Student Financial Aid News

The Orion:

California’s budget still hasn’t been finalized, but Schwarzenegger is proposing to cut funds for higher education by $312 million. Lawmakers are working with a budget that reduces the cut to $215 million, according to Inside Higher Ed, a news Web site for higher education resources.

The dramatic cut in funding would make California’s community colleges unable to accommodate classes for more than 50,000 students - and 18,500 would not receive financial aid, said Diane Woodruff, chancellor of the California Community Colleges. Several thousand California State University and University of California students will be affected, too.

Commentary

Higher education budget cuts to any state running a deficit are nearly inevitable. Students, parents, families, and financial aid professionals need to be prepared for significant decreases in state government aid. If you’re a student receiving any serious amount of financial aid from state-funded sources, you absolutely, positively need to be hunting down scholarships like crazy, right now and throughout the school year.

If you’re a financial aid administrator at a state-funded school, be prepared for cutbacks, and consider the radical step of teaming up with the development office to solicit additional contributions from alumni and donors specifically for financial aid that you can administer directly at your institution.

Scholarship of the Day: Anne Ford Scholarship Award

The Anne Ford Scholarship is a $10,000 award given to a high school senior with an identified learning disability (LD) who is pursuing an undergraduate degree. The deadline for application is December 31. The ideal candidate is a high school senior who has faced the challenges of having a learning disability; is committed to completing a college degree and setting career goals; has demonstrated perseverance; embraces new opportunities; has a well-rounded perspective shaped by experiences in school, in the community, and with family and friends; understands how LD affects his/her life and recognizes the importance of self-advocacy; believes in contributing to society in a way that increases the opportunities for individuals with learning disabilities; and will feel comfortable serving as a role model for others who struggle with LD.

Details and application located here.

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Reminders
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+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Open an FDIC-insured savings account today!
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ Graduate student loans at GradLoans.com
+ Private student loans available at any time - visit AlternativeStudentLoan.com
+ Private student loan consolidation at StudentLoanConsolidator.com
+ FAFSA form tutorials and free help at FAFSAonline.com
+ Get FAFSA news at the FAFSA blog

+ The Financial Aid Podcast is a publication of the Student Loan Network.

I want to hear from you! Email me at financialaidpodcast {at} gmail {dot} com, visit http://www.FinancialAidPodcast.com, or call 206-350-1208.

Looking good!

Let’s see what Student Loan Network sites you can find using common student loan terms.

Parent PLUS loans:

Stafford loans:

Student loan consolidation:

Not bad - a few of our other services aren’t the Chrome-recommended choice, but glad to see a good number of our sites as recommended choices in Google’s new Chrome browser.

Other first impressions - this thing is FAST. Very snappy, much faster than Firefox or IE in my Windows XP installation. I got a kick out of the titles in the preferences:

It’s a great metaphor that gives a clear mental image of what’s about to open up.

Other neat things - it comes with Google Gears pre-installed, but Google didn’t auto-approve their own sites, which is nice. It also doesn’t come with Flash built in, but it does download the plugin and install it without a browser restart, which is also nice.

This I thought was kind of weird:

You can report to Google broken web pages. I wonder - if enough people report, does Chrome ignore the site? Change its recommendations? Inquiring minds want to know.

Other fun stuff - check out the stats!

And finally this interesting tidbit - Google Chrome can create applications on your desktop of web apps, making them function like regular programs on your computer.

Kudos to Google for this release.

Did you enjoy this? If so, please consider subscribing for free to get it delivered to you. Subscribing for free means you don’t have to remember to download it every day.
+
+
+

Reminders
+
+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Open an FDIC-insured savings account today!
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ Graduate student loans at GradLoans.com
+ Private student loans available at any time - visit AlternativeStudentLoan.com
+ Private student loan consolidation at StudentLoanConsolidator.com
+ FAFSA form tutorials and free help at FAFSAonline.com
+ Get FAFSA news at the FAFSA blog

+ The Financial Aid Podcast is a publication of the Student Loan Network.

I want to hear from you! Email me at financialaidpodcast {at} gmail {dot} com, visit http://www.FinancialAidPodcast.com, or call 206-350-1208.

This is economics 101. Supply and demand are inversely related to each other. As supply increases, demand diminishes. If there’s little supply but a lot of demand, the price to buy is high - the purple arrows. If there’s plenty of supply but little demand, you may actually have to pay people to take your stuff.

If there’s little supply but no demand, prices stay low. If there’s lots of supply and lots of demand, price will follow whichever is higher - more supply than demand means lower prices, more demand than supply means higher prices.

Examples

If everyone wants a Nintendo Wii for Christmas, and there are fewer Wiis than there are customers, the price can go up until you reach the point where it’s only affordable to as many people as there is supply. The higher you raise the price, the fewer people who can buy it, until price and supply are in equilibrium.

If you try to sell blades of grass, you have a giant supply but almost no demand. Who wants a blade of grass? As a result, not only can you not even give away your blades of grass, you may actually have to pay people to take them, which is the blue line on the right side of the chart.

If you are trying to figure out why college cost so much, it’s because we’re on the left side of the chart, low on the green line. There’s a lot of demand for college, and not a lot of supply. Look at the admissions statistics for this year. Competitive colleges accepted fewer students than ever. Demand for a college degree is high and increasing as our economy changes from a manufacturing economy, where a high school degree was more than enough to get you through life, to a knowledge economy, where a college degree is a basic prerequisite for many jobs.

As a result, with not a lot of supply but a lot of demand, tuition prices are high. As demand increases but supply doesn’t keep up, tuition prices get higher.

How to lower the cost of college

Logically, there are two ways to alter the price of a college education, then - reduce demand or increase supply. Right now, the market - you - is saying that college is worth paying for, largely because the job market creates demand for a college degree. The price of college will continue to increase until a certain percentage of the population can’t afford it, at which point demand would be in equilibrium with supply.

Financial aid makes college more expensive

This is why financial aid is actually making college tuition prices worse, believe it or not. Financial aid alters demand - the more money available in financial aid, the more demand there is. A college that costs $10,000 without financial aid still costs $10,000 with financial aid - the financial aid just comes out of taxes or from student loans that borrow from a student’s future earnings.

At the same time, colleges aren’t easy to create or run. They’re big things, with buildings and professors and all those capital costs. As a result, supply isn’t easy to create.

As a result, prices go higher because demand is outrunning supply. If financial aid didn’t exist, there would be far fewer customers for colleges (lower demand) and colleges would either have to accept a much smaller student body or lower prices until demand rose to equal supply.

Financial aid makes college cost more because it increases demand and does not change supply.

How to lower the cost of college, part 2

The second way to lower college costs is to increase supply. If supply increased to exceed demand, prices would come down.

Fundamentally, the lesson is this: until supply increases or demand decreases, college will continue to get more expensive. As our economy continues the transition to a knowledge-focused economy, the demand for higher education will continue to increase, so if a large number of citizens educated well is a national priority, the most rational choice is to increase supply. If a large number of citizens educated well is not a national priority, then the rational choice is to eliminate financial aid and let the market - the basics of supply and demand - re-price college.

What does this mean for you?

As we head into election season and proposals of all kinds are thrown out about how to make college more affordable, now you know the question to ask - will this increase supply or decrease demand? If a proposal doesn’t do one or the other, it’s not going to work, no matter what the politician says. Throwing more money at the financial aid system will increase demand without an increase in supply, so beware of candidates who propose that solution.

Distance learning and online learning stand the greatest chance of reducing the cost of a college education because they can create supply faster than building a physical college. It doesn’t matter whether a professor has 1 student or 100,000 students watching a pre-recorded video - the cost of that professor’s time is the same, especially if colleges continue the trend of using graduate students and adjunct faculty for administration and testing.

How can you make college more affordable for yourself? Simple. Because a college degree is in demand, lots of people are trying to get them. Back to supply and demand - if supply is outpacing demand, then the value of the supply goes down. If more and more people have a college education, every additional graduate diminishes the value of the degree if demand doesn’t keep pace. As a result, this means that having a “name brand” degree from a “top college” really doesn’t mean much outside of a few limited circumstances. Having a degree is what matters.

This means that getting a degree from a lower cost college i