Tuition trauma

PERSONAL FINANCE

Colleges are trying to handle a huge increase in financial aid requests

March 22, 2009|By EILEEN AMBROSE

Phone calls stream into the financial aid office at University of Maryland, College Park and the callers say much the same thing: A parent has lost a job or suffered a pay cut, and the family needs help paying for school.

It's become such a frequent refrain that counselors this month underwent sensitivity training to ensure that they are as patient and caring the 100th time they hear a hard-luck story as they are the first time.

"When you see 90 appeals that look the same, you can get a bit desensitized," says Dan Beaty, a financial aid counselor.

Colleges in Maryland and elsewhere have seen big increases in aid applications for the current academic year. But as the recession lingers and unemployment climbs, schools brace for even greater demand for aid during the months ahead.

And for families that suddenly find themselves with a reversal of fortune, it's critical to contact aid offices immediately to find out what resources are still available.

"I am concerned about the increase in demand for financial aid," says Vince Pecora, financial aid director at Towson University, which is preparing its 2009-2010 aid packages for 12,000 students.

Students eligible for Pell Grants, which go to the neediest of students, are up 30 percent over a year ago, he says.

Towson expects to give out $11.4 million of university need-based money to students during the next academic year, or 115 percent more than it did four years earlier. The university largely has been shifting money from merit scholarships to aid for needy students.

"We are robbing Peter to pay Paul," he says.

Signs of financial stress are showing up at the business and education schools at the Johns Hopkins University, where many students attend part time and work full time.

The aid deadline for the spring semester was Nov. 1, but there's been a 5 percent increase over last year in the number of students retroactively applying for assistance, says Laura Donnelly, financial aid director.

"They paid for spring tuition upfront and suddenly lost their jobs. The money they put forth, they now need to live on," Donnelly says. Students get a tuition refund, then turn around and pay the education bill with federal loans, she says.

And Donnelly says she's noticed that a handful of students filed for bankruptcy in recent months, something not seen before.

At College Park, appeals for aid are up 30 percent over a year ago. Some are from higher-income families who never have filed the Free Application for Federal Student Aid before and are learning to do so, says Sarah Bauder, director of financial aid.

"The face of the financial strain has taken on a new look," Bauder says. "It's hitting everybody."

During normal times, the College Park campus spends about $500,000 to help families that have fallen on hard times through a sudden illness, job loss or a parent's death. The college will spend about $1.5 million during the current academic year, and expects to double that for 2009-2010.

To raise funds for such emergencies, the school recently launched the "Keep Me Maryland" campaign to solicit money to keep students on the Maryland campus.

Financial aid counselors are on the front line, dealing with parents who are upset, panicked, angry - or all those things. The recent training at College Park was to prevent counselors from becoming less sensitive to distraught families, which some counselors acknowledged was happening.

"Redundancy often brings callousness. You hear the same story again and again," Bauder says. "For the person telling it, it's new to them. And so you have to be sensitive to that every single time."

Of course, don't expect much sympathy at any school if you earn well into the six figures, and spent every dollar and then some on everything but saving for your child's education.

Bauder's office didn't give more aid recently to an overextended family who lost a home after income fell from $2.1 million to $1.3 million. But the office is trying to do what it can for the family whose $48,000 income dropped to $17,000 because a parent lost a job. "They don't have any place to go," she says.

If your family finances change for the worse, contact the school's financial aid office immediately. You could qualify for scholarships, grants or subsidized federal loans that you were ineligible for before. Schools have their own money to help in emergencies, but these pools are limited and could be exhausted if you wait too long.

Federal Pell Grants, which were recently increased, as well as Stafford and PLUS loans, are available throughout the academic year, so you don't have to worry funds will run out, so long as you qualify.

For federal money, you need to fill out the FAFSA form, which added several more questions this year, including queries into whether a parent has lost a job and whether the student was homeless at any time.

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