Paying for College

College costs are continuing to go up as students are scrambling for ways to pay for it.  With the credit crunch forcing many banks and lenders out of the student loan business, the real price is being paid by the students who are finding it next to impossible to get enough financial aid and loans to fund their college experience.

Making matters worse is the dramatic drop in the amount of money in the Perkins pool.  U.S. News and World Report estimates that as many as 50,000 students who previously qualified for the low interest Perkins Loan will not be eligible this year.  This is sure to cut deep for those that need it most.  Perkins loans are historically given to only the poorest students and fall in the category of “exceptionally needy”.

Colleges such as Michigan State University and Maryland College have had to deal with a 25%-50% drop in available Perkins loans.   In many cases, colleges have started to cut off graduate students from getting the loans in an attempt to make more available for undergraduates.

The Perkins loan program has been criticized by Congress as not being fair.  This is in large part to the pool that was set years ago and has not been reset to account for recent enrollment.  This creates a situation where a student who can get a Perkins loan at one school may not be able to get the same loan at another with a smaller pool of money.  Federal Stafford and PLUS programs are seen as equal regardless of which school you attend.

In the end, it is just one more hurdle that students will face as they head off to college this fall.  Perkins loans are down, federal loans will be more difficult to obtain, and the private student loan industry has seen a rise in rates and a tightening of credit criteria.  In an attempt to address what many believed was a broken system, it seems that all that has been accomplished is making it that much harder to afford to get a degree.