Financial aid will be harder to come by next school year due to increased competition and limited funds.
Robert Zellers, director of scholarships and financial aid at Ball State University, said students who apply for Pell Grants or borrow from private institutions may receive less money because of the recession's effects on available financial aid.
"This will be a challenging year since the economy isn't likely to make a quick recovery," Zellers said. "There are some issues at the state level, and budgets are tight."
The number of grants, such as the Pell Grant, and their monetary values are expected to decrease next year, Zellers said. The decrease in value comes after two years at a constant level, he said.
The recession also has created an increase in competition for financial aid. More students are eligible for financial aid, but Congress did not authorize enough funding to meet increased student need, he said.
Junior Desiree Chon, who received a Pell Grant for $2,241 last fall, said it eased the burden her parents had to pay for her tuition.
"This definitely will affect me because my parents paid for all of it [freshman and sophomore year], and it was hard for them," she said. "My parents have blue-collar jobs, so we had enough to make it through each month, but this year it helped my parents out and they can save up for utility bills and rent."
Chon said she was worried she would not receive a Pell Grant for next school year because competition for the money has increased and, compared to other students, her finances might be much better. She understands why they had to decrease numbers and values, she said, but the small amount could have a significant effect on a student.
"It can make the decision for a student to go to school or not to go," Chon said. "Just because they didn't get this grant, they might have to drop out, so I think they should continue to provide it to as many students as they can."
Other possible worries are private loans from banks outside of Ball State's financial aid office. For students who need to borrow more than their grade-level loan amount limit, borrowing from local banks has gained popularity in recent years.
Zellers said Ball State students borrowed more than half a million dollars in private loans during the 2000-2001 school year. The number of private loans increased to more than $14 million during the 2007-2008 year, he said.
According to statistics from the financial aid office, the number of private loans has been increasing significantly, almost doubling in some years.
Zellers said this trend is nationwide, and he expects the number will continue to grow.
The economic crisis has forced many banks to pull out of the loan market because they do not have enough capital to secure their loans, he said. Others have raised interest rates and the credit score requirements to borrow loans. In both cases, some students may lose a source of financial assistance to pay for their education, he said.
Sophomore Kyle Hovanec said the possibility of fewer private loans worries him.
"Private loans are a huge bulk of how I'm paying for college," Hovanec said. "It would be a huge blow. Even working during the summer, all the money we make goes toward the house, utilities, medical bills. The chance [of fewer private loans] worries me when I need all the help I can get."
Hovanec said he would begin creating a backup plan in case his private loans fall through.
Zellers said the economy would not affect Stafford Loans and Parent Loans for Undergraduate Students (PLUS). Interest rates on Stafford Loans have regularly decreased and will continue to do so for next fall.
Zellers said he hoped Congress would use the proposed stimulus package to help offset the demand for financial assistance.
"Even though there are no real figures yet," he said, "that's certainly what most of us in Financial Aid are hoping to see."
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