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Financial Aid Dries Up as Recession Takes Toll

5 years ago
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A number of colleges and universities are cutting back on financial aid to students, just when the need is greatest.

The New York Times reported on Wednesday that Reed College, a private school in Portland, Ore., with 1,300 students, turned away more than 100 applicants simply because they would need to draw from a financial aid pool that was already pushing its limits.

With the cost of higher education reaching $50,000 per year or more at a large number of private schools, many -- if not most -- students require some financial assistance, whether through loans, grants, work study programs or some combination thereof. There are also federal and state grants available to help students pay tuition, but those are not tied to specific schools.

Reed College, like all but a few schools, sometimes gives admission preference to students who can pay full tuition. And that's what has been happening in the current recession. Additionally, with more students competing to get into prestigious colleges in recent years, and colleges hitting maximum enrollments, more students are put on wait lists. Because schools' financial-aid coffers are so tapped out, wait-listed students who can pay full freight are likelier to be admitted than those who can't.

The recession has proved to be doubly problematic for schools -- as their budgets tighten, schools around the country have reported an increase in financial aid applications. A survey in February found that 69 percent of financial aid offices received more requests this year than in 2008-2009.

Financial aid offices also have been hard-pressed to meet the increased need from current students. Because many schools reevaluate financial aid packages if a family's circumstances change, there is greater demand on financial aid allocations before new students are even considered.

"We had so many of these people (who needed additional aid)" the aid director at Reed College, Leslie Limper, told The New York Times. "We had to say, oh my goodness, we can't offer aid to everyone who needs it."

A survey released on Tuesday by the National Association for College Admission Counseling found that 71 percent of high schools have reported some students foregoing their dream schools for more affordable options.

Also, nearly 60 percent of the 658 high schools that completed the survey said more graduating seniors were planning to enroll in public colleges, compared to 2008. Thirty-seven percent reported more students enrolling in community colleges, presumably to save money.

"Parents and students just had the conversation that `You're going to have to go to a state school,'" Barbara Gajewski, a college admissions counselor at Vestavia High School near Birmingham, Ala., told The Associated Press. "They didn't even want to look and take a chance, even though we counsel them the colleges will do their best to make it possible. But they didn't want their kids to end up with loans."

At the few schools which admit students based on merit alone, without regard for their ability to pay, significant fundraising has been needed this year.

Tufts, for example, which based admissions on merit for the graduating classes of 2011, 2012 and the early acceptance class of 2013, launched a program in early April called the "Students First" challenge in which an anonymous donor matches all gifts of financial aid over $7,500, The Tufts Daily reported.

Alumni responded to the appeal, but the amount raised was not enough to allow Tufts to continue its merit-based admissions policy for the entire class of 2013.

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