Updated law cuts college confusion


August 10, 2008|By Eileen Ambrose

Confused about tuition costs or the terms of private education loans? Wish you knew the price of textbooks before signing up for a class? Well, you no longer will be in the dark.

The Higher Education Act, recently renewed by Congress, is all about transparency.

The updated act requires new disclosures on the cost of textbooks and tuition as well as the terms of private loans. These disclosures take aim at some of the problems afflicting higher education: Skyrocketing tuition. Soaring textbook prices. And last year's student loan scandal over the all-too-cozy relationships between private lenders and financial aid offices.

The legislation, which is five years' overdue and runs 441 single-spaced pages, also offers provisions that should make college more affordable for many students.

President Bush is expected to sign it. Here are some of the highlights:

*Year-round Pell Grants: Pell Grants go to the neediest students. A single grant is usually awarded for the year, and the money is disbursed over two semesters. Students attending school year-round to finish more quickly would be able to receive more Pell money.

"That's a big change and that will help a lot of people," says Laura Donnelly, director of financial aid for the Johns Hopkins University's schools of business and education. *Loan increases: Congress wants to raise the limits for Pell Grants and Perkins Loans. But it's unclear how much students would benefit or when.

The maximum Pell Grant now authorized by Congress is $5,800. That limit would start to gradually increase next year, reaching $8,000 in 2014. Sounds good, but the grants aren't funded to the legislated limit. For instance, the most you could be awarded for this coming school year is $4,731.

Still, financial aid directors see this as a positive signal.

"It's symbolic of their intent," says Sharon Hassan, director of financial aid for Goucher College. Raising the limit shows that Congress recognizes the need for larger grants, and students may be awarded more money if it becomes available, she says.

Needy students also would be able to borrow more under the low-interest Perkins Loan program.

Undergraduates would be able to borrow up to $5,500 a year, up from $4,000; graduate students would be able to borrow $8,000 a year, up from $6,000. The total amount students would be able to borrow while in school would go up from $20,000 to $27,500 for undergraduates and from $40,000 to $60,000 for graduate students.

"This won't have much of an impact immediately," says Mark Kantrowitz, publisher of FinAid, an online provider of aid information. That's because the money for the program comes from graduates repaying the loans. When students rushed to consolidate loans a couple of years ago, they paid off Perkins Loans, and there was lots of money to lend. "Nobody is consolidating anymore," he says. "Now we're in the middle of a famine."

*Loan forgiveness: Congress added new loan forgiveness programs.

Full-time workers in fields where there is a "national need" would be able to have up to $2,000 a year in federal loan debt forgiven, up to $10,000 total. The list of eligible workers is broad. It includes firefighters, police officers, dietitians, dentists, medical specialists, early childhood educators, foreign language specialists and child welfare workers.

"You could stay just one year and get some forgiveness," Kantrowitz says.

There's an even more generous program for lawyers who eschew a high-paying job in private practice to work at least three years as a prosecutor or public defender. They could have up to $10,000 a year of student loan debt wiped out, for a maximum of $60,000.

*Tuition transparency: Starting in July 2011, the Department of Education would start posting on its Web site a list of the 5 percent of schools with the highest tuition and fees, and a list of the 5 percent of schools with the largest percentage of cost increases. It would also post the names of the 10 percent of schools with the lowest tuition and fees. The lists would be updated annually.

Will this shame schools into keeping costs down?

"It will add a little bit of pressure" but won't solve the problem, Kantrowitz says.

Also, don't rely just on these lists when selecting a school.

"It still will be best for consumers to apply to several schools and get financial aid offers to compare based on their individual situation," says Robert Shireman, executive director of the Project on Student Debt.

*Textbook disclosures: Publishers would have to tell faculty and others selecting textbooks the wholesale price and, if possible, the retail cost at bookstores. They would also have to describe any substantial revisions to the current edition from the previous one. And publishers that bundle textbooks and supplemental materials - a move that makes it more expensive for students and can hurt the resale value of the items - would be required to sell the books and materials separately.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.