I don't 100% understand.

I just read an article this morning on Forbes about parents getting into the "risky business" of co-signing for a student loan with their child. Here it is: http://www.forbes.com/2009/05/14/student-loans-retirement-moneybuilder-personal-finance-loans.html

But here's what I don't understand. Why are they encouraging parents and students to tap a 401k retirement fund or take out a second mortgage on the home when if the parent is willing to co-sign, there are plenty of much safer alternatives that are set up for education to take?

For instance, first the student has the option of Stafford Loans. These have many, many years to repay and are primarily in the student's name. (And while I understand many parent's don't want their child to leave college with debt, I think a little isn't a bad idea because it helped me get my credit established which eventually let me buy my first home and a nice car... and it also helped me take school a little more seriously when I realized it was coming out of my own pocket!) They also have low, low interest rates as well as some have subsidized interest while you're in school so you don't accrue any interest during that time.

Then there is, at least in Minnesota, the PLUS loan which requires a co-signer and again is similar to the Stafford loan. Then there are Perkin's loans and a whole bunch of other loans that are set up for education- specifically in that there are no payments while the child is in school, interest is low and there isn't a risk of the parent losing a home or a retirement fund.

Articles like that, in my opinion, cause the unnecessary panic about attending college due to the financial situation that is completely unwarranted. I think they also prevent some students from going to college because the parents put it in the child's head (and I have seen this happen) that it's completely impossible because it's too expensive.

Dear Publication Companies: before you cause an uproar in the educational community by showing how risky financially it is for a child to attend college PLEASE show the whole story and not make it appear that the parent has to remortgage their home (an example used in the article) to send their child to school.

Thank you,
Nikki

Now, that being said: do some students not understand that their loans are loans that have to be repaid? Yes. But there is REQUIRED financial aid entrance counseling when a student starts school and REQUIRED financial aid counseling when a student leaves school. If a parent co-signs on the loan should the student have a clear understanding that the student is the primary beneficiary of the loan and therefore responsible for repayment? Yes! However, these issues which seemed insurmountable in the article are ones that a little communication between the parent and student will clear up..

As far as the student not getting a job right out of college? Again, as long as the student doesn't have the unrealistic expectation (or the parent!) of the student walking off the graduation stage into the $500,000 a year job (not saying that doesn't happen, but let's face it, it's not common) and will have an entry level salary for a while and may have to (gasp) make some sacrifices to start some of the repayment on student loans repayment is not impossible.

I have a fair amount of student loans myself from my undergraduate and graduate studies. (And by "fair amount" I mean significantly more than I see people freaking out about in these articles.) And you know what? Once repayment starts my payments for all of them are less than $300 a month. I have made payments on them in the past between colleges, and you know what? I was able to make the payments on my student loans, my car payment on a new car, my rent payment and still have money left over for food on about $12.00 an hour.

So please, please please please when you read articles like this please don't fall prey to the panic that I think they induce. Talk to your financial aid counselors before you say college is impossible. I'll get off of my soap box now. Please go to college.

Oh, and have a great weekend!

Summer sessions = savings?

Similar to another blog post about the three year plan versus the four year plan for a bachelor's degree, I was presented with the idea of taking summer classes to help reduce costs.

I wonder if that is true?

There is the obvious payment of tuition fees, but I have heard (don't know if it's true) that some schools do reduced tuition to attend summer classes? Anyone else heard this?

The other thing I was thinking of was ability to hold a job while you're in school. If you spread out your credits a little thinner each semester/trimester due to taking classes in the summer while you wouldn't have as much time in the summer you would have more time during the course of the traditional school year enabling you to work more hours during that time than not.

I would think, and of course this depends on what industry you work in and the city, but you would be able to bring in more income during the school year by working a few more hours part time all year than by only working full time in the summer.

In addition, while the summer courses tend to be somewhat accelerated (in my experience) the classes tend to be a little smaller and I found them to have a slightly more engaged group of students. This may have only been my observation, but I always liked my summer classes.

As far as graduating sooner, it would depend on how many classes you took over the summer and how that worked into your overall schedule. I still hear of it happening where a student gets ahead of schedule with class completion only to have to wait until spring semester to take that one last class that is only offered in the spring or every other year... etc.

Anyone else have observations on summer classes? Help/hurt finances?

Hurray, US Dept of Education!

Not too often that you see that as a blog title, right?


Last week they did something really cool- yet very simple- for people using the web to try and navigate some of the higher education websites that they have. The web address for the Department of Education has always been http://www.ed.gov/- which makes sense to many of us who work in higher education, but not always to the every day person who is trying to figure out their (or their child's) Federal Financial Aid. The other government departments aren't abbreviated like that, for example there is http://www.justice.gov/ or http://www.treasury.gov/... but http://www.education.gov/ took you to an error page.


Not anymore! They have updated it to take you to the REAL US Department of Education page.

Why is this such a big deal? As also shown in this article, there are many websites that will take advantage of students who don't know as much about the FAFSA (free application for Federal Student Aid... free being the key word) and will charge them to file it through their site. Yep- that's right you can pay a fee to file your FREE application for Federal Student Aid through other sites. These sites were coming up instead of the education site

One service advertises that for the "low fee" of around $80 they will help you fill out your FAFSA, review and submit it. Maybe I'm biased working in higher ed, but I've been doing my own for years (including when I was a dependant student) and I thought the thing was pretty easy to do myself. Even students who I worked with who had never done it before found out it was easy after they got over the initial jitters of filling the form out. The FAFSA literally puts what line on your tax form you'll find the information on so you can go right down the line and fill everything in!

Some people do have really complicated taxes (or rather, parents do) and at that point if you can't figure out where to go/what to do that is what your college financial aid department is there for. They know that thing inside and out and can help you out- for free!!

So back to my original point. These outside companies were often coming up fairly high on the search pages when www.education.gov would send people to an error page, and the new Secretary of Education, Arne Duncan, finally got on the tech folks around the Dept of Ed and had them update the links.

Because really, searching for a college is hard enough that getting error messages from the sites you depend on for information is not something you need!

New Years... Resolutions?

Welcome back! I hope everyone had a wonderful winter break and is back feeling a little more relaxed after some lighter weeks.

We are getting to the time of year where colleges are beginning to make decisions, send out decision letters and help students moving along with the dreaded Financial Aid since it's the beginning of tax season.

Financial Aid... why do these words inspire absolute terror in so many parents of college students? It's not just the looming possibility in this economy of not getting enough, but merely the thought of filling out the FAFSA (Free Application for Federal Student Aid) that sends folks into a tizzy. They're overwhelmed with the prospect of filling this out before they've even looked at the form because they've heard how difficult it is.

But where on earth is that perception coming from?

Every financial aid officer that I personally know will tell you the FAFSA is an extremely easy document to fill out. Most of them will walk you step by step through the process as well, unless you're at one of those massive schools that seem to have 3 financial aid officers for every 15,000 students. (Exaggeration, yes, but when you're waiting in line for three hours to talk to one that's how it feels.) But there are workshops and other community resources offered in many places to assist parents with walking through the forms. Heck, the FAFSA form itself shows you how to fill it out- all you need to do is be able to match the instructions on the FAFSA with the line number on your taxes since it tells you exactly where to find the information it's asking for.

It also frightens me that a simple Google search for "FAFSA" offers so many places that will fill yours out for a nominal fee of $79.99. First off, the very first F in "FAFSA" stands for "free"... so why pay? And, what scares me even more is that these rather disreputable (in my opinion) companies will have your tax information as well as your birthday, social security number... etc. Would I trust them with this? Personally, absolutely not.

So, if you're coming up on starting your Financial Aid for the first time take a deep breath. The FAFSA isn't that bad. If you fill it out online it will even be remembered for next year. I think the last time I filled it out about a year ago I did the whole thing in a little under 15 minutes, so if I can do it and receive aid (so it must have gone in correctly) I believe a trained monkey could figure it out.