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.

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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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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?

One of the perks about graduating is that my father who is a CPA doesn’t I don’t have to fill out a FAFSA this year for me. The form, which is used by colleges and states to determine student/family need when doling out aid, used to be quite a long and involved process. One of the most frustrating aspects for my CPA father me was the fact that it often required the re-entry of information that he I had already filled out for tax returns.

Luckily, the Department of Education recently released a new, streamlined FAFSA. Most critically, they simplified the instructions and made it more user-friendly, which is critical because many of the highest-need applicants are the ones whose parents are the least computer-literate.

If you’re attending college next year, be sure to go here to fill out the FAFSA and see if you qualify for aid. Deadlines vary by school, but most are in February or March. Good luck!

In its latest issue, Newsweek tackles a question I’ve been seeing posed quite frequently lately: Can college be completed in three years?

Lamar Alexander, a former senator and education secretary, argues that a three-year degree would be a beneficial option for some students, given the financial costs of a four-year program and the archaic nature of the school calendar (which was set back in the day when students needed to take time off and work on the family farm). Then, a panel of education profs and college presidents, including Columbia’s Lee Bollinger and Penn’s Professor Robert Zemsky, debate the potential pluses and minuses of the three-year plan.

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The literal cost of higher education has been in the news a lot recently (wait till you see my next post), and today, the College Board released a study detailing the dollars and cents of higher education in 2009.

The bad news is that the bottom line has gone up. College costs outpaced inflation again, with public-school costs rising 6.5 percent and private schools increasing by 4.4 percent, despite the fact that the economy deflated last year. Bad, right?

Not so fast. The actual answer, which the College Board acknowledges, is a lot more nuanced. Through aid programs, the costs to students and parents has actually decreased. For instance, in the past five years, costs have risen by 15 percent at private schools and 20 percent at public schools, but consumers are paying, on average, $1,000 less than they would have in 2004-2005. The way I’m reading it, too, the College Board is only counting grant (gift) aid, and not student loans (which students have to pay back plus interest). The findings raise questions with kind of complex answers (like, if students are paying less then why can’t colleges just charge less) but nevertheless, I think it’s something to cheer about.

According to the Seattle Times this weekend, “Hundreds of students who planned to attend community college this fall haven’t yet received the financial aid they need for tuition and expenses.”

According to Washington’s Higher Education Coordinating (HEC) Board, applications for financial aid for state community colleges and universities are up 23 percent. In fact, it has done so much as double in some schools. As a result, colleges across the state are still processing financial aid application — four months late. This has prevented hundreds from being about to pay for their community college’s tuition and textbooks. 

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The Chronicle covered a discussion at the libertarian Cato Institute today, where one scholar, Neal McCluskey, had an, ahem, interesting solution to the rising cost of tuition at college: Kill all federal financial-aid programs.

Yes. By cutting off support to students, the costs of college will go down. That logic makes so much sense.

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For college administrators and financial-aid officers, a concern when distributing aid is whether or not said student will be able to complete his/her education. There’s a new report shedding a little light on how to structure and advertise that aid.

A new report (well, it’s a report reporting about other reports) that looks at which aid programs work best to motivate and reach low-income students says that it’s the simplest that work best, particularly at large state schools. For instance, for all the flack the maybe-soon-discontinued HOPE scholarship in Georgia gets — critics say the solely merit-based program favors upper-middle-class kids who don’t need a scholarship — the study finds that it’s one of the easiest to advertise and make real for high schoolers from lower incomes, and pretty successful.

The Chronicle’s got a great look at the possible end of merit aid at state universities. The scholarships are the source of quite a bit of controversy: Pro-merit-aid people see it as a valuable way to keep high achievers in state, increasing their likelihood of getting jobs and fueling the state economy; others see it as taking away from students who need the money to go to college, period.

It’s an interesting conundrum, and as things develop we’ll keep you posted.