The recent fluctuations in the economy have many people worried about their current and future financial security, and many are considering how much they can invest in an education.
"I am not worried because this is my last year," Duke University senior Clifford Goodwin said. "But I do feel sorry for those [students] behind me."
The University, as a need-blind institution, has stated that it is committed to meeting 100 percent of need for all students.
"If there are specific or identifiable needs, then we can immediately respond to that if they submit documentation," Director of Financial Aid Jim Belvin said.
The University's aid to students is fixed annually because of regular changes in the stock market.
This year marked the first after the Board of Trustees announced in December 2007 the expansion of the University's financial aid program for low- and middle-income families. Duke eliminated parental contributions for families who make less than $60,000 a year, reduced loans for students from families with incomes up to $100,000, among other changes. The announcement came in addition to the overall Financial Aid Initiative, which was launched in 2005 to fund a $300 million endowment for aid by this December.
"[It] was successful, we certainly attracted low-income people, but if you look to the future we will have an even greater impact," Belvin said.
Duke's commitment to aid
One of the reasons for America's financial woes was subprime mortgage lending. The real estate market has taken a huge hit over the past month, which puts pressure on low- and middle-income families because their primary assets may be in home ownership.
"Families who own homes will see a fallout on housing values," said Connel Fullenkamp, associate director of undergraduate studies for economics. "A lot of parents take out home equity loans to fund children's education. Families applying for financial aid will be more impacted by the real estate market. Housing prices dropped 15 to 17 percent and are still heading down."
Middle- and lower-class families do not have substantial non-retirement investment accounts, he added.
Belvin said the Office of Financial Aid is prepared for this and noted that changing home values will be reflected on the family balance sheet submitted by students applying for aid next year.
"Duke has made a commitment to you students and I can not see in my wildest dreams that Duke would break that [promise]," said Lori Leachman, professor of the practice of economics.
Provost Peter Lange said not many families are asking for more aid in response to the financial crisis.
"Few families contact us in relation to changes in earned income," he said. "If we get them, we ask for info, we evaluate info and provide additional aid if needed."
The economy may lead to a decline in charitable giving, including donations to universities, Leachman said. This could influence the pool available for future financial aid priorities. Last year, the University received philanthropic gifts from more than 100,000 donors totaling $385.7 million, according to the Duke University Development Office Web site.
"Foundations and philanthropists' money in those organizations will be way down," Leachman said. "Money will be off [in that sector] about 25 percent. People who donate have less money to give."
And with pressure put on universities, private lenders and the government, uncertainty about aid might have an impact on what applications a student chooses to complete.
Duke has worked to reach out to all prospective students of diffeent socioeconomic backgrounds, Dean of Undergraduate Admissions Christoph Guttentag said.
"We work hard to be sensitive to students from every background who have the potential to be good students," he wrote in an e-mail.
Duke officials said they hope the new financial aid expansion will encourage more prospective students to apply, regardless of need.
Other sources for financial aid
Few students can afford college without some form of financial assistance. In fact, 66 percent of undergraduate students graduate with some kind of debt, which is estimated at $19,237, according to FinAid.org. More than 40 percent of Duke undergraduates are on financial aid, and last year, the average package covered around $26,700, according to a December 2007 University release announcing the aid expansion.
Another option for families has been the private lending sector, but that seems to be a quickly shrinking market.
"It is going to be hard to get money," Leachman said. "Banks are just not lending and it has nothing to do with income-they do not want to take on any more debt."
Thirty-six lenders have suspended private student loans. According to FinAid.org, every type of lender has been affected, including state loan agencies, banks, credit unions, nonprofit lenders and non-bank lenders.
"In general student loaning mostly relies on banks' willingness to lend," Fullenkamp said. "Private lenders will definitely struggle."
The federal government has also been an option for families where paying for college is concerned. In fact, most financial aid advisers at universities across the country tell their students to look into government loans before turning to private loans. The low and fixed interest rates of government loans to families are considered to be a much better option.
This summer, Congress passed the College Oppportunity and Affordability Act, mandating the Free Application for Federal Student Aid be more user-friendly.
Although FAFSA will be more accessible for some, other sources of federal aid are dwindling-137 education lenders have suspended or terminated all or part of the federally guaranteed student loan program, according to FinAid.org.
The federal government has substantial commitments coming up, primarily the bailout, but also social security and Medicare, which may be prioritized.
"If I had to guess I would say spending on young people will go before spending on elderly people because young people do not vote," Leachman said.