New grant programs. Higher interest rates for student
loans. A permanent tax exemption for 529 savings plans. In the
college financing arena, the hottest trend in 2006 seemed to
be change itself. A little tinkering here. Some sweeping
overhauls there. What it all means depends on your personal
circumstances. But no matter where you are today -- whether
salting away money for your toddler's future higher education
or working nights to foot the bill as a cash-strapped
undergrad -- it's worth reviewing this year's most important
changes and trends in the college money game.
Tuesday November 28, 6:00 am ET
Debt and rising costs
Tuition at both public and private institutions continued to
climb at a pace that outstripped inflation for the 2005-2006
academic year. According to The College Board's annual report,
Trends on College Pricing, the tab at four-year public schools
rose 7 percent to $5,491. At private four-year colleges and
universities, costs increased nearly 6 percent to $21,235. But
as any college student -- or any parent saving for their
youngster's future education -- knows, these most recent
increases are just part of a long, on-going ascent.
No wonder, then, that student debt emerged as this year's most
pressing focus for reform. Colleges, consumer groups,
lawmakers, lenders and even Secretary of Education Margaret
Spellings called for solutions to debt relief. Consider this:
In 2004, the latest year for which data is available, two out
of three students graduating from four-year colleges had debts
averaging $19,200. In 1993, fewer than half of all grads left
school with debt and it typically ran $9,250.
This year, The Project on Student Debt, a nonprofit policy
research group based in Berkeley, Calif., led much of the
effort to reduce post-college debt loads. With the support of
higher education groups and lenders, the group formally
petitioned the Department of Education to make five reforms.
Proposed changes include simplifying deferment applications
for individuals who need to temporarily suspend loan
repayments due to hardship situations, limiting student-loan
payments to a manageable percentage of an individual's income
and shielding borrowers who suffer hardship from high interest
rates. It also seeks to have remaining debts canceled for
borrowers in hardship situations who've made regular payments
for two decades.
While it's unlikely the Department of Education will enact
every proposal as written, the federal agency does have the
power to make reforms without an act of Congress. That means
there's potential for some lightning-quick changes, at least
by Washington, D.C., standards, says Robert Shireman,
president of The Project on Student Debt.
Source: http://biz.yahoo.com/brn/061128/20066.html?.v=1
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