Financial Aid News 132: California Financial Aid Endangered By Budget Crisis

From NASFAA:

“Seniors at for-profit colleges are more than twice as likely to have accumulated dangerous amounts of education loans as seniors at other kinds of four-year colleges, according to a new report.,” U.S. News & World Report reports. “Almost 30 percent of seniors at for-profit universities in 2008 owed at least $40,000 in college loans, an amount that could be excessive, according to a new analysis of the latest federal data by Mark Kantrowitz, publisher of Finaid.org and Fastweb.com. For comparison, only about 11 percent of seniors at private nonprofit colleges-many of which charge higher sticker prices than typical for-profits-graduate with excessive debt, Kantrowitz found. And excessive debt was a problem for only about 6 percent of seniors at public universities, which are typically comparatively lower priced. That means new graduates of for-profit schools are about five times as likely to have borrowed heavily as new graduates of public universities. “

Commentary

Public or private, for-profit or non-profit, the rule is the same: never borrow more than your anticipated first year’s net income after graduation.

From NASFAA and the LA Times:
“With deficit forecasts growing darker by the day, Gov. Arnold Schwarzenegger is considering a plan to slash California’s safety net for the poor by eliminating the state’s main welfare program, health insurance for low-income families and cash grants to college students,” Los Angeles Times reports. “Potentially on the chopping block is CalGrants, a financial assistance program that offers cash grants to lower- and middle-income college students each year. The governor’s proposal would eliminate the 77,000 new grants awarded each year at a cost of $180 million, but that saving would eventually grow to more than $900 million as students graduated and the program was phased out.”

Commentary

The state of California’s finances are in a complete mess. Expect very little of what the state government provides now to survive its multibillion dollar shortfall. If you’re a student in the state of California, expect financial aid to suffer the consequences of the state’s finances, and plan accordingly. If you currently receive the CalGrant or any other form of state financial aid, plan in the near-term for that aid to be unavailable. Adjust your scholarship search and financial aid plans accordingly.

To be clear, there is still plenty of money out there for the dedicated, aggressive student willing to spend an hour each day over the summer hunting down scholarships. If you’re talented at using Google and willing to work hard at scholarship hunting over the summer break, you will find more money.

Scholarship Update

We’re nearing the end of the month. Make sure you’re a participating member of Scholarship Points, as we draw our $1,000 and $2,500 scholarships on or about May 31, 2009.

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