'Debt relief' firms misleading student loan borrowers
By Melanie Hicken, CNNMoney
New York (CNNMoney) - Firms offering student loan "debt relief" are deceiving borrowers into paying hundreds or even thousands of dollars for access to free government programs, according to a recent consumer watchdog report.
With student loan debt soaring to record levels, many graduates are turning to companies that claim to help reduce or manage their debts. However, some of these firms are charging borrowers initial fees as high as $1,600 and monthly fees as high as $50 to secure services that these borrowers could otherwise get for free, according to the report from the National Consumer Law Center.
While the government offers several relief programs free of charge, such as repayment plans based on a borrower's income level, getting through the red tape is "rarely easy," according to the report. And many borrowers are unaware that the programs even exist in the first place.
To conduct its investigation, undercover NCLC "mystery shoppers" contacted 10 randomly selected student loan relief companies, analyzed websites and reviewed a variety of actual contracts and consumer complaints. They found that the majority of firms surveyed didn't inform potential clients that the products they offered - most frequently loan consolidations - were actually free government programs, or the companies buried that information in the fine print.
My View: A trillion dollar anvil dragging us down
By Van Jones, CNN Contributor
Editor's note: Van Jones, a CNN contributor, is president and founder of Rebuild the Dream, an online platform focusing on policy, economics and media. He was President Barack Obama's green jobs adviser in 2009. He is also founder of Green for All, a national organization working to build a green economy. Follow him on Twitter: @VanJones68.
(CNN) - The student debt fight is back - with a vengeance.
Once again, current students are facing the possibility of interest rates on Stafford Federal student loans doubling.
Once again, we are asking what our leaders are doing about a crisis that gets worse every year.
Once again, the answer is: Not much.
It is the only form of household debt that has continued to rise during the Great Recession. It is also the only form of debt that cannot be discharged under bankruptcy or even death, as parents who have lost children have discovered to their horror. It is preventing young people from buying homes and starting businesses.
In short, student debt is a $1.1 trillion anvil dragging down the entire U.S. economy.
Unfortunately, the conversation in Washington is not about big fixes, but simply how to avoid making matters worse by letting interest rates rise.
Making college worth it
(CNN) - Christine Romans asks former Education Secretary William Bennett about the proposed Student Loan Fairness Act and rising tuition costs.
Columbia University seeks to change whites-only fellowship
By Dominique Debucquoy-Dodley, CNN
New York (CNN) - Columbia University is seeking to alter the 1920 charter of one of its graduate school fellowships which is still limited "to persons of the Caucasian race," though the fellowship has not been granted in years.
The Lydia C. Roberts Graduate Fellowship is, at least on paper, available to white students "of either sex, born in the state of Iowa," according to a Columbia University charter from 1920.
The university filed an affidavit in Manhattan Supreme Court last week to support a petition from JPMorgan Chase, the fellowship's designated trustee, to change the whites-only provision, according to Robert Hornsby, assistant vice president for media relations at Columbia.
Other restrictions for the fellowship stipulate that a recipient may not concentrate their studies in "law, medicine, dentistry, veterinary medicine, or theology." Recipients must also agree to return to Iowa for two years after completing their studies at Columbia.
The fellowship was established in 1920 by Lydia C. Roberts, an Iowa native, with a $500,000 donation to the university upon her death. However, the school stopped awarding the fellowship in 1997 for several reasons.
It's not clear when the university stopped adhering "to the race-related terms of the gift," Hornsby explained.
"The university administers gifts in accordance with applicable law and (anti-discrimination) policies, and it has long been the university's practice to disregard donor restrictions that violate either the law or our policies," he added.
Students occupy college to keep tuition free
Editor's note: This story was updated May 16, 2013, to reflect new information about the student protest.
By Dantel Hood, CNN
(CNN) - For more than a century, Cooper Union for the Advancement of Science and Art in New York provided free education to all admitted students. But the school isn’t immune to the money crunch forcing tuition increases at colleges across the country.
In April, Cooper Union announced that it will start charging tuition for undergraduate students matriculating in fall 2014. Citing a $12 million annual budget deficit, the Cooper Union Board of Trustees will scale back the full scholarship it has traditionally awarded.
At least 50 of Cooper Union's nearly 1,000 students have been occupying President Jamshed Bharucha's office on the seventh floor of the school's Foundation Building. The students organized a sit-in to protest the decision to charge future undergraduate students half the cost of tuition, up to $19,000 a year.
This week, they painted the office’s lobby black as a symbol of their protest. Cooper Union junior Troy Kreiner said it was an extension of a demonstration by architecture students, who painted another lobby black to protest tuition.
Senator wants deep discounts on student loans
Sen. Elizabeth Warren, D-Massachusetts, introduced a bill that would take the interest rate for student loans from 3.4% to less than 1%.
"If the American taxpayer is gonna invest in those big financial institutions by giving them a great deal on their interest rate, let's invest in those students by giving them the same deal," Warren told CNN's Jake Tapper.
Critics say it's not quite the same - student loans are riskier than short-term, bank-to-bank lending. Warrens says loans for big banks are no-risk because they're still "too big to fail."
"Let's make at least a level playing field on those investments," she said.
Student debt delays spending, saving, marriage
By Blake Ellis, CNNMoney
New York (CNNMoney) - Student loan debt is leading some borrowers to put off buying a home, saving for retirement or even getting hitched - and many now regret taking out the loans in the first place.
About three-quarters of student loan borrowers surveyed said they - or their children - have been forced to make sacrifices in order to keep up with student loan payments, according to a survey from the American Institute of CPAs.Forty-one percent of the more than 200 people surveyed said they have delayed saving for retirement, 40% have put off buying cars, while 29% have postponed home purchases.
Even marriage has been put on hold, with 15% of respondents saying they delayed tying the knot because of student loan debt.
The majority of borrowers said they didn't anticipate having such a difficult time repaying their loans, and 60% feel some amount of regret about the decision to fund their education this way.
"[Graduates in debt] start out with an anchor that slows their progression toward future goals," Ernie Almonte, chair of the AICPA's National CPA Financial Literacy Commission, said in a statement.
Prestigious program mistakenly announces scholarship winners
(CNN) - It was an exciting moment when Torrean Johnson heard from his teacher that he'd won a major scholarship through the Gates Millennium Scholars Program administered by the United Negro College Fund.
The excitement was short-lived, though.
Johnson, a student at Southwest High School in Fort Worth, Texas, received notification he hadn't won. The teacher was one of hundreds who received erroneous letters saying their students would receive full-ride scholarships, CNN affiliate WFAA reported.
A statement on the Gates Millennium Scholar website said: "UNCF deeply regrets that an error by a staff member resulted in a miscommunication to some nominators and/or recommenders for students who were not selected to receive scholarships under the 2013 Gates Millennium Scholars (GMS) Program....we recognize the incorrect update sent to their nominators and/or recommenders created stress and disappointment for everyone involved."
Accepted to college? Time to negotiate financial aid
(CNN) - By now, most college applicants are another step closer to making their decision: They've gotten admission or rejection letters, and financial aid offers. But they shouldn't make any decisions on that initial aid offer, said Jordan Goldman, CEO of the college resource site Unigo.com. Now's the time to do another sweep for scholarships and grant, to ask about additional aid and negotiate, negotiate, negotiate, he said.
"More and more, people need to be really scrappy about paying for college," Goldman said. "They can't look at the financial aid offer they get as the be all and end all. They need to look at that as a starting place."
College Scorecard tries to reality check college 'sticker price'
Did you negotiate on college financial aid? Share your story in the comments or tweet us @CNNSchools.
College savings hits all-time high
By Melanie Hicken, CNNMoney
New York (CNNMoney) - As tuition soars, parents and grandparents are putting more money than ever into 529 college savings plans.
Average balances for 529 college savings and prepaid tuition plans grew to a record $17,174 in 2012 - up 12% from an average of $15,349 in 2011, according to a report from the College Savings Plans Network, a nonprofit and affiliate of the National Association of State Treasurers.
Also known as "qualified tuition programs," 529 college savings plans are typically offered by the states and allow holders to save money and withdraw it tax-free, as long as the proceeds are used towards approved college costs - typically tuition, fees, room, board and other required supplies. Another kind of 529, prepaid tuition plans, let savers prepay for future tuition and lock in current prices, but they typically do not cover other expenses.
In December 2012, the number of existing 529 accounts increased by about 4% to 11.1 million, up from 10.7 million in December 2011. Total 529 investments reached a record $190.7 billion, up from $165 billion in 2011.
Those numbers were also helped by a strong stock market last year. In 2012, the S&P 500 soared 13%.
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Related: Student News
CNN Student News is ten minutes of commercial-free, cost free news for middle and high school classrooms. It is available on line on our website, as a free downloadable podcast on iTunes and on HLN at 4:00 a.m. ET weekdays during the school year. Go to www.CNNStudentNews.com@CNNSchools on Twitter
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