| President Obama in his recently proposed budget is | | | | largest in the program's history. |
| asking for substantial increases to college financial aid. | | | | I wouldn't expect to see these changes for the |
| This is not a surprise. There has been a lot of news | | | | 2009-10 academic year, but more likely for the 2010-11 |
| coverage over the past several months about how | | | | academic year. In the short run, these changes will be |
| student loans are harder to come by, how many loan | | | | very welcome help to many students around the |
| companies have locked their doors, and how colleges | | | | country. There is however a downside to this helping |
| endowments have taken a hit. | | | | hand. |
| While the news coverage painted a picture of fund | | | | Mark Kantrowitz, publisher of FinAid.org said in a |
| availability that was far more gloomy than reality; an | | | | recent interview... "It puts pressure on colleges to start |
| increase in federal funds was virtually inevitable. Only | | | | controlling their costs, because if they know the Pell |
| social security is probably a greater hot button issue | | | | Grants are only going to go up by so much, then it |
| than helping students pay for college. So how will | | | | means that they'll either have to control their costs or |
| these changes affect students on the way to college | | | | find other sources of funding to help the students if the |
| and those already there? The answer is two-fold... | | | | college costs go up even faster." With all do respect, I |
| There will be a substantial increase in funds available | | | | have to disagree with my colleague. |
| to college students. The Perkins loan program has | | | | Pouring more money into the college funding system |
| been one of the least expensive methods for | | | | does not put downward pressure on controlling college |
| student's to borrow money for years. Many in our | | | | costs. It has the exact opposite effect. Although these |
| industry regard Perkins as perhaps the best type of | | | | increases in available financial aid will help many |
| loan that students can get their hands on. The only | | | | students' immediate needs, it will also have a continued |
| problem with the Perkins is its rarity. Hold on to your | | | | inflationary impact on overall college costs. It's simple |
| hat, because the Obama administration wants to | | | | economics. If you inject more money into a system to |
| increase the Perkins program 6-fold. They have | | | | pay for a limited resource (such as college education), |
| proposed an increase in funding from $1 billion to over | | | | you will increase the price of that limited resource. |
| $6 billion. The President also wants to increase the | | | | This, however, is not a new problem in college |
| number of schools participating in the program from | | | | financing; it's just exacerbating the same old problem |
| 1,800 to over 4,000. The Perkins loan program just got | | | | we've been dealing with for years. How do we make |
| an incredible shot in the arm. | | | | college costs manageable in a market that rises two |
| The President has also asked for a substantial | | | | to three times faster than the average inflationary rate. |
| increase to the Pell Grant program. Although numbers | | | | You can expect to see another spike in cost of |
| are sketchy at this time, expect that increases in Pell | | | | attendance figures in the next 2 - 3 years. |
| resources for the coming year will be some of the | | | | |