The College Savings Foundation's summit meeting of experts on college savings, loans and financial aid in Washington next week could not have been better-timed.
The College Savings Foundation's summit meeting of experts on college savings, loans and financial aid in Washington next week could not have been better-timed.
Following a national uproar over lenders' pulling out of the student loan market, a bill was passed late last month that would alleviate the crisis by using federal funds to pump liquidity back into the system and increase the amount of money available for student loans. The bill awaits President Bush's signature.
The legislation was stoked by the devastating toll the credit crisis has taken on the student loan industry, forcing about 50 private and non-profit lenders to withdraw from the business since last August, according to Cranberry Township, Pa.-based FinAid Page LLC, whose finaid.org website provides financial aid information.
"This has been the worst loan environment in the history of student loans," said Peter Mazareas, co-chairman of the summit and vice chairman of the CSF, a Washington-based advocacy association for the Section 529 college savings plan industry.
HEIGHTENED ANGST
"Without relief, loans would have been much more difficult in the long term, and in the short term, people who need money in the coming months for tuition would have been in desperate straits. It's a situation that only time and Congress can fix," said Mr. Mazareas, who is also chief executive at Strategic Advancement Group Inc. of Nahant, Mass.
"The squeeze on loans has definitely raised anxiety among students and parents," said CSF member Bruce Harrington, the summit's other co-chairman. "It's a crisis that has underscored the need for all of us to work together and has made this meeting more and more relevant every day," said Mr. Harrington, who is also managing director of Cogent Research LLC of Cambridge, Mass.
Rising college costs and tuition prices, as well as the effect of the credit crunch on loan availability and financial aid, will be discussed at the CSF summit, "Perspectives on College Access," along with ideas for the future of college savings and financing.
The summit, to be held at the Capitol View Business and Conference Center, will open with an overview of issues that parents and students who are looking for loans and other funding for college face. The talk is by Diane Auer Jones, assistant secretary for postsecondary education at the Department of Education. The summit will end with a round-table discussion.
One panelist, Justin Draeger, assistant director for communications for the Washington-based National Association of Student Financial Aid Administrators, is optimistic that there won't be any disruptions in the student loan program for the coming school year.
"I'm not aware of students who can't get a federal student loan," he said.
But without federal intervention, Mr. Draeger said, "the potential impact [of the credit crunch] could be quite large."
Government action was also needed "to inject cash into the system so we don't see more families financing college through credit cards," said Elizabeth Fontaine, a CSF member and assistant executive director for the Boston-based Massachusetts Educational Financing Authority. She will moderate a panel on the state of college financing.
POSITIVE REACTION
Reaction to the summit has been positive among college-financing professionals.
"I am very enthusiastic about increased cooperation among these groups," said Phillip Day, president and chief executive of the NASFAA.
"Federal student aid cannot operate in a vacuum," he said. "College savings plans, tax benefits, need-based student aid and low-cost loans should be part of a multilateral college access and completion strategy."
While the summit can be beneficial, colleges, loan companies and financial-aid officials are prone to overlook "how to qualify for maximum financial aid in the first place," said Reecy Aresty, the founder and president of College Assistance Inc. of Boca Raton, Fla.
He is also the author of "How to Pay for College Without Going Broke" (Palm Beach Press, 2007).
Other panelists participating in the summit include James Delapane, partner in the Washington-based law firm Davis & Hartman LLP; Joe Hurley, president and chief executive of Pittsford, N.Y.-based Savingforcollege.com LLC; Michael McPherson, president of The Spencer Foundation in Chicago; and Kathleen Smith, president of the Washington-based Education Finance Council.
E-mail Charles Paikert at cpaikert@investmentnews.com.
