<p>Mark Kantrowitz, who has been labeled a "financial aid guru" in national publications, predicts dire consequences if federal aid to college students is cut.</p>
<p>
[quote]
The game of chicken being played out in Washington, DC, may have serious consequences for student financial aid as well as the rest of the economy….</p>
<p>Instead of defaulting on the debt, the White House would need to decide which among the other expenses must be cut….</p>
<p>In such an environment, spending on student financial aid would almost certainly be eliminated. Student financial aid is not one of the top spending priorities according to internal rankings by the Office of Management and Budget. It isn’t even in the top 10. Effectively this means that the Federal Pell Grant program and the federal education loan programs, which together represent more than $150 billion a year, would be suspended. This would force millions of students to drop out of college because they could not afford to pay for college without student aid. This, in turn, would force most colleges to lay off faculty and staff. Many colleges would have to close. The only alternative would involve doubling tuition rates, guaranteeing nationwide tuition riots.…</p>
<p>During the ongoing debt negotiations, one side proposed eliminating the subsidized interest on federal student loans. Currently, the federal government pays the interest on subsidized Stafford loans during the in-school and grace periods. Both parties have already proposed eliminating the subsidized interest on loans to graduate and professional students. The new proposal would eliminate the subsidized interest for undergraduate students as well, saving the federal government an additional $4.3 billion a year.
[/quote]
</p>
<p>I don't foresee riots, but who can predict what would happen if these cuts were enacted.</p>
<p>(My previous post on this was apparently deleted by the moderators, probably because I mistakenly linked the above quote to a site that promotes services. Sorry about that! If you want more details you can go to my CC profile "contact info" section to check out my blog.)</p>
<p>No need for the government to cut grants and loans. All they need to do is to crack down on fraud (especially in the area of pell grants). Many people are receiving grants due to lying as to which parent they actually live with, and not claiming income. I had a financial aid officer at my daughters school admit that they dont check things like this even when a family claims zero in income but does not receive any government assisstance. How do they think these people are living?</p>
<p>But, I do think that if a person attends a CC or very low cost public, then the Pell Grants should be reduced to an amount that is not more than the tuition plus books. </p>
<p>Some CCs are very cheap…like a $1200 per semester. So, no reason to hand a person $5550 in a Pell Grant for a 0 EFC. They can still take out the $5500 in student loans if needed.</p>
<p>On second thought, I can see students demonstrating in the streets in opposition to budget cuts, and perhaps that could develop into “riots” of some sort. Taking over the administrator’s office and that kind of thing. I hope we don’t see this. If programs start getting cut as a way to get the deficit under control, many of us will feel it in some way. But I’m not sure if rioting would be a useful response.</p>
<p>Financial aid officers are not fraud experts, nor do they have the time to become fraud investigators. Those who “have” do not truly seem to understand how many in our country do NOT “have” … there ARE many, many people living on VERY LITTLE money. I worked at a school with a huge number of extremely poor people. Yes, they lived on almost nothing. They lived in shelters, with relatives, with friends … they were constantly in transit from place to place. They received benefits but did not understand what they were being asked on the FAFSA (eg, they did not realize what “TANF” meant). The kids completed the FAFSA because Mom couldn’t/wouldn’t/had no internet access/etc - and the kid didn’t know that Mom was receiving “benefits.” We had our hands full enough with people who misreported income/family situation resulting in verification … we sure didn’t need to have to go to their homes to verify whether or not the kid actually lived there.</p>
<p>Folks, while there are surely some who scam the system, there are many more who correctly report very little income. Adding regulations for increased fraud detection only costs schools more & leads to hiring more federal investigators to make sure the regulations being followed. </p>
<p>As far as federal funding goes, I doubt there will be rioting in the streets. However, something different must be done in order to somehow make college affordable to those who truly cannot afford it. That requires some creativity, IMHO. Once upon a time, we were innovators in our society. Not so much anymore, I am afraid. I don’t know the answer, but I don’t see one anywhere on the horizon in the near future. Wish I could be more optimistic, but I am not. We don’t have enough money to fund all the programs we want/need to fund in our country.</p>
<p>I am certainly not a “HAVE”, but I am tired of supporting those that are “HAVES” and are cheating the system. I am all for helping the truly needy, but there has to be some way for the government and financial aid officers to start to curtail the fraud.</p>
<p>We don’t have enough money to fund all the programs we want/need to fund in our country.</p>
<p>And that is true.</p>
<p>I have no problem with structuring aid (state and fed) where kids can start at a CC and then go to a local state school. However, I don’t support tax-payers paying for kids to skip past their local schools and live on tax payer money elsewhere.</p>
<p>mom2collegekids you are so right. In regard to both your posts, I couldn’t agree more. Students should not be given federal and state grants that far exceed their cost of attendance. I know a cc student (eligible for maximum pell and tap), whose cost of attendance was more than covered by these grants ( no loans required). At the end of the spring semester she was given a refund of over $5,000.00 to do with what she wished. She bought a car. I wish my kids were able to get funding like that. By the way to those of you thinking this is a “have-not” family, guess again.</p>
<p>your citation was from a political outfit (which is likely against the TOS). But such citations are not exactly publishable in peer-reviewed journals, last time I looked. But carry on.</p>
<p>In 2008 for example, there were 230,774 recipients for Pell Grants at the University Of Phoenix, who earned over $650 million from these grants. There is a lot of leakage and wastage there and fraud. U of Phoenix has settled lawsuits, where high pressure tactics were used to enroll students and they were signed up for Pell and other loans that they could not pay back.</p>
<p>I really do not think these grants will go away as there enough lobbyists on the payroll of the for profit schools including trade schools. The Robert Byrd scholarship was dropped and there was very little complaint as the people affected do not have lobbyists. If you drop the Pell and other loans, there will be a lot of complaints orchestrated by these schools. </p>
<p>I think removing these grants and loans will force down the pace of tuition inflation. If Colleges realize that their aid packages cannot have Pell and Stafford loans, they have to make up the difference or take chance that students will not join and hence would need to control tuition increases. </p>
<p>I understand that there are needy students who need these grants to go to College. However given the budget situation, everything should be on the table including Pell Grants. Some cuts have to be made there as with every other expense. Unfortunately, we cannot have too many scared cows. Sad, but that is the reality.</p>
<p>The Center for Budget and Policy Priorities is no more a “political outfit” than is the American Enterprise Institute. They’re think tanks with viewpoints.</p>
<p>I must have missed the news that College Confidential is being converted into a peer-reviewed journal. You have a citation for that claim, I’m sure?</p>
<p>Your original link, polarscribe, was to a blog, which if I’m reading correctly, was in violation of cc’s Terms of Service. OTOH, “authoritative sources” are always appreciated.</p>
<p>Although I do understand kelsmom’s comments about trying to investigate fraud, I do wish that more was being done to address this issue. I work with a number of students who would generally be considered closer to the “have not” end than the “have”. It is getting to the point where their financial aid packages from the less expensive state schools here are only loans - no work study, Perkins, nothing else. Just Staffords. And they are all panicking because they assume that they will simply not be able to pay them back with this economy appearing not to be going anywhere.</p>
<p>Meanwhile, I have an acquaintance who is a divorced mom, making a relatively low wage, who has an arrangement with her ex-husband for her to claim the “college children” as her dependents so that they can receive financial aid - because he is an ER physician and makes over $200,000 a year but doesn’t want to pay for school. In return, he pays other costs such as car insurance, etc. - a drop in the bucket. The way they have it worked out, the EFC for the students is unbelievably low, and they receive everything under the sun. She says they never ask any questions from the school about their aid because they don’t want the school to “look too closely” at their situation. I don’t recall all of the particulars - there is obviously more to it - but I couldn’t believe she had the gall to tell me all of this while she knew my son received no financial aid but loans for our lower middle class life - and who also had the gall to ask me what I was thinking by sending my son to such a thing as a state university and not a private school.</p>
<p>Meanwhile, I have these kids I work with who are either going to be drowning in loans (my oldest son included), barely taking one class a semester, or foregoing higher education altogether. It makes me sick. I wish there was more that could be done, for it’s hurting so many other deserving students on the other end.</p>
<p>This is what drives me crazy. So while this kid is getting “everything under the sun” while daddy earns 200,000+, a middle class kid (where the family income is perhaps 75,000) might need to pay an extra 9,000 in payments if the subsidized student loan vanishes and this new grad has a good chance of graduating without being able to find a job!!! I know a young man who just graduated from a private school, one that is well knowon for offering “paid internships/co-ops” as part of their education. Guess who still cannot find work, even after being at a school that offers work experience! Nothing wrong with this young man, it is our economy!</p>
<p>The feds (thru fafsa) made the (political?) choice to exclude the non-custodial parent long-ago. No reason to rehash; just write your local Congressperson if you feel strongly (but it would be a waste of ink and a stamp, IMO).</p>
<p>That is the problem - it IS a waste of stamps - or at least time on email - and it shouldn’t be. It breaks my heart to see the middle class kids being wiped out again. Kids whose parents are in the $50000 to 75000 range foregoing school because they get nothing and can’t afford publics (I was stunned at how many kids here are not going this fall), and more importantly are honest, and then those who are gaming the system. Something COULD be done; just no one wants to do it. In the meantime, I can hardly speak to this woman whose oldest just graduated from a higher tier private, and whose next one just completed his first year at another - both tuition free with aid with nary a loan in place. Recently, she asked me where another of my children was going this fall, and when I replied with the name of the large public university, she frowned and said “Oh”. If only I was good at the quick comeback! lol! </p>
<p>Meanwhile, my older son at the state school got his financial aid offer the other day - loans. Only loans. Couldn’t find a summer job. Parents very much under the middle-class umbrella. Not really sure how this may play out financially and it’s scary. Oh, if only it were still those days when I paid $750 a semester - still have the bill. If I didn’t have the proof, I’d never believe it had been so “cheap” back then…!</p>