World-Shaker

Obama's Student Loan Plan Guide →

A short but effective overview. Here’s the really key part:

Q: What does Obama’s plan do?

A: Obama will accelerate a law passed by Congress last year that lowers the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent for eligible borrowers. It goes into effect next year, instead of 2014. Also, the remaining debt would be forgiven after 20 years, instead of 25. The White House said about 1.6 million borrowers could be affected.

Obama also will allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them at an interest rate of up to a half percentage point less. This could affect 5.8 million borrowers, according to the White House.

Warning: Profit-Making Colleges Are After You →

Here we go again. Corporations are making money not by producing a product and marketing it, but by loading consumers with loans they cannot pay and then sticking the taxpayers with the bill. Only this time, it’s not houses and mortgages but “higher” education and student loans.

Here’s how it works. Fly-by-night “educational entrepreneurs” — people who run profit-making colleges — buy small liberal arts colleges that are on the verge of collapse because of financial difficulties. This provides the profit-makers with coveted regional accreditation, which is needed to allow their students to take out federal loans. The profit-driven colleges then set up boiler-room style “recruitment” offices to hunt and pressure people to enroll and take out loans, promising them bright futures and successful careers. Former recruitment officers have reported that they were under intense pressure to meet quotas and enroll students, regardless of their readiness for college-level education. Enrollment counselors were told, when on the phone with prospective applicants, to “create a sense of urgency” and “push their hot button,” all tricks typically used to sell penny stocks. (All of this was vividly documented by PBS’s Frontline in an episode entitled “College, Inc.” You can watch it here.)

It’s really messed up that this is legal. In 2009, for-profit University of Phoenix pulled in almost $3.8 billion in revenue, and 86% of it came form the U.S. Department of Education. That’s a lot of Pell Grants and subsidized loans.

motherjones:

Chart of the Day: The amount that students owe quintupled between 2000 and 2011. For more, check out our MoJo College Guide.

I think I just threw up in my mouth a little.

Loan Study on Students Goes Beyond Default Rates →

For each student who defaults on a loan, at least two more fall behind in payments on their student debt, a new study has found.

The Institute for Higher Education Policy, a nonprofit organization, said in a report that two out of five student loan borrowers were delinquent at some point in the first five years after they started repaying their loans.

Almost a quarter of the borrowers used an option to postpone payments to avoid delinquency.

The institute said the goal of its study was to develop a fuller picture of the debt burden that students face by compiling data on students who have trouble repaying their loans, but do not default.

Every time an article comes out about student loans, it cites the stat that college graduates in 2009 had an average of $24,000 in student loan debt.

Where are these lucky, lucky people? What sort of magic allows you to graduate with only $24k in loan debt? Because I was working two jobs and attending part-time to cut costs, and still ended up in the hole for twice that.

For-Profit Colleges Offer High-Risk Loans To Keep Fed Dollars Flowing, Consumer Group Says →

Many of the large corporations that own for-profit colleges are increasingly issuing their own in-house private loans to students — even though some schools expect more than 50 percent of such loans to go into default, according to a report released this week by the National Consumer Law Center.

Through the eyes of those who run for-profit schools, the risky sideline lending business enables them to satisfy a federal law that requires at least 10 percent of a school’s revenue to come from sources other than federal financial aid. By complying with the 10-percent requirement, schools can then access the lucrative 90 percent of revenue that comes from the federal government.

Federal student-aid dollars have been the lifeblood of the for-profit education sector, allowing the industry to more than triple the number of student enrollments over the past decade — far outpacing the growth of private and public traditional universities. That growth has come amid questionable outcomes for its students, who default on student loans at twice the rate of their counterparts at public universities.

Cheaper Student Loans, But Shortage of College Grants Likely in 2011 and 2012 →

Although the federal government will hand out billions of dollars more in college grants in 2011 and 2012 than ever before, the nation’s financial aid programs as a whole are not keeping up with rising tuition, government officials and financial aid analysts say.

That means for millions of America’s working and middle class families, “college is going to become less affordable,” warns Mark Kantrowitz, publisher and founder of Finaid.org and the scholarship search site Fastweb.com.

Isn’t it Alanis? Don’t you think? We cut funding for higher education at the state and federal level, and then wonder why financial aid (which we only provide token increases for) doesn’t cover the rising tuition costs.

But no worries, there are now cheaper loans you can take out. You know, because nothing says starting your adult life like a mountain of debt on top of you.

Colleges hold firm on no-loan financial aid - Apr. 9, 2010 →

Yale, Harvard and the University of California network are among the at least 50 colleges planning to limit or remove loans from their financial aid packages, according to a report released this week by the Institute for College Access and Success. While 50 might not seem like a lot, their student bodies represent 8% of all four-year college students in the United States.