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As College Acceptance Rates Increase, Affordability Does Not

As College Acceptance Rates Increase, Affordability Does Not

It’s among the most stressful (and joyous) times of the year: college acceptance season. April is the season of acceptances, wait lists, and campus visits. It’s also the season of financial aid packages. With the tuition at some elite colleges now north of $40,000, when you bring together tuition, books, room, and board, almost no one can afford to go to college without some sort of financial aid.

And yet the financial aid system is incredibly complex. In general, three kinds of loans are available. Federally guaranteed loans made by banks and other lenders have interest rates that are both set and fixed by the federal government. Other loans can come directly from the government, as with Stafford loans. Here as well, interest rates are fixed and set by Congress. Students can also take out private loans, like loans for a car or any other large purchase—but these private loans have no extra protection.

This private-financing college loan system has recently come under scrutiny, first during the financial crisis as attention shifted to predatory lending practices in the mortgage industry and then in 2009 when Congress expanded federal aid to students. Last month brought a new development: The Consumer Finance Protection Bureau will now collect complaints from borrowers who have these private student loans, much in the same way that the Department of Education has an ombudsman to handle complaints from borrowers with federal student loans. This change is a direct result of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010.

Protecting students from predatory lending practices by private lenders is critical to maintaining a healthy system of higher education. It is also critical to keeping young adults out of poverty: The class of 2010 saw two-thirds of its members graduate with debt, averaging $25,250, and unemployment among recent college graduates is around 9 percent.

No student, though, should have to shackle him or herself to a mountain of debt just to go to college. So, to all you soon-to-be-college-freshman out there (and to your parents): First, congratulations, and second, know what you’re getting into—research your options, and consult with counselors and others who can best help you understand the complexities of the system. More information on college loans is available from the New York Times.

Image courtesy the St. Louis Post-Dispatch

Published: 4/03/2012

Categories: Social Justice
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