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  • President’s Word on Higher Education

    “Thank you.  That was excellent — we might have to run her for something some day. That was terrific.  Thank you, Stephanie.  I want to also introduce Yvonne Thomas, who is Stephanie’s proud mother.  And we appreciate everything that you’ve done.  And Stephanie’s father, Albert, is around here as well.

    There are few things as fundamental to the American Dream or as essential for America’s success as a good education.  This has never been more true than it is today.  At a time when our children are competing with kids in China and India, the best job qualification you can have is a college degree or advanced training.  If you do have that kind of education, then you’re well prepared for the future — because half of the fastest growing jobs in America require a Bachelor’s degree or more.  And if you don’t have a college degree, you’re more than twice as likely to be unemployed as somebody who does.  So the stakes could not be higher for young people like Stephanie.

    And yet, in a paradox of American life, at the very moment it’s never been more important to have a quality higher education, the cost of that kind of that kind of education has never been higher.  Over the past few decades, the cost of tuition at private colleges has more than doubled, while costs at public institutions have nearly tripled.  Compounding the problem, tuition has grown ten times faster than a typical family’s income, putting new pressure on families that are already strained and pricing far too many students out of college altogether.  Yet, we have a student loan system where we’re giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans.

    This trend — a trend where a quality higher education slips out of reach for ordinary Americans — threatens the dream of opportunity that is America’s promise to all its citizens.  It threatens to widen the gap between the haves and the have-nots.  And it threatens to undercut America’s competitiveness — because America cannot lead in the 21st century unless we have the best educated, most competitive workforce in the world.  And that’s the kind of workforce — and the kind of citizenry — to which we should be committed.

    And that’s why we have taken and proposed a number of sweeping steps over our first few months in office — steps that amount to the most significant efforts to open the doors of college to middle-class Americans since the GI Bill.  Millions of working families are now eligible for a $2,500 annual tax credit that will help them pay the cost of tuition; a tax credit that will cover the full cost of tuition at most of the two-year community colleges that are some of the great and undervalued assets of our education system.

    We’re also bringing much needed reform to the Pell Grants that roughly 30 percent of students rely on to put themselves through college.  Today’s Pell Grants cover less than half as much tuition at a four-year public institution as they did a few decades ago.  And that’s why we are adding $500 to the grants for this academic year, and raising the maximum Pell Grant to $5,550 next year, easing the financial burden on students and families.

    And we are also changing the way the value of a Pell Grant is determined.  Today, that value is set by Congress on an annual basis, making it vulnerable to Washington politics.  What we are doing is pegging Pell Grants to a fixed rate above inflation so that these grants don’t cover less and less as families’ costs go up and up.  And this will help prevent a projected shortfall in Pell Grant funding in a few years that could rob many of our poorest students of their dream of attending college.  It will help ensure that Pell Grants are a source of funding that students can count on each and every year.

    Now, while our nation has a responsibility to make college more affordable, colleges and universities have a responsibility to control spiraling costs.  And that will require hard choices about where to save and where to spend.  So I challenge state, college and university leaders to put affordability front and center as they chart a path forward.  I challenge them to follow the example of the University of Maryland, where they’re streamlining administrative costs, cutting energy costs, using faculty more effectively, making it possible for them to freeze tuition for students and for families.

    At the same time, we’re also working to modernize and expand the Perkins Loan Program by changing a system where colleges are rewarded for raising tuition, and instead, rewarding them for making college more affordable.

    Now just as we’ve opened the doors of college to every American, we also have to ensure that more students can walk through them.  And that’s why I’ve challenged every American to commit to at least one year of higher education or advanced training — because by the end of the next decade, I want to see America have the highest proportion of college graduates in the world.  We used to have that; we no longer do.  We are going to get that lead back.

    And to help us achieve that goal, we are investing $2.5 billion to identify and support innovative initiatives that have a record of success in boosting enrollment and graduation rates — initiatives like the IBEST program in Washington state that combines basic and career skills classes to ensure that students not only complete college, but are competitive in the workforce from the moment they graduate.

    And to help cover the cost of all this, we’re going to eliminate waste, reduce inefficiency, and cut what we don’t need to pay for what we do.  And that includes reforming our student loan system so that it better serves the people it’s supposed to serve — our students.

    Right now, there are two main kinds of federal loans.  First, there are Direct Loans.  These are loans where tax dollars go directly to help students pay for tuition, not to pad the profits of private lenders.  The other kinds of loans are Federal Family Education Loans.  These loans, known as FFEL loans, make up the majority of all college loans.  Under the FFEL program, lenders get a big government subsidy with every loan they make.  And these loans are then guaranteed with taxpayer money, which means that if a student defaults, a lender can get back almost all of its money from our government.

    And there’s only one real difference between Direct Loans and private FFEL loans.  It’s that under the FFEL program, taxpayers are paying banks a premium to act as middlemen — a premium that costs the American people billions of dollars each year.  Well, that’s a premium we cannot afford — not when we could be reinvesting that same money in our students, in our economy, and in our country.

    And that’s why I’ve called for ending the FFEL program and shifting entirely over to Direct Loans.  It’s a step that even a conservative estimate predicts will save tens of billions of tax dollars over the next ten years.  According to the Congressional Budget Office, the money we could save by cutting out the middleman would pay for 95 percent of our plan to guarantee growing Pell Grants.  This would help ensure that every American, everywhere in this country, can out-compete any worker, anywhere in the world.

    In the end, this is not about growing the size of government or relying on the free market — because it’s not a free market when we have a student loan system that’s rigged to reward private lenders without any risk.  It’s about whether we want to give tens of billions of tax dollars to special interests or whether we want to make college more affordable for eight and a half million more students.  I think most of us would agree on what the right answer is.

    Now, some of you have probably seen how this proposal was greeted by the special interests.  The banks and the lenders who have reaped a windfall from these subsidies have mobilized an army of lobbyists to try to keep things the way they are.  They are gearing up for battle.  So am I.  They will fight for their special interests.  I will fight for Stephanie, and other American students and their families.  And for those who care about America’s future, this is a battle we can’t afford to lose.

    So I am looking forward to having this debate in the days and weeks ahead.  And I am confident that if all of us here in Washington do what’s in the best interests of the people we represent, and reinvest not only in opening the doors of college but making sure students can walk through them, then we will help deliver the change that the American people sent us here to make.  We will help Americans fulfill their promise as individuals.  And we will help America fulfill its promise as a nation.

    So thank you very much.  And thank you, Stephanie.  And thank you, Stephanie’s mom.

    All right.  Thanks, guys.”

    Taken from whitehouse.gov

  • Going to College Reminder(s)

    You have already been accepted to a college and have decided to attend that college. There are three main points that you must remember.

    1st – Contact your roommate.

    That first conversation is very essential for getting to know each other. It builds your relationship as roommates, and for figuring out who is going to be bringing what. A good roommate can make your life amazing, but on the opposite, an ill suited roommate could make your life miserable.

    2nd – Have everything you need purchased and packed.

    Knowing what to bring is just as important as knowing what not to bring. Obtaining the correct book(s) is important as well as what type(s) of computer(s) you may want, and that they/it is convenient.

    3rd – Make sure you understand your financial situation.

    The last thing you want to have happen is for money and budget to get in the way of your academic progress. Make sure your finances are in order — and that you understand all you need to do while you’re in school.

  • Financial Aid – Premier Schools

    Stanford’s announcement came two months after Harvard publicized its expensive new financial aid policies and over a month after Yale and Dartmouth followed suit with their own. Since Harvard’s announcement in December (at which time it saw its application rate spike by 19 percent), other top ranked schools including Williams, Princeton, Swarthmore, Cornell, Northwestern, University of Pennsylvania, Bowdoin, Pomona, Cal Tech, Duke and Davidson have announced new financial aid policies in what some people consider an effort to “keep up with the Harvard’s.”

    Similar to Harvard and many other elite universities, on February 20, Stanford University announced a new financial aid policy dramatically increasing the eligible amount of aid for middle-income families. The announcement comes as the latest in a series of policy revisions over the past three years designed to ease the burden of paying a tuition averaging $47,000 a year and to ensure that no high school student considering applying to Stanford decides not to because of cost.

    In addition, the plan also calls for eliminating student loans. All students qualifying for need-based financial aid no longer need to take out the expected $4,000 loan before receiving money from the scholarship fund. Beginning in the 2008-09 school year, students are only expected to earn $2,500 from working during the school year and earn approximately $2,000 over the summer.

    Each fall, the financial aid program is reevaluated by the Financial Aid Office, the Dean of Admission and Financial Aid, the Budget Office, the Provost, and the President, with consultation from the Board of Trustees. Cooper added, “There are no specific plans in the works for more changes at this time. We will be evaluating the success of our current changes next fall.”

    The changes were made possible through an increase in the endowment payout and doubling the financial goal of the Stanford Challenge, an effort to increase fundraising for the university, to $200 million. The Board of Trustees approved the increase in endowment payout from 5% to 5.5%, or by $160 million, on June 14, 2007, at the time intending to fund capital improvement projects.

    The announcement follows the House of Representative’s passing of the College Opportunity and Affordability Act, which aims to expose the allegedly corrupt relationship between expensive colleges and loan agencies and give greater transparency to the consumer. The Senate has put forth its own version of the bill. If passed, the law would require colleges to report financial information that Stanford University officials claim to be unproductive and difficult, namely revealing the rate of their endowment spending.

    Many people believe Stanford’s increase in endowment spending on financial aid from five to 5.5 percent this year is aimed to counteract the repealed provision of the College Opportunity and Affordability Act that would have required colleges to spend at least five percent of their endowment on financial aid. But the Board of Trustees approved the increase in endowment payout in June, nearly five months before the act’s proposal. As far back as 2003, Republicans had been discussing a bill that would penalize colleges that raised tuition significantly faster than inflation.

    These policy revisions have also coincided with and followed those of other top ranked schools. In 2006, Stanford eliminated educational costs for families earning less than $45,000. Harvard had enacted a similar policy in 2004 and Yale in 2005.

  • How will schools help fund families?

    How exactly do all the schools start to help poor families, or even middle class?

    Harvard took the lead. Two years ago, Harvard implemented a policy in which students whose parents earn a $60,000 or less no longer pay for tuition or room and board. Stanford has just adopted the same policy, adding that students whose parents earn $100,000 must only pay room and board. Stanford Financial Aid has not provided a formula for evaluating aid for students who come from families with income over $100,000.

    Princeton has taken a similar approach in which it evaluates aid on a case by case basis rather than the more formulaic sliding scales that Yale and Harvard have decided to use. At Stanford and Princeton, students in the income bracket range between $60,000-100,000 can expect to pay $11,000 or less, approximately the cost of room and board.

    But at Harvard and Yale, students in the income range $60,000-120,000 can expect only to pay on a sliding scale between 1 and 10% of their income ($600-12,000), which is significantly less than students at Stanford. Students at Harvard and Yale from income brackets between $120,000 and $180,000 can expect to pay between $12,000-18,000. Cooper has refused to make comparisons between higher income students at Stanford and Harvard, saying she does not want to mislead them about their potential aid package. She cautioned that aid will be evaluated on an individual basis with a number of factors including home equity, other siblings in college, and cost of living taken into account.

    The new financial aid policy isolates the upper-middle class. Universities are increasing tuition fees for students who do not receive financial aid. It is called “Take from the Rich and Give to the Poor”. While the financial aid policies have made it less expensive than some state schools for students from households less than $100,000, colleges generally remains much more expensive for students from households with income well over $100,000. State schools also usually offer merit aid, which can often significantly decrease the expense for top students.

  • College Bills in this Economy

    With the economic downturn, how will you pay for the college bill?

    It could be either merit aid from the school or a simple federal financial aid. If you think your income is too high, you may not qualify the school’s aid. Of course you may fill out the federal application for financial aid, known as FAFSA. You may check the colleges’ websites to see whether there are additional requirements for merit aid; some scholarships require a separate application that may have an early deadline.

    You can use the 529 college savings plan to pay for the bill of a high school junior or senior has dropped 12.5% in value over the past year. Is your 529 in cash or stocks? If it is in stocks, with the stock market like today, it will not do much. If it is in cash, it depends on when you sold the stock and convert it to cash. If you sold at the low with panic selling, since most of the money in your 529 in cash or other fixed-income investments by now, a big surge in stocks won’t help you much.

    Could using 529 funds early hurt your chances of getting financial help later? Although withdrawals used to be treated as income, which is counted more heavily in financial aid formulas than savings, that’s no longer the case.

    You can get a home equity loan (if you home did not have the problem of the recent collapse in home values). You could borrow at a lower rate than for federal or private college loans, and the interest expense was often fully deductible. But many banks have frozen home-equity lines of credit, even for people with a good credit score. While the credit crunch threatened the availability of college loans last year, you’ll have no problems now, thanks to swift action by Congress to keep the federal money flowing. And while the rates aren’t as cheap as on a HELOC, they’re reasonable. The best deals are on loans made directly to students. Freshmen can take out up to $5,500 in Stafford loans this year (the limit rises to $7,500 for seniors), and the top rate is 6.8%. If you need to borrow more, getting a federal loan for parents, called a PLUS, is a snap. Just about anyone with a halfway decent credit history can get one and borrow up to the full cost of attendance, minus any aid received, at a maximum 8.5% rate.

    The recently passed economic stimulus legislation included a welcome provision for tuition-paying parents: an expansion of the Hope Credit for educational expenses — now called the American Opportunity Tax Credit — to $2,500, from $1,500. It will be available for the 2009 and 2010 tax years. Unlike the Hope, which could be used only for expenses in the first two years of college, this new credit can be claimed for costs over four years. And more middle- and upper-middle-income families will qualify; if you make $180,000 or less ($90,000 for singles), you’ll get at least a partial credit. (The Hope phased out if you earned more than $120,000.) You can even claim the credit if you fall under the alternative minimum tax.

    There are other breaks available, like the Lifetime Learning credit (up to $2,000) and a tuition deduction of up to $4,000. But you can claim only one tax break per child each year, and the American Opportunity is the best of the bunch. One other benefit you may be entitled to: You can deduct all or part of the interest you pay on college loans, up to $2,500, if you make $150,000 or less ($75,000 for singles). Finally, the new rules from Washington also expanded the kind of bills you can pay from a 529 account to include computers and related equipment if it’s required by the college, as well as Internet access.

  • School Funding

    A lot of universities are struggling with endowments that are now underwater. If the current financial downturn continues, the problem will only get worse. Most states adopted a uniform law that prohibits withdrawing money from endowments that fall below their “historic dollar value” — the money given to create the endowment, plus any later gifts. The law is designed to protect endowments by preventing institutions from dipping into the principal. An endowment is supposed to be a perpetual source of revenue, with institutions drawing off only the earnings. The rule affects newer funds most severely, since they have had less time to invest a gift and build the endowment’s value.

    Some donors may have intended for the principal to remain intact, but was it their intent that the students they want to help won’t get any help? Certainly there is a need to loosen the strings attached to the gifts.

    In the University of North Carolina system, where as many as 70 percent of the endowments at one campus are underwater, some of the system’s 16 schools are going back to donors and asking them for one-time donations to pay for what would normally be covered by the endowment.

    The University of Wisconsin system suspended payments this month from 38 underwater endowments, taking away $700,000 that would have gone for scholarships and other programs at campuses across the state. At New York University, about $10 million of $16 million in scholarship endowments is untouchable.

    Because of funding problem, Brandeis University originally planned to close its Rose Art Museum and sell its more than 7,000 works, including pieces by Willem de Kooning and Jasper Johns. After much criticism, the school backed off.

    There are ways to get around the law. In creating an endowment, nonprofits can enter into an agreement with the donor that allows for the use of principal in emergencies. They can also ask the donor to change the endowment’s terms retroactively, which requires a trip to court if the donor has died.

    Since early 2007, 26 states and the District of Columbia have passed laws that give nonprofit organizations more flexibility in using money from endowments that are underwater. Because of the economic meltdown, 12 other states are considering such laws, according to the National Conference of Commissioners of Uniform State Laws.

  • Best Valued School

    Which school has the best value? Value is what you got for what you had paid. It is about spending less money and getting more than you paid. The more grants the school provides to you, the better value to you. You can always borrow money, but that does not lead you to a better value. This is especially important during current recession.

    The No. 1 Best Value for public schools is the University of Virginia. This year’s tuition, fees, room and board totaled $18,499 for in-state students and $37,749 out of state. The average grant UVA offered (including scholarships) totaled $9,531. The average 2008 graduate’s debt was $16,847. At top-rated private college Swarthmore, with 1,480 undergraduates for the 2008-09 year, the total cost is $47,804 (with large portion $36,154 — for tuition). But the average grant is $30,073, this is very attractive. The school did not report the amount of student debt, but at each of the top two campuses, about 70% of students graduated debt-free in 2008.

    The Princeton Review’s aim was to determine the average annual cost that a freshman paid for the 2008-09 school year. The selection criteria looked at academics, costs and financial aid, using the most recently reported data from each institution for its 2008-09 academic year. Overall selection criteria included more than 30 factors in three areas: academics, costs and financial aid. Academic ratings were based on student surveys about such issues as professors’ accessibility and class sizes, as well as institutional reports about student-faculty ratios and percent of classes taught by teaching assistants. The financial aid rating is based on a combination of school-reported data and student surveys. Tuition, room and board, and required fees, as well as book costs and other factors, are included in the financial measurement.

    The TOP 10 best value schools from Princeton Review are listed below.

    PRIVATE School;

    1. Swarthmore College (Swarthmore, Pa.)
    2. Harvard College (Cambridge, Mass.)
    3. Princeton University (Princeton, N.J.)
    4. Rice University (Houston, Texas)
    5. Yale University (New Haven, Conn.)
    6. Williams College (Williamstown, Mass.)
    7. Amherst College (Amherst, Mass.)
    8. California Institute of Technology (Pasadena)
    9. Pomona College (Claremont, Calif.)
    10. Stanford University (Stanford, Calif.)

    PUBLIC School

    1. University of Virginia (Charlottesville)
    2. New College of Florida (Sarasota)
    3. College of William & Mary (Williamsburg, Va.)
    4. State University of New York-Binghamton
    5. Florida State University (Tallahassee)
    6. North Carolina State University (Raleigh)
    7. University of California San Diego
    8. City University of New York — Hunter College (New York, N.Y.)
    9. University of Georgia (Athens)
    10. The College of New Jersey (Ewing)

  • College Scholarships

    College scholarships are one of the biggest factors when determining which university a person chooses to attend. This is because nearly every student needs financial aid these days with the economy so bad and tuition so high. A lot of the time, a brilliant student will be accepted by Harvard, Yale, Princeton, UC Berkeley, and many other great schools. Unfortunately, this student probably will choose to go to a lesser ranked college just for the money. Most people get partial scholarships. For example: 45% of a full four years paid for. Only very few get a full scholarship (full ride). There are many ways to obtain a scholarship. Some of these include sports, SAT scores, grades, music, national competitions, and other extra curricular activities. The most common way to get a full ride is by sports.

  • College Tuition

    College tuition has been on the rise for decades, and now the prices are just getting ridiculous. To go to a mid-ranked university it costs more money than it took to go to the best school, 10 years ago. In the upcoming 2009 tuition fees, there could easily be a high record of over 70,000 dollars per year. Not to mention, students usually have to buy their own books, rooming, etc. When it comes down to it, parents and relatives don’t have that kind of money. Universities will be giving out many, much fewer scholarships because of the recession/ economy blowout. Money should not be an issue when determining which college a person wants to go to. However, in this day and world it’s the rich that are going where they want, while others have to stand by and watch. The solution to this problem remains to be seen.