There used to be an understanding. Every year, colleges and universities would jack up their tuition prices on the incoming class of freshlings. And every year, students and their families would take out more loans to cover the costs.
The schools have kept up their end of the bargain: Penn State and the University of Pittsburgh both raised tuition by roughly 6 percent this summer, with smaller increases at other state-funded schools. But thanks to turmoil in the housing market and the securities industry, it's gotten increasingly difficult to find the money to cover those increases.
This spring, the state's largest issuer of student loans -- the Pennsylvania Higher Education Assistance Agency -- announced it would no longer issue federally guaranteed programs like the Stafford Loan, which has financed college education for decades.
And it's getting harder to find money anywhere else. Some schools, like Penn State, have begun offering loans directly. But increasingly, families have turned to banks and other private lenders -- at exactly the time those institutions are getting stingier as well.
Mark Kantrowitz, an expert in student-loan financing and author of the Web site finaid.org, estimates that some 200,000 students could find themselves ineligible for private loans. The squeeze is likely to become more noticeable in the months ahead. "Some industry observers say that families may be able to cobble together the funds to pay [tuition] for the fall, but then run into trouble later in the year," The Wall Street Journal reported on Aug. 11.
What happened to all that money? Economists will tell you it's due to a collapse in the "auction-rate securities market," where agencies like PHEAA used to sell their loans in order to raise cash for new ones. And so far, government has done little about the problem.
Congress passed a bill to free up money for student loans in May. But the Bush administration has interpreted the law narrowly, providing assistance to institutions that already have money to loan -- while doing nothing for cash-strapped agencies like PHEAA. "[T]he administration has not yet used its full authority to help nonprofit lenders like PHEAA," warned U.S. Rep. Paul Kanjorski, a Pennsylvania Democrat who has been especially vocal on the student-loan issue. "We can wait no longer."
Actually, we'll have to wait until at least Sept. 18, when Kanjorski has scheduled a hearing on the matter. And Kantrowitz says this crisis has been long in coming. The Bush administration, he says, has been "the Dark Ages for federal support of higher education."
And the students in the dorms are the lucky ones, says Liz Rincon, the executive director of the state's chapter of the League of Young Voters. "It's trickling down: People who were college-bound are now heading either to trade schools or community colleges, or not going to school at all." Older adults trying to retrain themselves for new careers are hurting too, she says.
"It's a serious situation," Rincon adds. "I don't have an answer about how to fix it except kick the bums out and replace them."
And therein lies the problem, says Kantrowitz: "Politicians ignore students because students haven't voted." While Congress devotes considerable energy to propping up the housing market -- in part because the real-estate industry has pull -- students and their families have gotten comparatively little attention.
To keep yourself in school and out of bankruptcy (which, by the way, does nothing to erase many student-loan debts) Kantrowitz recommends such commonsense measures as pursuing scholarships and financial-aid staffers for help. But in the long run, he says, students need to seize their destiny. Kantrowitz credits the campaign of Barack Obama for starting to reverse this trend: Based on youth turnout in the primaries, he says, "This is one year where that might change. If students become the new swing vote, that will have an impact on who Congress pays attention to."
And he says that while Obama's plans for making college affordable -- which include tax credits of up to $4,000 for tuition costs, as well as a streamlined approval process -- are a bit hazy, they seem workable. "Sen. Obama is much more pro-higher education than Sen. McCain," Kantrowitz says. "I haven't seen anything from McCain that suggests higher education is a priority."
And the best thing students can do, he says, is make McCain pay for that oversight -- so they won't end up paying for it instead.