UC Berkeley Web Feature
Q&A with Cheryl Resh, UC Berkeley financial aid director
Q. Are more UC Berkeley students on financial aid due to the economy?
A. At UC Berkeley, there currently is no indication that a higher number of enrolled students and families need aid due to current economic conditions. In fact, the percentage of students on aid is comparable to last year's at this time.
UC Berkeley did experience a 20 percent increase in financial aid applications for fall 2008, but that was to be expected because there was a similar increase in the number of students seeking admission. However, among those new and continuing students who are enrolling at UC Berkeley this fall, the percent on financial aid to date is similar to last year's.
Q. Is there a federal loan access crisis at UC Berkeley?
A. Although there have been numerous news reports of lenders having trouble financing federally backed student loans and of students having problems finding a lender, this is not an issue at UC Berkeley, which has been in the Direct Loan Program for the past 14 years. As a Direct Loan school, UC Berkeley students are not experiencing any delays in obtaining federal student loans since they, their parents and the campus deal exclusively with the federal government. To date, more than 10,000 student loans totaling more than $34 million have been disbursed to our students' accounts for the fall term.
Q. Is the nation's mortgage crisis affecting student aid at UC Berkeley?
A. In the past, home equity loans were an option used by many parents to help pay for their son's or daughter's education. Given the current environment in which home prices have dropped in some areas, coupled with the fact that financial institutions have tightened their lending requirements, home equity loans may not be an option this year for some families.
Parents who no longer have access to home equity funds can still apply for a Parent Direct Loan, a federally backed loan at a fixed 7.9 percent interest rate. To date, the campus has not seen an increase in parents taking out Parent Direct Loans, but we may see an increase later in the fall term as more families consider this option. Parents who want to learn more should contact the Financial Aid Office.
Q. Are there other loan issues to consider?
A. Lawmakers recently passed HR5715, which raised both the annual and aggregate maximums allowed for Federal Direct Loans. Students may now receive up to an additional $2,000 in unsubsidized federal loan money each year. The UC Berkeley Financial Aid Office has recently added this additional $2,000 to all student aid packages that needed it. This, consequently, reduced the loan amount that parents had to seek through Parent Direct Loans or other alternative loans.
Private alternative bank loans are still available to UC Berkeley students who need them. At this time, 260 of our students have received approximately $3 million in private loans.
Q. Will the current state budget impasse affect payments of Cal Grants for UC Berkeley students?
A. University of California campuses have traditionally paid Cal Grants for the fall term prior to receiving the actual funding from the state. UC Berkeley, which begins its fall term before most other UC campuses, has always ensured that its students are not affected by Cal Grant and state budget delays; it temporarily uses other university funds to cover the Cal Grant awards until state funds actually arrive. To date, approximately 4,000 UC Berkeley students have Cal Grant awards paid on their student accounts.
Q. How does the UC Berkeley Financial Aid Office view the reauthorization of the Higher Education Act, which was recently passed by federal lawmakers and signed by President Bush?
A. The Higher Education Act has two enhancements to the Pell Grant program that would really help the 30 percent of our undergraduate students who are Pell Grant recipients: year-round Pell awards and the potential for qualifying students to receive larger grants.
In the case of year-round Pell Grants, summer enrollment will become more affordable for the 7,400 Pell Grant recipients at UC Berkeley. With this additional summer Pell Grant, they will not have to rely as heavily on student loans. We are also hopeful that federal officials will provide funds with which the act's authorization for higher awards can be met.
In addition, this legislation authorizes a study of the inequities of the current need-analysis formula that many of us have argued was very unfair to students who live in high-cost areas of the country. A household income of $40,000 simply does not go as far in Oakland, Calif., as it does in Des Moines, Iowa. The current formula has never taken that into account, instead giving families in both areas the same "expected family contribution" for their child's education.