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Monday, September 1, 2008

Anxiety about paying for school plagues University of Pittsburgh undergraduate Kate Kelley -- and she's far from the only one.

Like many students throughout the country, Kelley, 21, a senior majoring in biology and history of art from Beaver Falls, had to change her student loan lender earlier this summer.

Then, Kelley learned last week from a university employee that someone had canceled her financial aid offer. Kelley said Pitt officials couldn't say why, nor could they let her know when or if the problem was resolved. Kelley said they told her she'd have to check back in a week or so.

"It's been stressful, sure -- my next tuition bill is due on Sept. 17th," said Kelley, who plans to borrow tens of thousands of dollars more in coming years as she pursues her goal of becoming a medical doctor. "I'm super concerned about where the money's going to come from."

Problems this year in financial markets made it difficult for lenders to access money, and many stopped offering student loans. To free up money for college, Pennsylvania's congressional delegation, led by Rep. Paul Kanjorski, D-Luzerne County, helped to craft a bill that became law in May.

That legislation increased the amount that students can borrow from federal loan programs, and permitted lenders to sell their outstanding federal loans to the U.S. Department of Education to make additional loans, Kanjorski said.

But money remains scarce, say Kanjorski, other members of Congress and loan companies. Kanjorski has scheduled a Sept. 18 congressional hearing that will explore securing additional money.

"The school year is beginning," Kanjorski said. "We have waited for the private sector and financial regulators to solve these problems. We can wait no longer."

Those like Dan Thibeault, president of Graduate Leverage, a loan company based in Waltham, Mass., hope the government's solution includes actual financial support and tax incentives.

"The bill Congress passed was about ensuring access, and will help on the federal side," Thibeault said, referring to loans guaranteed by the federal government. But the real issue is what Thibeault said would be a between $5 billion and $6 billion shortfall this academic year in the demand for loans made by private companies like his.

"The hope is that the financial markets will mend themselves," Thibeault said. "But that's not a good thing to bet on."

Doing so could force students to make "real tough decisions" such as canceling courses or taking semesters off if they can't find enough money to pay for school, Thibeault said.

Sammie Schaefer, 19, a Pitt sophomore from Brighton Heights studying bioengineering, almost dropped out last year because she had trouble gathering enough money to pay tuition bills. Schaefer still doesn't know if she'll find what she needs for this academic year.

"I worked two jobs last year and had to ask my grandmother for $5,000 because I was desperate," said Schaefer, who said her grade point average was 2.0 because of constant money worries. "I'm thinking about bartending this year. Money doesn't make you happy, but you're a lot less stressed out if you can pay your bills."

For in-state undergraduates, tuition at Pitt -- a public university -- ranges from about $13,000 to $16,000 a year. That doesn't include living expenses.

Uncertainty continues whether the student-loan situation will improve by the 2009-10 academic year. So far, 132 lenders have left the Federal Family Education Loan Program and 30 lenders have stopped loaning private student loans for the current academic year, said Mark Kantrowitz, publisher of FinAid.org and a nationally known financial-aid expert based in Cranberry.

Kantrowitz said the Kanjorski hearing could help lenders obtain more money to make loans. And he believes the capital markets will recover within a few months.

"Otherwise, there needs to be another source of capital," Kantrowitz said.

In the meantime, financial aid officials at area schools like Seton Hill University in Greensburg and Robert Morris University in Moon have stepped up counseling and communication with students and parents.

"We're keeping current on what all the different lenders are doing," said Maryann Dudas, director of financial aid at Seton Hill. "We can't make decisions for families, but we can guide them.

"Right now, we don't know what lenders are going to stay or for how long. That's creating great frustration and terrific concern."