The recent downturn on Wall Street was bound to hit home sooner or later. As the credit crisis stretches on, the interest rates on student loans have begun to creep upwards. Student loan interest rates, which traditionally hover around 11 to 12 percent, are now around 13 to 14 percent. This seemingly small jump in rates can cost students up to $10,000 during a 20-year period. Sallie Mae, the largest provider of student loans, has been slowly but surely raising its interest rates, affecting a large portion of college students. The good news is that many government-funded student loans have fixed rates, so your loan should be safe from any interest rate hikes.
AU's administration has taken some short-term steps to shore up its financial situation by restructuring more than $100 million in university-owned bonds. Despite the recent financial tribulations, AU administrators still say they will provide the same amount of scholarship money next year as they did this year. We can only hope that they meet this promise. Still, if the amount of scholarship money stays the same but tuition increases - as it has been consistently - then this is still a reduction in financial aid offered. In general, AU needs to ensure that it has a detailed plan for whatever the future may hold. After last week's 778-point drop in the Dow Jones Industrial Average, it is time to shutter the blinds and prepare for the worst. It is our tuition money that is being invested, and rather than see it squandered on bad investments, it would be nice to see some come back to the students in the form of financial aid.
On a more optimistic note, the federal government has responded to the current crisis relatively quickly. A recently passed bill, The Ensuring Continued Access to Student Loans Act of 2008, has increased the amount of money available to students in the form of Stafford Loans and has increased the amount of federal money available to students. While this bill is a good step forward, it also raises questions about college affordability in general.
This election could have been a great opportunity for either candidate to talk seriously about college tuition reform. Unfortunately the recent economic crisis has drowned out any of the limited discussion that was going on. Ironically, the very crisis that has diverted attention away from college tuition reform is making it all the harder for us to pay for college in any capacity. What's the bottom line? It looks like we will all be tightening our belts for the foreseeable future.
