The fallout for MSU financial aid
Financial aid officer Cindy Osborne gives prospective student Jake Adams and mother Mary Beth Adams, of Portage, directions to the Office of Financial Aid during an Inside MSU tour on Monday. Mary Beth said financial aid availability is a big factor in determining what school Jake will attend in the fall.
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Editor’s note: This story is the first in a three-part series on MSU’s budget pressures.
Like many aspects of life, the amount of financial aid available to MSU students is a process of give and take. How much money goes to help students pay for college? And how much goes to fund the classes themselves?
This seemingly natural balance has been thrown off by the tense economic climate currently enveloping Michigan and the rest of the country.
David Byelich, director of the Office of Planning and Budgets and an assistant MSU vice president, said a decrease in state support coupled with the status of the economy present a unique set of conditions that makes allocating funds doubly difficult.
“The state of Michigan has really been in a circumstance over the last six years where we’ve encountered a gradual attenuation of state support,” he said. “We’ve experienced downturns before in terms of the state’s economy, and we’ve experienced downturns in terms of the national economy, but not when they’re both occurring to this extent simultaneously.”
Financial aid comes from two main sources — the university’s general fund and donations.
MSU has about $700 million for financial aid that comes from the general fund, which is supported by tuition and state appropriation money.
On average, MSU receives $13 million annually from donors. These donations usually provide funds for scholarships. Need-based funds come from the general fund.
The amount financial aid will increase is a balancing act with the rest of the university budget, which will be announced by the end of June, Provost Kim Wilcox said.
Wilcox said the university has to guess how much money it will get from the state in planning the budget, but the later it waits to do that, the more difficult it is for students to plan for tuition.
“The extent to which we put (money) into programs, we have less money for financial aid,” he said. “The extent we put more money into financial aid, we have less for programs.”
A numbers game
Aid applications for the 2009-10 year have increased about 20 percent from previous years nationwide, and MSU is no exception, said Val Meyers, associate director of the Office of Financial Aid.
“People are definitely concerned about the economy and more people are applying for aid,” she said.
Meyers said the university plans to increase the amount of financial aid available, especially for need-based aid. The increase would follow a trend from the past five years, when financial aid increases exceeded tuition increases by about 4.5 percent.
MSU gave almost $470 million in financial aid during the 2007-08 year, and a little more than $430 million during the 2006-07 year, Meyers said. The data for 2008-09 is not yet available.
“Some of it will come out of tuition, some of it comes from cuts — they’re trying to save money in some places,” she said. “They basically are moving money around so needy students don’t get hurt — they’re trying to make it equal on everybody.”
Another way the university combats the economic struggles students face is through the Adverse Economic Circumstances Fund, which was created in December 2008 to help students and families who have been affected by the downturn in the economy. Meyers couldn’t provide a figure for how many students have applied for it.
A face to figures
Florensio Hernandez has spoken to hundreds of parents and potential Spartans during the two years he has been an admissions counselor. Despite the diverse group of people who go through Inside MSU — a program for admitted freshmen to familiarize themselves with the university — one thing remains constant, and that is the concern about financial aid.
“(Parents) will say, ‘She really likes it, but we can’t afford it,’” Hernandez said. “That’s why we have the aid reps.”
Hernandez said having the representative speak with the families one-on-one is more comfortable for the participants.
“We don’t want to do a big group thing because parents don’t want to ask,” he said. “It gets people to talk.”
With the financial climate, financial aid is more pressing now than before as students try to pay for college, Meyers said.
Despite the anticipated increases in aid, some students think it isn’t enough.
Journalism freshman Kate Masters said despite having scholarships, it’s still tough for her to pay tuition. She paid for most of her tuition this year out of pocket.
“I get financial aid, but not a lot. My mom makes too much money,” Masters said. “I don’t like the way they do the financial aid because I know a lot of people whose parents make too much, but if you pay for school, they don’t have enough money to pay for it.”
Rick Shipman, director of the Office of Financial Aid, said federal student and parent loans are still available to those who don’t qualify for a need-based grant.
“There is no dollar amount that somebody can make that simply makes them ineligible for need-based financial aid,” Shipman said.
“There’s a formula that takes into account the number of people in the family and the number of family members in college.
“We can actually have someone who comes from large family where there are several family members in college and makes over $100,000 a year that get traditional financial aid.”
Commentary
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alumni
(04/22/09 2:35am)Report
Would it not make more sense to eliminate Univ. funded financial aid and reduce the amount of tuition students pay. From the way the article reads it appears as if students paying tuition are subsidizing the Univ. financial aid packages for other students. So on top of your parents paying taxes to the state parents/students are now subsidizing other students tuition bills while paying tuition.
What about those individuals that do not qualify for Univ. financial aid or have private bank loans or federal student loans,or working jobs and are also struggling to pay tuition … I guess you get a pat on the back for paying your tuition and some one else’s tuition too.
Has anyone ever asked the Administration if you eliminate roughly $470 million dollars (07-08 academic year) in Univ. financial aid that is covered by tuition payments what the real tuition cost would be for an individual I am guessing a few thousand dollars less over the course of a year. Lets see MSU has roughly 35,000 students so 470,000,000/35,000 = $13,428 wow think that covers full tuition for a year for in-state student and then some. Can some one ask the Administration how this all works?
Would not the real cost of tuition for a single individual (and only for that individual) make college more affordable for everyone.
Sounds like the Univ. is stealing money from students that are paying tuition via parents, private bank loans, federal student loans, and working.
Reads like a distribution of wealth from one group to another based on the way the Univ. sees fit, and we wonder why college tuition is increasing at such a rate. Can some one show a breakdown on percentage of where our tuition money goes to including the subsidization of the Univ. financial aid programs.
KJ Green
(04/22/09 2:45pm)Report
There are so many variables here.
One is the cost of delivering the education. Two is how much is funded by the state and how much is funded by tuition. Finally, is how much financial aid is available (not counting tuition “premiums”) such as established scholarship funds. Not to date myself, but when I attended MSU, state support provided 75% of the funding for delivering education. I don’t know what it is today, but it has not kept pace with the average of support from other states (see http://www.budget.msu.edu/app/index.php?app).
A paradox existing in the funding the state does provide is the fact that the majority of college graduates are seeking work outside of Michigan, thus there is diminished return on investment that the State provides to higher eduction.
I do agree with “Alumni” (4/22/2009, 02:35 am). You have a scenario unfolding where the net amount that individuals pay varies widely due to the range of financial aid one may or may not get. Those who do not receive financial aid are paying more than the cost to deliver the education. I’m not suggesting there is a better way of doing this, but let’s be honest and call this what it is — a tax on those who are paying full tuition costs to help subsidize those who aren’t. Moreso, let’s figure out if there is a way of pricing how much a student pays that is easier to understand than airline ticket pricing.
In the end analysis, however, Michigan needs to again become a destination of choice requiring a skilled workforce (that an institution of higher education like MSU can help provide) and the state needs to figure out how to better support its anchor Universities. The second item follows the first … now how the heck do we achieve the first?
recent graduate
(04/22/09 9:46pm)Report
The fact that my tuition costs are going to pay someone else’s tuition pisses me off. Reason being is that I have 50,000 dollars in student loan debt for an undergraduate education. My parents made enough money to help me through school but decided to spend the money on an RV and a truck instead. Now I am flipped the bill for other students tuition because they are in need? How is their need any greater them mine? I understand that their parents couldn’t help them pay tuition, but when someone else’s parents make the choice not to help their kids, then those kids are the ones who get screwed over. I have to agree with Alumni on most of this.
alumni
(04/23/09 12:02am)Report
There was another post that was posted last night that has been removed (not sure why)… that referred to the MSU press release on Feb. 3, 2009 that addressed MSU tuition specifically:
“If higher education funding from the state had increased at the average rate of change for Michigan’s Department of Corrections, MSU would have an additional $120 million support, sufficient to reduce tuition by 24 percent (or about $2,500 for each family of a full-time student).” http://news.msu.edu/story/5905/
Where if you apply the same logic in respect to 470 million (470/120 = 3.92) and if 120 means a reduction of 24 percent then (24% X 3.92 = 93.84%) meaning that tuition could be reduced by 93.84% or $9,800 for a full time student … again WOW why is college so expensive when you look at these numbers …
I think the Board of Trustees and Predsident Simon have some explaining to do … maybe it is time for CHANGE in the way tuition is calculated these are the days of CHANGE right … where is ASMSU … maybe they should be looking into this … and getting answers … maybe each student should only pay for their personal tuition …
Also reducing tuition $9,800 per student would result in a lot more students being able to afford college and those that could not would be able to get private or federal student loans to cover the lower tuition cost and would graduate with signficantly less debt verse the amount of debt most student graduate with where that debt includes funding the Univ. financial aid.
Current Junior
(04/23/09 9:09am)Report
I feel very generous that I am $30,000+ in debt because I am paying fellow students’ tuition. That’s very nice of me.