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The economy may be in the tank, but business is still booming for Andrew Yang. The CEO of MBA test-prep firm Manhattan GMAT told the Voice in October that enrollment was up 50 percent from 2007. "November and December are usually quiet months for us," he recalls. "That said, we're [still] up 50 percent from last year," with 776 students signing up compared with 515 in 2007. With January usually Manhattan GMAT's third-busiest month of the year, Yang is feeling good about 2009.
When the economy heads south, the job market dries up and layoffs mount, and many people turn to higher education—whether it be graduate school, continuing education, or college—as a refuge. It's a long-term investment, they figure—when they graduate, the skills and degree they've acquired will make them stronger candidates for employment and, two or three years down the road, the economy, one hopes, will be back on track.
Yet the economic gloom that may be pushing people to campus is also clouding academe. There's increased competition not only for a finite number of classroom seats, but also for financial aid. Lending institutions have tightened up credit criteria, making student loans harder to get. Universities are anticipating less money coming in from alumni donors and other investments. (Hello, Bernie Madoff.) Oh, and the government is short on grant cash, too.
Local universities say they won't know for another month or longer how many additional applications they saw this fall, as more than one million people nationwide lost their jobs. Other indicators, however, show that more New Yorkers are eyeing going to school—and looking for help to pay for it.
According to the U.S. Department of Education, the number of applications for the Free Application for Federal Student Aid, or FAFSA, the first step for getting any grant, scholarship, or other assistance, is up 9 percent for the 2008-09 school year, with 13,477,158 applications received between January 1 and October 12, 2008, compared with 12,327,671 during the same interval in 2007. (Data for the rest of 2008 are not yet available.) In New York, 865,822 applications (by dependent and independent students) were filed (second only to California), compared with 824,190 the year before.
The increased demand has helped strain the money supply. Take the Pell Grant program, which awards tuition money to qualifying underprivileged undergraduates. It's $3.2 billion short, according to the Education Department's Budget Services Office. That's due to several factors, according to the department: a 12 percent increase in applicants this year; "decreases in personal income levels"; more people actually using the grant they've been awarded; the College Cost Reduction and Access Act, which in 2007 expanded the number of students who qualified for the grants; and a proposed increase in the maximum grant of $4,241.
"While it is hard to identify all the reasons for the increased applicants, the trend includes both dependent students and older, independent students who qualify for greater amounts of aid," according to a budget office report. "Of note is that we have seen increased Pell applicants and recipients in periods of economic downturn (claims for food stamps and other need-based programs have seen similar increases)."
The College Cost Reduction and Access Act raised the Pell Grant maximum incrementally each year between 2008 and 2013. It's contingent on available funds, however, and they're lacking for 2008-09, which could necessitate a decision next month to cut off grant increases to as many as six million students. To cover additional costs and the increases, the department is seeking $5.9 billion in additional money.
The Education Department believes it has enough money to fund Pell Grants, for now. "Because Congress provided some flexibility in the continuing resolution through March 6, 2009, we should be OK until Congress has a chance to pass an appropriation for all of 2009 and then 2010," says a department spokesperson.
"I'm excited to hear they are optimistic," says Dillonna Lewis, co-director of the Welfare Rights Institute at Hunter College, which helps needy students address issues around access to higher education. The undergraduates she works with who qualify for Pell Grants generally fall 50 percent below the poverty line, Lewis says. If the pool of qualified students is expanded, the financial allocation must also expand, she says. Otherwise, "it's going to crash."
There's a buzz among students, she says, about rising tuition costs. Students who qualify for New York State's Tuition Assistance Program, for example, which awards grants up to $5,000, often use their Pell award to offset the remainder of their tuition and, if anything is left over, pay for books and other costs of attendance. As Governor Paterson tries to close the state budget gap, tuition hikes and changes to TAP are on the table, according to Fran Clark of the New York Public Interest Research Group's Higher Education Campaign. SUNY and CUNY students are looking at 14 and 15 percent increases, respectively, according to Clark. Proposed TAP changes include eliminating the program for grad students, pro-rating awards for students taking less than 15 credits per semester, and eliminating awards for students who default on federal student loans or who can't meet a higher GPA requirement. Students with another family member in college could also see their awards reduced, as could dependent students of retired state workers. (In September, Paterson vetoed a bill that would have made it easier for students to access TAP if something happened to their parents' incomes.) "Each of these cuts helps close the budget gap by making it harder for certain students to afford college," Clark says.