PHOENIX, AZ–(EMWNews – August 7, 2008) – Not only is the weakening U.S. economy creating

challenges for students and parents trying to pay for college this year,

it’s also forcing colleges and universities to find new tactics to maintain

their enrollment numbers and accommodate students’ growing need for student loans and other forms of

financial aid.

Amid speculation about the effect of the current economy on the financial

stability of higher education institutions, Moody’s Investors Service, an

international bond-rating company, had issued a stable financial outlook

six months ago for the nation’s colleges and universities. But now, a

recent updated report from Moody’s shows that in the worsening economy,

certain schools could be headed for financial trouble.

Institutions of higher education have typically been insulated from

economic downturns, thanks to their resilient, diversified business models

that draw on revenue from multiple sources, including the income from

tuition and fees that families have continued to pay year after year,

regardless of the state of the economy, even as those attendance costs have

spiraled upward, far outpacing inflation.

This year, however, almost all the financial resources that parents and

students normally rely on to help pay for college — private

student loans, home equity loans, stock values, lines of credit — have

become increasingly unavailable as a sagging economy limps along hand in

hand with swelling unemployment and an ongoing credit crunch that grew out

of the spectacular collapse of the subprime mortgage market.

And although the government eased credit restrictions on federal parent

loans and raised college loan limits on certain federal student loans in

emergency legislation in May, in an attempt to counter college financing

obstacles arising out of the disruptions in the credit and student loan

markets, private providers of federal parent and student loans continue to

drop their unprofitable and loss-heavy federal college loan programs,

leaving families with fewer lender options for their federal parent and

student lo ans.

With student loan providers and home equity disappearing, lenders in every

sector tightening credit restrictions, salaries stagnant, and the price of

gas and food at all-time highs and still on the rise, the severity and

persistence of the current economic downturn increase the likelihood that

schools will begin to see more students who are no longer able to afford to

go to college.

The updated Moody’s report indicates that high-tuition institutions may be

particularly affected by prevailing economic conditions as students who are

dealing with their own financial struggles opt for less expensive schools.

Those institutions that rely on large fundraising ventures or generous

endowments may see a decline in their number of donors and in the amount of

their donors’ contributions. State-supported institutions, for their part,

may see a decrease in government funding.

Institutions that are anticipating financial shortcomings this year are

working to find new ways both to attract prospective students and to retain

current students who are struggling to cover their college costs and stay

in school. While some colleges may not be able to award their students

additional grants or student loans, these schools are finding more

creative ways to help their students afford to remain enrolled.

In an effort to help students cut their gas costs, for example, some

schools have shortened their weekly class schedule to four days, while

others have begun to provide more online courses and more blended courses,

which combine on-campus classes with online sessions. While online courses

aren’t necessarily less expensive than brick-and-mortar classes, the money

students can save on gas by attending classes from home may explain why

enrollment in online courses is up across the country.

This summer in particular, colleges and universities nationwide have

reported spikes in their online enrollment, with administrators generally

attributing the upsurge to record-breaking gas prices. At the University of

Houston, for example, enrollment in online courses is up 40 percent

compared to last summer, and enrollment in blended classes has risen by 50

percent. Applications to Drexel University’s online programs submitted

between April and June this year jumped a staggering 86 percent compared

with application numbers for January through March.

Those students looking to attend classes exclusively online and cut their

commuter gas costs altogether can enroll in any of a growing number of

online universities such as DeVry or the University of Phoenix. Students

who qualify for federal financial aid are generally able to use their

federal grants and college loans, along with private student loans, to pay for

their accredited online studies, just as they would for a degree program at

a physical campus.

About NextStudent

NextStudent, Federal Lender Code 834051, is dedicated to helping students

and their families find affordable ways to pay for college. NextStudent

offers one-on-one education finance counseling and has a portfolio of

highly competitive education finance products and services, including a

free online scholarship search engine, private college loans, and

information on federally guaranteed parent and student loans, student loan

consolidation programs, and college savings plans.

For more information about NextStudent and its student loan programs,

please visit our website at http://www.nextstudent.com.

Contact: Philip J. Tannenbaum