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 September 27, 2007, 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

Emory Eases Loan Burden for Students

Emory University announced today the establishment of Emory Advantage, a program of financial aid initiatives that will help lower- and middle-income students and families reduce debt incurred during the undergraduate years. The changes will begin in the 2007-08 academic year, marking one of the most aggressive programs devised by any national research university to enhance accessibility and affordability.

"These new programs will make it possible for any qualified student to obtain the advantages of an Emory education regardless of family background or circumstance," says Emory President James W. Wagner. "We are especially concerned to address the particular needs of many middle-income families, who ironically make too much money to qualify for many types of financial aid, but who find themselves unable to afford four years of college education without incurring substantial levels of debt."

Under Emory's new Loan Replacement Grant, students whose families' assessed income is $50,000 or less will graduate with no need-based loans from their four undergraduate years. Emory's new Loan Cap Program will assist students from families with assessed income between $50,001- $100,000 by capping their total need-based loan amount over four years at $15,000.

"We believe that extending loan caps to families making up to $100,000 is rare, if not unique, among our peers," says Provost Earl Lewis. "Most other loan replacement or loan cap programs are aimed primarily at low-income students."

"We are committed to providing access to an Emory education for all students," says Wagner. "An important goal is to foster further excellence of our academic community with the inclusion of highly talented students who would not have felt able to seriously consider applying to Emory in the past."

The new Loan Replacement Grant will be available to students in all four of Emory's undergraduate divisions - the two-year Oxford College, the four-year Emory College, the Nell Hodgson Woodruff School of Nursing and Goizueta Business School. The Loan Cap Program will be available to students beginning enrollment in 2007.

In another initiative announced today, Emory is rolling out new Liberal Arts Scholarships for semi-finalists applying for Emory's long-time Emory Scholars Program, recognizing outstanding academic achievement, talent, leadership and community service among high school students. The Emory Scholars program began in 1979 as a result of the $103 million gift from the Woodruff Foundation; each year the university awards some 70 scholarships to outstanding entering freshmen, including Woodruff Scholarships.

Emory also will enhance its Dean's Achievement Scholarships, rewarding academic achievement, leadership and community service among current Emory sophomores, juniors and seniors who did not receive a merit scholarship coming from high school. "The opportunity to receive merit-based awards as a function of college performance is rare," says Robert Paul, dean of Emory College.

"We greatly value rewarding students for their ongoing excellent work in Emory College," says Thomas D. Lancaster, senior associate dean for undergraduate education and administrator of the program. The Dean's Achievement Scholars will be selected after the spring semester by a comprehensive selection committee comprised of faculty from across the university and alumni, says Lancaster. Those selected will become part of the Emory Scholars Program.

Once fully implemented, the University's investment in these initiatives will be about $7 million per year (in today's dollars). The university's Strategic Plan funds will support the new programs for the first five years. They will be sustained by reallocating existing endowment streams of approximately $150 million and by raising at least an additional $75 million in endowment by the end of those five years, says President Wagner.

Higher Education Reconciliation Act Expands PLUS Loan Program to Graduate Students

The new Federal Graduate PLUS Loan (Grad PLUS) is the biggest change in graduate financial aid in nearly 15 years. The Grad PLUS, a new loan option available to graduate and professional students, was created as part of the Deficit Reduction Act in February 2006 with loan processing effective July 1. The Grad PLUS Loan will allow more graduate/professional students better access to full education funding as the credit criteria is less stringent than for private education loans. Designed after the Federal Parent PLUS Loan, the Grad PLUS is different in that the graduate or professional student is the borrower of the loan, not a parent.

While the Grad PLUS is a great new opportunity for graduate students, its approval in February provided little lead time to the Department of Education, educational lending community, software system providers, and schools to implement such a comprehensive program prior to its effective date of July 1, 2006. As a result, the financial aid community and all of its many partners are still finalizing processing procedures.

Currently lenders are beginning to accept Graduate PLUS applications which will be held until the July 1^st effective date. Starting on July 1^st lenders will begin processing loan applications for approval. Over the summer Emory University’s software system provider will be releasing two software upgrades which will allow the Office of Financial Aid to process these loans. The last upgrade is scheduled for release during mid-August. If all goes according to plan, our office will begin to certify these loans at that time. Should you decide to apply for a Grad PLUS Loan, please know that we will make every attempt to have funds available to you by early September 2006.