Don’t Panic! How the economy should impact your college search


As markets continue their roller coaster ride while the candidates sling invective at one another’s financial bailout plans, I hear daily from people reacting to the financial situation as it relates to colleges.  On the college side, college administrators are concerned many of you will stay home, or at least closer to home than you might otherwise have gone.  For students, or more specifically, parents, there is a growing trend to rule out some colleges now on the basis of finances.

A study out today from the National Association of Independent Colleges, however, offers a more realistic picture.  That association is made up of the high cost private institutions.  A Dean of Admissions for a major public institution, such as myself, who was feeling less than charitable might mention that these are the schools most likely to have graduates with HUGE DEBT LOADS, but I wouldn’t stoop to that level (cue campaign music).  The study found that, while many schools had lost some of their student loan lenders, only 8.5% had trouble replacing those lenders.  They also reported a handful of students at most institutions facing financial difficulty, but reported that most found alternative payment plans or other funding sources to continue meeting their (incredibly inflated) tuition costs.

So how does all this impact YOU?  There are two big aspects to how the “crisis” can impact your ability to pay.  First, most of us with savings have seen those funds take a huge loss, so have less cash on hand to pay college bills.  Second, loans to make up that gap might be harder to get, and/or more expensive to pay off.

While I appreciate that families need to assess their financial situations in making their college choices, it seems a bit bizarre to me for students to be making up their minds already that some schools are out of reach.  We really don’t know what will be going on by the time those of you applying for college this year get your financial aid packages (for most of you that won’t be until March or April 2009), let alone when you need to make your commitment to colleges (May 1, 2009) or when you bills will start to come to (for most in early September 2009).   It’s entirely possible that the financial situation, particularly the availability of loans and their rates, will be very different by those dates.

So my advice:  don’t rule out any schools at this point based on their cost (even if those costs are ridiculously high from some of those other schools), especially before you see what kind of aid they might supply.  At the same time, it’s certainly worth making sure your mix of schools has some reasonably priced alternatives that you can be excited about.  Did I mention that, even for out of state students, Mason’s tuition is about HALF of the other D.C. institutions?  I did?  Oh good.  Be seeing you.

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11 Responses

  1. I think it’s also important to note that the economy ebs and flows and just because it’s bad now doesn’t mean it will be bad when you graduate. Don’t get me wrong, it’s important to be frugal, but the more people freak out and stop spending, the worse our economy will get. It’s important for us not to panic! The media loves to scare people, but my husband is searching for a job and there are plenty of companies hiring. He was just was approached about two opportunities yesterday.

    Don’t panic, your education is too important to waste.

  2. Would you have to fill out the FAFSA form to receive a merit-based scholarship from a public college such as… oh, George Mason? 🙂

  3. I am in a panic two kids in private college we lost our job,savings,stocks.Need loans to cover full tuition our income went from 25o,ooo to 0 we have down sized everything given up everything now what Fafsa won’t give anything because they base everything on last years fugures but all is now gone.What can we do?Help please any advise Oh ! we have perfect credit and no debt at all what we have we own the only debt we are willing to take on is the student loan debt.

  4. Very good question (although I DID tell you NOT to panic). Actually this should be resolvable without an abundance of stress. Contact the Financial Aid office – it is a routine matter for them to make adjustments based on recent income changes. That should clear up the FAFSA issue and allow you to rceive aid (and student loans) consistent with your current situation. For more details, try the finaid.org website – my colleague there, Mark Cantrowitz, is the nationally recognized guru for financial aid issues.

  5. I beg your pardon, but can you please tell me if FAFSA is necessary for ANY financial aid, or only need-based?

  6. Delighted to do so. At most institutions your merit based aid (scholarships) don’t require the FAFSA. There are a number of institutions that do, however, so be sure to check in with each institution.

    As for loans, there are a number of loans available regardless of need.

    My advice: Fill out the FAFSA – as with the post above, you don’t know what else might happen, and its a lot easier to work with the aid office if you information already went through the process.

  7. PLEASE D’ONLT PANIC!!! Yes, the FAFSA is based on the previous year’s income, etc HOWEVER…financial aid offices can take into account current year situations.

    If you visit the financial aid office homepage (http:financialaid.gmu.edu) under the “contact us” section is the listing of the financial aid counselors (we assign based on last name) And you can email or call and then they will walk you through what you need to do.

  8. Thanks for your great advice Dr. Flagel, but where have you been as of late?
    Oh I suppose you might have moved over… I thought you were going to post in both places for a while! You could at least write a blog pointing us towards where your new stuff is!
    We miss your insight!
    Thanks

  9. Read an essay by Victor Davis Hanson today and there was a section I was hoping you could comment upon. Here it is:

    “Universities raise tuition rates that exceed the rate of inflation. But in our brave, new no-failure world, why worry when more promised federal-guaranteed student loans and credits will ensure steady paying enrollment? With guaranteed federal money, why be concerned that colleges and universities are overstaffed with administrators, replete with centers and programs that have nothing to do with undergraduate education, and erecting Las Vegas-like student unions and colossal recreation centers?”

    —-

    The consensus among economists and policy experts seems to be we are in for a protracted recession. With that in mind, what should universities do to make college more affordable? Should they focus on more spartan campuses? After all, as cool as the new buildings at GMU are, they do have a price tag near half a billion. Should administrative staffs be reduced? (I know you would love the extra workload.) What – if anything – can be done to stop the rise of tuition? Because frankly I think tuition indefinitely outstripping inflation is simply unsustainable.

  10. My son is applying to graduate school for the up-coming Fall. He is a Mason Graduate. Is there a bias against accepting students who graduated from Mason into a graduate program? It would be a different department from the one he graduated in. Also do state residents have an easier time getting in?

    • Most institutions, Mason included, tend to be biased toward their own graduates. The exception is departments that receive far more applications, particularly from their own alumni, than they can accept. Most competitive departments don’t want to get so overwhelmed by their own alumni that they squeeze out highly qualified external candidates, so in general admissions committees will try to strike some balance. In other words, being an alumni may be a plus or a minus depending on that departments goals and the application pool received in any particular year.
      Mason has not historically had any bias for or against state residents. Over the past several years Mason has kept access to Virginia residents by increasing out of state enrollment, but the state situation has become bad enough that this may shift to limiting our Virginia enrollment, as the state has not funded our Virginia enrollment increases for some time. Decisions on the in state out of state mix at all levels are still being discussed, and I have heard from colleagues across the country that their public instittuions are having very similar discussions.

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