Before College: Don’t Delay or Pause Postsecondary Enrollment! Take Classes Now and Make as Much Progress as You Can!

Forty percent of academic year 2020-21’s admitted freshmen recently told surveyors they’re likely/highly likely to skip college this fall. And 28% of other students indicated they’d do the same. But unless college enrollment is absolutely impossible this year, make not delaying progress on your education part of your Pre-College Finance Plan.

You have good reasons to be reluctant about enrolling. Will you be safe from COVID-19 on campus? Will fellow students may behave in ways that spread it? Will online classes be worth the tuition and fees you pay for them, especially as some schools hit you with extra fees for providing those classes.

Even so, to keep college affordable, you’d be smart to make as much progress toward your degree or certificate as soon as you can, because your out-of-pocket (net) costs of attending a postsecondary school are likely to accelerate over the next several years.

Closing campuses, moving to online classes, and cancelling intercollegiate athletics are certainly the right things to do from a public health standpoint, but they’re also generating significant institutional revenue losses. Some school endowments can offset these losses. Most can’t. And since at least 35 states have already revised their 2021 revenue estimates downward, they’re unlikely to increase postsecondary appropriations. Result? In future years, tuition and fees will likely rise faster than their 5% per year jump over the last decade.

And during the next several years, cash-strapped states will find it difficult to impossible to keep their grants, scholarships, and work-study programs at current levels. This will accelerate net cost increases for students.

Speaking of scholarships, if you’ve been awarded one for 2020-21, you may not be able to keep it if you delay college until January or next academic year.

Must you borrow? The Federal Direct Loan Program’s (FDLP’s) interest rates are 0% through December 31. Thereafter, interest on FDLP loans for 2020-21 undergraduates will be 2.75% — the lowest ever. All of this’ll save you money when you start repaying your loans. But those 0% rates end on January 1, and for each academic year FDLP rates are set anew, so FDLP interest on future year loans will surely cost you more.

You may get housing and food refunds if campus closure makes living in a residence hall impossible for 2020-21, but your chances of getting such refunds are quite slim if you voluntarily give up dorm space that your school held for you.

If this fall’s only option is online courses, you can still get a lot out of those courses by really investing yourself in them. If you conclude that online credit hours won’t be worth the costs, go take transferable courses at a nearby community college. This can help you reduce how long you need to pay for school once your campus reopens.

With a future of fast-rising costs and financial aid uncertainty, make as much academic progress as you can as soon as you can. The savings will be worth it!

Are you scheduled to start your postsecondary education after this academic year? if you follow this website this fall at https://collegeafford.com, we’ll help you gather ideas for a Pre-College Finance Plan that’ll help you keep that education as affordable as possible when your day comes.

Special COVID-19 Bulletin #14: Your New 3-Month Payment Suspension — Will It Count Toward Income-Driven and Public Service Loan Forgiveness?

Hopefully you already know that the U.S. Education Department (ED) has extended two forms of COVID-19 relief on your federally held student loans — interest on those loans will continue to be 0%, and monthly payments you would otherwise owe have been automatically suspended. Both have been extended from September 30 through December 31.

While you’re not making monthly payments on these loans, will you still be able to count October, November, and December toward time-based loan forgiveness options for them? Yes, they will!

The forgiveness options to which we’re referring go into effect after:

Do you have “federally held student loans?” Yes, if ED made them to you under the Federal Direct Loan Program, of if their ownership was transferred to ED by commercial lenders that made them under the old Federal Family Education Loan Program or by your college under the old Federal Perkins Loan Program.

This extension prolongs identical forgiveness provisions established by Congress for March 13 through September 30 under last March’s CARES Act. According to Forbes Money Advisor, it was announced at a recent press conference by ED Secretary Betsy DeVos.

If you want the latest on postsecondary educational affordability, including but not limited to student loans, be sure to follow this website.

Special COVID-19 Bulletin #13: Federal Student Loan Relief Extended Through End of 2020

As we reported, the president signed an August 8 executive memo ordering the U.S. Education Department (ED) to do things regarding the requirements and conditions to continue temporary payment cessation and interest waivers on certain federal student loans. Unfortunately, nobody quite knew what this meant. But we now have the answer.

ED has announced that all borrowers with federally held student loans will have required payments automatically suspended until calendar year 2021, and that the interest rate on federally held students loans will continue to be set at 0% until that time. Collections on defaulted federally held student loans also remain halted until the new year begins.

The term “federally held student loans” means loans made under the:

  • Federal Direct Loan Program;

  • Old Federal Family Education Loan Program (FFELP) that were made by commercial lenders, but only if those lenders have turned those loans over to ED; and

  • Old Federal Perkins Loan Program that were made by postsecondary schools, but only if those schools have turned those loans over to ED.

Are you still repaying a FFELP or Federal Perkins Loan that hasn’t been turned over to ED? And what if you’re repaying a private student loan? Sorry. You get no payment suspension or 0% interest rate.

But if you do have a federally held student loan and you wish to make one or more payments on it during the rest of 2020, you’re welcome to do so.

Democrats in Congress wanted to extend payment suspensions and 0% interest on federally held student loans for another year — through September 30, 2021. They also wanted to expand those suspensions and that interest rate to all student loans, even private and other federal student loans not federally held. However, congressional Republicans refused to agree. So, in the absence of any new law, this executive action is a relief measure for Americans struggling due to the COVID-19 pandemic.

Should changes occur on any of this, we will post another article about it.

Follow the College Affordability Solutions website to get the latest news on developments related to your efforts to control and pay postsecondary educational costs.

Before College: America’s Postsecondary Affordability Crisis

You may wonder if education after high school is worth what you pay for it. And you have good reasons for doing so, because postsecondary educational costs are way too high.

In academic year 2018-19* U.S. Median Household Income (MHI) was $63,179. Here’s the share of that needed to cover the average full-time student’s budget at various types of postsecondary schools:

The result is that, without considerable financial aid, postsecondary studies are simply unaffordable for low and even many middle-income students. But such assistance is woefully inadequate these days.

Federal Pell Grants are the nation’s single largest source of student grant and scholarship funds. But inadequate appropriations limit them to the lowest-income undergraduates. And even then, Pell Grants averaged only $4,160 in 2018-19 — just 8% to 23% of what students budget for their expenses.

Loans are by far the largest source of student financial aid, and 65% of the Class of 2018* who earned bachelor’s degrees did so after borrowing an average of $29,200 — swelling their lifetime costs for postsecondary learning by as much as $5,230 even at today’s low interest rates.

Not surprisingly, postsecondary attendance has declined significantly. Since fall 2010, when 20.1 million Americans were attending colleges, universities, and trade and technical schools, there’s been a net enrollment decline of 14%. So even before the spring 2020* COVID-19 pandemic, fewer than 17.2 million Americans were at such institutions.

That’s bad news, because in the 21st century’s knowledge-based, high-skill economy, Americans without postsecondary degrees and certificates are increasingly limited to shrinking numbers of lower-paying and less-healthy jobs.

For example, in 2017, the median lifetime earnings of bachelor’s degree holders was $1.2 million — twice that of high school graduates. And in 2019* the unemployment rate among those with bachelor’s degrees was 2.2%, considerably less than the 4.1% unemployment rate for high school graduates. Moreover, during the current pandemic, those least likely to suffer layoffs and/or contract COVID-19 are those working online from home — and they’re mostly college graduates.

Absent big changes, student costs will continue to rise and government appropriations for limiting those costs are unlikely to keep pace. So education after high school will become even more unaffordable, and student debt will keep increasing.

But if you hope to one day be a postsecondary student, or postsecondary parent, there’s a way to help offset these problems, even if you’re not rich. It involves designing and living within a “Pre-College Finance Plan.” We’ll discuss strategies for such a plan right here every Wednesday for the next four months.

So don’t miss a single one of the Pre-College Finance Plan elements we’ll be covering this fall!

* Most recent data available.

It’s never too early or too late to put together your Pre-College Finance Plan! Become a follower of this website now to make sure you receive every article we publish on such plans!

Special COVID-19 Bulletin #12: Key Questions Unanswered by President’s Guidance on Student Loan Relief Extension

This past Saturday, to great fanfare from the White House, President Trump signed some executive memos he said will provide extended economic relief to Americans in the midst of the COVID-19 pandemic. One of these documents related to student loans. The problem is that it’s impossible to know whether you as a borrower will get extended relief and what that relief will be.

The CARES Act Congress passed in March automatically waived interest charges and automatically suspended monthly payments on all student loans you owe to ED. This waiver and suspension lasts from March 13 through September 30. It also required ED to count March 13 through September 30 toward the number of months required for you to qualify for Public Service Loan Forgiveness (PSLF) if you’re a public and private nonprofit employee that would have been obligated to make payments.

Democrats in Congress wanted to extend your waivers and suspensions for another year — through September 30, 2021 — on student loans owned by ED and other parties. But congressional Republicans refused to agree, so Trump’s memo is supposed to substitute for additional changes in federal law. However, the memo directs ED only to waive or modify “the requirements and conditions of economic hardship deferments . . . and provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest. . . .”

Here’s what’s not clear:

  • Will you get an automatic extension or need to apply for an extension and meet rules set up by ED?

  • Will the months to which your extension applies count toward the number of months you need to qualify for PSLF?
  • Will wage garnishment will resume against you if you defaulted on your ED-owned student loan debt?

What is clear is that, whatever ED does, it will:

  • Last only from October 1 through December 31, 2020 — nine months before what would have been the new end of the extension period Democrats wanted.
  • Apply only to your student loans owed by ED — mostly loans made under the Federal Direct Loan Program.
  • Not apply to your private student loans, or your loans from private lenders under the now-defunct Federal Family Education Loan Program, or loans you got from postsecondary schools under the Federal Perkins Loans that closed down in 2018.

Stay tuned! We’ll post clarifying information on this website if and when it becomes available from ED.

College Affordability Solutions offers 42 years experience to help you understand how to best manage and repay your student loan debt, and we never charge borrowers for our services. To arrange a consultation, contact us at (512) 366-5354 or collegeafford@gmail.com.