Arielle Lubbers was packed and ready to head to Southern University Illinois Carbondale, excited to begin her college career in biology. August 20, the day before move-in, she received a phone call from the financial aid office, informing her she was $5000 short. Lubbers’ $240 per month paycheck would not cover the outstanding balance, and since she would have to quit her local job to attend school downstate, a payment plan wasn’t an option. Severely disappointed, she had no choice but to withdraw.
In today’s global economy, a college education is mandatory in order to ensure success; however, during the last three decades, college tuition and fees continued to increase while earnings sagged, making higher education out of reach for many young adults.
What does it cost to attend college? According to the U.S. Department of Education National Center for Education Statistics, the average cost of attendance for full-time students who lived on-campus in 2008-09 was $17,655 for in-state public institutions, $32,670 at private not-for-profit institutions, and $35,021 at private for-profit institutions. These NCES figures include tuition and required fees, room and board, books and supplies, and other standard expenses.
Tuition costs continue to escalate while employers are freezing wages or awarding raises of less than 4 percent. The NCES reported that between 2008 and 2009, tuition costs have increased by 5.9 percent at private four-year institutions, and 6.4 percent at public four-year in-state institutions.
Published tuition and fees at public four-year colleges and universities rose at an annual average rate of 4.9% (beyond general inflation) from 1999–2000 to 2009–10, faster than in either of the previous two decades.
Lubbers, whose parents are divorced, applied to a few colleges while still in high school. Her respectable 3.1 grade point average and reasonable score of 21 on the ACT left her confident that she would be accepted to one or more of her choices.
Lubbers had lived with her father and his second wife until circumstances forced her to move out in January 2009. She spent five months living with supportive friends and neighbors so she could graduate from high school in May.
Eligibility for federal need-based student aid is determined by their Free Application for Federal Student Aid (FAFSA), which measures financial need mainly by a student’s family income. The student’s dependency status determines whose income is considered during need analysis. If a student is dependent upon parents for financial support, the parents’ income is considered. If the student is financially independent, only the student’s income (and their spouse, if they are married) is considered. All graduate students and most undergraduates over the age of 24 are classified as independent.
“The FAFSA is our first clue in identifying those students who need the most money. The student has to apply for the aid. If they enroll and don’t apply for the aid, we don’t know what their situation is, and can’t make any determinations,” said Janeen Decharinte, director of financial aid at Lewis.
When acquaintances began receiving their financial aid packages, Lubbers wanted to know why she hadn’t heard from SIUC, so she phoned the financial aid office. “I sent in my FAFSA application three weeks before it was due. SIUC said they hadn’t gotten it, and that I wasn’t eligible for certain grants and loans.”
In May, when Lubbers’ living status changed from dependent to independent and homeless, her FAFSA needed to be changed, but her father threw a wrench into the works. When asked to verify her status, he denied she was homeless, and insisted that she had been living at his home.
“To change my FAFSA, Lockport High School faxed a statement over to SIUC verifying I was homeless. SIUC didn’t talk to me about it, they called my dad, and he denied that I was homeless. The school accused me of fraud. It was really difficult for me to prove myself as independent,” said Lubbers.
Lubbers eventually moved in with her mother, and used her mother’s financial information for her FAFSA. “There was a lot of wait time. I would just call, and call, and call, and the financial aid office wouldn’t get back to me.”
The FAFSA application relies on income from the previous year, but in this economic climate, is the FAFSA the best way to measure a student’s current financial need?
Decharinte thinks the FAFSA is realistic in assessing family income. She explained that the government allows financial aid offices to use professional judgment if a family has lost a job, or experienced economic hardships based on the economy. “The financial aid office is able to use professional judgment to review a family’s current situation versus their past situation to make a determination of whether to use current income or past reported income to award financial aid,” said Decharinte.
Financial aid eligibility is also influenced by whether or not the student attends full time and enrolls for a full academic year.
The NCES reported that in the United States, during the 2007-08 school year, 28 percent of dependent undergraduates came from families with incomes under $40,000 while another 28 percent had family incomes of $100,000 or more. During the same year, 40 percent of independent undergraduates claimed incomes under $20,000.
Eventually, Lubbers’ independent status was confirmed, and she received a generous financial aid package from SUIC and the maximum allowable Pell Grant, a federal grant that does not need to be repaid. Because of the timing of her changed status, she missed the deadline to be considered for the Illinois MAP grant. Lubbers said, “By the time I got it all straightened out, it was 3 weeks before move-in, and I was pretty much denied everything except for the Pell Grant.”
The College Board, a not-for-profit membership association whose membership includes more than 5,700 schools, colleges, universities and other educational organizations, reports that among all 2007-08 bachelor’s degree recipients, 34% graduated with no education debt.
At Lewis, Decharinte estimated that only 15 percent of newly enrolled students pay their tuition in full, after institutional scholarships are applied.
Many potential college students are forced to incur large amounts of debt in order to attend college. Graduates with entry-level, low-paying jobs struggle to get out from under the loans when faced with large purchases, like replacing a car.
In 2007-08, 39 percent of all students and 54 percent of all full-time students took out an education loan.
Students and their families have to sort through the various loan options, which could be taught as a for-credit course. Federal government-sponsored loans awarded directly to the student include need-based and subsidized Perkins, and subsidized and unsubsidized Stafford, with interest rates currently between 5 and 6.8 percent.
“A lot of parents are encouraging the students to take out the (federal) loans, even though they have the means to pay the tuition balance, just because it’s a good interest rate,” said Decharinte.
The federal government also sponsors the Parent PLUS loan program, allowing a parent to borrow on behalf of their child at interest rates ranging from 7.9 to 8.5 percent, depending on the program.
Currently, the government is discussing changes to these federal loan programs. Said Decharinte, “The government is trying to eliminate the banks from the federal loan programs, and move all of the lending into direct loans.” She explained that the money that is being paid to banks in subsidies for managing the federal loans would instead be put into the Pell Grant program, increasing the maximum Pell award. “They wanted this change to go through in fall 2010, but I don’t think we’re going to see this come to fruition until 2012.”
Finally, students can apply for private loans if they have a credit rating, although most do not, and need a creditworthy parental cosigner. Interest rates on private loans are variable, and higher than federal rates—usually exceeding 10 percent.
Lubbers received federal loans, but still fell $5000 short—the amount of her fees, housing, and books, which are not covered by federal loans. Her mother’s poor credit rating excluded her from applying for a Parent PLUS loan. Her strained relationship with her father barred any chances of securing him as a cosigner for a last-minute private loan.
Many parents deposit money into tax-free college savings plans as soon as their children are born. These plans began in 1996, and since 2001, can be redeemed tax free when used for postsecondary education expenses. Standard 529 savings plans are tax-preferred investments in mutual funds and other financial assets. Prepaid tuition plans are guaranteed to pay a pre-determined proportion of future tuition prices, regardless of tuition increases. In Illinois, 529 investment withdrawals and returns for qualified educational expenses are exempt from state taxation.
The total number of Section 529 accounts increased from 10.6 million to 11.2 million between December 2007 and March 2009.
Decharinte said, “One thing that I think a lot of families don’t realize is that families have choices. If you have credit card debt, or you have three or four cars, or you take out a second mortgage to remodel your home, or you take a vacation, those choices affect your ability to pay for an education. The government doesn’t look at your personal choices. I think what we need to do as a society, is to reevaluate our priorities and maybe the extra car or vacation is not as important as putting your son or daughter through higher ed. If I had any advice for everybody, I’d tell them as soon as their child is born, start socking away $20 or $30 a week, or a month, and it all adds up. An Illinois college savings plan is an awesome opportunity.“
Lewis, like most higher education institutions, discounts tuition by offering institutional scholarships.
According to Decharinte, private institutions usually discount in the range of 42 to 45 percent, on average, nationwide. “The more you discount, the less revenue you have, so you’re less able to update classrooms and create a learning environment. We try to stay around 40 percent for our undergraduate students.”
Lewis ranks above the national average for undergrad discounts of 34 percent for private four-year institutions published by The College Board’s Annual Survey of Colleges.
Lewis’ overall discount rate, including graduate students and accelerated programs, is 26 percent.
Institutional scholarships at Lewis are all-inclusive, and cover academic, athletic, musical talent, transfer student, and other awarded scholarships.
Decharinte said, “Every private institution discounts, and actually, a lot of four-year public institutions have their own institutional scholarship money, as well. They are in the process of discounting because scholarships have not kept pace with the amount of tuition.”
Lubbers continues to communicate with SIUC, and is planning to enter this fall as an education student so she can be eligible for a full scholarship. “I was going to go for biology/zoology, but I can get more financial aid if I go into education, and I thought about teaching before, so the extra financial aid helped push the decision,“ she said.
Decharinte explains this Illinois individualized scholarship program: “The state of Illinois has very individualized programs, especially related to being a teacher. They have the Illinois Future Teacher Corps and Golden Apple, which are minority teacher scholarships that can be applied to public or private schools. These scholarships have a service component attached to them: graduates need to teach in a high-need area that has a shortage of teachers. If the teaching commitment is not fulfilled, the scholarship would then convert to a loan.”
If all else fails, Lewis has one mission-related option, Decharinte explained. “Lewis, realizing the economic times, has set up a Mission Fund. Students who have extreme difficulties with their current tuition can provide us with documentation of their economic hardship. There is a committee that reviews their situation and their history, and then we make the determination for whether or not we can award them an additional scholarship from this Mission Fund. That is our solution, at this point, to this economic crisis.”
For many students, applying for college and the tuition payment process is their first foray into managing a substantial amount of financial responsibility.
Decharinte, a single parent with two teenage boys, can speak from personal experience. “We just hand over $10 or $15 so they can go out to eat. They don’t know about money management, because we’re not teaching them. I don’t think we sit down and say, ‘the light bill costs $60 per month, and the mortgage costs $1000 per month.’ I think we need to be more cognizant of what we’re teaching our children regarding money management.”
Lewis tries to help students gain these life skills. All incoming freshman are required to enroll in a for-credit class called First Year Experience, where each student is paired with a staff or faculty mentor. The class covers life skills, including money management, social responsibility, the mission of the school, and other topics. “It’s not just about being in college. It’s about life experience,” said Decharinte.
Like many postsecondary schools, Lewis also requires new students to attend and overnight orientation program. On day two of the program, Decharinte and the Bursar give a presentation that explains tuition and room and board costs, how to access their bill, and how to determine the amount of money that they need to pay out of pocket.
Decharinte stressed that students need to talk with financial aid counselors. “Open communication is the key, especially in these tough times. Our doors are always open; we’re always here. Someone will talk with the student to plan out our steps. We will point them in the right direction, but they’re going to have to do some paperwork—maybe a scholarship application or an essay for a scholarship. They need to be willing to work with us. It has to be a partnership.”
Sometimes, more than one visit to a financial aid counselor is needed. Said Decharinte, “Because of the massive amount of paperwork that we get as a Financial Aid office—and this is across the board for all Financial Aid offices—unless the student physically comes and talks with someone (in Financial Aid), by looking at numbers, I can’t tell you not to come to school, I can’t say if you should be here. All I can do is present you with your financial aid package, and it’s then up to the student to initiate more conversation.”
Lubbers will resubmit her FAFSA, with her mother’s income information, in January. “I’m going to start in January, because I don’t want them to run out of money. I’ll do it all early, so that I’m not in trouble by the time I need to move in.”
If Lubbers had applied at Lewis instead of SIUC, would things have turned out differently?
Said Decharinte, “Situations like hers are very difficult, and take a lot longer. I don’t think there’s anything you can do to speed things up. It’s unfortunate that the school didn’t allow her to continue—to be enrolled and figure something else out along the way. We would’ve done that; we wouldn’t have made the student withdraw.”
Lubbers summed it up succinctly. “It’s frustrating when you want to go to college, but you can’t.”
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Leslie Bolin
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