Recession is pushing college out of reach - Commentary about Student Loans

Recession is pushing college out of reach
BY JENNIFER WHEARY | Jennifer Wheary is a senior fellow at Demos, a public policy organization in Manhattan.
January 30, 2009

It used to be that having a son or daughter in college gave families a sense of pride. These days it's also giving many a sense of anxiety.

Struggling to pay for school is nothing new. College costs have risen more than 400 percent since the 1980s, and the stats about skyrocketing tuition and fees are cited so often that we barely take notice anymore.

So what if the average student graduated with more than $20,000 in loans in 2008?

So what if the amount of unregulated private student loans families have taken on has more than tripled in five years, and nearly one in 10 college students now has loans with interest rates that can hover near 20 percent?

And so what if a small percentage of parents has been tapping into the equity in their homes to pay for college, and nearly one out of every three dollars families spend on school comes from parental income or investments?

These "so whats?" point to a commendable fact, and to an unfortunate one: When it comes to paying for college, modern families have exhibited extraordinary resilience and commitment. But all their efforts may not be enough.

Enter the recession - the job losses, decline in home values and investment portfolios, the tightening of financial aid belts - and the ability of families to meet the mark is severely strained.

The fallout from this is only beginning to become evident. Don't be surprised to see more college-age children extending their winter breaks this year.

The spring semester has just begun at most colleges, and according to a survey by the American Association of Collegiate Registrars and Admissions Officers, 65 percent of schools across the country have reported an increase in the amount of unpaid tuition bills, which have prevented many students from returning to class.

Colleges are responding in a number of ways.

Knowing that about one in four students would have a hard time returning to school due to unpaid bills, Spelman College in Atlanta unleashed a large-scale donor drive to incite alumni to help current students stay enrolled.

Brown University has increased the amount of back tuition students can owe and still stay on campus by 50 percent.

Closer to home, SUNY officials are reminding people that the state's schools are still a bargain, even after the 14 percent tuition increase in the spring 2009 bills.

Still, any increase can be tough to swallow in light of Gov. David Paterson's proposed $47 million cut in the state's Tuition Assistance Program.

New York State is not alone in its double-pronged hit on college affordability. Just like American families, state university systems nationwide are doing their best to stay afloat.

Given current conditions, very few state schools can successfully promise to keep tuition costs constant and to increase financial aid availability. The more common comment from officials is that they will not raise tuition or cut financial aid "that much."

Meanwhile, lawmakers are talking up tuition tax credits at the state and federal levels. It's essential to the dreams of millions of families that lawmakers make these tax credits a reality.

But families shouldn't put all their eggs in the tax-credit basket. Much financial aid is awarded on a first-come, first-served basis. With the prospect of increased Pell Grants being discussed as part of President Barack Obama's economic stimulus plan, families should help themselves by getting in line and submitting the FAFSA (Free Application for Federal Student Aid) ASAP.

But beyond holding out hope in these two arenas, what's a family that has already pulled out all the stops to do?

It doesn't seem that the policy experts and financial aid advisers have quite figured that one out yet. And until they do, families' pride in their students' achievements will likely remain a source of stress.