Weeks or even days before classes start, hundreds of thousands of college students nationwide still don't know whether they'll be able to cover their tuition bills this year.
In Michigan, the state legislature continues to battle over the Michigan Promise Grant, a merit award of up to $4,000 given to 96,700 students. The State Senate recently passed a bill to cut it entirely and eliminate another $56 million in need-based aid for this school year.
In Illinois, the need-based Monetary Award Program was halved last month, leaving about 145,000 students without a spring-semester payout. The full award used to total nearly $5,000.
In Utah, the state cut the tuition subsidy to 40% from 75% in its New Century Scholarship, a merit program in which students earn their associates degrees while in high school.
And in Pennsylvania, a state budget impasse is leaving 172,000 students unsure what funding they'll get from the state Higher Education Assistance Agency. The maximum award is slated to be $4,700 for students who attend in-state schools.
Even where state budgets are more secure, parental layoffs and shrinking savings accounts have imperiled college funding for many, sending students and their parents scrambling to find last-minute sources of money for school.
Most students file for financial aid months before the start of the academic year, and high-profile scholarships are often awarded a full year before the funds are disbursed. Some money is still available from federal, school and private student loans right before and even during the school year. But sources of state-based grants are drying up. And alternative student loans, to whom students often turn for extra help, are shying away from riskier borrowers with little credit history. Once they exhaust federal and school funding, students may be forced to defer or shift to part-time status, switch schools or give up entirely.
Cheaper Options
School financial aid offices will likely direct students to file the Free Application for Federal Student Aid. If they have already done so this year, students can't file a new application. But financial aid offices can also help them access additional federal funds that they may not have qualified for when they first applied.
All students can get up to $2,000 in unsubsidized federal Stafford loans. Those with financial need can take out other Stafford loans—as much as $5,500—as well as Pell Grants and low-interest Perkins loans. Financial aid officers say even parents should apply for government loans; if they are denied, their children will be eligible for higher Stafford loan limits.Because many schools require at least some payment before registration, students who don't expect money to come through for weeks or months can pursue school-sponsored emergency loans. The terms are generally more attractive than private student loans, from an interest-free loan of up to $300 at Purdue University to 7% for up to $1,500 at the University of Denver. Those loans are intended to be emergency stopgaps and require repayment in as little as a few weeks.
Students who still find tuition bills daunting can ask about tuition payment plans, which allow payments to be made in small installments. Southern Methodist University in Dallas, for example, offers a half-dozen options with terms ranging from four to 12 months, with enrollment fees of $50 to $150.
Some schools are releasing extra funds after finding their financial aid offices overwhelmed. Hiram College in Ohio, with about 1,000 students, raised $20,000 to provide needy students with one-time grants this year. And the University of Indianapolis, facing a drop in state aid, set aside up to $3 million for extra grants. But many institutions, facing their own budget problems, have come up dry.
Creative Financing
As a result, a number of students are looking elsewhere. Many are advertising their tuition needs on peer-to-peer lending Web sites such as Prosper.com, where groups of lenders provide funds directly to borrowers, or trade a portfolio of loan notes. Yet interest rates on such sites can climb to as high as 34%—far worse than even alternative student loans.
Some students are switching to part-time status to cut their costs. Much institutional financial aid is available only to full-time students.
Others are joining the Reserve Officer Training Corps, which provides stipends and merit scholarships for full tuition in exchange for eight years of military service. The campus-based program accepts new students year-round, though tuition assistance may be credited to future semesters, depending on when a student enrolls.
