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Certain profit based Colleges, such as DeVry University are set to lose federal government assistance unless they meet new guidelines on student loans as indicated by the United States Department of Education. This excludes non profit colleges such as DePaul University.
Students at non profit colleges make up 88 percent of those in school, but only represent about 1/2 of the defaulted student loans; therefore, the other half pertains to defaults from for profit schools. This is the reason why the “gainful employment” talk within the government has been in recent discussions where if graduates owe too much relative to their income, or too few former students are paying back their student loans, colleges may lose grants and federal tuition loans.
In order to hold federal assistance, for profit schools will have to show that their previous attendees have not defaulted on more than 65 percent of the loans and that the student loan payments do not equate to one third of their total income, or twelve percent of their annual income. Estimates predict that close to 20 percent of such colleges will fail to reach those requirements and only about 95 percent will get to keep such federal government aid programs which may leave up to 5 percent closing down.
Arne Duncan, Education Secretary, said, “We’re asking companies that get up to 90 percent of their profits from taxpayer dollars to be at least 35 percent effective. “This is a perfectly reasonable bar and one that every for-profit program should be able to reach.”
This will all set into place July of 2012; however, schools may not be ruled ineligible until 2015, giving 3 years for readjustment. Talk continues as the requirements are proposed to become more lenient as stocks for profit based schools increased.
While protests rage on and students plead with lawmakers to ease their student loan burdens, the last thing the younger generations want to hear is that college costs may again be on the rise.
The California State University Board of Trustees received horrible news regarding the impact that state funding cuts would have on their institutions. If a November ballot fails to be passed, the Cal State system could lose up $200 million in funding for the 2012-13 academic year, reported the LA Times.
If such a slash occurs, thousands of faculty and staff positions would be in jeopardy, some academic and athletic programs would have to be eliminated and student loans may rise.
F. King Alexander, the president of Cal State Long Beach (CSULB) believes his campus will lose $26 million if the November legislation falls through. Such an enormous funding slash would result in CSLB being forced to eliminate 400 jobs and 1,800 classes.
“We already are spending so little on our students,” explained Alexander. “We can no longer spend less on them and give them a quality education unless we reduce enrollment.”
The enrollment to CSULB is expected to impact 23,000 applicants that Alexander believes will be wait-listed in fall of 2013.
With such alarming numbers facing closed doors at colleges, high school counselors are having difficulty advising their students on what to do after graduation. Sylvia Womack, a college and career center supervisor for Polytechnic High School in Long Beach, told the LA Times that the enrollment uncertainty will drive students to private or out-of-state schools.
“This will them think, ‘Why should I wait for Cal State Long Beach when Whittier College will take me in right now?’ ” explained Womack.
In addition to those being turned away, the burden of such costs could fall on attending students as well. When the state cuts funding to its higher education institutions, the individual campuses will need to extract that money from other sources. One such possibility is raising prices for students. Raised fees would directly affect the cost of student loans.
Dan Nannini, the director of the transfer center at Santa Monica College, expressed his concerns of rising student loan costs. “The kid who is not of means or can’t enough to pay, they have to wait around until someone opens up their door.”
Many already feel higher education opportunities cater to the upper class, and place an unfair burden on those in the middle and lower brackets. Some believe the rising costs of student loans will expand that gap while others feel a price hike may deteriorate the California state university system to such a degree that future generations will simply avoid it.
21-year-old CSULB women’s studies major named Sara Castledine seems to be losing hope. “I graduate in May and if this is how it is now, how is it going to be in five years when my siblings and others are graduating and going to college? Is there going to be a school worth going to?”
Her questions raise a good point. Will there be high school graduates willing to borrow expensive student loans for what appears to be an inevitable subpar educational system, or will they simply leave California for other states’ institutions?
An interesting report by Reuters revealed that Ivy League colleges, such as Princeton and Harvard, are leaving graduates with less student loan debt than many public colleges.
Ivy League costs continue to remain high, but their generous financial aid policies and the availability of large grants allow students to obtain an Ivy League degree for less than, say, UCLA.
Reuters gathered data on the average student loan debt that graduates of 2011 were saddled with upon leaving school. Surprisingly, Princeton was the very lowest, weighing in at right around $5,000. Most students at a typical state college graduate with three or four times that amount.
Next up was Williams then Yale, both of which yielded less than $10,000 in outstanding student loan debt for graduates. Following those two were Pomona, Harvard and Amherst, with less than $15,000.
Compare these numbers to Berkley and UCLA, two of the most famous California-based public colleges, which both boast over $15,000 in outstanding student loan debt for graduates.
The reason for this surprising trend is that the Ivy League schools are offering massive financial incentives and rebates of much greater value than a lot of their public counterparts.
Take Harvard, for example.
Students from low- to middle-income families—characterized by those households earning less than $65,000 a year—pay nothing to attend the prestigious school: nothing for tuition, fees or room and board.
Furthermore, those who come from families that make less than $150,000 are only be required to pay 10 percent of Harvard’s tuition, fees, and room and board.
When asked by Reuters about the financial policies of Ivy League schools, Adam Falk, the president of Williams College, responded by saying, “Our commitment is not to make education free, but to make it affordable.”
During a time when graduates are haunted by their enormous student loans, the policies of these prestigious colleges sound like nothing short of a fantastical dream. If competition for placement in these historical Mecca’s was stiff before, just imagine what demand for an opportunity to study at these schools will be like once word gets out about their prices.
A recent survey found that most admissions directors at both public and private colleges feel that it is perfectly acceptable for students to graduate with debt. The survey also found that public and private student loan debt in the five-figure range was deemed acceptable. Inside Higher Ed ran this latest survey, which was conducted by Gallup on their behalf, on Oct 3.
In the survey’s findings, only two percent of admissions directors believed that graduating without any student debt was a reasonable expectation.
According to the Project on Student Debt, a student-advocacy non-profit initiative of the Institute for College Access & Success, the average student graduates from a four-year program with roughly $25,250 in student loan debt—whether in the form of public or private student loans. 42 percent of admissions directors feel that graduating with debt in the range of $20,000 to $30,000 is very reasonable. 17 percent of admissions directors feel that graduating with debt in the range of $30,000 to $40,000 is also reasonable.
Admissions directors at private non-profit colleges usually approved of higher debt amounts when compared to the admissions directors at both public and community colleges. At private colleges, 50 percent of admissions directors feel that graduating with $20,000 to $30,000 in debt was appropriate while only 32 percent of public and community college advisors agreed.
None of the admission directors at community colleges believed that students should graduate with over $40,000 in college debt.
According to the survey, 47 percent of polled admissions directors feel that what students studied somewhat mattered in how much debt they acquired. 31 percent felt that it mattered very much.
The survey results found that the majority of admissions directors and both public and private four year colleges agreed that too many students were borrowing private student loans.
Private student loans have higher interest rates compared to their public counterparts. Similarly, they also have fewer options—such as deferment—when compared to public college loans.
Despite the fact that student loan debt currently outpaces all other public debts, it is the only type that is near impossible to discharge through bankruptcy proceedings. Congress has proposed bills which would add more disclosures to college loan contracts so as to inform students about how to avoid accumulating heavy debt burdens by the time they graduate.