College bound high school seniors, their parents, and college officials are typically anxious at this time of year regarding admission decisions, aid packages, and what colleges call “yield,” which is the size of the incoming freshman class after offers are made, accepted and declined. Due to the deepening recession, this season those anxieties are significantly magnified.
Here is a quick overview of what national education sources are saying about the status of financial aid for college in 2009, along with some tips for making the best of the situation. Happily, there is actually some good news despite the gloomy economic picture at present!
The best news is that federally funded student loans are secure and have been affirmed by recent congressional legislation; in fact, funding has been expanded somewhat. This applies to Stafford loans, Perkins loans and PLUS loans.
Many families will qualify for the American Opportunity Tax Credit included in the recently passed stimulus package, a potential credit of $2500.
Colleges are aware of and concerned about the ability of families to afford the cost of higher education in the current climate. As a result, most are trying to contain costs (60% of U.S. colleges have hiring freezes at present), striving to limit the extent of tuition increases, and in some cases, attempting to increase institutional aid packages.
Not Such Good News:
Private college loans are now much harder to come by and carry less desirable terms than in the past. These have been affected in much the same way as other forms of credit, unlike federal student loans, which are guaranteed by the government.
The continued stability of federal grants, such as Pell grants, may be tenuous, as more families are now eligible given the drop in net worth for most Americans. While increased eligibility is positive, it is also possible that the unanticipated increase in demand will negatively affect the availability and the size of future grants.
Virtually all colleges provide aid on their own, based on unmet need as well as merit. Given the particular strains faced by public institutions that rely on state funding, and different strains faced by private colleges (in the form of decreased donations and diminished endowments), institutional award packages may not match what students have been offered in the past.
Tips for maximizing aid in the present environment: apply early, shop around for the best offers and packages, appeal award decisions whenever circumstances change, and definitely ask about the financial health of the institution when visiting campus. Also beware of financial aid scams in the present environment. Check out “too good to be true” private offers with the financial aid office at your college. Also check into the background of private entities that promise to secure questionable levels of aid.