Special Bulletin: Help’s Available for Current and Ex-College Students Affected by Hurricane Harvey

 

A little-known fact is that the U.S. Department of Education (ED) has policies in place to help currently-enrolled college students hurt by federally-declared natural disasters such as Hurricane Harvey. These policies also provide relief to disaster-affected ex-students and parents struggling to repay their federal loans.

A description of these policies, and what should be done to use them, is available on the Federal Student Aid (FSA) Programs’ Hurricane Harvey web page. Texas counties that have been declared federal disaster areas are listed on the Federal Emergency Management Agency (FEMA) Hurricane Harvey web page.

Here are some examples these policies:

  • Aid Eligibility: Harvey will no doubt undermine the ability of many families to come up with the money they planned to provide their students for the 2017-18 academic year. Students from such families should file the Free Application for Federal Student Aid (FAFSA) to request aid. If they’ve already filed their FAFSAs, students should contact their campus financial aid offices to learn what documentation is needed for them to request “professional judgment” reviews that can determine if they qualify for additional financial aid.
  • Damaged or Lost Documents: Sometimes students are required provide certain documents before getting their aid to verify the accuracy of their FAFSA data. If these documents have been damaged or lost due to Harvey, students should notify their financial aid offices. ED has given those offices the authority to not require those documents in such situations.
  • Dropping Out: Some student who’ve already received their fall financial aid may need to drop out to go home and help their families recover from Harvey. Such students should contact their financial aid offices and let them know why they are dropping out. In these circumstances, ED allows schools to waive a regulatory requirement that usually compels drop-outs to pay back federal grants received for the fall.
  • Temporary Postponement of Loan Payments: Many ex-student and parent borrowers are likely to find their ability to make federal educational loan payments disrupted because Harvey adversely affected them. Such borrowers should contact the “loan servicers” (contractors Washington hired to collect their federal debts) and request “administrative forbearances.” These forbearance allow affected borrowers to postpone their federal education loan payments for up to three months. Ex-students can get contact information for their loan servicers through the government’s National Student Loan Data System.

In the wake of all the problems stemming from Hurricane Harvey, current and ex-student borrowers who need help should review and use these policies!

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

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Before and During College: Help Your Student Avoid Credit Card Traps

There’s nothing inherently wrong with college students having credit cards. In fact, 56% of them posses at least one. But help your student beware of all those offers from banks and other credit card providers at this time of year.

After all, a credit card is an opportunity to rapidly amass high interest debt, and only predatory lenders would push such an opportunity at a naive 18-24 year-old with no regular income. In the words of Bernie Sanders:

What the . . . credit card companies are doing is not really much different from what gangsters and loan sharks do. . . . While bankers . . . don’t break the knee caps of those who can’t pay back, they still are destroying peoples’ lives.

IMG_8287So advise your student to ignore those unsolicited offers. Just the act of applying for multiple cards within a short period can cause her credit rating to take a dive. Instead, advise her to carefully search for and start with a single credit card — one without annual fees and, if study-abroad is in her future, without foreign transaction fees. Adding another credit card later is an option that can actually help build up her credit rating, but only after she’s learned the ropes.

There’s more danger, of course, once your student obtains a credit card. It poses an almost irresistible temptation to a young person facing the pressures of keeping up with more affluent peers in an environment full of spending opportunities.

In short, a credit card makes it far too easy to shell out too much. The credit card IMG_8288provider hopes she’ll do this, because then it gets to add interest and fees that may exceed 20% of whatever’s unpaid by the monthly due date. Her credit rating gets damaged, too. To keep this from happening, the provider figures you’ll cover the unpaid balance for her.

Still, when properly managed, a credit card offers certain benefits — funding for emergencies, small savings if it’s a reward card, a record of purchases. Moreover, if paid in full every month, your student will establish a strong credit score that’ll help her borrow for a car, home, and other big post-college purchases.

Help protect your student from the dangers and reap the benefits described above! Be assertive in coaching her about credit card management both before and after she goes to campus. Make sure her college credit experience is a good one!

Contact College Affordability Solutions at (512) 366-5354 or collegeafford.gmail.com for more information about how students and families can manage college-related expenses well.

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.