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The Deal with Debt

Who Owes What, Where and Why

October 22, 2010

The Deal with Debt

by Alexis Mattera

$24,000. To a recent graduate, that five-figure number could be 1. their starting salary at their first entry-level job or 2. the amount of student loan debt they have accrued while in school.

We’re going to talk about the second choice this morning, as a study by Peterson’s and the Project on Student Debt just revealed it was the average amount owed by graduates of the class of 2009. The study broke down debt levels by state and school (D.C. graduates had the highest while Utah students had the lowest) but did not include debt levels for graduates of for-profit schools because of a lack of data.

Arriving at these tallies didn’t come easy for the Project on Student Debt, which adjusted the averages initially recorded by Peterson’s ($22,500 and 58 percent of students who borrowed) because it felt they were too low when compared to the statistics recorded last year by the National Post Secondary Student Aid Study ($22,750 and 65 percent).

You may be one of the lucky students who scored enough scholarships and grants to have a degree in hand and no debt in sight or you may be flipping couch cushions in search of change to put toward your next payment but what do you think of these findings? A college degree certainly doesn’t come cheap these days!


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How Expensive is "Too Expensive" for a College Education?

Students Willing to Spend More for Academics, Prestige

November 4, 2010

How Expensive is "Too Expensive" for a College Education?

by Alexis Mattera

The true cost of a college education is seldom the number that’s printed in school brochures and on various college comparison lists. When you figure in federal aid, scholarships, grants, room and board, books and supplies, that price fluctuates. One thing remains constant - higher education doesn’t come cheap - but a new poll finds students are willing to stretch their finances for several key factors.

In April, right up until enrollment deadlines, students were still considering “too expensive” schools and were willing to stretch to pay for their education, poll conductors the College Board and the Art & Science Group report. While it would be more financially sound to select the school with the lower tuition and better financial aid package, “too expensive” colleges remained in play if they had strong academics in students’ fields of interest, were places students felt comfortable, had prestigious academic reputations or had excellent records of graduate school acceptance or good job placement after students graduated. Here’s the breakdown:

  • Twenty-six percent of students surveyed said their family would have to stretch a lot, but “I think we’ll make it.”
  • Twenty-two percent chose “I’m not sure how my family will afford to send me to college, but I believe we’ll work something out when the time comes.”
  • Eleven percent said, “I don’t think my family can afford to send me to college, but we are going to try.” Nearly 40 percent of students surveyed did not have a sense of long-term costs, citing “no idea” what their likely monthly payment on student loans would be after graduation.

If you think back to every award show you’ve ever seen, you’ll recall those who do not win always say it is an honor just to be nominated. The same can be said for college admissions: It’s an amazing achievement to be accepted to a prestigious college but is attending worth it if the cost of attendance is going to drive you and your family into debt?


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Mind the Gap

Should You Take a Year Off?

December 30, 2010

Mind the Gap

by Alexis Mattera

The road to college – once thought to be straight and narrow – is detouring into uncharted territory. It was once expected for all high school seniors to matriculate to an institute of higher education the semester after they graduate but today, many students (and their parents) are considering the notion of taking a year off from formal schooling first.

But what do students do during this time, often called a gap year? Not catching up on “Extreme Couponing” or trying out online dating: Students use this time to volunteer abroad or build their resumes and schools are adopting formal programs allowing incoming freshmen to defer admission for a year to do so. According to the Wall Street Journal, "gap fairs" are becoming just as common as campus job expos. The results? Mixed. While most students end their gap years better prepared to attend college, some get so waylaid that they abandon a collegiate education all together.

It may sound tempting to take a year off to explore the unknown but there are a few confounding variables. First, the price tag is far from alluring – unless you feel $35,000 is a reasonable figure. (The upside is that costs can be defrayed by stipends, grants, research fellowships and scholarships or the agreement to work in a very remote area.) Next, the hazy direction of your future. I won't deny that your late teens and early 20s are the best times to gain life experience but if said experience is going to leave you in debt or questioning once-important educational goals, is taking the time off worth it?


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5, 4, 3, 2, 1…Happy New FAFSA!

2011-2012 Application Available Tomorrow

December 31, 2010

5, 4, 3, 2, 1…Happy New FAFSA!

by Alexis Mattera

Ladies and gentlemen, prospective and current college students, I (or the federal government, rather) give you the 2011-2012 Free Application for Federal Student Aid (FAFSA). Hooray!

Vacuum up the confetti because it’s time to get down to business. January 1st marks the first day college-bound seniors, continuing undergraduate and graduate students, and their parents can begin filling out the FAFSA online. Completing the FAFSA is a vital part of the college process: The Department of Education uses it to determine eligibility for federal student financial aid for college. This aid includes federal grant programs (such as the Pell Grant), federal work study, and federal student loans; it is also used by states to determine eligibility for their college aid programs, such as state grants. Colleges also use the FAFSA to determine eligibility for the need-based aid programs they administer and, finally, many scholarship opportunities request FAFSA information as part of their application processes. Even if you think that you won’t qualify for free money in the form of need-based college scholarships and grants, you should still apply. At the minimum, the vast majority of students qualify for Stafford Loans, low-interest federal student loans that represent one of the best deals in borrowing and paying for school.

Submission deadlines vary by state (verify yours sooner than later here) so, as with any sort of college funding, we recommend you complete the FAFSA as early as possible because funds do run out. For more information, visit the official FAFSA website or review our federal aid pages. Happy filing (and New Year)!


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Obama (Sorta Kinda) Keeps His Promise

Changes in Higher Ed Funding Afoot

February 15, 2011

Obama (Sorta Kinda) Keeps His Promise

by Alexis Mattera

While "Honest Barack" doesn't have quite the same ring as our 16th President’s nickname, we have to give him credit for keeping his promise to privilege spending on education and research...for the most part: Some potentially painful cuts could slice through the higher education pie relatively soon.

First, the good news. The 2012 budget blueprint reveals the maximum Pell Grant (currently set at $5,550 per year) would not be slashed by $845 as originally expected and funding will continue for financial aid programs including AmeriCorps, the Perkins Loan and Supplemental Educational Opportunity Grant Programs and academic research agencies. The Education Department's overall budget would grow by 4.3 percent in 2012 under the President's budget but despite this positive information, it won’t be all unicorns and butterflies for college students. Education Secretary Arne Duncan said the administration had to make some "tough choices" to maintain the current level of funding and compensate for future spending. For example, the department's 2012 budget calls for ending a three-year experiment allowing students to qualify for two Pell Grants in a calendar year and use this funding to attend college year-round, as well as eliminating the subsidy in which the government pays interest on graduate student loans while the students are in school; the Leveraging Educational Assistance Partnership Program, the Byrd Honors Scholarships and the TEACH Grant program would also be eliminated.

Obama said, "Education is an investment that we need to win the future...and to make sure that we can afford these investments, we’re going to have to get serious about cutting back on those things that would be nice to have but we can do without," but student advocates, like Justin Draeger, president of the National Association of Student Financial Aid Administrators, were quick to show their displeasure. "It is regrettable that the administration is proposing to maintain Pell by making cuts to other student aid programs that provide much needed funds to students," he said.

The information above merely scratches the surface (check out Inside Higher Ed’s article for all details) but it’s enough to get the conversation started. What do you think of the proposed budget? Will the changes impact your ability to pay for school? Would you propose a different course of action?


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Scholarship Scam Spotting 101

February 16, 2011

Scholarship Scam Spotting 101

by Alexis Mattera

Applying for scholarships requires hard work, creativity and time...not boatloads of cash, frustration and empty promises. Each year, however, students are duped into ponying up exorbitant application fees for scholarships they aren’t even guaranteed to win. This is just plain WRONG, people – scholarships are supposed to be free money for college! – and while we’re betting you’ve already checked out our pages on scholarship scam prevention, the Washington Post recently published some refresher info:

  • Filling out the FAFSA is 100-percent free and you can do it either online or on paper. If you would like to fill it out online, be sure your search terms are correct: A seemingly small typo like "FASFA" can direct you to sites that ask you to pay to file...and the forms they have are sometimes the wrong ones.
  • It's legal for for-profit companies to charge for providing scholarship information but it's illegal for them to collect fees but never provide the information, misrepresent themselves as government officials or guarantee they'll get the student full funding for college.
  • Voice any concerns about an organization to a high school or college counselor; they've been there and done that and can point you to the truth.
  • If you are alerted that you're a finalist for a contest you've never entered or if credit card/banking information is requested online, go no further unless you are positive the organization is legit.
  • Don't give in to anything branded as a "limited time offer" or "exclusive opportunity." They're just high-pressure sales tactics.
  • Investigate the success stories presented at seminars. These so-called "satisfied customers" could have been paid to give glowing recommendations so ask for a list of at least three local families who used the service and contact them directly to make sure the organization delivered on its promises.
  • If you do find a legitimate organization that requires payment, get in writing how much the service costs, what exactly the company will do and the refund policy.

College is expensive enough so save those application fees for books and other college expenses: All Scholarships.com’s services – from the scholarship search and college matchmaker to financial aid information and college preparation tips – are available completely free of charge. You’re welcome!


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College Costs (Literally) an Arm and a Leg

Parent Offers to Become Live Cadaver to Pay Off Children's Student Loans

February 28, 2011

College Costs (Literally) an Arm and a Leg

by Alexis Mattera

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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Students Say "I Do" for Lower Tuition

Would You Marry to Keep College Costs Down?

June 7, 2011

Students Say "I Do" for Lower Tuition

by Alexis Mattera

In February, we read a New York Times article about students getting married to save on tuition and asked our Facebook friends and Twitter followers if they, too, would get hitched if it meant they’d pay less for school. The responses? Mixed, but the topic is still hot four months later.

State aid is down, tuition is up and students are stuck in a tough position these days. While some are continuing down the traditional paths of obtaining funding for college (filling out the FAFSA, applying for scholarships and grants, taking out loans, etc.), others are taking a different route – or should we say aisle – with a friend or another student in a similar monetary situation. Why? If a student is single and under the age of 22, their financial aid is determined by their parents’ income but if the student is married, aid is determined by the joint income of the student and their spouse – an enticing loophole for cash-strapped undergraduate and graduate students. Unlike marrying to obtain citizenship, marrying for financial aid or in-state residency benefits is legal according to WalletPop; there are even matchmaking services that help students find likeminded individuals to marry for tuition relief and divorce after graduation!

What are your thoughts on these “on-paper” marriages? Would you say “I do” if you could save thousands on tuition and fees or do you feel this practice – while legal – is too unethical to consider?


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The Good News and Bad News About State Aid for Students

by Alexis Mattera

There’s good news and bad news regarding state aid for students. The good: State financial aid for college students, including grants, work-study and loans, rose by nearly 4 percent last year. The bad: Just about half of the states surveyed cut need-based grants, even as demand for financial aid increased.

The data – from a report by the National Association of State Student Grant and Aid Programs – also revealed a 1-percent decline in overall state higher education spending and more money spent on need-based grants versus the amount spent on merit-based grants. While this means some students have access to resources that will help them complete college and bolster the economy, not all students are benefiting. Ohio, Alaska, Michigan, Hawaii and Utah have cut need-based grant funding by as much as 66 percent and in Georgia, lower award levels have been implemented for the HOPE Scholarship. And what about California and Washington, where financial aid increased? They’ve seen an increase in student-aid applications but cannot honor all requests because they have run out of money.

Experts view these findings as positive overall but are proceeding with “cautious optimism.” Do you agree or disagree with the actions taken thus far?


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The Best Financial Aid Policies in Higher Ed

by Alexis Mattera

Did you know that more than 70 colleges across the country have replaced loans with grants? That’s right: Schools are offering more free money to entice students to enter their hallowed halls, meaning they will not be saddled with the often-dreaded student loan payments after graduation. What institutions come out on top? Here are a few of the best aid policies, courtesy of the Washington Post’s Daniel de Vise:

For de Vise’s complete top 12, click here. If your school made the cut, are you reaping the financial benefits? If your school is not represented, how are you paying for your degree?


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