Monday, March 24, 2008

Is the Economy affecting College affordability?

Unless you've been living in a cave or under a rock for the past few months, you've probably realized that we are in the midst of an economic crisis, most notably with mortgages but also with credit and the stock market.  While I am aware of the economic crisis, I haven't noticed my lifestyle change all that much in the past 6-8 months.  But, as a recent college graduate and soon to be graduate student (hopefully), my major expense is my student loans, and this made me wonder if the current economic crisis is really affecting college affordability.  I mean, gas and groceries cost more these days, but does college?  

A quick search of the New York Times website led me to an article in from March 15.  The article covered Secretary Margaret Spellings' testimony to the House Committee on Education and and Labor.  In her testimony, Secretary Spellings assure the Congress that the Department of Education would be ready to meet the demand for student loans if banks and private lenders should find themselves unable:

"Federal student aid will continue to be available,” said SecretaryMargaret Spellings, testifying before the House Committee on Education and Labor. Although a “small number” of lenders have stopped making loans in the federally guaranteed program, she continued, “other lenders have stepped in to meet student needs.”

Facing tough questions, at times, from lawmakers, Ms. Spellings said the Education Department was monitoring market conditions and collecting information from colleges to find out whether their students had been unable to borrow. She said that, if necessary, the direct-loan program, through which students borrow directly from the government, could double the amount of new loans to student borrowers.
While Ms. Spellings did assure Congress that loans would be available, the one thing the Bush administration has taught me is that I should never believe anything a Bush appointee says.  Really, I question everything the administration says or does.  So of course, I wonder how ready the Treasury Department and the Department of Education is to really handle the imminent lending crisis. 

On the positive side, however, we here at GW shouldn't have to worry too much about it.  According to a recent Kiplinger's Personal Finance study, GW is ranked among the top 50 best values in Private College.   
Regarding GW's cost, the editors write, "Financial aid for students who qualify either for need-based or merit assistance brings the cost to a much more doable $32,000." GW will provide $118 million in institutional financial assistance for undergraduates in 2008-2009.
Interestingly, the article did not note how many students pay only 32,000 a year for a school who made last year's City Paper as the most expensive university in the country. Hopefully for those students paying the full $50,630, Secretary Spellings was correct about the readiness of the government to help. 


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