Before and During College: Parent Loans — Helpful Today, But a Potential Curse Tomorrow

IMG_1169Federal Direct Parent PLUS Loans. They’re often the way families fill the gap between their resources, financial aid, and costs their undergraduates incur at college. But parent PLUS loans have their pros and cons.

Parent PLUS loan advantages:

  • There’s no PLUS borrowing limit other than the cost of attendance for the student for whom you borrow (i.e. your “beneficiary”) minus her other financial aid.
  • The interest rate on each academic year’s PLUS loan is fixed so, unlike this rate on many private loans, it’ll never go up.
  • The only fee is a 1.069% federal loan fee.
  • Amounts you repay within 120 days of disbursement reduces principal and IMG_1150cancels interest and loan fee on that principal.
  • Your payments may be deferred while your beneficiary is enrolled at least half-time and during her 6-month post half-time grace period.
  • Payments may also be postponed under other federal deferment and forbearance programs.
  • Should you die or become totally and permanently disabled, or if your beneficiary dies, your PLUS debt will be discharged.

Parent PLUS loan downsides include:

  • The highest interest rate of all federal college loans. Currently 7.0%, this rate’s expected to rise on PLUS loans borrowed for the next few academic years. But with fixed rates, PLUS interest is still likely to be lower than variable rate private education loans.
  • To borrow a PLUS loan, you (or a cosigner) must have a sound credit history. IMG_1152Your credit history isn’t “sound” for PLUS if (1) when your credit report runs, you don’t owe over $2,085 that’s 90 or more days delinquent, or (2) for five years before your report runs, you’ve had no charge-offs, bankruptcies, defaults, foreclosures, repossessions, tax-liens, wage garnishments, or write-offs.
  • PLUS debt isn’t legally transferable to anyone else unless it’s privately refinanced.
  • Parent PLUS debt isn’t easily forgiven. Bankruptcy generally won’t discharge it, and it’s not eligible for the federal teacher loan forgiveness program. But, in addition to the discharges described above, it is eligible for Public Service Loan Forgiveness.

IMG_1151Borrow parent PLUS loans only as a resort, especially if you’re approaching retirement. Why? The Government Accountability Office recently found 17% of 65-74 year old parent borrowers had defaulted on such loans — subjecting themselves to expensive collection fees and the confiscation of their Social Security benefits and tax refunds. So while PLUS can be helpful today, it can be a curse tomorrow.

Note: College Affordability Solutions will be on “spring break” next week and so won’t be posting a blog. But look here again on Wednesday, March 21, for another post on issues related to keeping college affordable.

Contact College Affordability Solutions at (512) 366-5354 or if you’re looking for a no-cost consultation on strategies for minimizing college costs.


During College: Now’s the Time for College Students to Search for Summer Jobs

Seventy percent of student summer jobs are filled before June. So prompt your student to start searching now!

The payoff can be substantial — work experience, a chance to apply classroom learning, a stronger resume, funds for college. At average summer wages, a student working June 1 through mid-August can bank over $3,300 by saving two-thirds of his gross earnings, and many summer positions pays above that average.

If your student doesn’t have a summer job, here are five steps for effectively seeking one. You can help with all of them.

  • Define Himself and His Best Fits: Start with a self-analysis. What can he bring an employer in terms of knowledge, skills, and volunteer or work experience? Then identify the characteristics of jobs in which he’s interested — type of work, location, hours, pay scale, etc. He may not get everything he wants, but this’ll help him get as close as he can.
  • Make Himself Presentable: Now’s the time for him to write his resume and IMG_0968cover letter, leaving them on his word processor for easy updating and tweaking if needed. And since most summer employers audit applicants’ social media, have him review his and delete anything that might be inappropriate.
  • Search . . . and Search More: You and your student should network by sharing his resume with adults you know. Ask about their employers — lines of business, work environments, whether they use students in summer? If a workplace sounds promising, request contact names and ask the adult to be a reference. And until he lands a position, your student should continue searching for job opportunities on internet job boards, search engines, and websites; in newspaper ads, etc.
  • Get Out There: Urge your student to apply online or send send his cover letter and resume to employers of interest before spring break if possible, then visit IMG_0969those employers in-person over spring break. Remind him to dress conservatively and review of notes on each employer for each visit. Whenever the opportunity arises, he should complete applications and participate in interviews. Help him prepare for interviews by developing answers to common questions and formulating his own inquiries.
  • Keep After It: Advise him to follow up on opportunities he likes with notes of thanks and, later, with calls expressing continued interest in those positions.

Whatever your student’s summer employment needs, the keys are to start early, be thorough, and remain persistent!

College Affordability Solutions offers practical advice on strategies for keeping college affordable. Call (512) 366-5354 or email for no-cost consultations.

Special Bulletin: Congress Considering Cuts to Student Aid Programs

On Monday the White House released its budget proposal for Fiscal Year 2019, which begins this coming October. The prospective budget is similar to HR 4508, the “Promoting Real Opportunity, Success, and Prosperity through Education Reform” IMG_0890(PROSPER) Act. This is a bill designed to revamp federal higher education programs. It will soon to be debated in the House.

If your student is now or likely will be a federal financial aid recipient, contact your  U.S. Representatives and Senators to let them know your thoughts on the proposed budget and HB 4508. Why? If Congress passes either as written, several federal student aid programs would be reduced or eliminated.

Subsidized Federal Direct Loans: Currently, no interest is charged on these loans until six months after their undergraduate borrowers leave college. But they would end for those first borrowing on or after July 1, 2019. Even at current interest rates, which are expected to rise, this would increase the cost of borrowing the $27,000 maximum allowed over 4 academic years by at least $2,800.

Income-Driven Repayment: Four repayment options would be replaced by one repayment plan requiring ex-students to pay 12.5%, instead of the current 10%, of their discretionary income toward their federal college debts. The repayment period would last 15 years instead of 20 to 30 years for undergraduates, and 30 years for graduate students. Discretionary income is the amount a borrower’s income exceeds 150% of poverty-level.

Public Service Loan Forgiveness (PSLF): Any student first borrowing a federal loan on/after July 1, 2019 would be ineligible for PSLF.

Federal College Work-Study (FCWS): The budget would reduce FCWS funding by 49.5%. FCWS currently helps over 630 thousand students earn more than $1 billion a IMG_0891year to pay college costs. Graduate students would become ineligible for FCWS.

Federal Pell Grants: College costs keep rising, but the budget proposes to limit Pell Grants to the same amount as in FY 2019 as this year.

Pell Grant eligibility would be extended to students in short-term programs providing certificates, licenses, or other credentials for “in-demand fields”. For-profit vocational schools usually offer such programs, but their certificate earners average 1.5% higher unemployment rates, 11% lower earnings, and $5,000 more in student debt than students earning similar certificates at community colleges.

Federal Supplemental Education Opportunity Grants (FSEOGs): The FSEOG program, which provides extra grant dollars to approximately one million of the nation’s neediest Pell Grant recipients, would be eliminated.

Contact College Affordability Solutions at (512) 366-5354 or for a no-cost consultation you have questions about how to pay for college.


During College: Things To Watch For Before Signing An Off-Campus Lease

So your student found an off-campus apartment for next year. And now it’s time to execute the lease, which is strictly binding, and pay the deposit, which can be non-refundable. Guide her to do certain things before signing her name and turning over her money.

IMG_0532Tell her to read the lease thoroughly. This is a boring task, but she needs to understand everything in it. If she doesn’t, have her contact you, the local tenants association, or even an attorney for help.

She should zero in on key leasing terms and conditions. For example, when could her rent be increased, how does she get her deposit back, under what circumstances could she be required to vacate?

Advise your student to try to negotiate provisions out of the lease that’d give the landlord or property manager the right to:

  • Keep part or all of her security deposit for moving out early or normal cleaning and upgrades once she’s gone;
  • Charge her to repair or replace what she doesn’t break; or arbitrarily extend required periods for fixing or replacing things;
  • Enter her apartment without prior notice; and
  • Confiscate her property, unless she leaves it behind after moving out.

Coach her to check out the actual unit she plans to rent, if possible. It may be damaged or neglected in ways that’ll never show up in the model unit, and she’ll have to accept those deficiencies or fight with her landlord to get them fixed.

Tell her to conduct all business about her residence in writing. She needs datedIMG_0535 receipts or cancelled checks on all payments she makes, written commitments about how long repairs will take, and responses to all landlord notices in writing. Have her keep copies in her records in case her property’s management tries to rip her off.

Anything the landlord or his agent promises verbally that runs counter to the lease is a warning sign. She’s may be dealing with an unscrupulous character, so she should probably look for another place.

It’s important for your student to consult current residents or the local tenants organization about landlord/management’s record in living up to their responsibilities. Lease problems today’s tenants are experiencing are lease problems she’ll likely experience, too.

Finally, suggest she review local codes and ordinances on landlord/tenant responsibilities — who does inside and outside maintenance, how are landlord-tenant disputes settled, and so on? She can probably find these rules at public libraries or city offices and websites.

Yes. College is expensive. But if you’re trying to identify ways to make it less costly, do a no-cost consultation with College Affordability Solutions by calling (512) 366-5354 or emailing


During College: What to Consider Before a Student Chooses an Off-Campus Residence

Many students are now looking to move into off-campus housing next year. It’s natural. Leaving the dormitory’s cramped, closely supervised, heavily regulated environment is a natural part of growing into an independent adulthood.

But there are dangers your student may not recognize in the heady rush toward off-campus living. A bad living arrangement may lead to poor grades, dropped classes, and even dropping out, which can cost him (or you) lots of money.

Here are some issues your student should consider while searching for that off-campus apartment . . .

Is it affordable? New off-campus residences tend to be high-amenity facilities with IMG_0526everything from resort-style swimming pools to granite countertops and upgraded cable TV packages. But luxuries mean rent, deposits, and utility bills that may be outside your student’s budget. Costs may be cut by getting one or more roommates, and your student, like thousands of others, will definitely find he can save by selecting an older, more basic residence.

Roommate(s)? Speaking of roommates, your student should be extra careful about who he lives with. It’s not just about friendship. He needs someone he’ll get along with in close quarters, who’ll work to resolve conflicts, and on whom he can count. Off-campus living isn’t like the dorm — if his roommate moves out two months into the lease, your student will have to pay full rent and utilities.

Does the facility have what he needs? Notice the reference to needs not wants. A place offering sufficient space, bedrooms, bathrooms, kitchen facilities, and parking is more important than all those glitzy niceties.

Getting to and from campus? Easy access to classes is, of course, a necessity. If an IMG_0529apartment’s not within walking distance of campus, can your student get there on low-cost institutional or municipal bus systems?

Safety? Your student should check out issues of crime and safety in and around every facility he’s considering. Have him check police reports and talk to current residents for such information.

Landlord and/or management company? Too often, off-campus residences have crooked landlords and predatory managers. No matter how much they fail to deliver what’s promised to this year’s tenants, there’ll always be new victims who’ll unwittingly rent from them next year. Urge your student not to rent until he’s quizzed current residents and checked with local tenant organizations about complaints against the owner and management.

Look here next Wednesday for what to watch out for in the lease for an off-campus residence.

Got questions about college costs? Need advice on making college more affordable. Contact College Affordability Solutions by calling (512) 366-5354 or emailing for a no-cost consultation.


Special Bulletin: Your College-Related Tax Breaks Survived a Congressional Move to Eliminate Them

In November College Affordability Solutions urged you contact your members of the U.S. House and Senate in opposition to certain provisions within the House tax bill that was then working its way through Congress.

That bill was supposedly designed to cut taxes. But it would have done away with IMG_0428deductions and exemptions that reduce taxes for you and other students and parents by over $18 billion a year — money that helps pay college costs.

The original House bill was remarkably partisan. It was written by Republican House members without input from Democrats, and it got 227 Republican votes but no Democratic votes

Fortunately, the Senate also opposed eliminating college-related tax deductions, exclusions, and exemptions. It made sure they remained unchanged in the final bill, which is now law. So don’t ever think your voice doesn’t matter — constituent pressure clearly helped preserve these tax breaks!

Here are the college tax benefits that were preserved in the final bill:

  • If you’re a student, you still won’t be taxed on money you use from your College Savings Bonds to pay your educational expenses.
  • Parents, you may keep on making deposits into your Coverdell Education Saving Accounts to build up money for college.
  • The first $5,250 you use from your Employer-Provided Educational IMG_0429Assistance program to pay higher education costs will continue to be untaxed.
  • The Lifetime Learning Tax Credit remains unchanged. So you may keep reducing what you’ll pay in federal income taxes by up to $2,000 a year based on what you spend on tuition, required fees, books, and supplies for any student (including you) taking courses to get a degree or improve job skills.
  • The Scholarship and Fellowship Exclusion will continue to omit from federal taxation what your scholarships and fellowships pay toward your college costs.
  • Borrowers, you’ll still be able to claim your Student Loan Interest Deduction of up to $2,500 for student and/or parent loan interest you pay each year.
  • Your $4,000 per year Tuition and Fee Deduction remains unchanged.
  • Are you or will you be a graduate student? If so, any Tuition Reduction you receive in connection with a graduate assistantship or fellowship still won’t be subject to taxation.

Congratulations on keeping these benefits! But stay active and alert. More bills impacting college affordability will come before Congress soon.

Contact College Affordability Solutions by calling (512) 366-5354 or emailing


During College: Timely Advice To Help Your Student Manage January Expenses

January can be expensive for college students. A new academic term often means paying for travel back to school, tuition and fees, books and supplies, and room and board. Add leftover holiday bills and January spending can quickly get out of control.

How to best resolve all this without jeopardizing progress toward graduation? These are big, intertwined tasks, so your student may need guidance from you, her parents, or even a skilled money management professional.

Linda Matthew, an experienced Accredited Financial Counselor with Money Mindful Personal Financial Coaching, endorses a four-point approach.

(1) Your student should confirm exactly how much she owes and when payments are due using her records, including credit card and other receipts, to make a list of these.

(2) Urge her to prepare to pay her outstanding debts and soon-to-be expenses by IMG_0367writing out a spending plan for the first quarter of 2018.

This plan should include your student’s school-related costs. If she must pay 100% of these by a certain date to enroll and succeed in classes, she needs to pay them by that date even if doing so means spreading other payments over the next two or three months.

But payment may not be required on every institutional charge as the term begins. Some colleges offer payment plans that delay one or more installments until later in the term, freeing up funds for other January expenses. Some also offer short-term tuition loans. However, these usually require extra fees so she should take those costs into consideration.

Your student may also want to investigate refinancing her credit card debt. Doing so could reduce her interest and even postpone a payment on her new card’s balance.

IMG_0366(3) If your student ended up dealing with unexpected January expenses because she didn’t plan for this past Christmas, it’s absolutely critical that she begin saving for next holiday season as part of her spending plan. No sense in courting another problem in another 12 months.

(4) If extra income’s needed, suggest your student search out a short-term, part-time job if she’s not already working. Another way to raise money is to file for her federal tax refund ASAP. The IRS issues 90% of tax refunds within 21 days of receiving 1040 forms.

The holidays are over, but advice about managing expenses is one of the best gifts your student will ever receive!

To contact Linda Matthew at Money Mindful Personal Financial Coaching for help resolving your financial issues, call Linda at (530) 220-3369 or email her at
Have questions for College Affordability Solutions? Call (512) 366-5354 or email