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4:11 AM
. :~ ALIVE FUN ARTICALS ~: .
A growing trend in how students apply to college is changing the landscape of college admissions, forcing admissions offices to rethink the number of students the school needs to admit and, in turn, how the school awards its available federal grants, student loans, work-study, and other limited financial aid funds.
As colleges and universities provide a greater array of Web-based options, more students have begun to research their college choices online and to apply electronically. As a result, many schools have seen an increase in the number of students who don’t follow the traditional admissions path and who fail to show a measurable “demonstrated interest” in enrolling — applicants who forego visiting college campuses or personally contacting the admissions office and whose first interaction with a school is often their electronic application.
These students, known as “stealth applicants,” are throwing off administrators’ estimations of their school’s yield rate — the proportion of accepted students who will ultimately enroll at their institution.
Admissions Formula May Change
This inability of admissions offices to reasonably predict their yield rate in the face of a growing influx of stealth applicants has led many schools to realize they may need to change their admissions formula, according to a recent story in The Chronicle of Higher Education (“ ‘Stealth Applicants’ Are Changing the Admissions Equation,” May 2, 2008).
“For colleges that try to bring 100-percent science to the admissions process, it is very disruptive,” said Jeff Rickey, dean of admissions and financial aid at Earlham College in Richmond, Indiana.
Many colleges have begun to see a highly variable yield ratio over the past few years, the timing of which corresponds with the sharp increase in stealth applicants. At Earlham, for example, the yield ratio has fluctuated between 23 percent and 34 percent as the number of stealth applicants among the total applicant pool has jumped from 17 percent to 30 percent in the last four years alone.
Trying to Gauge Stealth Applicants: How Interested Are They?
In a recent Chronicle survey, more than a third of the admissions officials polled said that demonstrated interest was an important factor in admissions decisions. But since stealth applicants come to the admissions-review table with no established history of demonstrated interest, schools have no way of measuring these students’ interest along the “demonstrated interest” spectrum admissions officers have traditionally relied upon.
Are these applicants students who applied on a whim at the last minute? Or are they students who have been researching the school for months online — without the school ever knowing?
With the growing presence of stealth applicants leading to increasingly unpredictable yield ratios, schools are being forced to reconsider how many students they will need to accept each year and how the financial aid office should apportion the school’s limited grants, student loans, and other financial aid funds.
Increased Acceptance Offers Target Enrollment Gaps
To ensure that their annual freshman class has an adequate number of students, many schools are beginning to send out a greater number of acceptance letters. By increasing the number of accepted students, admissions offices are hoping to also increase the number of students who choose to enroll.
But at the same time that colleges and universities are trying to avoid enrollment gaps, schools that pledge to meet 100 percent of students’ determined financial need must ensure that each accepted student is awarded enough grants, college loans, and other financial aid to cover the cost of attendance after her or his family’s contribution.
Schools that gamble on a lower yield rate but end up with more enrollments than anticipated run the risk of having to award more money in federal grants, student loans, and work-study than they have available
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Posted by
. :~ ShAh G . :~
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4:01 AM
As a result of the string of rate cuts made by the Fed over the last year, most parent and student borrowers who have existing variable-rate federal student loans will see their interest rates drop by 3 percent on July 1, 2008 — the biggest rate drop in the history of the federal student loan program.
New undergraduate borrowers will also be seeing lower rates on subsidized Stafford student loans, with a 3.4-percent rate cut being phased in for new borrowers over the next four years as part of the College Cost Reduction and Access Act of 2007.
Variable-Rate Federal Stafford Student Loans
Students who took out Stafford student loans prior to July 1, 2006, will see a 3-percent reduction in their variable interest rate, which resets every year on July 1.
Stafford borrowers whose college loans were disbursed between July 1, 1998, and June 30, 2006, and who are currently enrolled in school at least half time, or whose student loans are currently in an authorized deferment or grace period, will see their Stafford rate drop from 6.62 percent to 3.61 percent.
If these borrowers’ student loans are in repayment or forbearance, the interest rate on their Stafford loans will drop from 7.22 percent to 4.21 percent.
The variable rates on Stafford student loans taken out prior to July 1, 1998, although higher than the rates on later variable-rate Stafford loans, will also drop by 3 percent.
Date of First Disbursement
In-School Rate*
as of July 1, 2008
Repayment Rate as of July 1, 2008
July 1, 1998 – June 30, 2006
3.61%
4.21%
July 1, 1995 – June 30, 1998
4.41%
5.01%
Oct. 1, 1992 – June 30, 1995
5.01%
5.01%
*Includes grace and deferment periods.
Fixed-Rate Federal Stafford Student Loans
As a result of the CCRAA legislation that passed last October, undergraduate borrowers who take out new subsidized Stafford student loans on or after July 1, 2008, will see a gradual reduction in interest rates over the next four years.
The rate on these student loans, which as of July 1, 2006, had been fixed at 6.8 percent, will drop to 6.0 percent on July 1, 2008. The fixed rate will continue to drop on July 1 each year for new college loans until July 1, 2012, when the interest rate is set to revert back to 6.8 percent, barring new legislation that keeps the rate reductions in place.
Date of First Disbursement
Interest Rate
July 1, 2006 – June 30, 2008
6.80%
July 1, 2008 – June 30, 2009
6.00%
July 1, 2009 – June 30, 2010
5.60%
July 1, 2010 – June 30, 2011
4.50%
July 1, 2011 – June 30, 2012
3.40%
The interest rate on new unsubsidized Stafford student loans for undergraduates will remain fixed at 6.8 percent, as will the rate on graduate Stafford student loans.
Federal PLUS Loans for Parents
Parents who took out variable-rate PLUS loans between July 1, 1998, and June 30, 2006, will see the same 3-percent drop as variable-rate Stafford borrowers, when their interest rates reset on July 1, 2008. Variable PLUS rates for loans disbursed in this time period will fall from the current 8.02 percent to 5.01 percent.
The interest rate on federal PLUS loans taken out on or after July 1, 2006, remains fixed at 8.5 percent with no changes.
Learn more about College Loans and Private Student Loans.
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Posted by
. :~ ShAh G . :~
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3:51 AM
The government hopes a new loan forgiveness program will give students an incentive to consider a career in public service. In exchange for 10 years on the job in a field of public service such as public safety, education, or social work, the Department of Education will erase certain borrowers’ remaining federal student loan debt.
To be eligible for this initiative — the Loan Forgiveness for Public-Service Employees Program — you must have either taken out or consolidated your federal student loans through the federal Direct Loan Program, in which you receive your student loan directly from the government rather than through a third-party lender.
Breaking It Down: How the Loan Forgiveness Program Works
The loan forgiveness benefit is available for any federal consolidation loan or any federal parent or student loans you’ve taken out through the Department of Education’s Direct Loan Program. If you took out your federal college loans from a private lender through the Federal Family Education Loan Program (rather than directly from the government through the Direct Loan Program), you’ll have to consolidate your FFELP student loans into the Direct Loan Program in order for those student loans to be eligible to be forgiven.
In addition to holding a federal Direct loan, you’ll also have to meet certain borrower requirements in order to qualify for the loan forgiveness program:
Spend a decade in a public service career. You must remain in a qualifying public-service career, working full-time, for 10 years, during which you must be making payments on the student loans you’re looking to have forgiven. You must still be working in the public-service sector at the time your student loans are forgiven.
Hit the 120 mark. During your 10 years of full-time public service, you must make 120 monthly payments on the Direct college loans you want forgiven. Only payments made after Oct. 1, 2007, will count toward the payment requirement. If you have FFELP loans (college loans that you took out from a private lender and not from the federal government) that you’re consolidating into the Direct Loan Program, you’ll only be able to count the payments you make on your Direct Consolidation Loan after your FFELP student loans are consolidated. Any payments you’ve made prior to Oct. 1, 2007, or to any lender other than the federal government won’t count.
Sign up for a qualifying repayment plan. Your required 120 payments must be made under one (or a combination) of three repayment plans: standard repayment, income-contingent repayment, or income-based repayment, which becomes available July 1, 2009. If you’re enrolled in a different Direct Loan repayment plan, only those payments you make that are at least equal to the monthly payment amount you’d be required to make under the standard repayment plan will count toward your 120-payment requirement.
The Fine Print: How You End Up Paying Off Your Student Loans Yourself
If you’re considering applying for the loan forgiveness benefit, you may want to look into your eligibility for the income-contingent and income-based repayment plans, which allow low-income borrowers to qualify for lower payments and extend their repayment period to 25 years. Only borrowers who are making reduced monthly payments on an income-contingent or income-based repayment plan will likely have a remaining balance left to forgive after making 120 payments on their student loans.
If you’re in the standard repayment plan, which has a repayment term of 10 years, you may find that you don’t have any student loan debt left to forgive after meeting your 120-payment requirement, since your 10-year repayment term is the same amount of time that the government requires you to hold your public-service job before any of your student loans can be forgiven.
What Qualifies as Public Service?
Public-service fields eligible for the loan forgiveness program include:
* Military
* Emergency management
* Fire departments
* Law enforcement
* Public library sciences
* Public school education
* Public child care
* Public health
* Public service for the elderly
* Public service for individuals with disabilities
* Nonprofit work with certain tax-exempt organization
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Posted by
. :~ ShAh G . :~
at
3:44 AM
Some 1.6 million veterans of the Iraq and Afghanistan wars will see their GI Bill benefits more than double from approximately $40,000 to $90,000 as the new Post-9/11 GI Bill goes into effect today.
Originally intended to cover 100 percent of veterans’ higher education costs, the GI Bill — known as the Montgomery GI Bill in its current form — hasn’t kept pace with the rising costs of college and now covers only an estimated 60 to 70 percent of the average cost of a four-year public college or university, or the average cost of two years at a private school.
While military recruiters often use the promise of a GI Bill–financed college education as a major selling point for potential enlistees, because the current Montgomery GI Bill generally falls far short of paying for school in full, some veterans find themselves having to rely on student loans or other financing to pay for their remaining college costs not covered by their GI benefits; other veterans may not find it possible to afford to attend college at all.
Limitations of the Montgomery GI Bill
Under the Montgomery GI Bill, which expires today, the Post-9/11 GI Bill goes into effect, veterans are required to make a nonrefundable contribution of $1,200 — $100 a month for the first 12 months they’re on active duty — in order to be eligible for their education benefits.
While 95 percent of members of the military make that contribution, nearly one-third of eligible veterans don’t use any of their Montgomery GI education benefits, and almost 10 percent use only a portion of their benefits, often because the benefits they accrue aren’t enough to pay for a full college education without college loans or other additional financial aid.
Over the last few years, as it became clear that the Montgomery GI Bill was no longer fulfilling the mission of the original GI Bill to make it easier for veterans to afford to go to college, legislators, veterans organizations, and supporters of the military grew increasingly critical of the current GI Bill, calling for many of the changes that will go into effect with the new Post-9/11 GI Bill.
“There’s a moral imperative for us to provide for veterans, and there is a practical benefit to educating these men and women who have served our country,” said James Wright, former president of Dartmouth College and GI Bill advocate. “For us to be failing to live up to that responsibility is unconscionable.”
Financial Aid Takes Over Where GI Bill Benefits Leave Off
Those veterans who have been using their Montgomery GI benefits have often had to rely on student loans and other forms of financing to help pay for school costs not covered by their GI benefits.
Veterans, like all college students, may apply for federal financial aid, but since the government regards GI benefits as income when determining a student’s financial need, veterans seeking to supplement their Montgomery GI benefits with federal student aid may not be able to qualify for need-based federal grants or subsidized student loans. Precluded from qualifying for low-income grants and college loans, some veterans have been forced to turn to higher-interest unsubsidized federal student loans, private student loans, and credit cards to pay for school.
Benefits of the New GI Bill
To restore veterans’ education benefits to a level similar to those college benefits offered to World War II veterans under the original GI Bill, the new Post-9/11 GI Bill will expand on current Montgomery GI education benefits, covering everything from full tuition costs to textbooks to monthly living expenses:
* Tuition payments up to the full cost of tuition at the most expensive public college or university in a veteran’s home state; as tuition rises, so will a veteran’s education benefits
* No required monetary contribution
* Yearly stipend of up to $1,000 for books and supplies
* Up to $1,200 (up to $100 a month) for tutoring services
* Monthly housing stipend determined by local costs of living
* One-time payment of up to $500 for certain veterans who relocate from rural areas
The Post-9/11 GI Bill will also grant veterans up to 15 years after their last round of active duty to use their benefits; the Montgomery GI Bill offers only 10 years.
Completely new with the Post-9/11 GI Bill is the ability for veterans to transfer their GI benefits to their spouse and children; full details and requirements of this provision will be released later on this year. The Montgomery GI Bill has no such transferability of benefits.
Service Requirements for the New GI Bill
To qualify for partial benefits under the Post-9/11 GI Bill, veterans will only need to have served 30 days in continuous active duty or a total of 90 days in non-continuous active duty since Sept. 11, 2001.
Partial and full benefits of the new GI Bill won’t go into effect until Aug. 1, 2009, during the second stage of the two-step implementation process, to allow the Department of Veterans Affairs enough time to transition into the new program.
But in the interim, veterans who have served for at least three years in active duty and are currently using their Montgomery GI Bill benefits as full-time students will see their monthly benefits increase from $1,101 to $1,321, effective August 1 of this year; full-time students with less than three years of active-duty service will see an increase in their monthly benefits from $894 to $1,073.
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Posted by
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at
3:38 AM
Some banking industry experts have long regarded the federal student loan program, established in 1965, as one of the most successful public-private partnerships ever created. A historically steady and reliable source of financing for parents and college students needing help paying for school, the federal student loan program also used to be a mostly risk-free and profitable venture for private lenders issuing government-backed student loans.
But all that changed, says Harrison Wadsworth, special counsel to the Consumer Bankers Association, when Congress passed the College Cost Reduction and Access Act in the fall of last year, tilting the storied partnership squarely toward the public side, as the bill positioned the government to assume a larger role as lender and manager of student loans.
The legislation, which was aimed at increasing college affordability, raised Pell Grant award amounts for low-income students and lowered interest rates on certain need-based federal student loans — but in order to pay for these measures without passing the cost on to taxpayers, the bill also cut $21 billion in government subsidies to private lenders of federal college loans and doubled the fees that lenders are required to pay the government for every loan they issue.
These subsidy cuts and the resulting unprofitability of federal student loans, followed by the “spillover effect” of the subprime mortgage crisis into credit-based private student loans, have pushed the student loan industry to the breaking point. Liquidity for new student loans is scarce, credit restrictions on private student loans keep tightening, news continues to break almost daily of major lenders that have suspended either their federal or private student loan programs or both, and public confidence in the availability of student loans is shaken, despite the government’s efforts to allay families’ and schools’ concerns.
Government Still Working Out the Kinks
In an effort to counter spreading apprehensions about the viability of college financing, lawmakers passed emergency legislation in May that raised the college loan limits on certain federal student loans and that authorizes the Education Department to purchase federal college loans from private lenders as a way of providing struggling student loan providers with the liquidity they need to resume or to continue issuing federal parent and student loans.
This bill, the Ensuring Continued Access to Student Loans Act (HR 5715), was designed specifically, in part, to assure families and schools that federal student loans would be readily available.
But according to a recent survey, financial aid administrators are still concerned that the legislation is a short-term fix and doesn’t do enough to ensure the longer-term availability of college loans.
The survey, sent to members of the National Association of Student Financial Aid Administrators, found that despite the government’s assurances, worries persist that students may not be able to get the college loans they need to pay for school:
* 52% of the NASFAA members who responded to the survey said that the emergency legislation hadn’t resolved the perceived “student loan crunch.”
* 56% indicated that at least one lender they had used as a provider of federal financial aid would no longer issue federal college loans to students at their schools.
* More than half believed it would be harder this year for their students to obtain private student loans.
Sinking Economy Stands to Hurt Smaller Colleges the Most
The sustained credit crunch has led lenders in every sector to tighten their credit criteria, meaning that the financial resources that parents and students have traditionally turned to in order to supplement their federal financial aid and help pay for college — private student loans, home equity loans, stocks and investments, lines of credit — are becoming increasingly unavailable.
And with families’ savings and finances buckling under the additional strain of a slumping economy, record-breaking gas prices, rising food costs, surging unemployment, and a weak job market, colleges and universities may begin to see more students who are struggling to afford to go to college. As more students opt for less-expensive schools, it’s the small private colleges with higher tuition costs that may suffer the most, warns Moody’s Investors Service in a recent report.
The report from the international bond-rating agency reveals that more students may start choosing to live at home and attend a commuter school rather than an out-of-state university that would require living on campus and incurring thousands of dollars in room and board costs.
“There are a lot of hard choices,” says Larry Warder, chief financial officer for the Department of Education, “and if you can’t afford a Cadillac, you buy a Chevrolet.”
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