Sour economy puts college on hold for more students

Sun Sentinel (MCT) - Joe Perri had big college dreams.

He wanted to pursue a degree in photography from an arts school.

He and his family saved, hunted for scholarships and applied for financial aid, but they eventually realized they simply couldn't find enough help to offset the $40,000-a-year cost for his first choice schools _ the California Institute of the Arts and Ringling College of Art and Design in Sarasota, Fla.

"It was a big bummer, but I understand," said Perri, 18, who graduated from high school in Coconut Creek, Fla. "You get accepted to this big school, and you get so excited, but then your parents start throwing reality at you. We don't have that much money."

So Perri changed course. He's now a freshman at Broward College, formerly Broward Community College. He plans to spend two years there, saving money that he earns through a photography business he started on the side.

Getting into college is tough enough, but students now have to face a tough economy. About one out of six students have put their search for a college on hold, according to a survey conducted in October by MeritAid.com, a scholarship Web site. Another 57 percent said they're looking for a less expensive, lesser-known school, just as Perri did.

Here's what they face:

The most difficult competition ever: A record number of high school seniors are applying to college.

Tough new economic hurdles: More restrictive lending requirements, driven by the national credit crunch, has led to a decline in the availability of private student loans. According to Mark Kantrowitz, publisher of FinAid.org, a Web site devoted to financial aid, 37 of 60 private lenders are not offering student loans this year. Federal student loans remain available.

Savings have taken a hit: The sinking stock market has slashed college savings accounts for many families and declining home values have also made it difficult for families to borrow against their houses to finance an education.

Rising costs: Public college costs have doubled in the last decade.

With his own retirement nearing and college costs coming at the same time, Perri's dad says it'd be very difficult to pay big tuition bills without taking on student loans.

"For most parents, with the economy being the way it is, the last thing you want to do is sink yourself into debt," Mike Perri said. "I said 'Joseph, your dream is still there, but sometimes we have to take side roads. The point is, you're going forward.'"

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That cherished family and financial goal of sending the kids to college is under serious pressure.

"You can hear about the economy a million times in school, but when it really hits home, the students realize what's needed," says Pam Kirtman, a college adviser at Nova High School in Davie, Fla. "A college education is very important to them, but they may be losing their houses, their parents are losing their jobs, and even professionals aren't working."

For some students, a community college is a good place to improve skills to increase their marketability in a tough job market, said Grace Truman, director of college relations and marketing. For others, it's the cost savings that drives them to community colleges. "The real savings is being able to live at home for the first two years," she said.

One issue all schools have to face is private student loans, which have become both essential and very difficult to find because of the credit crisis. Two-thirds of all undergraduates borrow some amount.

"I don't want to do student loans," says Sarah Cochran, a senior in Pembroke Pines, Fla., echoing the concerns of other students. "All those people are still paying them off while they're paying bills when they're older."

Cochran wanted to go to the University of Central Florida to study hospitality, with the goal of eventually working for Disney. Instead, she said she's going to go to Broward College and hunt for scholarships and financial aid.

The loans that parents take out for students _ "Plus Loans" _ also are showing signs of distress. Plus Loan denial rates have jumped 26.5 percent over last year, through June.

"It's a contagion effect," Kantrowitz said.

It began with the surge in subprime mortgages going into default, he said. Mortgages are bundled into securities and sold to investors. So are student loans.

"The lack of oversight of these irresponsible people has left us with this situation," said Davie, Fla., high school senior Lauren Barriere, who has decided to go to college in state if she doesn't make it into an Ivy League school. "If it's to pay a total over $120 grand for four years of college just to have a little bit better education, probably it isn't going to be worth it."

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(Sun Sentinel staff writer Jennifer Jhon contributed to this report.)

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© 2008, Sun Sentinel.