The Economic Downturn: How does it affect student financial aid?
A statement from the Director of Financial Aid
The downturn in the economy is increasing the interest in and the need for additional financial aid. We certainly understand that families may be facing difficult and uncertain financial times. The university remains committed to increasing accessibility for students who wish to pursue an Emory education through the Emory Advantage program, need-blind admissions and meeting demonstrated financial need for dependent, domestic, undergraduate students.
In 2007-08 more than $155 million in Emory-funded financial aid was provided to undergraduate and graduate students while funding from federal programs exceeded $111 million. Our university programs remain sound and we are exploring alternative options for families with exceptional circumstances.
Student Loan Market Remains Accessible but Tight
The University administration is watching the economic climate carefully and providing proactive input into the federal process as well. Specific to student lending, this past year has been a challenge.
A number of lenders participating in the Federal Family Education Loan Program (FFELP) have exited the market due to increased participation costs and poor market conditions. Borrower benefits and incentives such as reduced interest rates, fee waivers, rebates and default fee payments on behalf of borrowers are not as they once were.
In general the cost of borrowing is greater as compared to prior years. Private loan borrowers considered high credit risks may be required to obtain credit worthy cosigners, pay higher interest rates or face loan denials as the market tightens. During 2008 we communicated options to many students affected by lending market changes and will continue to do so throughout the 2009-10 cycle.
Congress Acts to Provide Continued Access to Student Loans
Although the pool of lenders has shrunk and costs of the program have increased, Congress introduced legislation to ensure continued access to student loan programs. This legislation (Ensuring Continued Access to Student Loans Act) signed by the President on May 7, 2008, instills liquidity into the student lending market and allows the Department of Education to purchase FFELP student loans.
A number of non-profit lenders are using the Department of Education’s mechanism for funding loans as access to capital becomes challenging. President Bush signed legislation which extends the authority for the Secretary of Education to purchase student loans to avoid any uncertainty of access to loans. Although a few delays have occurred with student loan disbursements here at Emory the overall program has been successful. Keep in mind that not all lenders are using this funding mechanism.
The recent $700 billion economic rescue package also gives authority to the Treasury Department Secretary to intervene in the student loan market. The authority is expansive and applies to the intervention in the market to prop up both FFELP and private education loans. The financial aid community is optimistic that the first piece of legislation mentioned, Ensuring Continued Access to Student Loans Act, will continue to be effective in providing access to student loans and the latter option may not be needed.
We do expect the Federal Stafford Loan and Parent /GRAD PLUS loan programs to remain options for many given the legislation noted above.
Prepare Early, Carefully Weigh Options
With the 2009-10 academic year approaching, students should apply for financial aid early so that we can provide the best review and financial aid package possible. Any changes in family financial circumstances should be noted and documented during the application cycle. Families are encouraged to be creative and review external scholarship sources as well as consider part time student employment possibilities.
Financial aid application information can be found at http://www.emory.edu/FINANCIAL_AID and advisors are available to assist families throughout the process.
---Dean Bentley, Director Emory University Office of Financial Aid