Monthly Archives: July 2011

Know Your Student Loans. Save Money

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A recent article in the Chicago Tribune has detailed why it is important to understand the student loans that you have received.

“After tapping as much free money as possible, your next step is to choose student loans. You want to turn first to loans from the federal government rather than private loans that come from a bank or non government lender.”

Gail MarksJarvis goes on to write that “The paperwork from your financial aid office will probably give you a choice between subsidized Stafford loans or unsubsidized Stafford loans. There is a huge difference between them. If you qualify, take the subsidized Stafford loans, which carry a $19,000 limit for four years of undergraduate studies. Subsidized means the government reduces your costs by absorbing interest during in-school deferment and provides a very low interest rate, of 3.4 percent. That rate is for loans originated during the 2011-12 academic year.”

This is excellent information. It is important to understand that the subsidized loan you are taking out will not incur any interest costs while you are in school. You are also not required to repay that loan until 6 months after you graduate.

The unsubsidized loan is similar, in that you are not required to make any payments until six months after you graduate, but the interest does begin to accrue once the money is disbursed.

With unsubsidized, a smart financial decision is to pay the interest only portion of your loan while you are in school, thus reducing the balance you will pay once you graduate and officially begin repayment.

Parents also have the option of applying for a federally guaranteed PLUS loan. This is a student loan in the parents name at a fixed 7.9% interest rate.

The last student loan option is private loans as MarksJarvis does on to explain “Although federal loans all have fixed rates, or interest rates that will never increase during the 10 years you pay them off, that’s not the case with many private student loans. They might have a starter interest rate that looks attractive, but with a variable rate that can increase continually over 10 years. So the rate might climb well past the 7.9 percent on parent PLUS loans.”

As you can see, there are many different types of loans, and it is imperative that you understand the terms and conditions of all of them.

As always, you are the only one with your best interest at heart. Remember that knowledge is power, and squeeze every ounce of information you can from your college financial aid office.

Photo used under Flickr Creative Commons License: AMagill

Students Take a Stand Against Education Loan Debt

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According to Credit Karma’s July 2011 survey, the average American carries      $29, 910 in student loan debt.

$29,910!

That is a shocking number, and indicative of the state of our financial future. Students are becoming saddled with increasing amounts of debt as they graduate and enter into an economy that is cutting jobs.

Not exactly a pleasant scenario.

How can you take a stand?

As a student, or a recent graduate, what steps can you take to minimize the burden of student loans?

  • Only take out the exact amount of student loans you need to cover your academic expenses. Many students receive loan refunds each semester that are above and beyond their actual needs. If you receive a loan refund that you do not need, you can return it to your financial aid office, or make a payment directly back to your lender.
  • Pursue grants and scholarships. The more awards you receive that do not have to be repaid, the less reliant on students loans you will need to be. You can start with the FAFSA, and check out places such as Fastweb.com, or your local high school guidance office for local scholarship opportunities.
  • Work during college. The number of students who hold part-time jobs while attending school is on the rise. This is an excellent way to help defray some of the costs of education and avoid student loans. This also has the added benefit of giving you work experience, and references to include on your résumé.
  • Become an Entrepreneur. The leading source of wealth in the United States is entrepreneurs who have started their own small business. As a college student, or a recent graduate, there is no better time than the present to start a business. Businesses started in the recession have the benefit of low costs, and low barriers of entry. Keep your overhead costs minimal, and your profit margins high. This will allow you to pay off your student loan debt as soon as possible, while focusing on growing your business into a sustainable income.

These are just a few ways that you can take a stand again the rising student loan debt levels.

What have you done to avoid taking out student loans? Please share in the comments below.

Photo used under Flickr Creative Commons Agreement: SMBCollege

Pell Grant As a Paycheck?

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Would you like to use your Pell Grant as a paycheck?

Mt. San Antonio College in California has started doing this, and they have reached some interesting conclusions.

They are running a pilot program that allows students to use their Pell Grant surplus (after tuition and fees are covered) in the form of a weekly paycheck.

Rather than getting all of your Pell refund up front, you would receive it in weekly installments, just like a paycheck.

Their rationale behind this is that it would cause students to stay enrolled in school longer.

What do you think? Would you like to see this put into play on your campus?

You can read more about Pell Paychecks here.

Debt Ceiling Debate Includes Protection For Pell Grant

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Yesterday, President Obama spoke with a group of student body presidents from across the nation to hear their pleas for continued support for student financial aid.

With the debt ceiling debates reaching a feverish pitch, it has become clear that student financial aid may not come through this crisis unscathed.

The conference call with president Obama focused on Mr. Obama’s commitment to ensuring that young people have education benefits well into the future.

“If we don’t raise our debt limit in seven days, then it’s very likely we could enter into the second dip of our recession; it’s bad for the whole economy but it’s disproportionately bad for my generation,” said Justin Kingsolver, president of the Indiana University student government, and one of the students on the call.

This is the prevailing feeling of students across the country. The crisis that could erupt if our debt ceiling is breached, and our credit rating is downgraded will hurt the college generation much more than it will others.

College students are having an increasingly hard time finding jobs upon graduation, and a further dip into the recession would only make this more difficult.

Both Senator Harry Reid and Speaker John Boehner have introduced bills which protect the Pell Grant and other popular forms of student financial aid. However, neither one of these bills has been agreed upon, so it is yet to be seen if student financial aid will make it through this most recent crisis without taking a few hits.

Finalizing Your Financial Aid Package

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The Fall 2011 semester is right around the corner!

Many of you will be entering college as freshman in just a few short weeks, and if you were anything like me at that stage in life, you have a lot going on. You are trying to get all of dorm furniture and gadgets stocked away, you are trying to connect with your future roommate to make sure they are not weird, you are finishing up a summer job, camp, or spend as much time with your friends as possible.

A New Season and a New Way of Thinking

One thing that most entering freshman do not think about until the very last minute is their financial aid package and their tuition bill. Parents, whether this is right or not, generally are the ones being held responsible for managing the tuition bill and ensuring that it is paid on time.

If there is one thing that I want to stress on this blog, it is that even starting out as an 17 or 18 year old entering freshman, it is YOUR responsibility to ensure that your financial aid package is what it needs to be, and it is YOUR responsibility to ensure that your bill is paid. In fact, unless you give them access, under FERPA regulations, parents will not even have access to a student’s account unless the student gives them access; even though they may be the ones paying the bill!!

Entering college is an excellent time to begin the maturing process. Parents, this means letting go a little bit. Your child will be considered an adult by the college they are attending and they they will be treated as such and given authority to make important decisions on their own.

Students, there will be a lot of responsibility on your shoulders. Earning a college degree involves a lot more than simply showing up to class and making good grades on exams. It requires planning, decision making (often difficult and complex), flexibility, and focus.

Moving on.

Financial Aid Package

Most colleges post their tuition bills at least one month prior to the start of classes. This gives the Summer semester time to wrap up, and allows students to focus on the Fall semester. The majority of you should now have access to your tuition bill for the Fall 2011 semester.

When you look at your tuition bill you will see multiple columns on your bill. You will see a breakdown of your charges, and then you will see a breakdown of your credits, payments, and financial aid.

If you have questions about any of the charges that you see on your bill you should contact your Bursar’s Office, or your Student FInancial Services offices for assistance.

If you have questions about your financial aid, then you should contact your Student Financial Aid Office.

When your tuition bill goes live you will see a snapshot of your tuition bill. You will also get credit for any financial aid award that you have accepted on your financial aid award letter. All financial aid awards, even if they are grants or scholarships that do not have to be repaid, must be accepted.

Some schools employ auto-acceptance tactics for grants and scholarships, while many others require students to accept each award individually.

When you look at your bill, you should compare the financial aid that is on your award letter, to the financial aid listed as a credit on your bill. It is your responsibility to ensure that this matches up.

Remember, nobody but YOU has your best interest in mind. It is your responsibility to follow up and correct any mistakes!

Ensuring that your financial aid package is correct will save you costly mistakes down the road.

As always, if you have questions about your financial aid, please do not hesitate to ask. I will do my best to answer them as thoroughly as I am able!

Cheers to a great Fall 2011 Semester!

Scholarship Search and Seizure

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Today we get to cultivate your ability to locate and win scholarships! In today’s economy money is hard to come by. It stands to reason then, that free money would be even more difficult to win. Well I have good news; that simply is not the case. Even though the stock market cannot decide whether it wants to be up or down and some might say the economy is in a  recession, people still need to get an education and as long as people still need education, there will still be scholarships.

Scholarships come in all shapes and sizes. They range from small grants ranging from $100 to help cover the costs of books, to scholarships that will cover a student’s entire cost of attendance. Millions of organizations sponsor scholarships totaling billions of dollars each year.

The key questions are: “How to find these scholarships?” and then ‘How to win these scholarships?”
I have compiled a list of tips and pointers that I think may be very beneficial when searching for and winning scholarships.

 

Here are the tips:

· Start Early!!! Almost every scholarship has a deadline and many scholarships give priority to applications submitted early.

 
· Compile a list of accomplishments, awards, professional experience, education credentials, and volunteer organizations. Having this list handy will save you hours during the application process as nearly every application will ask for this information

 
· Be aggressive. Scholarships are designed to reward deserving and persistent students who are willing to “do what it takes” to further their education. A scholarship committee is not impressed by a “less than your best” effort. Plan accordingly!

 
· Identify and contact at least three people who would be willing to write an impressive recommendation letter on your behalf.

 
· Apply for every scholarship for which you are eligible. You never know what somebody else may see in you. Remember scholarships are available for almost every facet of student life and education.

 
· Follow Up! Don’t let your scholarship application slip through the cracks. Scholarship committees will also appreciate the dedication you show in your future endeavors.

 
· Be organized! This is a great time to hone your organizational skills. Make sure to keep track of all deadlines, signatures, recommendation letters, and any necessary follow-up questions from a scholarship organization.

 
· Don’t underestimate the importance of applying for scholarships. After all, a successful scholarship search could land you with a free ride and money to spare! How’s that for motivation!!