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How Your College Education Has Changed Over Summer 2011

Aug 22, 2011 Jennifer Williamson, Distance Columnist | 0 Comments

It’s been a busy summer. The US debt deal, passed this summer, contains a lot of cuts to programs that college students depend on, including subsidized loans and Pell grants—significantly undermining President Obama’s expansion of these programs in 2010.

The US government might have reached a debt agreement at the last minute—but that didn’t impress Standard & Poors. The agency downgraded US debt from AAA to AA+, one step below the top investment grade—a historic event whose implications are still not clear.

"If nothing else takes place, meaning, if all other variables hold and there isn't say, a new problem in Europe, it won't make any difference," suggests Warren Buffett in a recent Fox News appearance. However, it’s definitely possible that there will be a significant effect  on borrowing—including student loans—in the coming school year.

The debt crisis and consequent downgrade of the government credit rating aren’t the only things that might have an effect on college
students in the coming semester. Here’s an overview of how recent events might
affect you on campus this year.

Student With Laptop

This could be the best year of your college experience. But it could also be the most expensive so far


School just got more expensive for graduate and professional students.

The debt ceiling agreement slashes Pell grant subsidies for graduate and professional students. It’s justified as a way for the government to cut back, and the savings will theoretically be used to preserve the Pell grant program for low-income undergraduate students. But if you’re a low-income student who wants to go to graduate school, expect to be eligible for only loans. In addition, starting in July of 2012, grad and professional students will no longer be able to get any kind of subsidized loan from the government at all.

Potential further cuts to aid

The belt-tightening isn’t likely to stop with Pell grants, however. A new bipartisan panel is planning to find at least another $1.2 trillion in cost reduction opportunities by Thanksgiving of this year. College aid programs will definitely be up for review again—and more programs you depend on could wind up on the chopping block.

Possible increases in student loan interest rates

The debt downgrade will affect everyone—including college students. It’s tough to predict the effects in advance, because this is a first in American history—but it’s possible that everyone, including college students, will have more difficulty getting student loans. And when you do get a loan—either federal or private—the interest rates could be higher than usual.

Your for-profit school faces tougher regulations

Early this summer, the government passed regulations targeting for-profit schools. They don’t go into effect for another three years—but if your school starts its efforts to come into compliance now, you could see some of its effects on campus starting in the fall semester. Among the new regulations are:

At least 35% of former students are making progress in repaying their student loans after graduation.
Annual loan payments don’t exceed 30% of the average graduate’s discretionary income.
The annual loan payment isn’t more than 12% of the average graduate’s yearly earnings.

It’s tough to say how this will translate for individual students during the school year. You could see more rigorous classes, a hiring of more qualified professors, or stronger employment placement services for new graduates.

A reduction in college services, classes, and professors

If you attend a school that relies on government funding, it’s possible that your college experience will be considerably reduced this coming year. Public colleges all over the country are facing dramatic cuts in funding that have led the schools to slash costs in ways that directly affect students. This could mean a cut in certain programs and majors; your favorite professor getting fired; or significantly larger class sizes. It could also mean a reduction in extracurricular activities and student services—even as colleges increase tuition.

This could be the best year of your college experience. But it could also be the most expensive so far—if recent current events cause a spike in education loan interest rates and if the debt downgrade makes it harder for students to get loans. Colleges are facing large cuts in funding, and many pass those costs on to students in the form of higher tuition.  But it’s not all bad—it’s possible that you could see an increase in the quality of your education at a for-profit college if your school is getting a head start on making changes to bring it into compliance with new federal regulations.


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