Special Bulletin: Help’s Available for Current and Ex-College Students Affected by Hurricane Harvey

 

A little-known fact is that the U.S. Department of Education (ED) has policies in place to help currently-enrolled college students hurt by federally-declared natural disasters such as Hurricane Harvey. These policies also provide relief to disaster-affected ex-students and parents struggling to repay their federal loans.

A description of these policies, and what should be done to use them, is available on the Federal Student Aid (FSA) Programs’ Hurricane Harvey web page. Texas counties that have been declared federal disaster areas are listed on the Federal Emergency Management Agency (FEMA) Hurricane Harvey web page.

Here are some examples these policies:

  • Aid Eligibility: Harvey will no doubt undermine the ability of many families to come up with the money they planned to provide their students for the 2017-18 academic year. Students from such families should file the Free Application for Federal Student Aid (FAFSA) to request aid. If they’ve already filed their FAFSAs, students should contact their campus financial aid offices to learn what documentation is needed for them to request “professional judgment” reviews that can determine if they qualify for additional financial aid.
  • Damaged or Lost Documents: Sometimes students are required provide certain documents before getting their aid to verify the accuracy of their FAFSA data. If these documents have been damaged or lost due to Harvey, students should notify their financial aid offices. ED has given those offices the authority to not require those documents in such situations.
  • Dropping Out: Some student who’ve already received their fall financial aid may need to drop out to go home and help their families recover from Harvey. Such students should contact their financial aid offices and let them know why they are dropping out. In these circumstances, ED allows schools to waive a regulatory requirement that usually compels drop-outs to pay back federal grants received for the fall.
  • Temporary Postponement of Loan Payments: Many ex-student and parent borrowers are likely to find their ability to make federal educational loan payments disrupted because Harvey adversely affected them. Such borrowers should contact the “loan servicers” (contractors Washington hired to collect their federal debts) and request “administrative forbearances.” These forbearance allow affected borrowers to postpone their federal education loan payments for up to three months. Ex-students can get contact information for their loan servicers through the government’s National Student Loan Data System.

In the wake of all the problems stemming from Hurricane Harvey, current and ex-student borrowers who need help should review and use these policies!

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com.

Before and During College: Help Your Student Avoid Credit Card Traps

There’s nothing inherently wrong with college students having credit cards. In fact, 56% of them posses at least one. But help your student beware of all those offers from banks and other credit card providers at this time of year.

After all, a credit card is an opportunity to rapidly amass high interest debt, and only predatory lenders would push such an opportunity at a naive 18-24 year-old with no regular income. In the words of Bernie Sanders:

What the . . . credit card companies are doing is not really much different from what gangsters and loan sharks do. . . . While bankers . . . don’t break the knee caps of those who can’t pay back, they still are destroying peoples’ lives.

IMG_8287So advise your student to ignore those unsolicited offers. Just the act of applying for multiple cards within a short period can cause her credit rating to take a dive. Instead, advise her to carefully search for and start with a single credit card — one without annual fees and, if study-abroad is in her future, without foreign transaction fees. Adding another credit card later is an option that can actually help build up her credit rating, but only after she’s learned the ropes.

There’s more danger, of course, once your student obtains a credit card. It poses an almost irresistible temptation to a young person facing the pressures of keeping up with more affluent peers in an environment full of spending opportunities.

In short, a credit card makes it far too easy to shell out too much. The credit card IMG_8288provider hopes she’ll do this, because then it gets to add interest and fees that may exceed 20% of whatever’s unpaid by the monthly due date. Her credit rating gets damaged, too. To keep this from happening, the provider figures you’ll cover the unpaid balance for her.

Still, when properly managed, a credit card offers certain benefits — funding for emergencies, small savings if it’s a reward card, a record of purchases. Moreover, if paid in full every month, your student will establish a strong credit score that’ll help her borrow for a car, home, and other big post-college purchases.

Help protect your student from the dangers and reap the benefits described above! Be assertive in coaching her about credit card management both before and after she goes to campus. Make sure her college credit experience is a good one!

Contact College Affordability Solutions at (512) 366-5354 or collegeafford.gmail.com for more information about how students and families can manage college-related expenses well.

Before and During College: A Car on Campus Can Create Colossally Causeless Costs

IMG_8107Most colleges and universities have vast student parking lots, sometimes unpaved areas on the outskirts of campus, generally poorly patrolled and supervised. Apartments near campus may also feature parking lots or nearby on-the-street parking.

The automobiles students bring to college quickly fill such parking places. And what could be more natural? Any young person anticipating the freedom of being on his own will also look forward to the convenience that comes with having a car.

But a vehicle at school also needlessly inflates college-related costs and educational debt. Consider:

  • Parking Fees: One large university near us charges its students as much as $796 per year to park on campus. Increased borrowing to pay this fee for four years at today’s federal college loan interest rates can inflate the total amount repaid by more than $4,000.
  • Maintenance and Upkeep: Gasoline, oil changes, and other auto-related expenses add up as the academic year goes along. Such costs can be deferred, if not skipped altogether, when your student’s car stays at home.
  • Damage and Vandalism: Cars sitting on the street and in remote, under-supervised lots are more prone to damage — from hailstorms, slashed tires, frozen batteries, collisions if others carelessly reverse or cut corners too closely, etc. Sometimes your student may need to pay for a tow job to the nearest repair shop just to get his car working again.

Most campuses are either small enough to cross on foot or have shuttle bus systems that are free to their students. And the municipal transit systems in many college towns also allow students to ride free or at reduced rates.

IMG_8108Your student may ask, how will I ever get home if I don’t have my car? This may be valid. But reasonably-priced bus services and trains often run between your state’s major colleges and large metropolitan areas. And if public transportation isn’t available, your student can probably get a ride straight to your door by offering to share gasoline expenses with a fellow student.

Now if a student commutes from home or to a job at an off-campus location not served by public transportation, a car may be necessary. Otherwise, a vehicle at college is an expensive and unnecessary luxury. So counsel your student to cut his college costs by leaving those wheels at home!

College Affordability Solutions offers guidance on a wide array of strategies to keep higher education costs, and higher education borrowing, as low as possible. Email collegeafford@gmail.com or call (512) 366-5354 for such guidance.

Before College: Prepare Your Freshmen to Manage Those First-Year Finances

Ever noticed college campuses and their surroundings? All those apartments, bookstores, dormitories, shops, and restaurants. They’re run by people called IMG_8045“landlords” and “merchants” — responsible, solid folks who make good friends and neighbors. But, at work, their job is to separate students from their money, and at this they’re exceptionally talented.

Dropping 17-19 year olds amongst these skilled professionals is almost unfair. For all their academic ability and digital literacy, young people on their own for the first time often aren’t savvy about considering, much less comprehending, the consequences of their financial decisions. Result? They can easily become the victims of slick marketing campaigns and peer pressures.

IMG_8046In the short run, this contributes to stress, frantic calls home for more money, skipping meals, borrowing too much, working too much, and even dropping out. In the long run, it’s one reason why 40% of college students don’t get degrees, 45% of college graduates live with their parents two years after commencement, and 50% of college graduates need financial help from their families.

Fortunately, today’s students and parents are generally close, so your students often want your guidance. This allows you to use your experience from decades of managing (and mismanaging) your money to help them avoid mistakes in managing theirs.

They’ve probably learned some things by observing you. Still, there are important matters you should make absolutely sure they understand — through frank discussions before they go to campus, by “just in time” phone counseling while they’re at school, or both. Here are some of these issues:

Budgeting: How and why to map out monthly income and expenses, track spending, routinely review and modify budgets.

Checking Accounts, Credit and Debit Cards: How to write checks and use debit/credit cards. Associated fees. Avoiding impulse purchases. When credit card interest kicks in and when to make credit card payments.

Comparative Shopping: How and why to comparatively shop for everything from checking and savings accounts to credit/debit cards to apartments, books, and clothes.

ID Theft and Scams: Securing their checkbooks and credit/debit cards. Avoiding scams. Protecting their critical personal information. What to do if their ID is stolen.

Saving: Why and how to save, even if only a little for a short time. How to open and manage savings account

Teaching your students about these first-year financial issues can protect them, and you, this year and for years to come!