Presidential Candidates on College Affordability

With Election Day right around the corner, most Americans have made up their minds on who they want to vote for. Behind all of the rhetoric and talking points, both the Obama and McCain campaigns have detailed plans and policies ranging from the struggling economy to the war in Iraq. But what about their platforms for affordable higher education?

USA Today on 10/13 of this year compiled the content in the chart below outlining the two candidates’ positions:

Barack Obama

John McCain

1. Supported a 2007 law that raised the maximum Pell Grant for low-income college students from $4,050 to $5,400. 2. Would eliminate Federal Family Education Loan program, which subsidizes private lenders that offer government backed loans. 3. He'd strengthen the federal Direct Loan program, which requires loans to be provided directly by the government. 4. Obama also proposes a $4,000 tax credit for tuition and fees. To get the credit, students must put in 100 hours of public service.

1. Supported a 2007 law that raised the maximum Pell Grant for low-income college students from $4,050 to $5,400. 2. McCain wants to expand the Federal Family Education Loan program, which gives subsidies to private lenders that offer government backed loans. 3. He'd simplify federal financial aid, saying "too many programs and a complicated application process deter many eligible students from seeking student aid." 4. He'd also simplify the tax benefits of families paying for college.

Issues concerning education probably will not make or break either campaign, but if you’re a student, it would probably be in your best interest to examine the platforms of each campaign. More information can be found at the following websites:

New York Times: Candidates’ Positions on Student Loans Reflect Experience and Market Views

The Dartmouth: Candidates Stress College Affordability

johnmccain.com: John McCain’s Higher Education Policy

barackobama.com A World Class Education

A Whirlwind of Credit Issues

Several months ago, around the time that Bear Sterns was bought by JP Morgan, there were signs of a waning economy on a significant scale. Now, there are strong indications that this “credit crunch” has begun to shift from speculation to reality.

An article published today by Doug Lederman in Higher Ed News, titled Surprising Impact of Student Loan Crunch, cuts through generalizations by analyzing a survey of 500 colleges:

When asked how the affected students were bridging the financial gap, survey respondents cited a range of responses, including participating in an institutional tuition repayment plan (52.6 percent of institutions), asking their parents to borrow federal PLUS loans for parents (48.8 percent), or paying with credit cards (34.3). But a staggering 45.8 percent of private colleges said that at least some of their students were “stopping out of school or switching to part-time status,” a finding that conflicts with the widely held notion that students had not, by and large, been seriously deterred from pursuing their studies. (Another 38.3 percent said they were working more, which, depending on the situation, can obviously also have a deleterious effect on academic performance and college completion.)

Higher Ed has published articles in the past where financial aid officers braced for an impending crisis that seemingly did not occur. Apparently, this issue is still unfolding for students across America. Students should not have to resort to paying their outstanding balance by using high interest credit cards, as opposed to lower interest student loans.

There is also indisputable evidence in other sectors, such as the automobile industry, that credit requirements are sharply tightening. Car dealerships are complaining that “the credit crunch will crush them,” according Jennifer Lawinski for Fox News. General Motors reported last week that it will only be offering auto loans to only those customers with a 700 credit score, and even these people will need to have 20% down payment.

The effect of the credit crunch on the student’s wherewithal to continue school has yet to be fully understood. What does seem clear now is that late summer indications of the threat being hyped and overblown, may now need to be revisited as the crisis extends into the winter and spring borrowing seasons. Many lenders are only now wrapping up their final disbursements before exiting the industry. While increased Federal lending limits have helped, they cannot make up for the loss of over 40 private lenders in the last year alone. These lenders often helped student’s bridge the gap between the federal lending limit, tuition costs, and the student’s ability to pay the difference out of pocket.

Fynanz Adds More States

Fynanz this week has extended states to lend in this week by including Colorado, Connecticut, North Dakota, South Carolina, and Virginia. The addition of these five states has increased the number of states to to 21 – meaning that if you a resident of any of these states, you are eligible to apply for a Fynanz OpenLoan.

Check to see if you are eligible to apply for a loan.

We encourage you to take a few minutes to apply and create a complete loan listing. Given our recent experiences, there is a strong likelihood that your loan request will be funded within a short period of time. Lenders continue to enter the Fynanz Marketplace in larger numbers.

If you are a lender on Fynanz, you may now be able to lend to neighbors in your own state!

Forty Percent of Students Graduate in Four Years

Students excited to start their college experience are aware of the doors that a degree can open. However, after beginning their journey, students begin to drop out for various reasons. Some can’t afford it. Some have personal problems. And some just don’t like being in the educational realm and want to start working.

For these reasons, colleges are starting to improve their efforts to retain their student bodies. Mary Beth Marklein from USA Today reported this week that 52% of students earn their bachelor’s degrees within 5 years, down from a high of 55% in 1988. So what exactly are colleges doing to prevent students from leaving?

Seton Hall University in New Jersey: 44% of the University are males and are less likely to participate in school-related activities than females. Seton Hall is sponsoring a videogame tournament to get them out of their dorm rooms and feel included in the community.

Southwestern University in Texas: Concentrating their efforts on holding onto their sophomore class, Southwestern University is generating a class that will help decide what majors they should be considering. Many do not know where they should concentrate, and some drop out or transfer based on their uncertainty.

The University of Richmond in Virginia: As a testament to retention programs, the University concentrated on retaining their male population in 2003. Since this time, male students have remained at a greater rate than females.

Connecticut College: Attempting to maintain their level of male minority students, Connecticut College is reaching out to minority businessmen by sponsoring different events.

Colleges are not alone in wanting to maintain enrollment. Various states and their state universities also want to retain their educated citizens. If students do decide to return for their degrees at a later date, certain states, such as Oklahoma and Kentucky, have state-sponsored programs for mature students to pursue their education. These programs benefit the state, because greater paychecks for citizens mean a stronger state economy and greater tax revenue.

State of U.S. Economy Boosts Enrollment

When the economy experiences a serious downturn, most companies experience changes in the way their business operates. This also holds true for the nations colleges, universities, community colleges and trade schools Many people are opting out of the workplace to go back to school while many high school students are choosing to enroll in their local community college rather than enter the workforce immediately, hoping that better training and an improving economy will help their prospects down the road.

From Indiana to Arizona, enrollment is up, especially at 2-year institutions. This does not come as a surprise to many analysts, who notice this dynamic often occurs when unemployment numbers are on the rise. A few examples of this include Frederick Community College in Maryland, which is expected to have an 8% - 10% rise in enrollment this year. Ivy Technical College in Indiana is seeing an enrollment increase 10.3% in the 2007-2008 academic year. Analysts expect these trends to continue in the near term.

Many wonder how the states are going to be able to cover the financial burdens. Governor Kaine of Virginia warned that the state budget would be slashed this October in areas that are traditionally considered off limits, according to Zinie Sampson of the Associated Press. Thirty or more states have fiscal deficits. Moreover, 60 percent of the funding for community colleges comes from the state legislature. While this may not be an immediate issue, Norma Kent of the American Association of Community Colleges warns that “it’s a perfect storm” that is looming over the coming months.

In addition to community colleges, online courses are also filling up quickly. The popularity of these online courses is causing schools such as Drexel University and the University of Houston to consider expanding their offerings. Drexel has reported an 86% increase in applications for its online courses from January through June, according to an article published by Reuters earlier this month. Education experts speculate that this trend is because of the higher transportation costs as well as other economic factors.

While these increasing enrollment numbers for lower cost schools are significant, statistics indicate that it is not at the expense of private schools, which typically have much higher costs. At all levels of the higher education spectrum, enrollment is increasing as students try to make the most of tough times, while preparing themselves for right opportunity when conditions improve.

Young and in Credit Card Debt

After graduating high school, some students go with their parents to the bank to take out a loan for college. Some go to the bank by themselves, and better yet, some don’t need to worry about paying for tuition. But what happens when an 18 or 19-year-old walks into their bursar’s office and are given a plastic card with a Visa or MasterCard logo on it?

Many colleges do just this, refunding any overpayments on a stored value debit card rather than refunding cash directly to students. While these cards are not technically credit cards, and are certainly convenient, they also encourage the use of plastic by students while familiarizing them with major branded credit card logos. The convenience argument promoted by the companies that provide these cards is flimsy at best, as nothing is more widely accepted than cash. For large amounts, most students have a bank account that already has a debit card.

Schools have defended the practice of forming select, sometimes exclusive, relationships with various companies by touting convenience. Many Schools have also allowed these relationships to permeate wide areas of campus so that credit card issuers may directly solicit student credit applications through various promotions. Whether students make the distinction between the debit cards they get from the school and the credit cards they are applying for while enjoying a credit card promotion is questionable at best. However, with the blanket issuance of credit cards, and on campus credit card application drives, the school has a responsibility of educating their students on fiscal responsibility.
As Tony Pugh of the Chicago Tribune points out in Big Debt on Campus: Credit Offers Flood the Quad, some students are using credit cards to pay for educational expenses, even their tuition. Students may not know what consequences may be down the road. Sure, swiping a credit card is an easy and immediate solution when there is no cash on hand, but with interest rates as high as 28%, students may face a rude awakening when trying to repay their debts.

A survey by U.S. Public Interest Research Groups reports that upon graduating, students without student loans have $2,600 in credit card debt, while those with student loans have $3,000 in debt. Pugh found two students who were willing to discuss the combination of credit cards and attending college.

John Velasco, who was a student at West Virginia University, was lured to sign up for a credit card with the promise of a slice of pizza. He refused. Others may not have had the same good judgment. Another student, Andrew Kunka who attended Loyola Marymount University in Los Angeles, charged $4000 for tuition and regrets it. He stated that he “…feel[s] like credit card companies target us because we really have no financial awareness. We're barely out of our homes, barely having experiences as adults, and they throw these things at us and they don't make you aware of what you're signing into.”

A lot of students may not object to their university giving them a debit card with a logo or using their own credit card to pay for expenses when in a financial bind. One thing is certain - students should know their options, and think twice before filling out a credit card application for a slice of pizza.

Learn How to Control Your Finances and Save

For many young adults, going away to school is the first time that they will have to think about how they spend all of their money. Many college students have never even balanced their checkbooks, but knowing how much you spend is the first step towards saving more money.

An online company called wesabe started in December 2005 to help individuals take charge of their financial situations. A student can easily sign up for an account, link their bank accounts, and can enter how much they spend on groceries, rent, transportation, and entertainment. Students can set goals for how much they want to spend each month and can rely on forums and other community members to give tips on how to save more money. The three minute video tour listed on the website is a great place to start learning more information.

If one decides to choose a different avenue, documenting what you earn and what you spend. Students can track their information – keeping it private on their own computers. Simple spreadsheets can be found by doing a Google search – like one found on vertex42.com.

A new website that may be convenient for students is Revolution moneyexchange. Similar to PayPal, this site allows for easy electronic transferring of money between friends, families, even customers and businesses. Users on the site can transfer money to any other users to cover debts, pay bills or informally lend money. Once money is transferred into the Revolution moneyexchange account, it may then be transferred again directly to the users linked bank account. Unlike PayPal, this site also has a debit card feature, but it is unclear how widely the card is accepted at this time. As with any website, make sure you read all the terms and conditions and get a comfort level before deciding to give any personal information.

Why not learn to save and take advantage of tools that technology provides?