With state education funds slowing and tuition costs on the rise, it may be necessary for UW-Madison students and their families to find alternate ways to fund their educations, including use of bank and credit card loans.
According to a recent New York Times article, the current recession is causing families to reconsider how they will foot the bill for their college students’ tuition.
The article said analysts at Moody’s, a bond rating agency, have seen twice as many parents requesting a postponement on repaying federally financed tuition loans in the last year.
The tentative good news for Wisconsin residents is the proposal to increase the need-based state grant loans by 14.5 percent, a rate exceeding that of the proposed tuition increase. Federal Pell Grants, for residents and non-residents, also are set to increase: by 6.7 percent.
“What’s important right now is making sure the most vulnerable students can still go to school here,” said Matt Fargen, president of United Council, the governing body for students of all UW System schools.
Fargen also asserts raising tuition is an inevitable part of helping the growth of the economy.
Associated Students of Madison chair Jessica Miller said she disagrees.
“We’re stuck between a rock and a hard place because the state of the economy is really bad,” she said. “Students need to bear some of the brunt of that, but I don’t know if raising tuition is the way to do it.”
ASM is working with the administration to find ways to help UW absorb the impact of the budget cuts while keeping education affordable and finding ways to obtain larger grants for students in need.
However, Keith White, associate director of undergraduate admissions, said the cost of attending UW is still a bargain when compared with other Big Ten universities.
White is concerned that tuition remains affordable not only for current students but also prospective ones. He predicts attendance of in-state residents will grow because universities in other states are becoming too expensive to attend.
On the other side, he said he is worried the amount of out-of-state students will shrink because UW has become too expensive. Out-of-state tuition costs are rising disproportionately to subsidize the cost for in-state residents.
Loans available for student use come from three primary sources. Subsidized student loans are controlled by the federal government and do not charge interest; private or alternative loans are unsubsidized and feature interest rates; and bank or credit card loans are given at very high interest rates.
The amount a student is allowed to borrow from these federal subsidized loans is capped — for example, a loan of this type for a freshman cannot exceed $2,625 per year.
“The amount of student borrowing for federally subsidized loans will go up a little bit, but not significantly because of caps that students are already encountering,” Steve Van Efs, director of the Office of Student Financial Services said.
Conjecture that there will be a notable increase in student borrowing on unsubsidized and credit card loans, however.”
Despite the decrease in state funding and the increase in tuition cost, White has an optimistic perspective on the future of this university, stating simply, “There isn’t another game in town like this.”
