Money pinch stifles college ambitions

Students are being forced to dig deeper into their bags of tricks to fund college educations as the struggling U.S. economy has claimed hundreds of thousands of jobs and ravaged countless families’ savings.

They are forced to borrow more, put four-year degrees on hold while they work, or even choose degree programs that aren’t what they necessarily want but one day may provide the means to pay off their education.

“Even families that have saved are facing dramatic losses in their college tuition plans,” Sheldon E. Steinbach said, noting a dive in markets that has slashed investments. Mr. Steinbach, a partner in the Washington law firm Dow Lohnes, has served for decades as the general counsel for the American Counsel on Education.

“There are many families out there who are changing plans. Students are staying at home, working, going to community college for their first couple of years then transferring to a four-year school” to lower their costs.

“It’s a very reasonable and acceptable way of going to college,” he said. “I think for many students, they are coming to terms with the fact that you don’t have to go to a school with all the bells and whistles.

“I think you will see more and more kids also transferring from the smaller private schools to the state public universities. Money is short and families have to make the determination as to how they are going to deal with this.”

Analysts say demand for student loans is higher than ever this year, but federal loans are still plentiful for those who need financial aid.

“Lots of schools are doing everything possible to increase financial aid this year and people are working hard on solutions, knowing that many families are going to have trouble,” said Sandy Baum, a professor of economics at Skidmore College and senior policy analyst for the College Board in New York.

Private financing to augment federal loans is tougher to find. The nation’s largest provider of private student loans, Sallie Mae, announced earlier this month a new model that will a smaller repayment over the long run but require some students to begin repayment while they are still in school.

Cautious private lenders will require a creditworthy co-signer on some student loans, she said.

“If you don’t have a parent who is creditworthy, you will have a harder time,” Ms. Baum said.

The Obama administration has proposed broad changes that would eliminate private banks from the federal student loan program. The president has argued that making loans directly from the Department of Education, rather than through private banks, would save the nation about $4 billion a year in subsidies.

Some students are finding innovative ways to meet the crunch.

In Muskegon, Mich., high school honors student Rachel Harris has taken to the Web to seek donations in an attempt to pay for tuition at her dream college, the University of Notre Dame, where she hopes to study biomolecular engineering.

Rachel is so intent on getting to Notre Dame that she’s advertising her worthiness at http://iwanttogotonotredame.com.

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