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The price of admission: Low-income college students bear big burden–particularly at tech schools

For Cassandra Habhegger, paying for school isn’t always easy.

The 24-year-old Southeast Technical College student and single mother of two young boys is in her third year studying nursing. Considered a low-income student for financial aid purposes, she receives thousands of dollars in state and federal grants to help her pay for college. She also works part-time and has some financial support — as well as moral support — from her parents and family.

Despite these resources, Habhegger has had to borrow. A lot. She has paid off the one private loan she took out early in her academic career, but when she graduates, she expects to have borrowed around $25,000. Even with a good-paying job in a field she loves, Habhegger worries sometimes about those future payments.

“Sometimes it gets really stressful,” she said, adding: “My family supports me, my boys’ father does. That support keeps me going.”

In today’s world, where even public colleges and universities cost tens of thousands of dollars a year to attend, not all college students pay for college equally. But as the cost rises, and state funding struggles to keep pace, so too rises the burden on low-income students. Despite two-year colleges being branded as a safety net for low-income students looking for a path to a good-paying career, many two-year schools in Minnesota, including Southeast Technical College, have a higher price tag for low-income students than their four-year counterparts in the state.

“I feel for students and how much they have to pay,” said Nate Emerson, Southeast Tech’s vice president for student affairs. “They have to borrow a lot just to go to school. Just to live.”

Big burden for low-income students

A low-income freshman attending Saint Mary’s University, Winona State University or Southeast Tech full-time with a family income at or below $30,000 receives more grants and aid than other students, and therefore has to cover less cost than more affluent peers. But that still leaves a huge portion, according to federal data.

TuitionTracker, a project of the Education Writers Association and various media outlets, analyzes the net price and cost of attendance of schools, with the most recent data covering the 2008 through 2011 academic years. The data show at Winona’s colleges and universities, even the poorest students are expected to cover more than $12,000 of the cost at WSU, nearly $14,000 at Southeast Tech, and more than $15,000 at SMU.

Dashboard 1

For a family with an income of $30,000 or less, this means students are expected to contribute or borrow more than a third of their family’s income to attend WSU or Southeast Tech, and more than half at SMU. And while they receive fewer aid dollars, students in higher-income groups face a lighter burden as their cost of college as a proportion of family income diminishes: The wealthiest families by comparison, pay or borrow less than 20 percent of family income to attend college.

Like many two-year schools, Southeast Tech draws a number of low-income students, looking to add job skills or save money by taking general education courses at lower tuition rates. As a result, more than half of Southeast Tech’s students are low-income and receive federal Pell grants.

However, with an average net price of $13,756 in 2011 for the lowest-income students, Southeast Tech was $1,600 more expensive than WSU despite having a lower tuition rate and total cost of attendance.

Students at Southeast Tech have noticed. The topic of college costs and affordability are on the minds of many in the college’s student senate, which worked with the state college student organization to lobby for the tuition freeze the Minnesota Legislature passed in 2013, said student senator Dakotah Schmidtknecht.

While not technically low-income himself, paying for college is a big concern for Schmidtknecht. He saves money by living at home, but that adds fuel and mileage costs. One thing that helped Schmidtknecht was a $500 scholarship from the Southeast Tech Foundation.

“For me it’s huge,” he said. “Even $500 – that’s all my books paid for then. Any assistance the school is able to offer is a huge impact for me.”

New changes to bridge the gap

There have been a number of efforts in recent years to help increase the amount of aid that students receive, which may not be reflected in data like TuitionTracker and 2011 figures. Along with the tuition freeze for public college and university students in 2013, the Minnesota Legislature also made a number of changes to the state grant program.

One of the biggest changes was an increase of funding for the program, which has allowed the state to increase the total amount of grants awarded to students by 15 percent. The state also increased the cost-of-living calculation from $7,000 in 2011 to $8,490 this year, to help offset living expenses.

Part-time students and independent students also received attention in the changes, which impacted how the state grant awards were calculated. The Minnesota Office of Higher Education, which administers the program, was given flexibility with the funding formula for part-time students to see how changes impacted enrollment and retention. Independent students received a reduction in estimated family contributions, which increased their state grant awards.

“They are now required to pay 20 percent of their income towards college instead of 30 percent,” Minnesota state grant manager Ginny Dodds said. “But twenty percent may still be too high. We are looking to see with that, but the student response has been positive overall.”

Southeast Tech draws a lot of part-time students, Emerson said, along with non-traditional students who fall into the age and marital-status calculation of being an independent student. As a result, these changes have been huge for the school’s students.

“It is our fastest growing population,” Emerson said. “We have a lot of students going part-time and working.”

A push for scholarships and more resources for low-income students at Southeast Tech is also helping students bridge the gap. The college gave nearly $125,000 in scholarships last year, and endowed a new scholarship fund this summer in honor of retired president Jim Johnson. The fund, which has raised more than $50,000, is geared toward second-year students, as studies show nearly three-fourths of two-year students who drop out cite financial reasons.

“If we had three times that amount, we would use it,” Emerson said. “We do a good job with scholarships. It’s a lot, but spread out doesn’t go that far.”

Southeast Tech’s new president, Dorothy Duran, started her career in academia in financial aid, and has said her passion for higher education came out of her work helping students. The issue of college costs is high on her radar, and she said one of her goals is to continue emphasizing scholarships and leveraging Southeast Tech Foundation resources for students to help keep them in school.

“As far as I can remember, going to school has been a sacrifice,” Duran said. “But it is also a great investment and an opportunity.”

Worth the sacrifice

In 2013, the Minnesota Office of Higher Education reported the median debt load for a student with two-year degree was $15,850, and Southeast Tech’s most recent loan default rates are high. More than 12 percent of the college’s graduates had defaulted within two years according to last year’s data from the office, and that number rises to more than 15 percent for the three-year default rate.

But Southeast Tech still serves as a valuable resource for many low-income students looking for a better job or to start a career. The school boasts high job-placement rates in many industries with good-paying jobs.

“We’re a safety net,” Emerson said. “We provide workers to the industries and a pipeline to higher wages and skilled jobs.”

That higher-paying job and family support keep Habhegger going, despite debt and stress over work, bills and education. And makes it all worth it, she said.

“I get to reach for my dreams of becoming a nurse,” she said. “It’s a struggle, but in the end, I get to achieve what I always wanted to do.”

US Department of Education Strengthens Federal Student Loan Servicing

U.S. Department of Education Strengthens Federal Student Loan Servicing


Created on Friday, 29 August 2014 21:39

Written by IVN

Washington, DC – esident Obama’s executive actions to help make student loans more affordable, the U.S. Department of Education has announced several new steps to help federal student loan borrowers better manage their student debt.

Following up on the commitments outlined by President Obama in June, the Department has renegotiated the terms of its contracts with federal student loan servicers in order to strengthen incentives for them to provide excellent customer service and help borrowers stay up-to-date on their payments. This action will help ensure that borrowers receive the highest quality support as they repay their federal student loans and help the Department better monitor the performance of loan servicers to help them continue to improve.

In addition to these important steps, today Secretary Duncan has directed Under Secretary Ted Mitchell to explore additional action the Department can take that will further strengthen the federal direct loan program to be even more responsive to the needs of borrowers both now and in the future. In the coming weeks, Mitchell and the Department’s Office of Federal Student Aid will announce a series of opportunities to hear directly from student loan borrowers and stakeholders about their ideas for improving the federal student loan program. By the end of the year, he will use this feedback to make key recommendations that will focus on solutions that can help struggling borrowers.

In the coming weeks, the Department will also begin the process to amend its regulations and allow more borrowers to cap their payments at 10 percent of their monthly incomes under an expanded Pay As You Earn repayment plan option, ensuring that students can repay their debt.

“All hard-working students and families deserve high-quality support from their federal loan servicer, and we are continuing to take steps to make sure that is the case,” Secretary Duncan said.

In administering the federal student loan programs, the Department’s top priority is to help students pursue and complete quality higher education programs. The performance-based contract renegotiations emphasize the importance of helping borrowers stay current on their loans and avoid default, while also incentivizing customer satisfaction. Loans will be assigned to servicers based on how well they perform on these and other metrics. This competitive structure to the contracts will ensure that borrowers receive high quality service while maximizing value for the taxpayer.

The renegotiated terms of the federal student loan servicer contracts are structured to create additional incentives for servicers to focus on the Department’s priorities: effective counseling and outreach to ensure borrowers select the best repayment option for them, and enhanced customer satisfaction for student and parent borrowers at all stages of the student loan life cycle. These incentives include:

  • Revised performance metrics that increase the weight of the existing borrower customer satisfaction survey from 20 percent of the overall score to 35 percent.
  • A payment structure that focuses on servicers’ success in keeping borrowers in on-time repayment status and helping borrowers avoid default.
  • Additional incentives tied to each servicer’s success in reducing delinquency in payments across their portfolio.

In addition, the Department is doubling down on efforts to make sure America’s active duty service members are served well, requiring loan servicers to focus dedicated resources and enhance outreach and information efforts for this important population.

The revised metrics will replace the federal student loan servicers’ quarterly and annual customer satisfaction survey scores and the default prevention statistics used to determine each servicer’s allocation of new loan volume. The most recent scores are published here. Additionally, in an effort to promote transparency and provide easily accessible data for customers and stakeholders, the Office of Federal Student Aid (FSA) recently shared updated information on its website about student loan servicers, repayment plans status and student loan delinquency rates.

The Department also has contracts with seven not-for-profit entities to service student loans. These entities have operated under separate pricing and performance metrics, but beginning October 1, most of the changes discussed above also will be extended to the not-for-profit entities so that all Department servicers will operate under common pricing and performance metrics. While previously these entities have only serviced existing loans, they will also begin to receive new borrower accounts in early 2015.

Current federal Title IV Loan Servicers (TIVAS) include: Great Lakes Educational Loan Services, Inc. (Great Lakes); Nelnet Servicing, LLC (Nelnet); Pennsylvania Higher Education Assistance Agency (PHEAA); and Navient, LLC. These companies were first awarded performance-based contracts in 2009. Current not-for-profit servicers include: Aspire Resources Inc, Utah Higher Education Assistance Corporation (UHEAC), Educational Servicers of America, Inc. (ESA), New Hampshire Higher Education Loan Corporation (NHHELC), Missouri Higher Education Loan Authority (MOHELA), Oklahoma Student Loan Authority (OSLA), and Vermont Student Assistance Corporation (VSAC).These entities received contracts between October 2011 and October 2012.

More information about the performance of federal student loan servicers can be found on the Department’s website at

The Office of Federal Student Aid (FSA) administers and oversees the federal student financial assistance programs, authorized under Title IV of the Higher Education Act of 1965 (HEA). These programs represent the largest source of student aid for postsecondary education in the United States. The Office of the Under Secretary manages policies, programs, and activities related to postsecondary education.

CAMPAIGN WATCH: This week in the race to November

Posted: Friday, August 29, 2014 10:01 pm

Updated: 1:02 am, Sat Aug 30, 2014.

CAMPAIGN WATCH: This week in the race to November

Associated Press |

HELENA, Mont. (AP) — Democratic U.S. Senate candidate Amanda Curtis proposed ideas to help those with student loan debt as she, her Republican opponent Rep. Steve Daines, and U.S. House candidates Republican Ryan Zinke and Democrat John Lewis campaigned in all corners of the state. A look at the week’s most interesting and important developments in Montana’s election campaigns:



Curtis, a high school teacher, appealed to college students and graduates this week with ideas to help reduce student loan debt. She proposed a plan that would include allowing those with student loan debt to refinance at a fixed rate of 4 percent and give low-income students receiving Pell Grants automatic cost-of-living adjustments. Her ideas also include forgiving student debt for Native American graduates who return to their reservation to work, expanding financial counseling for students, investing in career and technical schools, and expanding tuition benefits for veterans. Daines responded to the plan indirectly, saying he has voted for legislation to remove the threat of doubling interest rates on student loans and that he’s working on “common-sense policies” that grow the economy and help small businesses create jobs for recent graduates.



With little more than two months to go before the general election, the only U.S. Senate candidate debate that had been scheduled in Bozeman by Friday was in question. Montana Television Network News Director John Stepanek said Daines can’t attend on Oct. 4 and more coordination is needed before details would be confirmed. Other debates are in the works in eastern Montana and towns including Missoula, Kalispell and Helena. Zinke has declined to participate in debates in Great Falls and Billings, and officials with the Billings debate said Lewis will receive an hour of televised airtime for a panel discussion on Sept. 29.



Republican U.S. House candidate Ryan Zinke had campaign help this week from Rep. Greg Walden, R-Ore., who heads the National Republican Congressional Committee, the House GOP’s campaign arm. Zinke and Walden toured a Bozeman business and discussed developing technology in Montana. Zinke’s Democratic opponent, John Lewis, campaigned in Havre and Wolf Point before heading to the Fort Peck Indian Reservation for a powwow.



Daines continued his tour of the state this week, meeting with business owners from Shelby, Kalispell, Libby and Great Falls. Among other stops, he toured the proposed Montanore mine expansion project in Libby and held a discussion at the Kalispell Chamber of Commerce on how regulation and federal policies affect the economy, tourism and natural resource industries. Curtis visited the University of Montana in Missoula to present her education plan, visited Kalispell for a meet-and-greet stop and also met with members of the Blackfeet Tribal Council.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Friday, August 29, 2014 10:01 pm.

Updated: 1:02 am.

Sen. Dick Durbin talks student loans at NIU

President Doug Baker and student Jessica Ibares talk about student loan debt with U.S. Senator Dick Durbin

President Doug Baker and student Jessica Ibares talk about student loan debt with U.S. Senator Dick Durbin

During a Friday visit to Northern Illinois University, U.S. Senator Dick Durbin (D-IL) discussed legislation introduced in the Senate earlier this year to allow student loan holders to lower their loans’ interest rates with students, alumni and NIU President Doug Baker. The bill, which Durbin co-sponsored, allows current loan holders to refinance to a lower interest rate. A vote is expected on the bill when the Senate reconvenes the week of September 8th.

“Student debt has reached the breaking point in this country. Far too many young people are looking at a lifetime of debt just because they wanted to do the right thing and get a college degree,” Durbin said. “Reasonable borrowing has long been part of keeping higher education affordable. The bill which I co-sponsored earlier this year will help ease that burden by allowing them to lower their interest rates. The Senate will soon take up this common-sense legislation, and I hope my colleagues join me in supporting it.”

President Baker said he appreciated the senator coming to NIU to address what he called “a critical issue in higher education,” noting that the costs have gone up for students as budgetary support for higher educational institutions has declined over the past 12 years.

“We’re doing everything we can to keep tuition down. This year, tuition, room and board were held constant. We’re going to continue to go in that direction, look at our expenses and be efficient and create a great value for our students,” Baker said.

Many borrowers with outstanding student loans have interest rates of nearly 7 percent or higher for undergraduate loans, while students who took out new undergraduate loans last year paid a rate of 3.86 percent under bipartisan legislation passed by Congress last summer. The Bank on Students Emergency Loan Refinancing Act would allow students and young people to pay back their outstanding loans at these same low rates, lowering payments by hundreds or thousands of dollars a year for potentially millions of borrowers. The bill was introduced last month by U.S. Senator Elizabeth Warren (D-MA). Durbin is an original co-sponsor.

“Many students have to take out loans,” Baker added. “The senator’s work to reduce the interest rate on those, I think, is going to be critical to make colleges and universities more affordable for students.”

Senior Family Individual Development and Psychology double-major Angela Isom is one of those students paying for her education with the help of scholarships and loans. She is also a financial literacy educator for an NIU program called Financial Cents. The first generation college student is planning to graduate from NIU in December and is worried about how she will be able to pay back her loans on a new professional’s salary once she graduates.

“Being able to finance your education is important. It’s very important that you have your education,” she said, offering advice to other students. “After that, when it comes to payment, go seek help. Go to the Financial Cents educators or the Financial Aid advisors to help you, because you don’t want to get caught up in loans with interest rates that are skyrocketing.”

The Bank on Students bill would allow borrowers with federal FFEL loans or Direct Loans taken out prior to July 1, 2013 to refinance into the interest rates available to borrowers during the 2013-14 academic year. Those new rates are 3.86% for Undergraduate Direct Loans, 5.41% for Graduate Loans, and 6.41% for PLUS Loans taken out by a student’s parents.

Private loan borrowers would also be eligible to refinance through a provision that allows the federal government to purchase private loans from lending institutions and reissue them as federal loans at lower interest rates. Private student loans often have uncapped variable interest rates, hefty origination fees and few, if any, consumer protections.

Angela Isom (left) looks on as Aysha Flowers tells her student loan story to Senator Dick Durbin.

Angela Isom (left) looks on as Aysha Flowers tells her student loan story to Senator Dick Durbin.

Like many students, NIU alumna Aysha Flowers has a mix of federal and private student loans she has to pay off. She said her loan repayment responsibilities have affected not only her lifestyle but also has limited her ability to save for the future.

“For people who are in repayment, to have less to pay over the course of 10-20 years, it could change your future,” she said of the proposed legislation. “Because of the amount [of loans] I have taken out to fund my education…I can’t really plan for my future the way I would like to.”

The legislation would be fully paid for by enacting the Buffett Rule, which would limit special tax breaks for the wealthiest Americans that allow millionaires and billionaires to pay lower effective tax rates than middle class families.

According to a press release from Senator Durbin’s office, there are nearly 1.7 million Illinoisans with outstanding student loans. The average student loan debt for Illinois students in the class of 2012 was $28,028.

“If you have to take out loans, understand that loan payments sound scary, but the loan servicers do work with you; they do understand you are a real person and have life situations,” added Flowers, who has worked as a financial aid advisor for the past four years and told Senator Durbin she actually missed her first student loan payment. “It’s a matter of taking the initiative and communicating with the loan servicer if you are having problems.”

The refinancing bill is the third in a series of proposals introduced by Durbin, Warren, and U.S. Senator Jack Reed (D-RI) to ensure basic protections for student borrowers and to help address the mounting student loan debt crisis. Earlier this year, the three introduced the Student Loan Borrower Bill of Rights Act and the Protect Student Borrowers Act of 2013. The Student Loan Borrower Bill of Rights Act would ensure struggling student loan borrowers are treated fairly and understand the full range of repayment options and resources available to them. The Protect Student Borrowers Act of 2013 would help make institutions of higher education more accountable for student indebtedness by requiring institutions to assume some of the risk of a student loan default.


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How Closing Cards and Student Loans Affects FICO Scores

Dear Speaking of Credit,

Will shutting my credit cards, with a change of zero, impact my credit score? Do tyro loans impact my credit measure in any way? I’m not regulating my credit label to compensate off my tyro loans. we wish to tighten these cards since of a high seductiveness rates and presumably open a new one where we would have a reduce seductiveness rate or accept prerogative points/cash back. we now have a Macy’s label and JC Penny label and wish to get absolved of them. Thank you.  


Dear Than,

You competence cruise that such elementary questions — seeking either to tighten credit cards and either tyro loans impact your credit measure — would move elementary answers. Well, let’s usually contend I’m still acid for a credit scoring doubt that can be answered with a elementary reply. With that in mind, as simply as probable I’m going to yield a integrate of examples of how shutting cards can impact scores. In response to your tyro loan question, I’ll plead some of a similarities and differences in how credit scorers cruise a dual vital forms of credit: revolving (cards) and installment (student, automobile and debt loans).

Having created copiousness in a past about a ubiquitous impact of shutting credit cards, this time I’m going to yield some really specific examples that we can request to your possess credit label situation, regardless of how many cards or what kind of credit boundary we have. With these examples, we wish to assistance beam some of your destiny credit label government decisions in ways that will keep your credit measure as high as it can be.

To your initial question, I’ll cut right to a follow by observant that shutting cards with 0 balances will not impact your measure — unless and this is a large “unless” — we lift balances on any of your other cards. That is if all of your cards have 0 balances afterwards we have zero to worry about, either we tighten cards or leave them open. However, if your credit reports uncover balances on any other cards afterwards review on, as shutting cards could harm your measure if you’re not careful.

When deliberation a scoring impacts of open contra sealed cards, a scorer mostly looks during a credit utilization (card balance/limit ratio) calculations that make adult 30% of your credit score. Credit function is a scoring formula’s approach of assessing how many of your accessible credit is being used, with reduce function heading to a aloft score.

To answer your open contra sealed cards doubt further, a following “before and after” scenarios will illustrate how impacts to function from shutting cards can differ substantially, depending on either or not we lift balances on any of your cards.

Scenario 1 (both cards have $0 balances): 
Both cards A and B are open. Both have $0 balances. Combined function is 0%. 

Card A is afterwards closed, while Card B is left open. Both have $0 balances. Combined function stays during 0%.

Result: In unfolding #1, notwithstanding stealing $1,000 of accessible credit, that is what happens when we tighten $0 change cards, there is no impact to function from shutting Card A.

Scenario 2 (one label carries a balance): 
Both cards are open. Card A has a $0 balance, while Card B carries a $500 balance. Combined function is afterwards 25%.

Card A is afterwards closed, while Card B is left open. Combined function increases to 50%.

Result: In unfolding #2, stealing $1,000 of accessible credit from a balance/limit calculations doubles a function commission from 25 to 50%, notwithstanding a same volume of debt. While a doubling of a function commission will not start with any sealed card, and your mileage will positively change in these situations, a simplest doctrine to learn from this practice is to keep cards open whenever possible, generally if we tend to lift balances on other cards.

To your second question, tyro and other installment form loans, such as automobile and mortgage, will impact your measure usually like credit cards in some scoring categories — payment history, length of credit history, and new accounts, for instance — and differently in others, such as amounts due and inquiries.

The many vicious scoring eminence between cards and loans tends to be within a amounts-owed category, where loan debt carries distant reduction scoring weight than credit label debt, that includes credit function and some other debt-measuring calculations. For this reason, if we ever wish to assistance your measure by profitable down some of your debt above and over a smallest payment, always compensate your credit label balances before any loan debt.

Another disproportion between loan and label diagnosis that’s useful to know, generally when you’re about to emporium for a student, automobile or debt loan, are a ways in that credit inquiries impact scores for these dual forms of credit. While no inquiries of any kind that are some-more than a year aged will ever count in a credit score, any label exploration from an focus for credit (a hard inquiry) incurred during a past 12 months can potentially impact your score. For loans, inquiries are abandoned for a initial 30 days, after that usually one exploration incurred within any 14-45 (depending on a scoring model) day duration can impact a score.

No doubt, this kind of information can seem anything though simple, generally when we haven’t been enthralled in it for decades as we have. So, let me usually promulgate by observant that in further to creation all label and loan payments on time any month, if we wish to play it protected with your credit score, keep as many of your cards as probable open and active — even if we don’t now lift any label balances — to prevent, or during slightest minimize, any destiny boost in your credit label function percentage.You never know when a vital squeeze competence need we to run a change on a credit label from month to month.

Hope I’ve given we some useful information. Best of luck!

See related: Will canceling cards harm a good credit score?, Using cosmetic to compensate off tyro loans: A bad idea,