After College: Questions to Answer Before You Begin Student Loan Repayment

Did you complete college this past spring after borrowing from the Federal Direct Loan Program (FDLP)? If so, your government-hired loan servicer has or soon will contact you to arrange the repayment of that debt. So you’ve got some decisions to make.

Your servicer will send you detailed information on the FDLP’s 10-year Standard Repayment Plan (Standard Plan). It’ll use equal monthly payments to eliminate your debt within a decade. Student borrowers who earned bachelor’s degrees in 2018 owed $29,200 on average — generating Standard Plan payments of $309/month and a total repayment cost of $37,063 ($7,863 of 27% more than the amount borrowed).

But your servicer will also offer you ways to investigate all eight FDLP repayment plans, and you should do that.

Some of the other seven plans give you extra months to repay, lowering your monthly payments, and some allow you to begin working toward various forms of federal student debt forgiveness. But it’ll also take you longer and cost you more to pay off your debt under most of them.

Selecting the right repayment plan can be confusing. To clarify and simplify this decision, answer two key questions:

  • What are my present career, financial, and personal circumstances; and
  • How do I expect these to evolve in the future?

Two recent graduates illustrate this . . .

Drew

  • Career: June MBA graduate now working for large, national accounting firm. Hopes to stay long enough gain experience that’ll help him open his own firm.
  • Financial: $51,000 in FDLP debt. Earns $82,00/year. Expects steady salary increases. Wants to buy a new car and house next year.
  • Personal: Age 26. Engaged to a law student. Planning to marry after she graduates next spring.

The Standard Plan would require monthly payments equaling about 10% of Drew’s take home pay — pretty high since he’s just starting out. So his best option is probably the Graduated Repayment Plan. It’ll require initial monthly payments equaling 6% of his take home pay. They’ll rise every few years, but his debt will be gone in 10 years, freeing up capital he’ll need to begin his own firm.

Megan

  • Career: Got teaching degree in May. First grade teacher in small, rural public school. Loves teaching and hopes to spend her career there.
  • Financial: $31,500 in FDLP debt. Earns $35,00/year. Knows this will rise slowly. Hopes to someday buy a house.
  • Personal: Age 22. No marriage plans at this time.

Megan should consider the income-driven repayment plans. Whereas her monthly Standard Plan payments would exceed 16% of her current take home pay, three income-driven plans can drop them to a much more affordable 7% of that amount. They also position Megan to eliminate her remaining debt in 10 years via Public Service Loan Forgiveness.

So before you start making your student loan payments, think about where you are now and where you will be in the future. Doing this will help you pick the best repayment arrangement for you!

Next Wednesday we’ll begin exploring the terms and conditions of all the repayment plans available to you on your FDLP Loans.

If you’re looking for advice on repaying your student loans, contact College Affordability Solutions at collegeafford@gmail.com or (512) 366-5354.

Before and During College: Do Your 2020-21 FAFSA in Just Six More Days!

October 1 is just six days away! If you or your child will need financial aid to pay postsecondary education expenses during academic year 2020-21 this date is a crucial.

The U.S. Education Department (ED) is scheduled to make the Free Application for Federal Student Aid, also know as the FAFSA-on-the-Web — the nation’s primary financial aid application — available on October 1, and you need to complete and submit this form then or as soon thereafter as possible.

Why submit your FAFSA so early? Because:

  1. Many states and postsecondary schools use FAFSA submission dates to set priorities for making awards from sources with limited funding — e.g. state and institutional grants and scholarships;
  2. It positions you for early financial aid offers from schools that make such offers, giving you more time to compare their affordability;
  3. You’ll also get more time to review, correct, and update (here) your FAFSA data on the Student Aid Report (SAR) that’ll be made available to you soon after your FAFSA-on-the-Web’s processed; and
  4. Finally, Louisiana and Texas now require almost all their students to complete and submit the FAFSA in order to graduate from high school, and more states may soon add this requirement.

Ensure your FAFSA-on-the-Web is complete and accurate when you hit the button to submit it. Toward this end, you need to know whether it’ll require parental information because you’re a dependent student. In general, such students were born after January 1, 1997, are unmarried undergraduates without dependents, and aren’t in the U.S. military or military veterans (see more here).

You’ll also need certain information to put on the 2020-21 FAFSA-on-the-Web for you and any parent who’ll sign it. This includes:

  • Federal Student Aid (FSA) ID usernames and passwords (click here to create them, if necessary);
  • Social Security numbers or, for non-U.S citizens, Alien Registration numbers;
  • Driver’s License number, if you have one;
  • 2018 Federal Income Tax Returns, W-2 Forms, and other earnings records;
  • Most current bank statements and investment records;
  • Records of untaxed income; and
  • Federal School Code for each postsecondary institution you may attend in 2020-21 (look them up here).

Forget the horror stories about how long and hard it is to do the FAFSA. It’s much faster and easier than ever if you take the steps described above. So be sure your FAFSA is complete and submitted as soon as possible on or after October 1 — you have nothing to loose and everything to gain!

Need help completing your FAFSA? College Affordability Solutions is available for free consultations at (512) 417-7660 or collegeafford@gmail.com.

Before College: Don’t Let Price Considerations Force Private Schools Off Your List of Potential Colleges — At Least Not Yet!

Anna and Nathan are twins who finished their college freshman year last spring. To protect their institutions, let’s just say that Anna attended University A — a private college receiving no state subsidies — while Nathan enrolled in state-supported public University B.

The total cost — tuition, fees, room, board, books, etc. — for an undergraduate at these universities is vastly different. Last year, it was $52,000 at University A but half that at University B.

Still Anna’s net price — what she and her parents paid after the grants and scholarships she received — was just under $12,000. Nathan’s was a bit above $18,000.

They’re from the same middle-income household, so both qualify for similar federal and state grant amounts. The difference is their scholarships — in this case, institutional scholarships. University A, with a smaller student body but significantly larger endowment, awarded Anna over $30,000 in institutional scholarships. Meanwhile, Nathan got just a $2,500 scholarship from University B. And Universities A and B aren’t the only private and public institutions where these counterintuitive price difference exist.

But there are also well-endowed private colleges and universities whose net prices are much higher than those of their state-supported counterparts. You’ll never know for sure until financial aid offers begin coming in, some of which come as late as next March or April for academic year 2020-21’s prospective freshmen.

The moral is this — don’t cross private universities off your college application list simply because their published total costs are higher than those of public institutions on that list, for private schools may surprise you with large tuition discounts in the form of significant institutional scholarships.

What can you do to improve your chances of winning institutional scholarships at any college or university? Here are some pointers:

  • File Your Free Application for Federal Student Aid (FAFSA) Early: The 2020-21 FAFSA becomes available October 1. Next Wednesday you’ll find out how to prepare to complete and submit it on that day or soon thereafter.
  • File the Institution’s Scholarship Application Form As Soon As Possible: Many colleges use their own scholarship applications to supplement the FAFSA. If so, be thorough but timely in submitting them.
  • Apply to Institutions That Are Good Academic Matches for You: If they’re good for you, you may be the sort of student that’s good for them. Anna, wanted to major in music, and was her high school’s leading pianist. University A’s highly rated music department was seeking talented young pianists, so some of Anna’s institutional scholarship dollars came from that department.

Never pick a school that’s unaffordable or a bad match for you. But right now is to early to narrow your options based on cost!

For more pre-college strategies to help keep the net price of your postsecondary education affordable, contact College Affordability Solutions at (512)366-5354 or at collegeafford@gmail.com.

During and After College: Prepare To Fight for Your Federal Public Service Loan Forgiveness!

The U.S. Education Department (ED) continues to block federal student loan forgiveness for public servants who qualify — i.e. those who’ve faithfully made 10 years of monthly payments toward their Federal Direct Loan Program (FDLP) debts.

Congress authorized the Public Service Loan Forgiveness (PSLF) Program in 2007 to help recruit well-educated millennial replacements for millions of baby boomers scheduled to retire from government and nonprofit jobs. But the Trump administration was running ED by 2017, when qualified borrowers began applying for forgiveness. And Trump’s ED despises PSLF. Last December, its Principal Deputy Undersecretary reportedly said PSLF is a disaster ED doesn’t support.

ED and FedLoan, its PSLF contractor, denied PSLF to thousands. Last year ED’s own statistics showed that 99.5% of PSLF applicants had been rejected. So in 2018 Congress created a fix, authorizing $700 million for a Temporarily Expanded Public Service Loan Forgiveness (TEPSLF) Program. TEPSLF qualifies otherwise eligible public servants for forgiveness after 120 monthly payments made under any FDLP repayment plan, not just certain plans as required by PSLF.

But last week, the non-partisan General Accountability Office (GAO) reported that 99% of TEPSLF applicants had been denied forgiveness. It found that:

  • Over 70% of those who requested TEPSLF by sending FedLoan the emails it requires didn’t attach their PSLF Forgiveness Applications or PSLF Employment Certification Forms. There’s so much confusion surrounding these forms that it’s clear applicants aren’t well-informed about them;
  • 12% of TEPSLF denials were because borrowers hadn’t yet spent 120 months making full, on-time payments or working the right jobs;
  • When TEPSLF applicants are denied, they’re never told how to contest their denials; and
  • TEPSLF forgiveness for the 1% who’ve gotten it averages about $41,000; but $653 million remain for TEPLSF to forgive other public servants’ FDLP loans.

So if you do or will qualify for TEPSLF, you may have to fight for debt forgiveness to which you’re entitled as long as Trump appointees run ED — and maybe longer! Here’s to prepare for that:

  1. Be sure you fully understand exactly what you must do to get TEPSLF — i.e. all TEPSLF eligibility criteria and required forms. This information is available through FedLoan’s and ED’s PSLF websites;
  2. Keep a copy of every form, email, and letter you send FedLoan. Use the Postal Service’s tracking function for anything you mail FedLoan and print, file, and keep the tracking function’s feedback to prove FedLoan received what you mailed;
  3. Keep clear, thorough notes — names, dates, times, discussion content, etc. — on every phone conversation you have with FedLoan or ED; and
  4. If you’re wrongly denied, appeal through ED’s Federal Student Aid Feedback System or Ombudsperson.

Sadly, you must assume Trump’s ED and it’s contractor are opposed to you getting the loan forgiveness you deserve under law. So these steps may be invaluable if you ever need help from your congressmen or to sue ED.

Need help understanding what you need to know about student loan repayment or forgiveness? College Affordability Solutions is available for free consultations at (512) 533-5354 or collegeafford@gmail.com.

Before College: Hey High School Seniors! If You’re Not Already Searching for College Scholarships, You Should Be!

Jacob just began his high school senior year. He and his parents recently consulted us about raising the money he needs for a quality college.

Mom and dad can help, but their means are limited, so Jacob needs government grants and loans, summer jobs, and part-time work during the academic year to go to school.

Scholarships would be a big help. They’re the largest source of free money for college, providing as much as three times the amount available in federal grants!

But Jacob hasn’t looked for scholarships. This means he’s about six months behind his more scholarship-savvy classmates. Notifications about scholarship opportunities began coming out this past spring, and fall of the senior year is the key time to apply for them.

Why hasn’t he looked? “I’m just a C+ student,” he said, “I play football and soccer, but I don’t start. Why should I bother looking for scholarships?”

And that’s the biggest myth about scholarships — that they’re limited to academic and athletic stars. They’re not. Scholarships also go to students who meet a wide range of eligibility criteria including, but not limited to:

  • Student community, extracurricular, and leadership activities;
  • Student interest in various college majors and careers;
  • Parent or student membership in various civic organizations, churches, labor unions; and
  • Residence in cities, counties, and towns served by one of America’s millions of charitable foundations.

Where should Jacob begin his scholarship search? There are two places to visit right right away, and keep visiting through high school graduation:

  • High School Counselor’s Office: It receives notices about scholarships throughout the year. It organizes the in file cabinets, notebooks, or online for students to access them; and
  • Scholarship Search Engines: These national internet databases use student-created profiles to generate lists of scholarships for which students are eligible. Students won’t win every scholarship on their lists, but they should apply for all of them because they’re at least qualified candidates.

Free scholarship search engines are the ones to use. Some of the biggest are College Board, Fastweb, and Scholarships.com. But be warned, many search engines sell student profile data to merchants, so resist the adds you’ll get for products you don’t use or can’t afford.

There’s no single database or application for scholarships. As a result, students have to invest lots of time searching and applying for them. But think of it this way — every scholarship dollar won is one less student loan dollar to borrow. And at today’s interest rates, every student loan dollar borrowed can cost up to $2.05 to repay.

So what are you waiting for? Get busy! Start your scholarship search today!

Need pointers about seeking and applying for college scholarships? Students and their parents may consult College Affordability Solutions for free. Contact us by calling (512) 366-5354 or emailing collegeafford@gmail.com.

Before and During College: We Must Address Declining Enrollments By Making College More Affordable

The United States has a serious postsecondary educational problem. It’s affecting individual Americans and the whole nation. And though it needs to be addressed, it’s receiving scant attention.

From 2010 through 2017, fewer students enrolled in U.S. postsecondary degree-granting institutions every year. In 2017 almost 1,254,000 (6%) fewer Americans were attending such institutions than in 2010.

Federal enrollment compilations for 2018 aren’t yet published, but National Student Clearinghouse numbers suggest last fall will mark eight straight years of enrollment decline.

We’re in the knowledge-based century, so this matters — e.g. 79% of American manufacturing jobs went to those with high school diplomas or less in the 1970s, but now over half such jobs require some postsecondary education. Over 95% of all jobs created since the Great Recession went to workers with at least some college.

And for our nation to remain economically competitive, we need more Americans with postsecondary degrees. The U.S. now ranks 13th in the percentage of 25-34 year olds with these degrees (47.76%) — behind competitors like Canada, Japan, Korea, Russia, and the United Kingdom.

Here are some myths about our postsecondary enrollment decline . . .

  • Enrollment always increases during and drops after a recession: For nine straight post-World War II recessions, enrollment spiked in the fall closest to the peak of that recession’s unemployment rate. But the longest post-recession enrollment drop lasted just two years. Conversely, the seven-year post-Great Recession decline is the longest in U.S. history.

So what’s happening? Probably several things. But a most powerful one is surely the matter of postsecondary affordability.

In academic year 2018-19, the average total cost of attending public 4-year colleges and universities was 42% of 2017’s Median Household Income. No more than 24% of this cost was covered by the Federal Pell Grant, down from 43% two decades before. And 65% of 2017 bachelor’s degree recipients graduated after borrowing an average of $28,650.

These costs and debts doubtlessly frighten many students into joining, for example, the 56% who drop out of 4-year schools before completing bachelor’s degrees.

Moreover, the nation’s full-time equivalency rate of undergraduates fell almost 7% from 2010 through 2017. This indicates that increasing numbers are attending college part-time — a behavior strongly associated with dropping out.

But 78% of today’s postsecondary students work while enrolled, their jobs average 30 hours per week, and 25% of them work full-time. It’s nearly impossible to maintain full-time course loads with such demanding employment schedules. And what with escalating costs, family income limitations, and the shrinking “purchasing power” of their grants, students must work for money from sources in addition to or other than loans.

It’s time for policy makers to do something! It’s time to ensure that college becomes more, not less, affordable with each passing year. Reach out to your congressional and legislative representatives about this early and often between now and the 2020 election using Find Your Representative!

Seeking ways of your own to make education after high school more affordable? Let College Affordability Solutions help. Call or email us at (512) 366-5354 or collegeafford@gmail.com.

Authored by Tom Melecki, PhD, College Affordability Solutions.

Before College: Technical Schools May Be Better Options Than Colleges — But Shop Carefully For Them!

Kenny’s beginning his senior year in high school, and he’s looking forward to it. For one thing, his required schooling will soon end — something he’s looking forward to because subjects like civics, English, foreign language, and health bore him to death.

Kenny loves cars and the systems that operate them, so he wants to become a mechanic — and this year he’s got two classes directly related to that. One on computer systems; the other an advanced automobile mechanics course.

His guidance counselor tells Kenny that entry-level mechanics’ salaries average about $39,000 a year, but they rise for those with the right education, certifications, and experience. So Kenny knows he’ll need more schooling after high school. The question? Where can he get classes focusing solely on the workings of motor vehicles so he won’t be bogged down with subjects he doesn’t like?

Technical schools — also known as trade or vocational schools — are exactly what Kenny needs. Their classes and hands-on experiences lead to associate’s degrees, certificates, and diplomas for specific careers. And because their coursework concentrates on those interests, students can graduate from them more quickly and with a tighter focus than from 2 and 4-year colleges. They can also cost less than such colleges whether they’re for-profit or nonprofit.

Moreover, Georgetown University’s Center on Education and the Workforce reports that two-thirds of today’s jobs require postsecondary learning but not necessarily college, and that growing numbers of good jobs — positions paying 25-44 year olds at least $35,000 a year — don’t need bachelor’s degrees but do demand more than high school diplomas.

However, there’s a catch with technical schools. While many offer excellent classes and high placement rates, governments regulate and supervise this sector of postsecondary learning poorly — especially it’s for-profits — so some technical schools are rip offs. Their students suffer big educational debts, high drop-out rates, and few good jobs after graduation. Some are also in shaky financial condition, which can lead to overnight campus closures.

Kenny needs to shop carefully for technical schools, looking past their marketing pitches and instead:

  1. Checking out their costs, graduation and retention rates, salaries after attending, and student debt levels on the U.S. Department of Education’s College Scorecard;
  2. Finding and talking to their current and ex-students about whether they deliver what they promise;
  3. Doing Google searches to see if the media reports any complaints or scandals on them, or if they’ve recently closed any of their locations;
  4. Contacting their state regulatory agencies for whatever data they can share about them.

Good, sound technical schools help students achieve rewarding careers they want. But before enrolling, make sure they’re good and sound. Thoroughly check them out.

Searching for ways to get a quality but affordable postsecondary education? Call College Affordability Solutions at (512) 366-5354 or email us at collegeafford@gmail.com for a free consultation!