note (MPN) A note is a contract binding you to repay the student loan. Signing a “master” promissory note means you will not have to sign a new note every time you take a loan; one master note is valid for 10 years (at the same institution). You will have to sign separate notes for the Stafford Loan and Perkins Loan. To sign your Stafford MPN, go to www.dlenote.ed.gov. If you were awarded a Perkins Loan, the MPN will be mailed to you.

Title IV Credit Authorization “Title IV aid” refers to most types of federal student aid, including the Stafford and Perkins Loans. A Title IV credits exists when your federal aid exceeds your charges for tuition, fees, room, and board. By completing the Credit Authorization Form, you allow the University to use this credit to pay for any other charges on your student bill, such as parking or lab fees. You also use this form to allow the University to hold any credit balance to a future term; for example, holding a credit created in a fall co-op term to pay for spring term’s tuition charges. The Title IV Credit Authorization is available through the Self-Service tab on myNEU. The form can be found under “My Financial Aid Status” on the “Apply Online” tab.

Need Help Paying for NU?

No one needs to restate the fact that many of us are facing tough economic times. Here in the Office of Student Financial Services, we are often offering our assistance to students who, due to unforeseen circumstances, are suddenly faced with uncertainty about how to pay for school. If that sounds like you, we want to let you know that we are available to discuss a substantial change in you or your family’s financial circumstances.

We have a formalized process for requesting an appeal of your financial aid awards. The first step is to complete our 2009-2010 Change in Circumstances Form, which you can download from the “Forms” section of our website. This form acknowledges the fact that the FAFSA form collects data primarily on your financial resources in 2008, and gives you an opportunity to update us with figures that are more reflective of your current income. Therefore, if your income in 2009 is the same or more than in 2008, you will want to speak with your financial aid counselor directly about the particulars of your situation prior to submitting a formal appeal.  

When submitting an appeal, be sure to include all appropriate documentation that reflects your current income to ensure that the review of your paperwork is not delayed. This may include current paystubs, a statement of unemployment benefits, a copy of a termination letter with severance package information, etc. Also be sure to send along your 2008 taxes and W2s.

Upon receipt of your appeal and supporting documents, your financial aid counselor will forward your case to the SFS Appeal Committee. This Committee will award additional funding depending upon the review of your individual circumstances and the availability of funds.

As always, if you have any questions you should contact your financial aid counselor. Not sure who that is? Use our myCounselor Lookup tool.

Should Students Convicted of Drug Possession Receive Federal Financial Aid?

A House Committee proposed a bill last week that would allow students convicted of drug possession access to federal financial aid. If approved by the House and Senate, this bill would repeal a provision authored by Rep. Mark Souder in 1998, which effectively denied financial aid to all students with drug convictions. Despite Souder later stating that his intent was for the law to apply to students currently receiving federal funds at the time of their conviction, the law was applied to all drug convictions.

There have been critics ever since the law passed, and numerous attempts at repeal. Rep. Robert Andrews went so far as to say, “I’m glad that kind of standard doesn’t apply to Congress. Our offices would be empty.” Critics have complained that denying access to a college education limits a person’s ability to improve their life and perpetuates a lifestyle of addiction. In addition, the law disproportionately affects minority students who have a higher drug conviction rate.

This time around, the request for a change to the Souder law is part of a bill to shift government-funded student loans away from private lenders (see post). Under the current law, students convicted of drug possession lose their student financial aid eligibility for one year for the first offense, two years for the second offense, and indefinitely for a third offense. Drug sellers lose eligibility for two years for the first offense and indefinitely for a second offense. As part of the new bill, access to financial aid would only be denied to students convicted of selling drugs, not students convicted of possession.

Private Universities Respond to Economic Downturn

The National Association of Independent Colleges and Universities conducted a survey of 300 private, non-profit institutions to examine their responses to the economic crisis and whether their enrollment and affordability have been affected. Below are some of the highlights from the survey:

• Undergraduate enrollment for fall 2009 is projected to increase by 0.2% overall compared to fall 2008, despite 43% of schools reporting a decrease in the number of paid deposits. Around 75% of institutions will not see a decrease in the number of returning or transfer students.  
• Most schools accepted a higher number of regular applicants than last year, accepted late applicants, and extended the deadline. Schools also put more students on the waiting list and created a longer waiting list than in previous years.
• More than half of respondents increased tuition at a rate than was lower than in previous years. Five percent kept tuition at 2008-2009 rates.
• 80% of schools saw an increase in the number of students filing for financial aid. Two-thirds of these institutions increased institutional awards; only five percent decreased the amount of aid awarded. More than 90% of institutions cited increases in Pell Grants as beneficial to affordability.
• Half of the surveyed schools froze salaries and new hiring. Other cost-cutting measures included restricting staff travel, slowing down current constructions and renovation projects, and delaying maintenance.  Only 4% of respondents reported cutting student services and academic programs.

New Niche in Student Loan Market: Peer-to-Peer Lending

As banks and other traditional financial institutions continue to restrict lending as a result of the credit crunch, students are looking elsewhere to find the necessary financial assistance to pay for school. Some are turning to peer-to-peer lending, also called person-to-person or social lending. This form of lending involves unsecured exchanges of funds between individuals.

Although the concept of individuals lending money directly to one another became popular in the 1970s, the money was more commonly in the form of small loans to help people in developing countries start businesses. The idea of combining several small loans into a larger sum, such as a student loan, did not become popular until recently. Although increasing in number, currently only about 2% of the total education loan market consist of peer-to-peer loans.

Most peer-to-peer student loans are administered through a website. For a fee, loans between friends and family can be officially documents with a promissory note, and some sites will even process payments. Other sites will match lenders with unrelated borrowers, with a guarantee against default; however, these loans often have a higher interest rate and minimum credit criteria.

The benefits of a peer-to-peer loan over another form of alternative student loan include avoiding the need for a cosigner, having a fixed interest rate, lower credit criteria, and the opportunity to make a more personal connection with the lender.  Always be sure to take advantage of all the federal loans options available to you before looking at alternative forms of financing.

New Higher Education Bill Signed by President

On Thursday July 2^nd, President Obama signed the HEA Technical Corrections Bill, which makes amendments to the Higher Education Act of 1965. Provisions of the bill include the following:

• The EFC is excluded from information that must be provided to private loan lenders on the self-certification form.
• The exclusion of VA education benefits as financial assistance is moved to July 1, 2009.
• Clarifies that lenders and guarantee agencies may provide loan entrance counseling.
• Creates the “Iraq and Afghanistan Service Grants,” effective July 1, 2010, for non-Pell eligible students whose parent died as a result of military service in these countries after 9/11/01. Pell-eligible students will have their EFC automatically set to zero.

The entire bill can be veiewed here: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1777enr.txt.pdf

Where have the international students gone?

The number of international students studying in the United States has still not recovered from its decline in 2001; the first decline in over 50 years. Tighter immigration policies, a less than appealing global image, and an increase in recruitment efforts of other countries are blamed for the decrease in international students, who are only beginning to return to study in the U.S. However, the demographics of this returning student population have changed. Since 2001, the number of students from the Middle East and Europe decreased significantly, and although 2007-2008 showed a slight increase, the numbers still have not reached pre-9/11 figures. In 2007-2008, the largest percentage of students came from India, China, and South Korea.

This is of concern as many universities depend on foreign graduate students for research and teaching assistantships, especially in the engineering and science fields. In addition, Undergraduate students, who are often not eligible for financial aid and scholarships, bring revenue into the local economy. Students who have chosen to stay in the U.S. after their studies have strengthened the labor force and increased research and workforce skills.  A recent report by the U.S. Government Accountability Office stated that promoting and funding foreign students is now more important than ever, as it is crucial to improving global diplomacy and providing developmental assistance to other nations. Marketing strategies have been implemented in an attempt to improve international student numbers, which include slogans, websites, and overseas information centers.