High school seniors, thrilled at receiving fat envelopes from the colleges of their choice last month, must now figure out how to pay for the privilege of attending these institutions. For many, this will mean a journey into private student loan land, where financial fog and fine print reign," The New York Times reports. "At around $20 billion, the private student loan market is less than one-third the size of various federal lending programs. But students may have to rely more heavily than usual on banks and other private lenders this year because two alternative sources of tuition funding - the 529 plans and home equity balances - have been slammed by declining stock market and property values. ... As with all borrowing, making the right decision on a student loan is paramount. But lenders make this harder than it should be.

 

Colleges Flunk Economics Test as Harvard Model Destroys Budgets (Bloomberg)

Students, pummeled by scarce loans and savings plans that have fallen as much as 40 percent, are heading for less expensive schools," Bloomberg reports. "The perks designed to lure them during boom times -- from hot tubs to dorm-suite kitchenettes, to in-room cable TV -- are crushing universities with debt. Even projects like Simmons [College'] 'green' management building, with its rain-absorbing roof patio and toilets with two flushing modes, can turn into burdens as schools struggle with rising expenses, plummeting endowments and needier applicants. ... Independent colleges that lack a national name or must-have majors are hardest hit. Many gorged on debt for construction, technology and creature comforts. Now, as endowments tumble and bills mount, they're struggling to attract cash-strapped families who are navigating their own financial woes.

 

Climbing Costs Strain Colleges, Families (The Baltimore Sun)

For years, parents have grumbled about the escalating cost of private universities but paid up anyway," The Baltimore Sun reports. "Rising family incomes helped cover the bills, and students and parents burdened themselves with loans, believing the high price of the schools would eventually pay off. The universities pitched in by funneling more money to financial aid from their ballooning endowments. But with the economy in recession, endowments falling and tuition still climbing, college costs are coming under increasing scrutiny. As high school seniors and their parents make college decisions, experts say more people are deciding based on price and wondering why college is so expensive.

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Proposals Would Transform College Aid (The Washington Post)

President Obama's health-care goals may be garnering attention, but his higher-education proposals are no less ambitious," The Washington Post reports. "If adopted, they could transform the financial aid landscape for millions of students while expanding federal authority to a degree that even Democrats concede is controversial. At stake is a plan to expand the Pell Grant program, making it an entitlement akin to Medicare and Social Security. Key to the effort is a consolidation of student lending that would give the U.S. Department of Education a near monopoly over the practice -- a proposal that has mobilized the private loan industry, which lent $55.3 billion to 6.4 million students in the 2007-2008 school year.

Read more Colleges Take New Look at Role of Private Lenders (The Day)

Colleges around the country are banking more heavily on increased support from the federal government to help students weather the financial aid storm," The Day reports. "A recent survey by the research firm Student Lending Analytics found that 10.7 percent of colleges in the subsidized program are switching to direct federal lending for the 2009-10 academic year and that 15 percent were still considering a switch as of early March. As a result, the share of federal loans provided through direct lending could grow to 40-45 percent from the 26 percent in the current academic year, the survey estimated. The trend is spread evenly among public, private and two-year colleges, the study found. Schools are switching for a variety of reasons, said Pat Smith, a policy analyst for the American Association of State Colleges and Universities. 'Some of them are just nervous because they read in the paper about the credit markets,' Smith said. 'For others, the lenders that they've dealt with have said they're not going to make any more loans. Rather than go out and shop for a new [federally backed] lender, they've decided to go that way.

 

Senators Chuck Schumer and Chris Dodd Look to Ease Student Credit Woes (NY Daily News)

With tuition fees rising and jobs scarce, students are increasingly relying on plastic to cover everything from basic needs to tempting extras," the NY Daily News reports. "City college students are carrying about $1.25 billion in credit card debt, averaging about $3,200 each, Sen. Chuck Schumer (D-N.Y.) reported recently. Schumer and Sen. Chris Dodd (D-Conn.) are pushing for a new law that would require credit card applicants under age 21 to receive parental consent and take a financial literacy course. It would also ban companies from sending prescreened offers to those under 21.