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The financial pinch is not exclusive to Wall Street, as students at colleges and universities across the country are discovering. College students may find they are offered less in their financial aid packages as a result of the economy.
Much of the financial aid students receive is generated from endowments, and as the economic crisis affects these endowments, colleges have no option but to offer students less money. While student loans at the University of Maine are secure for the current semester, availability of loans in coming semesters may be questionable.
“For the spring semester, financial aid and loans are as available as they were for fall for students who already have it. However, what we are finding is we’re running out of options, because students may have borrowed as much as they can, and in many cases parents are unable to borrow also,” said Peggy Crawford, director of the office of student financial aid.
Students receive financial aid by filling out the Free Application for Federal Student Aid by March 1, produced by Federal Student Aid, an office of the U.S. Department of Education. Filling out the form guarantees that all eligible students benefit from federally-funded or assisted financial aid for post-secondary education. Once UMaine students submit their forms, they can view the status of them on PeopleSoft, a new function of the Office of Financial Aid.
Many students are offered work study as part of their financial aid package. This is also being affected.
“Specifically with work study, we have more students using more work study dollars faster, so we can’t add more, because we don’t have the work study funds to increase that. In past years we could have, but minimum wage went up. More offices and departments are relying on using work study as office budgets get whacked,” Crawford said.
Michael Montgomery, associate professor of the school of economics, acknowledged the financial pressure felt by college students.
“Student funding depends on state monies and federal monies allocated to the states, both of which are negatively affected by the downturn,” Montgomery said. “There will therefore be increased financial pressures on colleges, universities and their many students who rely on funding from state and federal sources, likely lasting for one to three years, at least,” he said.
Students may be affected by the financial crisis for a few more years.
According to Montgomery, the bailout package likely to become law in the next month could help, if sufficient funds are allocated for education.
“Still, students are far from the front of the line in this pork-stricken bill, and it is doubtful that enough funding will be made available to compensate for the large amount of funding available a couple years ago in credit-easy times,” Montgomery said. “Students and the universities that serve them should prepare themselves for a bumpy ride financially.”
The demand for financial aid is likely to increase. How much is not yet known. In coming weeks, the Department of Student Financial Aid will be planning for the next semesters in the coming weeks.
“As far as financial aid for next year, we’re meeting during the first part of February with the folks in Alumni Hall to see what the projected costs and fees will be for next year, and then at the end of February another meeting will be held to figure out what funds will be available to students for financial aid,” Crawford said. “I’m a little worried about what’s to come.”
According to Philip Trostel, processor of the School of Economics, “In an economic downturn, almost every sector is hurt to some extent, including financial aid for students. But the pinch felt on financial aid is probably about average – maybe even less than average. The weak performance in the stock market has hit university endowments, and much of the fall in state government revenues is being passed on to higher education,” he said. “Thus, there will be somewhat less funding for higher education, including that used for need-based aid. But most financial aid comes from federal programs, and to my knowledge these will not be affected.”
UMaine students have options that could save them money. Crawford advises creativity in planning class selections.
“One thing that could be considered is to take courses at another campus, such as Augusta, where the tuition is cheaper, and have them transferred back here. This is a way students could get financial aid from this campus, but use it toward a class that it is cheaper at another campus, as long as it transfers,” Crawford said.
While students may be worried about their financial aid packages, work is being done to find solutions.
“On the positive side, the institution is looking at these situations, not just the Office of Financial Aid. The institution is trying to help students because they recognize it’s a problem too,” Crawford said.
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