Student Loan Debt Clock

How can I reduce college loans?  That is a question that thousands of families with college bound students ask each year.  In the search for college financial aid, most will end up with some federal or private college student loans.  How big is the student loan business?

Wow! Look how quickly the current total student loan debt grows!  This clock, which is an estimate of federal and private student loan debt, was created by Mark Kantrowitz, publisher of FinAid.org. Mark developed it as a way to discourage people from borrowing too much.  he suggests that a student not borrow more than the expected starting yearly pay in the year after graduation, and believes that "if you borrow more than twice your starting salary after college, you will be at high risk of default.

He also believes the clock is valuable as a way to show that the need-based federal Pell grant program is inadequate.  these Pell Grants do not have to be repaid, a stark contrast to college loans, which can hang over the head of a graduate for years.

Mark suggests the following to keep loans low:

• Borrow federal first. Federal loans are cheaper, more available and have better repayment terms than private student loans. The unsubsidized Stafford and PLUS loans are available without regard to financial need, so you don't have to be poor to qualify.

• Live like a student while you are in school so you don't have to live like a student after you graduate.

• Do not borrow more for your entire education than your expected starting salary after you graduate. Otherwise you will find it difficult to repay the debt and will be at higher risk of default.

• If you are borrowing more than $10,000 per year for college, switch to a less expensive school.

• Submit the Free Application for Federal Student Aid (FAFSA) at www.Fafsa.Ed.Gov to apply for federal and state grants and search the Fastweb scholarships database to find scholarships for which you are eligible. Every dollar you get in grants and scholarships is a dollar less you will need to borrow.

Personally, I think Mr. Kantrowitz misses a giant piece of the puzzle by not suggeting that the public search out information on how to minimize their Expected Family Contribution (EFC) by talking to a college planning professional. Taking planned action before winter of a high school student's Senior year can often significantly increase the family's eligibility for either need-based or merit-based financial aid, drastically cutting down on the weight of student loans.  That's a real breath of fresh air!

Click here for your Free Report on the 5 Devastating Mistakes Most Families Make That Destroys Their Eligibility for Free Financial Aid. 

Privacy Laws Can Keep Parents "In The Dark"

Parents, please make sure to take care of your student's estate planning before sending them off to college. Here's another reason why legal documents should be completed.

On March 8, 2009, University of Kansas Freshman Jason Wren died of alcohol poisoning in an off-campus fraternity house. He had moved there 11 days before after being evicted from his campus dorm, and seemingly did not provide “full disclosure” to his father when questioned about what led to his eviction.

His father called the university to learn of the details of what happened, and the school stated “We can’t tell you because of FERPA”.

FERPA is the Family Educational Rights and Privacy Act which was passed 35 years ago to keep adult student’s academic records private. Unfortunately it seems to be increasingly used to hide student activities.

Eventually Mr. Wren discovered that his son had been disciplined six times for alcohol violations, and his father is left wondering if he could have prevented his death were he notified of these problems.

Here at College Funding Relief, we suggest taking care of these issues before sending your student off to school. Discuss these issues with your child, and suggest they complete a written waiver of the FERPA “shroud of secrecy”.

At the same time, we strongly suggest that you and your newly minted adults consult with an estate planning attorney to create a Health Care Power of Attorney, Living Will, and HIPAA release to ensure that 1) parents can receive the child’s medical information if necessary, and 2) the parents are empowered to make their student’s medical decisions for them should they be incapacitated. Visit www.GolowinLegal.com for more information.

College Graduates Face Low Unemployment Rates

You already knew that getting a college education was important, but the Orlando Sentinel recently reported that “better educated workers fare better than those with less formal schooling – much better”.

Nationally, people with bachelor’s degrees are only facing a 4.4% unemployment rate, which is less than half the national average. However, people without a high school diploma are unable to find work at a 15% rate, which is six points higher than the national average.

Keep your eye on education!

Will College Students Be Hurt By Change In Ohio Financial Aid?

Under a proposed state budget for education, Ohio students attending lower-cost community colleges would not receive state aid. State money would only be allotted to those whose federal Pell Grants did not cover their educational expenses, cutting out funding for students attending lower priced community colleges.

Governor Ted Strickland argues that because of an increase in Pell grant awards (the cap will be increased $500, or from $4,850 to $5,350), and tuition freezes, community college students, whose tuition rates are an average of $5,100 cheaper than four-year schools, should be able to afford attendance without extra aid. One student says she uses the state aid money for books and living expenses, and would have to take a loan if it was cut. Many students attending community college already take out loans.

The governor’s proposal also includes a provision to give state need-based aid according to the type of school a student attends. Tuition for public schools in Ohio averages $10,000 while private school tuition averages $22,461 a year. This would give more flexibility in helping needy students, but would come at the expense of cutting the $34.5 million dollar Ohio Student Choice Grants program, which gives $660 to any Ohioan attending a private college in Ohio this would cut total state student aid by 46% and cost the 70,000 students attending private school in Ohio about 46 million dollars in financial aid. On average, private school students in Ohio receive about $5,000 in combined state and federal aid, but still have about $6000 of debt.

All the more reason to help your children prepare well for applying to college so that they can either qualify for merit-based aid, aid directly from the school. Visit the College Funding Relief website for guidance on the FAFSA, EFC and College Financial Aid.

Private School Deals

The May 2009 issue of Smartmoney writes about "The Private School Pinch", which explains how to get into private colleges and universities for maybe even less than state schools.

Neil Parmar, author, writes "many of the nation's 27,000 independent primary and secondary schools are scrambling to fill spots left by recession-struck families."

As a result, some of these schools are waiving fees, extending deadlines, discounting tuition or even lowering admissions standards. The biggest news of all is that they are now willing to negotiate with families even more than before.

While this article was written primarily with the focus upon pre-college education, I find the same holds true for college and university planning. We are now able to negotiate much more effectively and assist students in getting financial aid or money off tuition at an even greater rate.

Some suggestions that we often implement are:

1) Leverage multiple offers
2) Ask for and extension
3) Strike A Bargain

For help maximizing your families financial aid, while finding the best school for your child, contact me at www.Graduate4Less.com.