Income levels have not kept pace with increasing college costs and tuition rates have risen five times faster than families' median wages, Sen. Edward Kennedy said at a Senate field hearing held Monday at Northeastern University.
The senior Democratic Massachusetts senator heard testimony about rising tuition and the decreasing college affordability in a faltering college loan market from financial aid insiders and a local student.
The U.S. Department of Education can only guarantee federal aid for students in the upcoming academic year, said Undersecretary of Education Sara Martinez Tucker. The department is working to ensure uninterrupted access to federal aid, she said.
Private lenders take advantage of the public's low confidence in federal aid programs by offering seemingly great deals, said Student Loan Borrower Assistance project director Deanne Loonin. These financing options are always more expensive, she said.
"We've seen a shift from parents being able to support their students to students taking out alternative student loans," Loonin said.
Kennedy said parents used to depend on increasing home values to finance their children's education, but now the sub-prime mortgage crisis has eliminated this safety net that families used to rely upon when securing a loan.
"When we read every day about the stock market, the housing market, the credit market, parents are wondering . . . if the student loans are going to be there," Kennedy said.
The higher cost of attaining a college degree has changed campus culture and students' views of the years after graduation, he said.
"My visit to so many schools and campuses, young people aren't talking about their books or their teachers, but their job and their next job and how they are going to get a job," Kennedy said.
Salem State College senior Eliaquin Gonell said his financial situation requires him to hold three jobs, as a sales clerk, desk assistant and resident assistant, to cover education costs.
"In this economy, many families are asking students to cover more of their college tuition," Gonell said.
"With these jobs, and the backing of my family and federal loans, I am able to live a relatively happy life," he said.
Gonell said he is grateful for the opportunities federal aid has given him as a first-generation American citizen and first-generation college student. The government often helps students whose families cannot shoulder the financial burden of tuition, he said.
Kennedy said especially in light of recent, nationwide economy turmoil, college loans should be available to families and students who need them.
"We want to try and make this as student friendly and family friendly as possible . . . to knock down administrative barriers so that students and families can get as much as they can," he said.
Thomas Graf, executive director of MEFA, a nonprofit student loan lender, said the current "unprecedented" financial credit crisis has affected private student-loan lenders, making funds less available for student borrowers.
"Our main concern is that parents will have fewer loan choices at a much higher cost," he said. "Our cost of debt has gone up significantly."
© 2008 The Daily Free Press via U-WIRE