Tag Archive: financial aid

A decrease in Pell Grant spending: Should we be concerned?

Pig

My quick answer to the question is “Yes, we should!” Simply put, any time money is taken away from college students, more students will find it harder to afford college. Many families prioritize saving for retirement first and paying for education second, based on the assumption that they can usually find money and assistance to help pay for college, but that it is more difficult to find money to fund life after retirement.

 

Let’s look more closely into these proposed Pell-Grant cuts so we can better understand them. According to CNNMoney.com’s article “Obama’s budget to target education Pell grants,” the cuts will come in two ways:

  1. Students will no longer be eligible for two Pell grants per year. In the past, students could apply for one grant for the regular semester and then another grant for summer school. Now students are limited to one or the other.
  2. The second cut affects graduate and professional students and comes in the form of how the government will pay the interest on loans to those enrolled in these programs.
In all, the purpose of the proposed cuts is to save around 100 billion dollars over a 10-year period, but to what effect? How will these cuts affect enrollment and graduation and drop-out rates? It is clear that with new Pell-Grant limitations, college students will have to spend more of their own money or find alternative funding in order to get degrees. According to FastWeb.com’s article “Congress Proposes Big Cuts in Pell Grants,” the proposal will cause more than a million students to lose eligibility for the Pell Grant as it exists now. The article states that every $100 change in the maximum Pell Grant corresponds to about 200,000 recipients, and the proposed change will impact 1.7 million low-income students.
 
According to “The Rising Price of Inequality: How Inadequate Grant Aid Limits College Access and Persistence,” a report published by the National Center for Education Statistics (NCES), there is a growing gap between those who aspire and are qualified to go to college and their ability to meet the financial requirements for enrollment. So is this program of proposed Pell-Grant cuts short sited? If we take our brightest minds and place them in schools where they will not be academically challenged (or deny them higher education entirely), will we produce the top-quality college graduates we need to lead us into the future? Are we mortgaging our future for short-term savings?

Cash-Strapped College Part 1: Before You Leave

Cash

Next to purchasing a home, paying for college is one of the largest investments in a lifetime. Obviously, saving money is on the top of the priority list. Having wealthy parents is the first money-saving strategy. If that’s out of the question, there are still a few things you can do before, during and after your college years to save money. This is the first of a three-part weekly series, and going in logical order, will outline some strategies for both parents and students to cut costs and reduce loans before you even get on campus.

BEFORE COLLEGE

The earlier you start preparing for college the better. For parents, starting a college fund earlier rather than later is always advisable, even if you feel you can’t contribute very much to it each month. One option is a 529 savings plan, which is especially beneficial if your student is aiming for a state school. These plans  “are operated by the state government, [and] allow you to lock in future tuition costs at participating schools at today’s prices, providing a guarantee against tuition inflation” says Rachel Grumman, in her Mom’s Guide to College Savings.

 

Things like having an after school job to put money away can help too, but one of the most valuable things a student can do is learn how to budget. Learning about money goes hand in hand with earning money, and high school students who are responsible for their own expenses are often more financially responsible when they reach college.

 

Lisa Belkin, at New York Times blog Motherlode, says that “being the parent of an 18-year-old means second guessing a lot of choices made over 18 years, and one that I might have done differently is the decision not to have him get a job until the end of high school.” Her regret isn’t unique, as any parent slammed with a credit card bill or a pleading phone call can attest. Over the course of a four-year undergraduate study, the ability to budget their income and avoid expenses can save a student more than many scholarships award.

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