June 30, 2009
While it falls in the middle of summer on most academic calendars, July 1 marks an important date for financial aid each year. On July 1, the Education Department switches from the 2008-2009 academic year to the 2009-2010 one, and new federal rules for financial aid go into effect. This means new loan consolidation and repayment options, lower interest rates on some federal student loans, among other changes for students receiving federal student financial aid.
One big change you likely already know about if you have applied for financial aid for fall is that Pell grants are going up from a maximum of $4,731 for 2008-2009 to a maximum of $5,350 for 2009-2010. This change has already been widely publicized and is already reflected on your financial aid award letter.
Changes for current undergraduate students that you may not already know about include lower interest rates and lower loan fees on federal Stafford loans. The interest rate on subsidized Stafford loans for undergraduate students will drop from 6.0 percent to 5.6 percent on July first. Rates will not change for unsubsidized loans, graduate students, or federal PLUS loans. The upfront loan fees on all Stafford loans will fall from 2 percent to 1.5 percent. Students who have older Stafford loans or PLUS loans with variable interest rates will also see lower interest rates as of July 1, provided they have not already consolidated their loans.
Those who are considering loan consolidation will see one of the biggest changes on July 1, with the unveiling of a new consolidation program through the federal Direct Loans program. It will allow students to participate in an income-based repayment plan that will forgive any outstanding debt after 25 years. Payments will be capped at 15 percent of whatever you earn above 150 percent of the federal poverty level and no payments will be required if your earnings fall below 150 percent of the federal poverty level.
Finally, since July 1 marks the start of the new academic year for financial aid, today is the last day to file a 2008-2009 FAFSA. If you are planning to enroll in summer courses and have not yet applied for aid, you may want to check with your school to see whether summer is counted as part of 2008-2009 or 2009-2010 for financial aid purposes. If your school counts summer as part of the previous academic year and you have not yet filed a FAFSA, you will want to do so right now.
October 9, 2009
The much-lauded new Income-Based Repayment plan for federal student loans has been available to student borrowers since July, but those who could potentially benefit may have difficulty enrolling in it. The Department of Education's Direct Loans website allows borrowers to enroll online in several student loan repayment plans, including the Standard, Graduated, and Income-Contingent options using a convenient drop-down menu. However, after over three months Income-Based Repayment is still missing from this menu, making it more difficult for borrowers to enroll in this plan, and possibly preventing some students from even realizing it's an option.
For many students who have large debt loads, are struggling to find work or are currently working low-wage jobs that make repaying student loans difficult, the new Income-Based Repayment plan may be their best option for repaying their federal student loans. It allows borrowers to only pay 15% of their discretionary income (their adjusted gross income minus 150% of the poverty line for their household size) once they've entered repayment, then cancels their remaining loan debt after 25 years of repayment. Borrowers enrolled in Income-Based Repayment can also take advantage of the 10-year public service loan forgiveness program, meaning they can make 10 years of affordable payments while working eligible public service jobs, then have their remaining debt forgiven.
Despite its appeal, though, students can currently only apply for Income-Based Repayment using a paper form, blank versions of which are available on the Direct Loans website, though not at all well-advertised. Students can eventually dig through the Direct Loans website to find it (we found it by clicking on the announcement in the upper right corner of www.dl.ed.gov, then following links through two additional pages), then complete it and mail it to the Department of Education. This is a somewhat time-consuming process, obviously, and may deter some borrowers who either lack the time or resources to locate, print and submit the form.
In addition to a missing online option and a buried enrollment form, the Direct Loans website also doesn't list Income-Based Repayment on their repayment options comparison site for logged-in borrowers (a calculator allows you to compare payments among Standard, Graduated, and Income-Contingent options but makes no mention of Income-Based Repayment). While a calculator is available through the Federal Student Aid website, it's not readily accessible from the Direct Loans site. To even choose Income-Based Repayment, then, borrowers will need to employ two different calculators on two different Education Department websites simultaneously, adding another confusing and time-consuming hurdle to the process.
According to The Chronicle of Higher Education, the Department of Education is aware Income-Based Repayment is missing from the online enrollment options on their site, but they don't plan to add it until March, citing a lack of resources due to the possibility Congress will soon switch all federal student loans to the Direct Loans program, as called for in a student loan bill currently under consideration. Hopefully, other revisions to the website will happen then, as well, but for students investigating student loan repayment options before then, enrolling in Income-Based Repayment will remain a hassle.
March 29, 2010
As Tiger Woods prepares to reenter the golf world at the Masters next week, it may be a good time for you student golfers to consider golf scholarships that could help you pay for college. The Bill Dickey Scholarship Association awards annual scholarships to high school seniors and previous winners based on academic achievement, entrance exam scores, financial need, references, evidence of community service, and golfing ability. This Scholarship of the Week targets minority applicants to expand access of the sports to minorities, but there are many scholarships for students golfers out there that place more weight on financial need. And if you're not a golfer but excel in another sport, don't be discouraged. There are athletic scholarships out there for nearly every sport you can think of, so do your research and look beyond your intended college for free funding for college.
Prize: Awards range from one-time grants of $1,000 to four-years worth as much as $3,500 annually.
Eligibility: The primary criteria are: academic achievements, personal recommendations, a GPA of 2.5 or higher, participation in golf, school and community service activities, financial need, employment, and extracurricular activities. Applicants may be high school seniors entering college in the fall or undergraduates who have already received the scholarship as high school seniors.
Deadline: April 26, 2010
Required Material: Applicants will be asked to fill out applications that include a response to the following essay question: "Here at the Bill Dickey Scholarship Association, we live by the motto 'Building Hope...One Stroke at a Time.' With that in mind, articulate your career goals and how they demonstrate personal growth." Applicants will also be asked to include personal references from a high school principal, guidance counselor or other academic professional who will vouch for their academic achievements.
Further details about the application process can be found by conducting a free college scholarship search on Scholarships.com. Once the search is completed, students eligible for this scholarship award will find it in their search results.
April 2, 2010
The country's top college sports programs haven't been faring as well as you'd think when it comes to bringing revenue in to their respective schools. With the close of March Madness upon us, USA Today decided to release a data analysis looking at the finances behind some of the most high-profile college athletic programs. And it seems that the schools are keeping their sports programs afloat by tapping into student fees and other general funds.
According to USA Today, more than half of the athletic departments at public schools in the Football Bowl Subdivision (formerly known as Division I-A) were subsidized by at least 26 percent last year. Those figures are up from 20 percent in 2005, or an additional $198 million if you account for inflation. That means athletic programs are getting subsidized by student fees and whatever general funds schools have set up to cover budget shortfalls. The analysis also shows that spending on athletics has increased, despite more of a reliance on outside funding to cover the costs of sports funding in the past year compared to the previous four years.
Why the increase in athletic expenses? Inflation could be one culprit. Drops in ticket sales, declining endowments and state appropriations overall, and general overspending all contribute to rising costs. Many of the big programs also embarked on expensive capital campaigns over the last few years, and those costs are catching up to them. According to USA Today, the number of schools that have sports programs that pay for themselves - via ticket sales and general marketing revenue, for example - fell from 25 to 14 schools over the last year.
Another story published in USA Today as part of their look at sports programs' finances looks at rising coaches' salaries as another factor. Although sports program budgets have shrunk over the last year, coaches' salaries have not shrunk alongside those figures. The country's top coaches, who had been making upwards of $2 million annually just two years ago, now make around $4 million. (Mike Krzyzewski at Duke University and Rick Pitino at the University of Louisville both made more than $4 million this season.) Coaches' compensation has grown so much that it has become the number one expense for college sports programs, replacing athletic scholarships. Last year, Division I schools spent more than $1 billion on coaches' salaries.
February 28, 2011
There's been a lot of talk about Harvard lately – its reinstatement of early action, a graduate winning the Best Actress Oscar, another Winklevoss lawsuit against Facebook, etc. – but this next story doesn’t fall within the boundaries of its ivy-covered campus...and not that far away, either. An arm’s length, shall we say?
Desperate to pay off their children's $20,000 worth of student loans, a Boston-area parent recently posted on Craigslist that he or she was willing to sell their body parts to combat the mounting debt. The posting did not include a name, gender or exact location but listed the "live cadaver" was 5 feet 10 inches tall, 200 pounds and had all organs in working order. "If you eliminate my children's student loans, I will give you my life!" the poster wrote. "Take my blood, take my plasma. Drill into my brain, my leg, my arm. Tap my heart, my liver, my kidney," the poster wrote, adding, "I am very very serious."
There are a lot of options out there to limit exorbitant loans (scholarships, grants and fellowships, to name a few) and consolidation can simplify the loan repayment process by allowing the borrower to combine several types of federal student loans and repayment schedules into one...but selling off one’s body parts piece by piece? We’re all for finding interesting ways to pay for school but this is just plain crazy. Would you ever consider taking this route to keep loan collectors at bay?
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