The day after Thanksgiving, Glen O'Brien had bad news for his two children, who were visiting from college. With his electronics business pummeled by weak demand, he told them he couldn't afford to keep paying their bills at New York University.
"We were both completely in shock," recalls his daughter Caitlin, a junior majoring in Spanish. She was looking forward to spending her spring semester abroad in Chile. Instead, she is planning to move back to California, get a job and take cheaper courses at a state college. She hopes to return to NYU next fall. The school costs about $50,000 a year for tuition, room and board, and fees.
As the economy shrinks, joblessness expands and small-business owners lose income, many students and their parents are struggling to make payments for the second half of the academic year, which are typically due this month or in January. Midyear applications for financial aid, typically rare, are up at a number of colleges, as families who believed they wouldn't need help earlier in the year are now feeling squeezed. Michigan State University, where students have been hit hard by the woes of the auto industry, last month set up a $500,000 fund for families hurt by the economy's slide.
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