Tight Budgets, Rising Tuition Spur Demand for Student Loans

College endowments are expected to fall nearly 30 percent this year, and universities throughout the country are downscaling. This may push lower-income applicants out of top-notch colleges, as families struggle secure student loans to make up for rising tuitions.

Other colleges, particularly those whose students rely heavily on financial aid, said they are as worried about their students' finances as their own. Boston College has called for a 2 percent budget cut to reinforce its financial aid reserves, and other schools, such as Princeton and Tufts, said they will spend millions more on student assistance next year.

Colleges are expecting a sharp increase in financial aid requests next year because of rising unemployment, declining home values, and the scarcity of private loans. (Government-backed loans are expected to be widely available.)

"We're not agonizing over the endowment losses," said Bob Brown, president of Boston University, which froze hiring and imposed a moratorium on all new construction projects in October. "All of our anxiety is around our students, and their financial ability to attend. That's an absolutely fundamental shift from the past few years."

Source: The Boston Globe