The Credit CARD Act of 2009 went into effect on Monday. Among many of the components of the new law, it restricts student access to credit cards. I wrote a column on it this week in the DP.
“When I heard that Congress had passed legislation to protect students from overwhelming debt, I assumed it could only be a good thing. The new federal regulations, which went into effect yesterday, will make it harder for credit card companies to market their product to college students.
It all seemed too good to be true. Over the past couple years, we have watched universities compete to give deserving students more money than their peer schools were. School after school (including Penn) announced massive loan-free student aid programs that promised to help socioeconomic groups that couldn’t afford private colleges in the past gain access to some of the most elite institutions in the country.
Turns out that it may, indeed, be too good to be true.
According to a recent USAT article, the economy is forcing some of these universities to pull back. After cutting across the school, laying off staff and shutting down libraries, it may be time for these universities to finally cut from (or at least stop expanding) financial aid.
Yale University — that Yale, where the Bushes went; that Yale, with the Mr. Moneybags-sized endowment; that Yale, with Skull & Bones and Josh Lyman and Rory Gilmore and some of the most intelligent, entitled characters in pop culture — has announced that, due to a deficit of over $100 million, it will be cutting core academic programs and lay off staff as the university re-evaluates its budgetary needs.
I have to admit it, I was kind of shocked when DP Executive Editor Rachel Baye forwarded me this news alert. Yale has always seemed golden, untouchable; its endowment, despite losing over $5 billion, was still valued at $16.3 billion. While the economy severely damaged endowments across the country, I honestly thought that “no more hot breakfasts at Harvard!” would be the worst tangible, layman effect we’d see at the Ivies. I know, I live in an elitist bubble.
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Last year, as we all know, was the Worst!Year!Ever! in terms of the economy, so it shouldn’t come as much of a surprise that alumni giving to colleges and universities fell 12 percent last year to an all-time low, as InsideHigherEd (and many other outlets) are reporting.
The sum total given was still pretty big — 27.85 billion — but like most trends in higher education, the economy, and life, a highly disproportionate amount went to the wealthiest institutions. Representing only 1.9 percent of those surveyed, the 20 wealthiest schools received over a quarter of the gifts.
One of the toughest numbers is the drop in capital gifts. This category, which includes buildings and gifts for the endowment, was down 25 percent. Considering many schools (including, it must be noted, Penn) kicked off ambitious, highly publicized capital campaigns in 2006 or 2007, let’s wait and see how these projects fared individually in 2009.
Last year, college and university endowments lost 18.7 percent last year, on average.
This return is actually better than returns in other industries. According to USAT, “the widely used S&P 500 was down 26.2% over the same period, the 12 months ending last June 30.”
The report, which was released today, was created by Commonfund and the National Association of College and University Business Officers. It is based on a student of 842 colleges nationwide.
While no increase has so far matched or exceeded U. Chicago’s epic 42-percent increase, other schools are showing huge jumps in admissions numbers. At Penn, a record-breaking number of apps led to a 17-percent jump, Princeton and Brown also saw huge surges.
Bloomberg has schools crediting the jump to savvier marketing and outreach campaigns, but I’ll bite: It’s the economy, stupid. A financial-aid award of a few extra thousand dollars could make or break a decision, and my guess is students are trying to see which schools can give them what. If any message has gotten out, it’s that the top schools can actually be more affordable than second-tier schools once you factor in aid awards. I’d love to see which demographics increased — the traditionally underrepresented groups, both socioeconomically and culturally, or the suburban kids whose parents now suddenly want them to apply for aid.
Where do you guys think the increases occured?
The economy is keeping freshmen up late in their extra-long twins this year, according to an article in the NY Times. In a survey conducted annually of college freshmen, the Class of 2013 is collectively painting a pretty dire financial picture: More students are reporting that their fathers are unemployed and fewer were able to get jobs in high school (an indicator of economic hardship, as most teenagers get temp jobs), which means that they’ll have to take out more loans to pay for schools. This year, 53.3 percent of students took out loans — the highest in nine years — and almost 50 percent said that financial-aid awards played a major role in their choice of college. Looking ahead, the ability to land a good job factored heavily into their decisions.
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It’s really easy to make the people who make the tough decisions into the bad guys. And, in a tough economy, it happens more than ever. Mid-level bosses around the country are laying off employees to stop their companies from going too far into the red. CEOs around the world are shutting down entire branches so they don’t have to declare bankruptcy. These are the faces angrily pasted on dartboards in employee break rooms.
Sometimes it’s easy to forget that difficult decisions are just that — really difficult. While the media, the faculty and the students turn the administrators of the University of California system into villains, this is something worth considering. The heads of (arguably) the best public university system in the country don’t want to increase tuition. They don’t want to furlough professors. They certainly aren’t happy to see libraries shut down and department lose funding. But they have to do something. Let’s face it: Balancing a budget sucks.
As we reported last week, The University of California system increased tuition by 32 percent to make up for a large gap in the budget. Student response to the decision has been overwhelming.
Graduate students at Illinois’ flagship university have been on strike since Monday, but that may be coming to a close, the Daily Illini reports.
The grad students are striking over tuition-waiver security. The most recent language in the school and unions’ bargaining guaranteed tuition-waiver security for in-state graduate students in good standing but didn’t have any language for out-of-state students.
The University believes that students and the school are essentially on the same page, and that the dispute will be resolved soon. Grad students have withheld labor, including attending classes, leading recitations, grading papers and being in contact with their students since the strike began.