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Is Your Financial Aid a Victim of the Recession?
The economy will affect your financial aid--find out how.
By Lauren Bayne Anderson
April 21, 2009
The stock market’s in a slump. The economy isn’t rebounding. Jobs are hard to come by— and so are student loans.
But you’re not sure how — or if— any of it affects you. Chances are it will. And while you may not be feeling the effects of it yet, that’s simply because it hasn’t trickled down yet.
When it comes to financial aid, some know the scope of the industry better than others. Mark Kantrowitz is one of those people. The author of our own, FastWeb College Gold, A Step-by-Step Guide to Paying for College, and a slew of other financial aid resources including FinAid.org, Kantrowitz sheds light on what today’s economy means for you.
Who is affected most by the credit crunch? Kantrowitz says: Students at community and technical colleges, especially institutions that are for-profit, are having the toughest time because they are more likely to receive private loans. Also, lenders under profit pressure are less willing to write loans for shorter, one- and two-year programs – especially at schools with historically high default rates. — Time
I’m leaving for college next year, is it worth it to start saving just now? Kantrowitz says: Save whatever you can. Something is better than nothing. If you wind up having to borrow the cash, you’ll pay for it in interest. Either you could save a certain amount of money before college, or pay back twice as much after college. — First 30 Days
Is it worth it to going back to school in lieu of the tough job market? Kantrowitz says: Prospective students should keep in mind that student loans may be more difficult to come by these days. “Lenders have tightened criteria,” he said. “If you have a bad or marginal credit score, you are going to have a harder time obtaining a student loan.” — Red Orbit
How will the financial crisis affect my ability to pay my student loans? Kantrowitz says: Interest rates on many loans are likely to jump by 2 percent within the next month. “Interest rates on these loans will increase as the lenders pass on their increased cost of funds,” he said. — New York Times
How do I select the best student loan for me? Kantrowitz says: Choosing a loan comes down to who offers the cheapest interest rates and fees. The Perkins loan is the most beneficial federal loan, followed by the Stafford loan. Families of undergraduate students can take advantage of a current phased-in interest rate reduction that Congress passed. But only for a while! “As in everything Congress does, it has five years and then it reverts to the status quo because of federal budgetary constraints." — Chronogram
For more advice from Kantrowitz, check out FinAid.org and FastWeb’s Financial Aid Channel!
mrobeng
17 days ago
Read all about student loan consolidation on this student loans blog
JulieL149
5 months ago
I work in Financial Aid at my college (washington and jefferson, which is extremely pricey) and if there are a few things I could recommend to students a) as a freshman coming in to a school make sure you compare other financial aid packages to the school you would like to attend. I sent another schools to my schools and they increased my grant by about 3,500 to almost match the other schools. so don't just take the pacakges for what they are when you recieve them, make sure you compare them to one another. b) If one of your parents lose their jobs you need to call your financial aid office because you are considered a special circumstance and a lot of schools will go out of their way to make things work for you. c) look for scholarships they are everywhere. Even a $500 scholarship could pay for most of your books for one semester.
RaquelC74
6 months ago
America, despite sucking up more resources than any other country, is very far behind in producing goods and intellectual property. Currently we are all just serving each other our gas and groceries. The economy cannot "pick up" if there are no educated people getting into jobs that produce. In America (especially the last administration) we have viewed education, child well-being, and health care as a minor issue. The major issue? The 1% at the top amassing more wealth and more power.
Obama says we all need education because it is not a personal choice for citizens, it is the only way to compete and function effectively as a country....and eventually regain prosperity. Unfortunately school is ridiculously over-priced that we are all going to go in debt 20, 40 60 thousand $ and rising....at least we can take comfort that our system still supports the bankers above the average citizens trying to make something of themselves through hard work. So, uh, what do you think we sold the American Dream for?
TanikaG15
6 months ago
This article is a bunch of garbage because most students in community colleges receive pell grants and the pell grants usually cover their financial needs because the tuition is so low. Not to mention that Obama raised the pell grant maximum from 4700 to 5300/yr so now more students can afford to take classes especially at a community college because of the low price. To make things even better, if you pay for your classes out of pocket or through a loan you can get approximately up to $1500 of your money back during income tax because Obama has now made the education loan refundable. It is one of only three (EIC and Child Tax being the other two) that are refundable meaning even if you owe the government no money you will still get to pocket the extra cash. With the job market the way it is, school is one of the best places to be right now.
SusanM536
6 months ago
What I don't understand is that Obama keeps saying that EVERYONE needs higher education, at least 1 year more than high school (or more) How does he think we can afford it???
JenniferO213
6 months ago
Im at the end of my junior year in high school... and coming from a small town in South Texas we feel the recession but i can only imagine not as much as the states up north. I worry constantly about my finacial state when it comes to attending collage. I don't think that anyone really realizes how bad students trying to get ready and plan for collage are scared about cost and how to get good lones.