After College: What If You Can’t Afford Your Monthly Student Loan Payments?

What if you are or soon will be making payments on your Federal Direct Loans on your Federal Direct Loans (FDLs), but you can’t afford the amount you’re scheduled to pay?

You’ve got a serious problem! The day after you miss some or all of a monthly payment you’re delinquent on your FDL debt. If you don’t pay the delinquent amount within 90 days, you’ll be reported to all three national credit bureaus, which’ll really mess up your credit rating.

And if you’re still delinquent after 270 days, you’re in default.” Now the government’ll inflict some nasty penalties on you — e.g. you’ll be required to pay the full amount of your debt immediately, the Treasury Department’ll take any federal benefits or tax refunds you’d otherwise get to reduce that debt, and your wages will be confiscated for the same purpose.

But there’s good news! You have ways to reduce your monthly payments. Check them out and get into the one that’s best for you immediately upon realizing your monthly payments are too high:

  • Switch Repayment Plans: You’re probably on the 10-year Standard Repayment Plan. It’s great if you can afford it because it’s the quickest and, in the long run, least expensive way to repay your FDL debt. But it typically requires the highest monthly payments of all federal repayment plans. You can switch to another plan that’ll lower those payments — some of them by tying them to your family size and income. Use the Federal Student Loan Repayment Estimator to calculate your payments and the number of months you’ll make them under each plan for which you’re eligible.
  • Consolidate Your FDL Debt: You can also borrow an FDL Consolidation Loan to replace all your existing federal loans, and depending on what you owe you can get a longer (12-30 year) repayment period. While this’ll cost you more to eliminate your debt, it’ll immediately and significantly lower your monthly payments.
  • Deferment: Need to temporarily postpone your monthly payments? Consider getting a deferment. You qualify for a deferment by meeting specific conditions associated with economic hardship; graduate fellowship, in-school status, active military duty (current or recent), rehabilitation training, or unemployment. If you qualify, you’re entitled to a deferment for a certain time period, and Washington won’t charge interest on your subsidized FDL debt during that period.
  • Forbearance: Forbearance lets you totally postpone or reduce your monthly payments for a set number of months. There are “mandatory forbearances” for those in AmerCorps, the Department of Defense Student Loan Repayment Program, medical or dental internships or residencies, national guard duty, high student loan debt burden situations, and the Teacher Loan Forgiveness program. There’s also a “general forbearance” for borrowers changing jobs, paying off medical expenses, experiencing financial difficulties, and enduring other problems acceptable to their loan servicers. The downside? Washington charges interest on your subsidized FDL debt while you’re forbearance, then adds whatever interest is unpaid to your loan principal when forbearance ends.

If your monthly payments are or will be unaffordable, pick your best option for reducing them and contact your loan servicer to get it — right away!

Need help analyzing your options, contact College Affordability Solutions at (512) 366-5354 or to arrange a consultation. We never charge borrowers for consulting with them!

Before College: How Your Fellow Americans Pay for College

Ever wonder how your friends and neighbors cover college costs? Sallie Mae has been researching this for the last 12 years. It’s most recent data were gathered last spring through interviews with 18-24 year old undergraduates and their parents. They offer some valuable insights.

College-Related Costs

College-related costs averaged $26,226 in academic year 2018-19 — just about the $25,890 average cost of attendance published by public four-year institutions. Of course, these costs keep rising but, even if they were to remain at 2018-19 levels for the four or more years it takes to get a bachelor’s degree, college costs would total at least $105,000 per student — way too much for low and middle-income American families to fully pay from their annual earnings.

College Finance Plans

Clearly, families need to execute college finance plans — featuring investments, savings, and other strategies — well before their students ever enroll, but just 46% of parents and 31% of undergraduates reported that they had such plans. Small wonder Americans now owe $1.5 trillion in college debt!

College Funding Sources

Despite their heavy reliance on financial aid and loans, families are the biggest source of college funding. Earnings and savings by parents and students combined to cover $11,303 (43%) of 2018-19’s college-related costs. However, since less than half of households have college financing plans, most of this comes earnings during the college years, not savings, meaning that parents and students pass up other important purchases, work extra jobs, and maximize overtime hours.

Most families count on grants and scholarships to help offset college costs. In 2018-19, 70% applied for financial assistance, and 57% received grants while 65% got scholarships. But grant and scholarship money combined to average just $8,177 — less than 32% that year’s college expenses.

Then there are loans. Although 28% of families hadn’t planned to borrow for college in 2018-19, more than half of them took on postsecondary debt during that year. Average amounts borrowed were $3,746 for undergraduates and $2,585 for parents. This means loans paid 24% of costs incurred while in college. But since they must be repaid with interest, loans actually expand and extend college costs.

Perceived Value of Higher Education

People know borrowing has drawbacks. The more debt students and parents took on, the more likely they were to feel that postsecondary learning was overpriced and overvalued. Clearly, the amounts that must be borrowed for college contribute to today’s high dropout rates.

Take Aways

These data suggest some important things about paying for college:

  • College is so expensive that, no matter how far away it is, you need a college finance plan.
  • Aggressively seek grants and scholarships before and during college, but you can’t count on them to cover even half of college-related costs.
  • Remember, students and parents pay the largest share of college costs, either from their incomes, their savings, or by borrowing.
  • The less borrowed, the more likely students are to actually get the degrees they seek.

Do you have one or more family members who are college-bound? Trying to figure out how you and they can minimize debt when paying college-related costs? A no-charge consultation with College Affordability Solutions just might help. Contact us at (512) 366-5354 or

During College: New Year’s Resolutions to Help Current Students Make College More Affordable

January begins a new calendar year. For postsecondary students, it often marks the beginning of a new academic term. So its a great time to make New Year’s resolutions that’ll help make your education more affordable.

  • I’ll make a spending plan for my money each academic term! Add up the money you’ll have after paying for tuition and required fees (including room and board if living on-campus). Then divide the term into weeks. For each week, project what you’ll need for crucial necessities such as, if you live off-campus, groceries, rent, transportation to and from campus, and utilities. What remains is what you’ll have for personal spending — clothes, eating out, toiletries, etc. Need more? Seek a part-time job or expand, within limits, your hours in your current part-time job.
  • I won’t borrow more than I need, no matter how much my school offers me in federal student loans! Your financial aid office may offer the maximum amount for which you’re eligible from the Federal Direct Student Loan Program (FDLP), not just what you need. But the more you borrow the more interest you’ll be charged. At current interest rates, every $100 you borrow will cost as much as $44 in extra interest over the life of your loan. So contact your aid office about declining or downsizing any FDLP loans (unsubsidized loans first) you don’t need.
  • I’ll prepay my federal student loans whenever I can afford it! If you couldn’t downsize your FDLP loans, or if you have money left when end of the term’s coming, contact your aid office for help in making a “prepayment” on your FDLP loans (again, unsubsidized loans first) within 120 days of their disbursement date. Any amount you prepay this way will have it’s loan fees and interest cancelled.
  • I’ll keep trying for scholarships until I graduate! Plenty of students pursue scholarships before college, but far fewer do so once enrolled. Big mistake! Many scholarships are targeted at students already attending postsecondary schools. They may be offered by on-campus departments, off-campus organizations, and even providers in your hometown. So keep looking for them!

College costs can eat up considerable amounts of your lifetime earnings and take as long as 30 years to pay. So keep New Year’s resolutions such as these now for a better life later!

College Affordability Solutions can help you find ways to cut your college costs. For a free consultation, contact us at (512) 366-5354 or

Before College: New Year’s Resolutions for Parents of College-Bound Students to Make College More Affordable

January is New Year’s resolution time! If you want your child to get a college degree, here are just some of the college-affordability resolutions you should pursue this year.

  • I’ll maximize my investments and savings for my child’s college education! One academic year at a public 4-year college or university now costs $26,590 on average — a whopping 42% of Median Household Income (MHI)! At their current growth rate, this cost will grow to almost $35,000 in 10 years. Your annual earnings during the college years probably won’t cover them all. Put aside everything you can now so your child, and you, can borrow less later.
  • I’ll help my preteen become a strong reader, speaker, and writer! Good communication skills are important in almost everything, including college scholarships. Applicant essays and interviews usually get careful consideration from scholarship evaluators. Students who express themselves clearly, succinctly with grammatical correctness get more scholarships.
  • I’ll encourage my high schooler to participate in extracurricular activities, pursue leadership positions, and take on part-time employment! These things can enrich the high school years. But also, few scholarships get awarded solely on the basis of grades. Applicants strengthen their scholarship chances by persisting in out-of-class activities, working their way into leadership roles, and holding jobs.
  • I’ll help my high schooler begin identifying a career direction! This includes pinpointing activities and classes that make her happy, creating a self-portrait consisting of statements describing her personality, and developing a list of her top five strengths and weaknesses. She can seek fields of study and occupations that match these qualities by consulting her high school counselor and/or using online tools such as College Board’s Major and Career Search. All this will position her to better select the right postsecondary school and major.
  • I’ll support my child taking dual credit classes to attend college during high school. Almost every community college offers dual credit courses for low or no tuition. They provide a taste of college-level coursework and, provided they transfer into the college she’ll eventually attend, they’ll reduce her college costs by shortening the time it takes her to get the degree she wants.
  • If my child’s selecting a college this year, I won’t worry about it’s level of status and prestige! Focus instead on finding a college that’ll fit her well to reduce the chances of her transferring and having to pay for previously completed courses not accepted by her new school. Also, consider having her start at her local community college — where average cost of attendance can be as little as 35% of a public 4-year institution — for general courses that’ll transfer to wherever she’ll complete her bachelor’s degree.
  • If my child will leave home for college this year, I’ll ensure that she knows how to manage her money before he does. The merchants surrounding campus and those on-campus bookstores and eateries love separating students from their money. But knowing how to prioritize her spending, construct a spending plan (most students hate the word “budget”), and stick with that plan will make your child less likely to need emergency funds because her money’s run out.

Whether college will come sooner or later, things can done to make it more affordable. Get started now!

Looking for help in putting the pre-college parts of your postsecondary education finance plan together. Feel free to reach out to College Affordability Solutions at (512) 366-5354 or to arrange a cost-free consultation.

Before, During, and After College: Federal Student Loans May Soon Undergo Many Changes

We recently reviewed provisions reduce college prices and increase grants for needy collegians in the College Affordability Act (HR 4676) , now pending before the U.S. House of Representatives. Today we look at how HR 4676 would modify federal student loans.

Improving these loans is essential. The latest data from College Board show them accounting for 87% of all college borrowing and 29% of all financial aid. The Project on Student Debt reports that 65% of undergraduates borrow an average of $29,200 before getting their bachelor’s degrees. And just last week the U.S. Secretary of Education announced 42 million Americans owe $1.5 trillion in federal student loans.

Here are highlights HR 4676’s student loan provisions:

  • Provides More Loan Dollars: Total college costs covered by Federal Direct Subsidized and Unsubsidized Loans continues to shrink because Congress hasn’t increased those loans’ limits in 23 years. But HR 4676 would restore the Federal Perkins Loans Program, which ended in 2017, by making it part of the FDLP. As in the past, institutions would select students for Federal Direct Perkins Loans. Selected undergraduates could borrow up to $5,500 and selected graduate students could borrow as much as $8,000 a year through these loans. Their borrowers would face 5% fixed interest rates, and Federal Direct Perkins Loan interest would be unsubsidized, meaning it would begin building from the day students get Perkins money and enlarge student indebtedness beyond $5,500 and $8,000 a year.
  • Eliminates Loan Fees: HR 4676 would eliminate the federal origination fees of 1.059% to 4.236% currently deducted from various FDLP Loans.
  • Simplifies Repayment: There are eight different FDLP repayment plans. Some complain borrowers can’t understand so many plans. So for those who borrow after July 1, 2021, HR 4676 would eliminate all but the most-used of these plans — Standardized Repayment, which requires the same monthly payments until the debt is fully repaid; and Income-Based Repayment (IBR), which ties monthly payment amounts to borrower income, then forgives anything still owed after 20 years of payments.
  • Federal Private Student Loan Consolidation: The federal government has never consolidated private student loans. That would change if HR 4676 becomes law. Financially needy private student loan borrowers could get federally consolidated private student loan debts with fixed interest rates of 4.53% if borrowed for undergraduate school and 6.08% if borrowed while in graduate school.
  • Limits Repayment Costs for the Financially-Stressed: Interest that builds up while FDLP payments are forborne for any reason or deferred due to financial hardships, Fulbright and graduate fellowship, or unemployment currently gets capitalized — i.e. added to loan principal — when forbearance or such deferments end. This can significantly enlarge federal student loan debts. But under HR 4676, such capitalizing would no longer occur.
  • Improves Parental Debt Management Options: Parents with FDLP PLUS Loans that helped their children pay college expenses are currently excluded from using IBR. HR 4676 would end this exclusion. It would also make parents eligible for loan forgiveness if the children for whom they borrowed suffer total and permanent disabilities.

The House will soon debate and vote on HR 4676. So if you like or dislike these revisions, or think they need to be changed, tell your House member right away! You can get his or her contact information here.

College Affordability Solutions will be closing for the holidays on December 13. But you can contact us by phone email at or by phone at (512) 366-5354 before 5:00 pm on that day, or after 9:00 am when we reopen on January 6. Meanwhile, we wish you a joyous holiday season and happy new year!

Before and During College: The U.S. House of Representatives May Vote on The College Affordability Act in the Next Three Weeks!

Last Wednesday’s article laid it out — bachelor’s degrees are fast becoming unaffordable even for middle-class students. Certain personal strategies can ease soaring college costs but, by themselves they’re often not enough.

We Americans generally expect our government to address problems affecting individuals and the nation as a whole. Unaffordable bachelor’s degrees are just such a problem. Today, 56% of America’s good jobs — those paying at least $35,000 for 25-44 year olds; $45,000 and up for 45-64 year olds — go to people with bachelor’s degrees.

And now that brains, not brawn, are the key to global competitiveness, the U.S. is falling behind. Examples: 1.3 million fewer Americans were pursuing college degrees in 2017 than in 2010. Meanwhile, we’re 13th in “knowledge workers” while our competitor, China, leads the world in them.

Unfortunately, Congress has done little about college affordability. The Higher Education Act (HEA) that governs federal postsecondary Education programs hasn’t been updated in over a decade.

But now the House Education and Labor Committee has produced the College Affordability Act (HR 4676). It would rewrite much of the HEA, and the House may vote it may before Christmas. Here are some ways HR 4676 would help make college more affordable:

  • Create the America’s College Promise Program: States eliminating community college tuition for full-time resident students would receive federal funds equalling about 75% of what they spend to replace that lost tuition. Today, this would result in a full-time community college student living at home paying only $5,700 per academic year at the average community college, just 21% of the average cost of a public 4-year university. Students pursuing associate’s degrees or starting toward bachelors degrees at community colleges would get substantial savings.
  • Pell Grants: HR 4676 would increase Federal Pell Grants to up to $6,695 in its first year, and it’d grow Pell awards with inflation thereafter. Today, America’s lowest-income students would be getting $500 (8%) more in Pell Grants. Financially needy middle-class students would benefit, too, because this would free up some state and institutional grant money for them.
  • TEACH Grants: TEACH Grants go to students in majors preparing them to be highly-qualified teachers in high-need fields in low-income K-12 schools. HR 4676 would double them from $4,000 to $8,000 per academic year. It’d limit them to juniors and seniors, and extend them to those majoring in early childhood education. HR 4676 would make TEACH Grants and maximum Pell Grants pay 53% of the average academic year’s costs at a public 4-year university today. Eliminating freshmen and sophomores would reduce the number of students whose TEACH Grants are converted to expensive federal loans because, ultimately, the students don’t go on to become teachers.

Do you like or dislike these changes? Exercise your right to express your opinion about them to your member of Congress! Find his or her contact information here.

Next Wednesday we’ll cover how HR 4676 would change the federal student loan programs.

Want more information about financial aid programs that make college more affordable? Contact College Affordability Solutions at (512) 366-5354 or to arrange a no-charge consultation.

Before College: Don’t Let Bachelor’s Degrees Become Even More Unaffordable to Middle-Class Students!

Are you “middle-class”? Do you want your children to go to get bachelor’s degrees? Well, you’ve got a problem, because such degrees are fast becoming unaffordable for families like yours.

Median Household Income (MHI) is right at the center of middle-class earnings. The latest data show MHI in the U.S. to be $63,179. A year at today’s average public 4-year university costs $26,590 for everything — tuition and fees, books and supplies, room and board, transportation, and other basic expenses. That’s 42% of MHI. Can you afford to spend 42% of your annual income to send a child to college?

And things are getting worse. Public 4-year institutions have always been affordable pathways to bachelor’s degrees. But rising costs are bringing that to an end. Four-year university costs grew 144% over the last 20 years, while MHI increased just 62%. Should these trends continue, over the next two decades the cost of going to a public 4-year college will grow to almost $65,000, or 63% of MHI.

Of course, there’s always financial aid and student loans. But, unfortunately, they’re not keeping pace with rising higher education costs, either.

The country’s biggest program for students needing financial assistance is Federal Pell Grants, but households with incomes of $40,000 or more get just 26% of Pell recipients and 18% of Pell dollars.

Furthermore, the portion of the average public 4-year university’s cost covered by the maximum Pell Grant slipped from 39% to 23% over the last two decades. This forced states and institutions to devote more of their grant funds to help their lowest-income students go to and stay in college. Result? Shrinking amounts of state and institutional grants for needy middle-class students.

Furthermore, Congress last set the annual limits for federal student loans in 1996. Thus the costs they cover for public university freshmen dwindled from 50% in 1999-00 to just 21% in 2019-20.

So if you’re middle-class, what should you do? Here are a few ideas:

  • You (and your children) should save and invest every possible penny for college;
  • Have your children shorten their time at a university while they’re in high school by steering them into transferable AP and dual credit courses; and
  • Forgo the status symbol that comes with going to a university right after high school and have your children generate big savings by living at home and taking transferable courses at a community college for a year or so after high school — today, average community college costs are about 1/3 of 4-year university costs.

You should also push your lawmakers for funding and policies that’ll make bachelor’s degrees more affordable. We’ll look into what’s brewing in Washington next Wednesday.

Need help identifying strategies to keep college costs from cutting your children off from bachelor’s degrees? Contact College Affordability Solutions at (512) 366-5354 or to arrange a no charge consultation.