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!

Before College: Make Sure Your Freshman’s Loans Are There When Needed

IMG_7991Soon you’ll be taking your new freshman to college. If you or she are borrowing Federal Direct Loans for the fall term, and if those loans’ proceeds are needed to help cover start-up costs that accompany the beginning of school, make sure they’re ready in time to do this.

How? Use your respective Federal Student Aid (FSA) IDs to make sure the following steps are complete on the government’s studentloans.gov website:

1. Your student should open “Complete Entrance Counseling” and get the 20-30 minute online briefing that’s full of information she needs about her rights and IMG_7990responsibilities as a borrower. If you’re a parent borrowing a PLUS loan, you need
to not do this.

2. Your student should then open the “Complete Loan Agreement for a Subsidized/Unsubsidized Loan (MPN)” link and fill out its online promissory note — the legal document through which she promises to repay all the federal subsidized and unsubsidized loans she borrows for 10 years. It’ll ask for her permanent and email addresses, her phone number, and for this information on two “references” — U.S. residents who’ve known her for at least 10 years.

3. If you’re borrowing your first parent PLUS loan for your freshman, open the “Parent Borrowers” page and provide the data requested under “Apply for a PLUS Loan.” Then open “Complete Loan Agreement for a PLUS Loan (MPN)” and execute its online promissory note, which’ll cover the PLUS loans you borrow for her for 10 years.

When everything described above is complete, each loan’s proceeds will arrive at the school within school 5-8 days. The school may apply them to tuition and other amounts owed 10 days before classes begin, then turn whatever’s left over to your student.

What if you or your student haven’t done everything and have enough funds to not need federal loan dollars until later this fall or even next term? Then delay the steps described above until about two weeks before the loan money is needed.

Why? Washington doesn’t charge interest on unsubsidized and PLUS loans until the school applies their proceeds. At today’s unsubsidized loan interest rate of 4.45% and PLUS loan interest rate of 7.00%, postponing this event from, say, mid-August until early January reduces the amount of interest to be paid on $1,000 of unsubsidized and PLUS loan by as much as $33 and $15, respectively. Small savings, but if you can do this every year, they’ll add up!

College Affordability Solutions is back for the 2017-18 academic year! Look here every Wednesday for a new post about strategies you and your student can use before, during, and after college to make higher education as affordable as possible! And check out what we can do for you by opening the “Services Offered” link on this website!

 

Special Bulletin: Tell Your Congressperson to Increase Federal Student Aid Appropriations

The U.S. House of Representatives’ Committee on Appropriations recently voted to send HR 3358 to the full House for debate and a vote. This bill appropriates funds forIMG_7979 federal student aid programs for federal Fiscal Year (FY) 2018.

Here’s a summary of HR 3358’s key financial aid provisions as currently written. But they’re not final yet, and you should tell your congressperson what you think about them. Visit during their August recess, or call or write them. For their contact information, go here and enter your zip code.

Federal Pell Grant

This program provides grants of $600 to $5,920 to the nation’s neediest students. It has a $4.3 billion surplus that could be used to increase the size of these grants or provide grants to additional needy students.

HR 3358 would reduce this surplus by $3.3 billion and keep Pell Grant amounts the same as they were in FY 2017. With inflation, this would reduce the Pell Grant’s “purchasing power” — the portion of college-related expenses covered by Pell. Furthermore, it would not provide Pell Grants to any more students.

Federal Supplemental Educational Opportunity Grant (FSEOG)

FSEOG goes to the poorest Pell Grant recipients — mostly those with family incomes below $30,000 per year.

HR 3358 would put the same amount into FSEOG for FY 2018 as that program received for FY 2017. FSEOG would be unable to help any additional students and its purchasing power would diminish

IMG_7978Note: As Pell Grant and FSEOG purchasing power decline, it’ll be necessary for colleges and states to divert more of their grant and scholarship dollars to help Pell and FSEOG-eligible students. This would reduce the numbers of college and state awards available to students who are not needy enough to receive Pell and FSEOG, but who still need plenty of financial assistance to go to or remain in college.

Federal Work-Study (FWS)

Hundreds of thousands of needy college student get part-time jobs through FWS. Most of these jobs are on-campus and many are related to students’ majors.

The administration proposed to cut FWS appropriations by 50%. But HR 3358 rejects this proposal and keeps FY 2018 FWS funding the same as it was for FY 2017. Still, there would be little or no opportunity for additional numbers of students to secure FWS jobs unless the program receives more funding.

Time to Act!

HR 3358 could affect your student’s financial aid even if he doesn’t receive Pell Grant, FSEOG, or FWS. So don’t sit on the sidelines! Make your voice heard!

Special Bulletin: Does National Collegiate Student Loan Trusts Supposedly Own Your Loans? Make Them Prove It!

If you borrowed private student loans for your postsecondary education, and if an organization called National Collegiate Student Loan Trusts (National Collegiate) asserts you owe loan payments to it, double check everything it says about how much you owe and whether it actually owns your loans.

The New York Times reports that courts across the United States have dismissed IMG_7740many educational loan debts supposedly owed to National Collegiate because its was unable to prove that it had actually purchased those loans from lenders who originally made them. And in at least one case, a court dismissed part of a college graduate’s debt after finding that some loans for which National Collegiate was billing her were for enrollment at a school she never attended.

Note: National Collegiate is a “secondary market” that buys private student loans after they’re made, giving it the right to collect what borrowers owe in principal and interest on those loans. It has been particularly aggressive in going to court against private student loan borrowers unable to repay their debts.

National Collegiate contracts with American Education Services to provide its borrowers with services and do routine collections on its loans. The Times reports it uses a collection agency called Transworld Systems to collect debts when borrowers fall behind on their payments.

If any of your private student loans are being collected by either of these companies, determine whether National Collegiate Student Loan Trusts says it owns them. To do this, contact American Education Services and/or Transworld Systems to inquire. If they list National Collegiate as the owner of any of your loans, double check your records to confirm whether you actually borrowed them. If not, ask for documents proving you borrowed the loans and establishing what the courts call a “chain of title” to prove National Collegiate’s ownership.

Note: There are no reports of any federal or state student loans being dismissed by IMG_7739courts because of the irregularities described above.

Never stop making payments on and debt you really do owe. This can cost you big bucks and ruin your credit rating. And never, ever, use false or misleading information to try to get out of any of your debt obligations. That’s called a criminal offense called fraud!

But if there are questions about debts National Collegiate Student Loan Trusts says you owe it, retain a law firm or seek help from your local legal aid society if necessary. Don’t get ripped off!

We’re on summer vacation at College Affordability Solutions, but this issue was too important to ignore. Join us next month when we again begin publishing regular weekly blogs.

After College: If Your Student Loan Servicer Mistreats You . . .

The U.S. Education Department (ED) is the lender to which you owe what you borrowed under the Federal Direct Loan Program (FDLP). But ED doesn’t collect payments, answer questions, or provide help related to your FDLP debts. It’s contracted those jobs to one of nine private companies called a “loan servicer,” something many lenders do for their student and other consumer loans.

IMG_6914Loan servicers are usually very helpful. However, in one year alone there were over 30,000 documented complaints about them denying or discouraging the use of loan deferments, forgiveness, and repayment plans to which borrowers were entitled; inappropriately charging late-payment fees or increasing interest rates; losing or misapplying loan payments; and otherwise doing injustices to student loan borrowers.

If your servicer messes you over, here’s what you should do:

  1.  Go to ED’s Federal Student Aid website and review the applicable section under “How to Repay Your Loans” to make sure you understand your rights and responsibilities as a federal loan borrower.
  2. Call your servicer for help in resolving the problem. If necessary, speak with someone in management. Keep detailed notes — date, time, names, what you said, what they said, etc.
  3. Problem not resolved? Submit a complaint on the Consumer Finance Protection Bureau’s (CFPB) website. The CFPB is an independent agency under current IMG_6917federal law. It has the authority to investigate servicers, fine them, and require them to repay the money borrowers lost due to their errors. The CFPB also maintains a publicly accessible database about complaints regarding loan servicers and other financial companies — a database that can be used to determine which servicers ED hires in the future.

The U.S. House recently voted for HR 10. This bill that would end the CFPB’s independence and shut down public access to its complaint database. Also, Education Secretary Betsy DeVos has proposed taking servicer misconduct out of the criteria used to award future federal loan servicing contracts.

Nobody’s sure if the U.S. Senate will agree with HB 10 or the DeVos recommendation. So if you have federal student loans call, email or write letters to your Senators now. Tell them what you want them to do regarding these proposals.

And if you ever are mistreated by a federal student loan servicer, be aggressive in standing up for yourself and seeking relief. It’s your right, not just as a borrower, but as a citizen!

This is College Affordability Solutions’ last regularly scheduled blog for the 2016-17 academic year. But we’ll start up again in early August with more strategies to be used before, during, and after college for helping to optimize higher education affordability. Have a great summer. We’ll be back soon!

Before College: College “Sticker Prices” Aren’t Necessarily Their Final Prices

This summer is the time for rising high school seniors to begin researching colleges they may want to attend. There’s much check out, including each school’s costs.

To get an idea of what it’ll cost to attend different colleges and universities, go to their websites and search for “Cost of Attendance 2018-19.” You might also want to use College Navigator from the National Center for Education Statistics, opening its IMG_6849“Tuition, Fees, and Estimated Student Expenses” page to track cost increases over the last four years.

Here’s an important point — 2018-19 college prices you see on websites and College Navigator are “sticker prices” and not necessarily final. Schools generally engage in “discounting” their tuition and fees and, sometimes, other student expenses.

Colleges offer discounts differently than auto dealers, although the end result is the same. Rather than reducing a student’s tuition and fees, they give him grants and especially scholarships to pay these charges. For recruiting purposes, prestigious institutional scholarship offers often impress families and help bring in students.

Public and private colleges both discount. A new study by the National Association of College and University Business Officers found that private non-profit colleges and universities provided institutional grants and scholarships to 87.9% of new freshmen and 78.5% of all undergraduates in 2016-17. Collectively, these awards discounted tuition and fees by 49.1% for freshmen and 44.2% for all undergraduates.

Why discount? One reason is increased price sensitivity by families still recovering from the recession. It’s also related to decreased numbers of traditional college-age students and increased competition from other institutions for, like all businesses, colleges must bring in customers to survive.

IMG_6850Not every student should expect grants and scholarships equal to the discounting percentages noted above. Financial need plays a role. So do the characteristics of students an institution seeks to enroll; some want higher SAT scores, or certain types of musicians, or students likely to succeed in various academic programs. Your student won’t know his actual discount rates until winter or early spring, when he receives official financial aid offers from the colleges to which he’s applied.

The important thing is this — don’t let a institution’s “sticker price” discourage your student from putting it on the list of colleges to which he’ll apply. If that price gets discounted, it may be much more affordable than he thinks.