FAP464: Budget Battle 2008, Jobcast with MaryHelen Votral Part 2, Emory University and the Dalai Lama, Lorena Mire

Student Financial Aid News
+ As promised, President Bush delivered a 2008 Education Department budget proposal on Monday that would increase the maximum Pell Grant to $4,600 in the coming fiscal year and to $5,400 by 2012. And as expected, he proposed doing so partly by reshuffling funds from several other grant programs for low-income students, and partly by further cutting into the profit margins of banks and guarantee agencies in the student loan industry, drawing howls of protest from lobbyists for students and lenders alike. On the table for the ax: FSEOG, Perkins, TRIO
+ The proposal sector leader Sallie Mae’s stock price reeling (ticker: SLM). The lender’s shares were down 8.7 percent on the New York Stock Exchange at $42.40 by midday. “The cuts proposed today by the president to the private-sector student lending program, which currently serves 80 percent of all student borrowers, would have far-reaching consequences for students and taxpayers,” Sallie Mae, formally known as SLM Corp., said in a statement.
+ “These harmful cuts would result in substantially fewer lenders participating in the program, reduced competition and move us closer to a government-run student loan monopoly in the Direct Lending program, supported by an enormous federal government bureaucracy,” the company said.
+ Nelnet Inc., another major student loan group (ticker: NNI), saw its shares fall 7.9 percent by midday to $25.52.
+ What’s the fuss about? The 2007 budget isn’t even done yet
+ From Inside Higher Ed: As the administration disturbed many college leaders and student aid lobbyists by proposing to gut the supplemental grants program to help pay for its Pell Grant proposal, it provoked the student loan industry by seeking to wring nearly $19 billion over five years by cutting subsidies for and increasing fees paid by lenders and guarantee agencies in the Family Federal Education Loan Program.
+ Most significantly, the department’s proposal would cut the interest rate subsidy that lenders receive on student and parent loans by 0.5 percentage points, which would raise an estimated $12.4 billion through 2012. The proposal drew dire warnings from bankers that the plan would drive lenders out of the student loan program, following cuts made during last year’s budget reconciliation that helped create the ACG/SMART programs. Democratic Congressional leaders have proposed additional cuts this year — including some similar to the president’s plan — to payfor their proposal to cut the interest rate on some student loans in half by 2012.
+ “Student lenders cannot sustain cuts of this magnitude, which would cut margins by about 20 percent,� Joe Belew, president of the Consumer Bankers Association, said in a statement Monday. “Driving away banks from this program will leave students with either a government monopoly or an oligopoly of loan providers and few if any of the benefits currently provided by competition. These include lender-paid origination fees, financial literacy and default prevention counseling, rate reductions for timely repayments, and quality customer service. Without banks in the student loan program, graduates can look forward to IRS-style quality of service.�
+ From the Washington Post: Loan giant Sallie Mae makes a 43 percent return on its cost of capital while incurring virtually no risk. Such rich rewards suggest that guaranteed profits on guaranteed student loans could be cut substantially without reducing the number of Americans who can obtain such loans.
+ That would trim 8.6% off of SLM’s return on investment. Would you still accept a 34.4% return on investment? (the average personal investor sees returns between 0 - 10%)
+ Emory University, which has a strong program in Tibetan philosophy, announced Monday that the Dalai Lama has accepted a position as presidential distinguished professor. In that role, the Dalai Lama will visit the campus periodically and will also offer instruction to Emory students and faculty members at the university’s study abroad program in Dharamsala. Emory will also create a fund to support scholarships for students from Tibet to enroll at the university in both undergraduate and graduate programs.

Scholarship Update
+ Emory University Emory Advantage
+ Apply for it by filing your FAFSA
+ Details at our free college student scholarship search site

Expert Interview and Jobcast
+ MaryHelen Votral, part 2
+ What makes a good resume or cover letter
+ How to use career-oriented social networking sites

Podsafe Music
+ Lorena Mire, Kid in a Candy Store
+ Music via the Podsafe Music Network
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Reminders
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+ Stafford federal student loans at StaffordLoan.com
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+ FAFSA form online filing at FAFSAonline.com
+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ The Financial Aid Podcast is a publication of the Student Loan Network.

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