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student loans

Rethinking Admissions

Continuing the Conversation

Posts Tagged ‘student loans’

Prices Rise but President Promises Help

Thursday, October 27th, 2011

rising-college-costsThere were two important stories this week about a fundamental concern for anyone interested in college admissions.  The first report, released by the College Board at their annual conference, detailed the alarming rise in tuition costs at the nation’s public and private colleges and universities.  Due to downturns in the economy and increasing costs for the institutions themselves, public school prices are now increasing at a higher rate than that of private schools.  The report also discusses the role of the federal government plays in the financial part of the admissions decision-making process.  Many families looking for help count on federal grants and the new tax credit available under the American Opportunity Tax Credit Act of 2009.  But in these difficult times, are those programs enough?  What about student debt over the long term?

Yesterday, President Obama announced a plan to address the debt issue.  His plan would allow for a cut in the monthly repayment minimum for federal loans and debt forgiveness after twenty years.  Additionally, the plan would offer loan consolidation for students that could cut their interest rate by half a point.  The bottom line is loan payments could drop by hundreds of dollars per month.

In terms of college admission, these news items may seem insignificant considering that more than 120 schools now have annual tuition fees topping $50,000.  But when it comes time for students and their families to make the decision about which school to attend, it is the dream of many to make the stress of the financial angle as insignificant as possible.  Whether by increasing need-based aid on the part of the schools themselves, expanding the availability of Pell Grants, or the new plans offered by the Obama administration, every bit helps.  In the realm of  Rethinking Admissions, choices should focus more on the educational reasons involved than on the pocketbook.  But matching what should be true and what is reality for most Americans still is a work in progress.

Failure Insurance for Students? Why Economists Think it May Work

Monday, January 11th, 2010

What if students applying to college knew that they could enroll in the school of their choice, and receive a tuition reimbursement if they later discovered it wasn’t a good fit? That might be possible some day if the insurance industry adopts a type of policy that two economists have outlined in a working paper. In Insuring College Failure Risk, Satyajit Chatterjee, an economist at the Federal Reserve Bank of Philadelphia, and A. Felicia Ionescu, an assistant professor of economics at Colgate University, explain why such a policy makes sense.

At the annual meeting of the American Economic Association, the economists presented mathematical models, which show that “failure insurance” might be a useful component of the federal student loan program. The models theorize that students’ college decisions are driven by their finances, their views on future earnings, and the amount of “disutility” that they expect from the academic work. If structured correctly, the failure insurance would ease student anxieties over debt, while giving them an incentive to stay in school. The economists explained how it would work in a Q & A with the Chronicle of Higher Education.