Special Bulletin: Proposed Federal Budget Would Reportedly Makes Big Cuts in Programs for College Students and Graduates

The Washington Post reports it has received what a U.S. Education Department staff member described as “near final” documents showing the administration will IMG_6510recommend a 13.6% reduction in federal education spending next week. The budget proposal would reportedly affect federal financial assistance for college students as follows:

  • Child Care for Enrolled Parents: End a $15 million program helping to make child care affordable for low-income parents attending college.
  • Federal Direct Subsidized Loans: Make as yet unannounced cuts that could end this program, which currently serves financially needy students. If this happens, all federal loans for such students would be unsubsidized and begin compiling interest the day they are made — significantly increasing student borrowing costs.
  • Federal Pell Grants: Hold Pell Grants for the nation’s neediest undergraduates at their current levels ($606 to $5,920 for fall and spring combined). Due to inflation, this would decrease Pell’s future “purchasing power.” Some good news is that the budget would fund an extension of 2017’s summer Pell Grants in future years.
  • Federal Work-Study (FWS): Cut FWS funding by $490 million (almost half), significantly reducing federally subsidized on and off-campus jobs that financially needy students use to pay for college.
  • Income-Driven Repayment: Close down all current income-driven repayment plans available to federal college loan borrowers. These plans offer loan forgiveness for balances remaining after borrowers pay 10% to 20% of their incomes over 20 to 25 year periods. They would be replaced with a new income-driven option requiring payments equal to 12.5% of income and limiting loan forgiveness to balances still outstanding after 30 years of such payments.
  • Public Service Loan Forgiveness (PSLF): Eliminate PSLF, which offers tax-free debt cancellation on federal student loan balances owed by ex-students in public service jobs after 10 years of on-time payment. Over 550,000 federal, state, local, and nonprofit employees are already registered for PSLF. It’s not yet clear whether they or public servants not yet registered would be cut off from It.IMG_6511

Presidents propose federal budgets, but Congress ultimately decides them. So if you support or oppose any of these proposed cuts, call or write your U.S. representative and senators to tell them how you feel.

College Affordability Solutions will post more bulletins on this website as additional information becomes available.

Before and During College: Summer Can Be Used To Reduce College Costs

Spring semester ends soon. After finals, many students will use the summer to cut their college costs. The payoff for doing so can be huge!

Lot’s of employers need student employees to help manage increased summer activity levels. Others look to student workers to fill in for regular employees on summer vacation.

Over the last 4 years — from the summer after high school graduation through the summer before his senior year — Jack banked about $2,000 a year from his summer IMG_6029jobs. This allowed him to forgo the $2,000 per year in Federal Direct Unsubsidized Loan he would otherwise have needed to borrow for the costs of attending his university. It cut the principal and interest he’ll pay each month on his student loans by a third. It’ll also reduce the total amount he repays on those loans under the “standard” 10-year repayment plan by a whopping $11,200. That’s a darned healthy bite out of Jack’s borrowing costs.

IMG_6030Another cost saver is attending summer school at a community college close to home so the student doesn’t incur expenses for room and board. This is particularly effective during the summers after student’s freshman and sophomore years, when they’re likely to pick up courses that’ll count toward degree requirements at their universities.

Jill took this approach. Over two summers, she completed a total of 15 credit hours at her local community college. Tuition and required fees there were $117 per credit hour, versus $321 per credit hour at the university Jill attended fall through spring.

In doing this, Jill reduced the number of semesters it took to fulfill her university degree requirements from eight to seven. This cut her costs at that institution by $4,825 in tuition and fees and by $5,220 in room and board. So for $1,760, Jill cut her costs by $10,045 — a net savings of $8,285.

And the good news is that this isn’t an either/or proposition. Summer work? Summer community college classes? Many students do both!

Jack and Jill still get lots of summer “down time.” They still get to see friends they missed while away at school. And they still get to eat that good home cooking and to be with family. But their summers are also highly productive, because they significantly reduce the cost of their degrees — and what’s not to like about that?

Looking for strategies to keep college more affordable? Feel free to contact College Affordability Solutions at collegeafford@gmail.com or (512) 366-5354.

Before College: Make Decisions Now That Will Minimize College Debt

Soon after the upcoming college commencement season you’ll begin hearing it. “Who got me into all this debt?” or “My school made me take out all those loans!”

There’s truth in this. College costs keep rising. Grants and scholarships aren’t keeping up. But two other parties also contribute to rising collegiate debt — the student and, often, his parents.

Is your student spending conservatively — e.g. buying used textbooks from an online discount bookstore, not buying all his textbooks but accessing some through the campus library’s ebook collection?

Many off-campus residences sell themselves as “high amenity” facilities. But they’re IMG_5814also high rent. Is living in a new high-rise with a rooftop pool and granite countertops really necessary? Can your student survive someplace that’s older, plainer, and less costly? Can he split rent with one or more roommates, eat out less often, put a brown bag lunch in his backpack and cook more meals at home?

Does he absolutely need an automobile at school? He’ll likely pay hundreds to put it in some remote, vandalism-prone parking lot. Instead, can he use campus shuttle buses and municipal transit lines? Can he share rides home?

Can he work part-time? Contrary to popular belief, students who work 10-14 hours per week while enrolled perform better academically than students who don’t work at all.

Parents? You probably think your Expected Family Contribution (EFC) is too high. But EFC is based on a reasonable assumption — that you’ll max out your own financial 20091030family5049resources before asking your neighbors to pay for financial aid to send your student to college.

So can you downsize your vacations; maybe even turn some into “staycations?” Can you get another few years out of your car? Do you really need to hire out the house cleaning or yard work? Or can you redirect such discretionary spending to support your student?

Most colleges offer the maximum loan amounts for which students are eligible. But your student need not accept all that debt. Minimize his costs and maximize your EFC, then reject any loan amount you don’t expect to need. If you miscalculate, what you turn down can be reinstated later.

Remember, students who borrow to live like professionals while in college often live like students while paying off their debts after college! Keep this from happening to your student by downsizing or rejecting loan offers now.

College Affordability Solutions helps families identify strategies for minimizing higher education debt. Contact us at collegeafford@gmail.com or (512) 366-5354 to learn more,

During College: Spring Break, Not Spring Bankruptcy

Soon it’ll be spring break, an opportunity for fun, travel, and memories. Many college students consider it a right of passage, and many families want them to enjoy it.

But spring break can be expensive. College students spend well over $1 billion on it every year. But using government loans to pay for it will, even at today’s record low interest rates, cost at least $19.78 in interest for every $100 spent.

There’s still a lot of school left after spring break. So help your spring breaker be tough-minded and disciplined about spending decisions. For example:

  • Travel: The farther away the destination, the costlier the travel — especially img_5569if it involves high March air fares. For example, one major airline’s coach fares show a mid-March round trip Denver to Cancun (2,693 miles) costing $2,333 while its airfare from Denver to San Diego (1,078 miles) is $859.
  • Lodging: The more friends your student bunks with, the lower the cost for shelter, especially if they’re splitting the cost of a short-term rental house instead of hotel rooms.
  • Food and Beverages: Renters can prepare some of their own meals instead of eating out. And caution your student not leave an open tab anywhere. It’s also important to scrutinize meal and bar bills to avoid accidental or “moocher” charges.
  • Purchases: Clothing, swimsuits, footwear, etc. — urge your student to pack it, not buy it there at inflated prices. He or she should also take that student ID because it may generate some discounts.

More and more students are also saving by skipping those stereotypical beech and ski trips. Satisfying but much less expensive activities are out there. For example:

  • Your student can get some friends together for camping or an amusement park visit.
  • img_5570Volunteering can create lifelong memories while helping make the world a better place.
  • Spoil your student with his or her own comfortable bed and favorite meals while he or she comes home to enhance career prospects through job shadowing, searching out summer internships, or applying for post-graduation employment.

Spring break can be a great time — if your student can avoid overspending that generates a self-inflicted wound leading to a ramen noodle diet until finals end.

You can contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com. 

Before College: Shop Comparatively Using the Financial Aid Shopping Sheet

Many colleges have begun sending newly admitted undergraduates “award letters” showing the types and amounts of financial aid they can expect if they enroll in those schools. If your high school senior hasn’t already received such letters, they’ll probably start arriving in the next few weeks.

So dust off your calculator because, just as with any major purchase, the key to college affordability is comparative shopping.

Unfortunately, no two award letters are alike. Each uses its own unique layout and terminology. Few offer consumer information you need to know about institutions. This makes it difficult to compare schools based on affordability.

img_5222That’s why the U.S. Department of Education created the “financial aid shopping sheet.” Thousands of colleges send it with their award letters, making it easier to compare key numbers about them.

The shopping sheet’s left side shows each school’s cost of attendance — the college’s “sticker price” for the upcoming academic year.

Next comes the grants and scholarships your student is set to receive at that college for that academic year. These discount sticker price to determine the college’s “net price.”

Then comes other types of financial aid — work-study, loans — being offered to help your student pay the school’s net price.

The shopping sheet’s right side also has useful data. These include 6-year graduation rates at universities and 3-year graduation rates at community colleges. Such rates show how schools compare to similar institutions in getting undergraduates across the finish line.

The sheet also discloses the percentage of the school’s alumni repaying their federal student loans three years after beginning to do so — indicating how well the school prepares students for gainful employment.

Finally, you’ll see the median amount the college’s students borrow in federal loans, and their median monthly payments. This can give a rough sense of how much debt your student might be burdened with to attend that school.

Schools use shopping sheets on a voluntary basis, but beware of colleges that don’t provide them. Why are they trying to make it more difficult for you to compare them with other institutions? What don’t they want you to know about their aid offers or graduation and borrowing data?

You should select a college based on many factors, but the shopping sheet gives you useful, easy-to-compare affordability information for this all-important decision.

College Affordability Solutions conducts affordability analyses on institutions students are considering, whether or not those institutions provide shopping sheets. Call (512) 366-5354 or email collegeafford@gmail.com for more information.

A Year of College Affordability Solutions

College Affordability Solutions is dedicated to helping families keep higher education spending within their means. It uses this website to highlight postsecondary educational cost-management strategies at the times of the year when you and/or your student are most likely to need them.

21-of-the-most-beautiful-college-campuses-in-amer-2-20243-1428837186-9_dblbigDespite those who’ll try to talk your student out of college, postsecondary education is still worthwhile even if he or she has to borrow to pay for it. But student loans increase the cost of college, so do everything possible to minimize their use.

Over the last year, we’ve covered several approaches to keeping college and college-related debt affordable. Click on any of the links below to learn more . . .

Before College

Various investment and savings programs can help you prepare for college bills. Among these are 529 plans and college savings bonds, but you should explore them all – the sooner the better.

And be sure to apply for financial for every year of college. Complete the Free Application for Federal Student Aid (FAFSA) as soon as possible after October 1 but, by all means, before your FAFSA priority deadline arrives.

Student dependency status plays a big role in who completes the FAFSA. Other family factors do, too. But it isn’t as hard to complete as you’ve heard, especially if you fulfill 5 key steps, gather all the documents you need, and get answers to your last-minute FAFSA questions before doing so.

Long before the FAFSA, your student needs to begin aggressively searching for scholarships. It’s critical to know about the when and where and the how of doing this.

Pay close attention after you file your FAFSA to make sure you handle what happens next. Then carefully assess your financial aid offers as they arrive from colleges.

But it’s not all about financial aid and scholarships. A critical factor in college affordability is for your student to enroll in a college and major that fits him or her well.

During College

Once college begins, you can help your student keep his or her expenses within reason.140815_FF_BestCollegeCard Limited spending and indebtedness is important even with today’s low college loan interest rates.

Some of the most effective strategies for minimizing student borrowing include your student getting through college in 4 years or less while carefully managing money and avoiding rip offs such as the recent “student tax” scam. A little-known but highly-effective cost-saver involves returning unneeded federal loan dollars with 4 months of disbursement.

Help your student keep college more affordable by giving him or her some holiday gifts that’ll lower his or her reduce expenses upon returning to school and by recommending he or she generate funds through seasonal employment instead of borrowing.

After College

Seven out of 10 students borrow before earning their degrees, and over 90% of their loans come from federal loan programs. Fortunately, the government has designed  post-graduation strategies to help keep educational debt manageable.

dddddddd

Your student needs to understand what happens to college loans after graduation. It’s worthwhile to consider the pros and cons of student loan consolidation, an often-used tactic for reducing monthly debt payments. Equally important is knowing how your student might qualify for forgiveness on all or part of what he or she owes.

Coming in 2017

We’re taking a few weeks off for the holidays, but beginning January 4 we’ll start publishing again about plans for keeping college affordable. Here’s hoping you have the happiest of holiday seasons, and that you’ll rejoin us then!

 Find out more about College Affordability Solutions and its services at https://collegeafford.com, or by calling (512) 366-5354.

Reduce the Need to Borrow With Seasonal Student Employment

With the holidays approaching, merchants and other businesses are looking for part-time employees to help them through their busiest time of year. For college students, img_4463such jobs can turn into a great opportunity to earn money that will help reduce their reliance on loans.

Consider Bob, a first-year marketing major. Bob just landed a job at a restaurant near campus. From mid-November through mid-December he’ll wait on tables — not very glamorous, but his 14-hour per week work schedule offers sufficient flexibility to study for and pass all his final exams.

Even after FICA taxes are withheld, Bob’s going to clear $500 in wages and tips. That’ll buy his spring semester book, so he can reduce the spring loan he would have needed by $500. This will save Bob as much as img_4480$880 in the principal and interest he’ll repay after college. Imagine how much Bob will save if he also does seasonal work during his three remaining years of college!

To be sure, part-time work is not for everyone. If your student can’t manage priorities or is having academic difficulties, the end of the semester may not be the right time for him or her to take on additional responsibilities.

On the other hand, research has shown that students who work a reasonable number of hours (10 – 14) per week while enrolled average higher GPAs and graduation rates than their non-working classmates.

Bob will also boost his resume by adding workplace experience. And he’ll line up an employer who’ll serve as a reference for future job opportunities — about his ability to deal with people, understand customer needs, and other qualities marketing firms seek. These, too, are advantages of “working your way through college,” at least in part.

So talk with your student about looking into seasonal work. This can be done by visiting the school’s student employment office, inquiring with employers near campus, or both. The results could help reduce indebtedness . . . and in other ways!

College Affordability Solutions offers a wide variety of suggestions designed to help lower college student borrowing costs. Call (512) 366-5353 or email collegeafford@gmail.com if such guidance might be helpful to you.