It started last year, but it will accelerate this year for sure. An Inside Higher Education article from September pointed me to reports from the Department of Education that shows, among other things, that applications for financial aid rose 16% in 2008 over 2007. Perhaps it was started by the credit crunch that impacted private student loans in April 2007. (See Borrowing for College Just Got More Expensive). Whatever the cause, the surge started before the difficult year in which we are now experiencing.
Since September 2008, when the financial crisis turned from alarming to severe and then critical, families have been expressing exasperation and despair over the difficulty of meeting the rising cost of college. Even as demand surges from graduating high schools, colleges will feel a resurgence of financial aid applications as parents grasp for ways to meet high cost of college.
California was among the states with the highest increase in financial aid applications, with a 19.8% increase.
What does this suggest for the 2009-10 school year, whose applications will be submitted in the next few months? With the home and stock market meltdown doing serious damage to family balance sheets, I would expect the number of financial aid applications to increase even more.
But perhaps more important to families, how will the schools respond this year? Who will get the aid? What will the effect be on private colleges? Opinions are welcome. I have my own, and they may surprise some.
Students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.
This last fact is lost on so many families. The largest amounts of financial aid dies not go to those in greatest need, but rather to the families that the schools want.
Many of the families with whom I work are feeling the pinch described in this study in a big way this year. But there ARE ways to ease the burden by knowing how the game is played and what financial techniques will reduce costs.
Here's the New York Times article: College May Become Unaffordable for Most in U.S.