Higher Ed Roundup: Week of September 8 – September 12

No Loan Crisis Here, Report New England Colleges

Sen. Grassley Requests New IRS 990 Form for Colleges

Survey Reveals How Families Pay for College

No Loan Crisis Here, Report New England Colleges

Fears that there would be a major breakdown in federal student loan availability have been greatly exagerrated, according to a new report by the New England Board of Higher Education. In a survey of 76 of its member institutions, the board found that the vast majority of colleges and universities in New England aren’t experiencing any major problems obtaining loans for their students. According the report, 40 percent of colleges reported that the Ensuring Continued Access to Student Loans Act of May 2008 had a “favorable impact” on loan availability, while 44 percent reported the legislation had “no impact,” primarily because they were not experiencing any problems accessings loans to begin with. The board noted that students are overwhelmingly taking advantage of the increase in borrowing limits that Congress approved as part of that legislation. In addition, there has been a substantial increase in applications for PLUS loans for parents, as high cost private student loans become harder to obtain. While colleges expressed some concern about the tightening of lending standards by private loan providers, the report concluded that “instances in which students have not been able to attend college due to inadequte loan availability are exceptional.”

Sen. Grassley Requests New IRS 990 Form for Colleges

A year after asking the IRS to revamp the 990 tax form used by colleges and other nonprofits, Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, now wants the agency to develop a form specifically for colleges. Speaking at a roundtable discussion on Monday on college endowments, Grassley said that the public needs more transparency from colleges. Last December, the IRS revealed a new form 990 for nonprofits that will go into effect for the 2008 tax year that requires schools to report the value of their endowments. According to Grassley, the new form doesn’t go far enough. “While the new 990 requests some information about endowments, it does not require institutions to report information about their student populations or costs,” he stated.

Survey Reveals How Families Pay for College

Nearly 40 percent of college tuition bills are financed by loans taken out by both students and their parents, while 32 percent of college costs are met by parental contributions, 15 percent by grants and scholarships, and 10 percent by student financial contributions. A survey, “How America Pays for College,” commissioned by Sallie Mae and conducted by Gallup, also finds that 14 percent of families surveyed rely solely on loans to pay for college, 9 percent tapped a college savings account (such as a 529 plan), and 12 percent received money from relatives or friends. Of the 23 percent of costs paid for by student borrowing, more than half came from federal loans and about 20 percent came from private loans. Parents were much less likely to borrow, with only about 3 percent reporting that they had taken out federal PLUS loans.