Will the Aid Be There?
More and more families find themselves in trouble. But there may be bright spots ahead
That's already happening: A new report from the Department of Education shows that students borrowed an average of $19,300 in 2000, compared with $12,100 some seven years earlier. Nearly half of all undergrads in the top income bracket now take on debt; these numbers continue to skyrocket. Increasingly, much of this money is coming from alternative private student loan programs instead of the government, which means variable interest rates that start accruing immediately, as opposed to upon graduation; specific credit requirements or cosigners; and, often, additional fees. "It is a very dramatic shift and a very disturbing one," says Sandy Baum, a professor of economics at Skidmore College and senior policy analyst at the College Board. Also coming: The interest rates on federal loans are expected to rise for the first time in five years this summer. "We are looking at a very messy, uncertain, complicated period over the next three, four, five months," says Terry Hartle, senior vice president of the American Council on Education, which represents 1,800 colleges and universities. No matter what happens, he adds, "the federal budget deficit is an 800-pound gorilla. We're not making decisions based on rational assessment of public policy needs in higher ed--we're making decisions based on what we can afford."
On the plus side, families who play the financial aid game right can maximize their chances. And many schools are helping out even more: Last month, Yale became the latest, dropping parental contributions from those making less than $45,000 and significantly decreasing them for those earning less than $60,000. And, like Princeton, which set the bar by eliminating all need-based loans in favor of grants back in 2001, the University of North Carolina-Chapel Hill and Rice University no longer require low-income students to borrow money. The University of Virginia has gone further by covering tuition with grants and eliminating loans and work study for the same group--essentially offering poor students a full ride--and capping all other need-based loans at approximately one quarter the cost of attendance. "Right now," says Yvonne Hubbard, Virginia's director of student financial services, "we think this is the best way to make up for the socioeconomic diversity that we were losing."
Even with the struggles, families like the McCorrys remain committed to college. "It's worth every sacrifice," says Pam, as she recalls how folks suffered when the local General Motors plant closed a few years back. "We want all of our children to go to college because we think that it will afford them a better job and open a lot more doors, and we'll do whatever it takes to get them there."
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