Before College: Changing Your Postsecondary Educational Plans? Be Careful About For-Profit Schools!

At times like this, for-profit postsecondary schools are very effective in marketing themselves to students who might not otherwise consider them. But be careful!

These schools are poorly regulated, weakly supervised and, more than anyplace else you can go to learn after high school, likely to rip students off. Unfortunately, the coronavirus pandemic is going to give them many opportunities to do this.

The National Center for Education Statistics expects almost 3.6 million high school graduates. this year. But one survey done a week before most 4-year college enrollment deposit deadlines found that 40% of them who planned to attend those schools this coming fall hadn’t yet paid such charges, and 12% who had paid no longer intended to enroll in such schools full-time.

Has coronavirus shrunk your ability to pay for college? Have you heard it’ll lead to big cost increases at public and non-profit colleges? Are you wondering if you can afford college at all.

Enter the for-profit schools. They’ll market themselves as faster, less expensive routes to graduation and success. They’ll highlight their flexible and online programs that’ll fit your schedule and keep you healthy. They’ll say their faculty’s real-world experience gives you practical know-how, not just theories.

To be sure, there are good for-profit schools. But others simply lure students into paying way too much for lousy education and training programs leading to unstable, low-paying jobs.

Conduct Research

How do you know if a for-profit (or any) postsecondary school is good or bad? Use the U.S. Education Department’s College Scorecard. For schools offering certificates and degrees you want, it’ll show:

  • Average annual cost after grants and scholarships;
  • Drop out, retention, and graduation rates;
  • Student loan indebtedness, and monthly payment amounts for its graduates; and
  • Typical first-year salaries for graduates.

Use these numbers to compare schools.

Consider Alternatives

Can’t find a good for-profit school? Consider your local community college or nearby public technical institute. They don’t have the money to aggressively market themselves, but they often:

  • Provide flexible and online classes;
  • Charge lower tuition and fees but spend more on instruction than for-profit competitors;
  • Have higher retention and graduation rates than for-profit schools;
  • Teach courses other postsecondary institutions are more likely to accept in transfer; and
  • Don’t close their doors in the middle of the night, leaving customers with nothing but student loan debt — something hundreds of for-profits did over the last three decades.

Determining whether a for-profit postsecondary school is good or bad requires some research, but you’ve got to do it to protect yourself. If you find a bad one, avoid it. You have options. Use them!

A quality education is more likely to be an affordable education. Need help in choosing a school, college, or university? Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com if a no-charge consultation built on four decades of postsecondary experience might be helpful.

Special Coronavirus Bulletin # 11: Trump Administration Imposes Limits on Federally-Funded Emergency Grants

We recently reported that thousands, if not millions of federal dollars were allocated to your postsecondary school for emergency grants to help students cover certain expenses. But just last week the Trump administration’s Education Department (ED) issued guidance limiting eligibility for these grants. Based on this guidance and the law that made the federal funds available, here are things you need to know.

Student Eligibility

The law is simple and straightforward. It says these federally-funded emergency grants are available to any student. However, ED’s new guidance limits eligibility for these grants to students eligible to participate in the federal student financial aid and loan programs. In general, this means you must be:

1. A U.S. citizen, national, or permanent resident;

2. Eligible to file the Free Application for Federal Student Aid (FAFSA) — if you’ve not yet filed a FAFSA, do so, because that’s the only sure way to prove you’re eligible to file it;

3. Enrolled or accepted for enrollment in a program leading to a certificate, degree, or some other recognized educational credential;

4. Registered for selective service (if you’re male).

5. Not currently in default on a federal student loan, or not currently owing a refund on a federal grant; and

6. Making Satisfactory Academic Progress toward your certificate, degree, or other credential (if you’re already enrolled).

Payable Expenses

The law says your federally-funded emergency grant may be used for “expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and childcare).”

ED added that such a grant cannot be used to pay off outstanding and overdue bills you owe to your school, and your school can’t use federal emergency grant money to reimburse itself for expenses it ran up for you — even if they’re because of a coronavirus-related campus disruption.

Expiration Date

The law says federal emergency grant funds remain available through September 30, 2021, so you may be able to get such a grant through that date — although your school is likely to run out of its federal allocation long before that.

Delivery of Funds

ED has ruled that your school may provide these grant funds to you by check, debit card, electronic transfer to your bank account, or any other application it uses to transmit your regular federal student aid and loan funds. ED also ruled that your school cannot issue such funds to you using a credit card that’s accepted only on campus or at an institutionally-affiliated retail establishments (bookstores, athletic apparel shops, etc.).

If you have a financial predicament, but something described above makes you ineligible for a federally-funded emergency grant, what should you do? Request emergency financial help from your school anyway, because some postsecondary institutions also have other funding sources for emergency grants.

Struggling to pay expenses related to education after high school? College Affordability Solutions has 42 years experience in helping to keep postsecondary learning within the means of students and families. Contact us at (512) 366-5354 or collegeafford@gmail.com if you need some advice — no charge!

Special Coronavirus Bulletin #10: Make Suspended Payments On Your Federally-Held Student Loans . . . If You Can Afford It!

The CARES Act suspended payments you’d normally make on your student loans held by federal government agencies* with an “administrative forbearance” lasting through September 30. It also waived interest accumulation on such loans through that date. This is all automatic. You need not do anything.

But although you’re not required to make payments, you’re not prohibited from making them, either. And there are advantages to doing so.

Say you owe the average for those who borrow as undergraduates — $30,000 at a 4.69% interest rate. And say you’re paying $314 a month under the government’s Standard Repayment Plan. Make no payments between now and September 30 and what you’ll owe on October 1 will be exactly what you now owe. But keep making your $314 monthly payments and your principal balance will be $1,884 less on October 1. As a result, you will:

    Pay Less on What You Borrowed: Make no payments and the interest you’ll eventually pay on your federally-held debt will be $7,842. But keep making payments over the next six months and you’ll end up paying $6,749 — or $733 less — in interest on that debt. Why? Since there’s no interest on that debt right now, 100% of every dollar you pay will reduce your loan principal, and by diminishing principal, you’ll pay less interest.
    Eliminate Your Debt Faster: Keep making payments and your federally-held debt will be paid-in-full six months earlier than if you don’t make your suspended payments.
    Match Your Employer’s Payments on Your Debt: If your employer also makes payments on your federally-held college debt as part of your fringe benefit plan, it may only match payments you make. So before deciding whether to stop making payments on your federally-held loans, find out how your decision will affect employer payments.

Carefully scrutinize your current budget. Don’t make payments if doing so will undermine your ability to cover necessities like food, housing, and transportation. But there are definite advantages for continuing to make payments if you can afford to do so.

By the way, the U.S. Education Department says that, if you want to keep making payments by auto-debit, you should contact your loan servicer and opt out of your administrative forbearance so your auto-debit payments will resume. But not all servicers will restart auto-debit right now, so you’ll have to make payments manually. Contact your servicer to learn how to keep making payments through September 30.

* Student loans held by federal government agencies include all loans made under the Federal Direct Loan Program (FDLP). They do not include (a) loans made under the Federal Perkins Loan Program unless the postsecondary schools that made those loans have turned their ownership over to the federal government; and (b) loans made under the Federal Family Education Loan Program (FFELP), also known as Stafford Loans, unless the commercial lenders that made those loans have turned their ownership over to the federal government.

To determine ways to manage you student loan debt during the current coronavirus national emergency, become a follower of the College Affordability Solutions website so you’ll always be notified about special bulletins such as this.

Special Coronavirus Bulletin #9: Emergency Grants Are Available To Postsecondary Students Who Are Struggling Financially Due To Coronavirus

Coronavirus has wreaked havoc on both the health and finances of college students and their families. So far more than 600,000 Americans have been infected and over 25,000 have died. Bloomberg Business News reports that 22 million unemployment claims have been filed since mid-March, and that economists are predicting a 20% jobless rate before this month ends. Almost every college campus has closed, and many students need new computers and software for online classes.

Does any of this describe a situation that applies to you or your student? Has this situation left you unable to cover college-related expenses for rest of this term? If so, don’t panic, drop classes, or drop out. Get an emergency grant.

In the last several years, colleges and universities have become keenly aware of how unforeseen financial problems undermine student success, obstruct student retention, and erode student opportunities to graduate. As a result, many institutions now offer their students emergency grants.

Students in need of emergency grants can usually obtain them fairly quickly, but such grants are normally limited to a few hundred dollars because institutional emergency grant funds normally don’t contain tons of money. However, these are not normal times.

In fact, depending upon the size and financial need of its student body, your college is getting federal funds ranging from thousands to millions of dollars out of $6.28 billion Congress allotted for emergency grants. To see how much Washington is sending your school, click here.

Institutions must use these federal emergency grant funds to help students to pay expenses related to the disruption of campus operations due to coronavirus. These include costs they can’t cover for child care, course materials, food, health care, housing, and technology.

Emergency grants are typically administered by deans of students, student financial aid, or student affairs offices. Check their websites to learn how and where to request such grants.

Recently, we recommended you seriously consider filing an appeal for additional financial aid if coronavirus-related issues have significantly cut your ability to pay necessary college expenses. Such appeals usually require you to get and submit various documents, and it may take several days or weeks for your financial aid office to make decisions about them. So if you can’t afford to wait out an appeal, seek an emergency grant to cover expenses that’ll come up until it’s decided.

Students in need of emergency grants should go get them. Don’t let coronavirus prevent the completion of your studies this spring!

Need information on how to make, and keep, postsecondary learning affordable. Start following the College Affordability Solutions website for articles and special bulletins like this.

Special Coronavirus Bulletin #8: You May Be Able To Suspend Your Private Student Loan Payments . . . If You Ask

It was recently announced that, if you owe one or more private educational loans, you may be able to suspend payments on it for up to three months. However, unlike student loan debts you may owe to the federal government, you need to contact your private student loan’s servicer to request such a suspension.

Scott Buchanan, executive director of the Student Loan Servicing Alliance (SLSA) — which represents companies private lenders hire to administer their educational loans — indicated borrowers who owe these lenders need to call their loan servicers if they’re in distress. This is because every private lender has its own payment suspension policies and procedures.

However, there’s significant pressure on private lenders to give their borrowers payment suspensions, interest waivers, and other forms of repayment relief similar to what the government’s provided to borrowers who owe federally-held student loans. Just two days ago, 12 U.S. Senators wrote to 13 of the nation’s largest private educational lenders urging them to offer such relief.

Of course, private loan borrowers can continue making payments if they don’t want them suspended. Doing so will eliminate their private student loan debts more rapidly.

Will your private educational debt’s interest accumulation be waived during a payment suspension the way it is under the CARES Act for your federally-held loans? Or will such interest end up being added to your loan balance when your payment suspension expires? Each lender decides this, too, so inquire about how your interest will be handled when you contact your servicer about a payment suspension.

And what about payment suspensions and interest accumulation waivers on state and institutional student loans? Such actions are up to the state agencies and postsecondary schools to whom such loans are owed, so contact the agency or school from which you borrowed to request a payment suspension and interest waiver.

If your financial life has been disrupted due to coronavirus, you should at least look into opportunities to put all your student loan payments on hold. Don’t be shy if you need to do this. In these days of skyrocketing illness and unemployment rates, you’re not alone!

To keep track of ways you can manage you student loan debts and other financial aid during the coronavirus national emergency, become a follower of the College Affordability Solutions website so you’ll always be notified of special bulletins such as this.

Special Coronavirus Bulletin #7: How To Suspend Payment and Interest Accumulation On ALL Your Federal Student Loans

You’ve probably heard that the new federal CARES Act has automatically suspended payments and the accumulation of interest on your “student loans held by federal government agencies” from March 13 through September 30.

This means that you need do nothing to have your federally-held postsecondary debt payments and interest put off until October — one way the federal government’s trying to eliminate financial burdens caused by economic upheavals during the coronavirus pandemic. But just what are student loans held by federal government agencies?

This term applies all Federal Direct Loan Program (FDLP) Loans. It also consists of other federal college debt owned by the U.S. government, including:

How can you find out if your Perkins and FDLP Loans were sold to the federal government? Contact the loan servicer administering those loans and ask.

And if such loans haven’t been sold to Washington, is there any way for them to get the automatic payment and interest accumulation suspensions available to FDLP Loans? Yes! You can borrow an FDLP Consolidation Loan to pay them off and, in effect, turn what you owe on them into an FDLP debt. It usually takes two – three weeks for FDLP consolidations to be completed. And when it’s completed, Perkins and FFELP interest will be capitalized (added to loan principal), so to minimize the amount of interest that’s capitalized, keep making Perkins and FFELP payments you owe until you’re notified that they’ve been consolidated.

The FDLP doesn’t consolidate private, state, and institutional student loans, but an FDLP Consolidation Loan will ensure that all your federal student debt payments are suspended without any interest accumulating through the end of September. If this’ll help you weather the current coronavirus crisis, start the ball rolling for a new FDLP Consolidation Loan today!

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com if you’re trying to figure out how to best manage your student loan debt, federal or otherwise. Let us use our 42 years of student loan expertise to work for you through our no-charge consultations!

Before College: Teaching Small Children About Money

Our children will leave for college in what seems like the blink of an eye, and among the things we need to teach them is how to work with money. There are many parts to this, of course – the nuts and bolts of day to day spending like remembering sales tax (for little ones) and keeping tabs on their bank balance (for older ones) — but how do broader concepts like debt and savings fit into it?

I believe that experience is the best teacher, and so from the time that they are quite young, it can be good to give kids the opportunity to experience both debt and saving. The key thing is to let them explore, because that is how they can learn.

How does an 8 year old learn about debt? The most likely scenario is that she will borrow some money from a sibling or friend, and then have to figure out paying it back. Some children can be quite disciplined and get it taken care of, others will find it more painful, or simply forget and need to be reminded. Either way, the important part is to not rescue them from having the experience and learning from it. It can be very interesting to see how our own issues can get triggered when our children are working through a situation, so if you feel uncomfortable, or have an urge to jump in and rescue, take a good look at that before you act!

Saving is another challenge. Teach them to save a portion of their allowance or earnings for the long term. (You can define how “long” that is – in my family we made it after they finished college.) This can be difficult. Most children will want to spend their money now; in fact, one could argue that most adults feel the same way! So be patient, but hold to it. When our sons had high school jobs we required them to save half of their earnings, and with the younger one it was easily a three-month period of daily pushback before he settled in!

The relationship between debt and savings is important. By practicing, children can learn how we build up savings, so that when they are away at college they will be able to run their finances from a cash-based rather than a debt-based approach – in other words, save up money before they buy something, rather than buy it first and then have to figure out how to pay for it. This takes patience and maturity to set up, but it will decrease both their stress and their financial vulnerability once they are at school and managing their own finances.

About Linda Matthew . . .

Today’s guest author is Linda Matthew, Accredited Financial Counselor® and owner of MoneyMindful Personal Financial Coaching, with which College Affordability Solutions has partnered since 2016. Linda has clients throughout the U.S. and Canada. She is also the parent of one college graduate and one current college student.

Linda’s new book, Teach Your Children About Money, describes age-appropriate methods for helping youngsters learn about themselves and different ways to manage their money. It also has a special section just for college.

Go to the MoneyMindful website for more about Linda, to arrange a free consultation and to order your copy of Teach Your Children About Money.