College Affordability Solutions Topical Index

This index links to almost 90 different posts from the last two years, each describing one or more approaches that’ll postsecondary education more affordable. Feel free to review them for steps you can take to do this before, during, or after college

Visit this index whenever you want. And mark August 15, 2018, on your calendar. That’s when College Affordability Solutions will begin publishing fresh posts again every Wednesday to help students and families devise strategies for making a quality postsecondary learning less costly to you.

Before College

College Finance Plan

Cost Reduction Strategies

College Costs

College Search and Selection

Credit Cards

Deadlines

Dependent and Independent Students

FAFSA (Free Application for Federal Student Aid)

Financial Aid Application Processes

Financial Aid Offers

Grants

Money Management

Parent Borrowing

Private Student Loans

Saving and Investing for College

Scams and Rip-Offs

Scholarships

Seeking Financial Assistance

Student Loans

Tuition and Fees

Value of Postsecondary Education

Verification

During College

College Finance Plan

Cost Reduction Strategies

Credit Cards

FAFSA (Free Application for Federal Student Aid)

Financial Aid Offers

Grants

Money Management

Off-Campus Housing

Parent Borrowing

  • Parent Loans — Helpful Today, But A Potential Curse Tomorrow (Published March 7, 2018)

Private Student Loans

Scams and Rip-Offs

Scholarships

Seeking Financial Assistance

Student Loans

Tax Benefits for Higher Education

Working While in College

After College

College Finance Plan

Consolidation and Refinancing

Debt Forgiveness and Cancellation

Grace Period

Missed Payment

Repayment of College Loans

Repayment Assistance

Repayment Problems

Tax Benefits for College Loan Repayment

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Before College: Step 1 in Building Your Student’s List of Potential Colleges

If you’ve got a college-bound student who’s entering her senior year of high school, it’s time for her to identify a set of schools to which she’ll apply this fall.

Step 1 is to build a list of institutions at which she’ll be happy and that will help her mature and succeed. Lisa Micele, Director of College Counseling at the University of Illinois Laboratory High School, recently provided some wonderful guidance about this list.

Ms. Micele cautions against concentrating solely on so-call “top-tier” and “name-brand” colleges and universities. The total cost of attending many of these institutions easily exceeds $60,000 per year. Some admit less than 10% of their applicants, and not all of their admitted students get institutional grants and scholarships to help discount their high costs.

This warning is right on target. And a 2017 report from the Institute for Higher Education Policy found:

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So before your student starts making her list, or at least early in that process, think carefully about your finances and family situation, then come up with answers to the following questions about how much your family will be able to contribute to your student each year from:

  1. Your annual income? Don’t forget expense reductions that can enhance this while she’s away at school – debt payments that’ll come to an end, her share of weekly grocery bills, money you can free up by squeezing your budget, etc.
  2. Your investment and savings accounts?
  3. Your retirement accounts? Think about how close you are to retirement when calculating this.
  4. Other family members? Consider funds from aunts and uncles, grandparents, and divorced spouses.
  5. What you would borrow in Federal Direct Parent PLUS Loans?

Now help your student answer these questions for herself:

  1. What’ll she be able to earn during summers and while in school?
  2. How much does she have in savings?
  3. What’s she willing to borrow in Federal Direct Subsidized and Unsubsidized Loans?
  4. How much Federal Pell Grant does the government’s FAFSA4caster estimate she’ll receive? It’s too early to count institutional, state, or private scholarships.

Add everything up and you’ve got an annual price range for schools your student can afford to put on her list. To find these prices, counsel her to search for “cost of attendance” on each school’s website, and then add another 4% per year (the approximate average annual increase in college cost over the last decade) for every year she’ll be enrolled.

Don’t worry. The U.S. has 4,360 degree-granting institutions, so your student will surely be able to some good “fits” in her price range while boosting her chance of graduating and keeping college debts lower – and isn’t that what it’s all about?

College Affordability Solutions can advise you and your student on strategies for keeping postsecondary education within your price range. Call (512) 366-5354 or email collegeafford@gmail.com for a no-charge consultation.

After College: Were You Wrongly Denied Public Service Loan Forgiveness? There’s a Chance to Fix That!

Are you a Federal Direct Loan Program (FDLP) borrower who applied for Public Service Loan Forgiveness (PSLF) after completing a decade of public service employment? Did you do exactly what you were told to qualify for PSLF, then told you weren’t eligible because you used the wrong student loan repayment plan? If so, help is now available!

What is PSLF?

Normally, PSLF forgives your remaining FDLP debt after you use a qualifying repayment IMG_2908plan to make 120 qualifying monthly payments while performing qualifying employment.

What’s the Problem?

Congress recently found that student loan servicing personnel hired by the U.S. Education Department (ED) to administer FDLP steered untold numbers of public servants into FDLP repayment plans that didn’t qualify them for PSLF.

After faithfully making payments for 120 months under the repayment plans they were directed to use, FedLoans (the loan servicer administering PSLF) informed these public servants they didn’t qualify for PSLF because they used the wrong plans.

So Congress created a $350 million fund to help borrowers left in the lurch by this fiasco. Applications for this money are now being reviewed under a program ED calls Temporary Expanded Public Service Loan Forgiveness, or “TEPSLF.”

What Should You Do?

If you were denied PSLF because of this blunder, ask for loan forgiveness again by sending an email to TEPSLF@myfedloan.org. Here’s the model ED recommends for this email:

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Do You Qualify for TEPSLF?

TEPSLF will forgive what’s left of your FDLP debt only if:

  • You submitted a PSLF application that was denied solely because some or all of your 120 monthly payments were made under the Extended or Graduated repayment plans — which don’t qualify for PSLF; and
  • Your employer(s) certified that you completed a total of 120 months of qualifying employment; and
  • FedLoans Servicing accepted your employer certification(s); and
  • Your payment amount for the 12 months before you applied for TEPSLF, and the last payment you made before applying for TEPSLF, equaled or exceeded what you would have paid under one of the four income-driven repayment plans qualifying for PSLF. FedLoans Servicing will make this determination and, when it does, it’s supposed to notify you by email.

Hurry Up!

While $350 million sounds like a lot, it’ll be used to forgive debts on a first-come/ first-serve basis. So if your PSLF application was rejected over the type of repayment plan you used, don’t miss your chance — email FedLoans Servicing right away!

Looking for advice on managing the debts you took on for college? College Affordability Solutions has been 40 years experience with student loan repayment issues. Call (512) 366-5354 or email collegeafford@gmail.com to consult us at no charge.

Before and During College: Get Answers to These Questions Before Borrowing Private Student Loans (Part 2)

In Part 1 of this series we identified answers to get on “up-front” issues when IMG_2699comparing a private versus federal student loan. Today we recommend questions to ask about things that happen after you get your money, but which are nevertheless essential to determining which loan is better for you.

Repayment Begin

  • When must you begin repaying your debt?

Payments aren’t required on federal student loans while you’re enrolled at least half-time and during a “grace period” lasting six months for Federal Direct Loan Program (FDLP) loans and nine months for Federal Perkins loans. Private student loan repayment start dates vary by loan.

Deferment and Forbearance

  • Under what conditions may payments be temporarily postponed or reduced?
  • What happens to interest that accrues (builds up) during these postponement and reductions?
  • Must you pay a fee to get your payments postponed or reduced?

You may temporarily postpone or reduce your monthly loan payments through various deferments and forbearances. Interest doesn’t accrue on FDLP Subsidized and Federal Perkins loans during deferment, but keeps accruing on other federal loans during deferment and all federal loans during forbearance.

The government charges no fees for deferment or forbearance, but some private lenders do — if they offer deferments or forbearances at all.

Loan Consolidation

  • May my federal and private college loans be consolidated?
  • Does my interest rate change if I consolidate? How much?
  • Does consolidating change my repayment period or other terms and conditions?

An FDLP Consolidation loan pays off whatever federal student loans you choose, but not your non-federal debts.

FDLP fixes your consolidation loan interest rate at the weighted average of all the loans it pays off, plus .125%.

You can usually get lower monthly payments on an FDLP Consolidation loan, which get extended repayment periods based on their size:

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Repayment Plans

  • How long will you have to fully repay your debt?
  • Do you have different repayment options. If so, what are their terms and conditions (monthly payment amounts, etc.)?

The FDLP allows you to choose from seven different repayment plans. The standard plan requires a monthly payment amount sufficient to pay off your debt within 10 years. Four others help ensure you’ll not be overwhelmed by monthly payment amounts by making such amounts a percentage of your Adjusted Gross Income, even if this requires a repayment period longer than 10 years.

Loan Discharge and Forgiveness

  • May any portion of your debt be cancelled? If so, under what circumstances?

Most private student loans offer no opportunities for discharge or forgiveness. Federal student loan debts may be discharged or forgiven under various reasons, including Public Service and Teacher Loan Forgiveness.

College Affordability Solutions offers free advice and counsel on college borrowing based on 40 years experience in student financial aid and student loans. Call (512) 366-5354 or email collegeafford@gmail.com for such assistance.

Before and During College: Get Answers to These Questions Before Borrowing Private Student Loans (Part 1)

Private credit providers want to increase their share of the student loan market. So if you’ll be in college — including graduate or professional school — during 2018-19, you may be targeted by private student loan marketing campaigns. If you are, remember that old saying, “Let the buyer beware!”

Private lenders want to convince you to borrow loans that’ll maximize their profits. You want to borrow loans that are as inexpensive as possible and, since you can’t predict the future, that give you flexible repayment terms. To do this, you’ll need answers to questions about your private and Federal Direct Loan Program (FDLP) borrowing options.

Here are some questions to ask:

Interest

  • What’s the initial interest rate?
  • Is the interest rate ever subject to change? If so, when and on what basis? If the changed interest rate was place today, what would it be?
  • Am I responsible for interest that accrues (builds up) during all phases of the loan’s life? What happens to this interest when I’m not required to pay it?

Many private college loans offer “introductory” interest rates that are lower than FDLP interest rates. But these rates generally rise later. Conversely, every FDLP loan has a fixed interest rate that’ll never change:

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FDLP interest payments aren’t required while you’re enrolled at least half-time and for six months after you leave school. But interest accrues on all but FDLP Subsidized loans during these times and, if you don’t pay it, it’ll be capitalized (added to loan principal) when your grace period ends. Many private loans handle interest in a similar manner.

Credit Record

  • What creditworthiness standards must you meet to get the loan?

Applicants get rejected, or charged higher interest rates, if they don’t have lender-required credit scores. But Washington limits access only to FDLP Graduate and Parent PLUS loans for applicants with “adverse credit histories.”

Loan Fees

  • How much will I be charged to obtain my loan(s)?

Washington currently charges a 1.066% fee on FDLP Subsidized and Unsubsidized loans, and a 4.264% fee on FDLP Graduate and Parent PLUS loans. Private lenders may require larger or smaller fees. These fees are deducted from the loan money you receive.

Private loan marketing campaigns usually concentrate on a few positive highlights about what they advertise so, to get all the answers you need, you’ll have to dig through lender websites and maybe even make calls or send emails to lenders. In-depth information on FDLP loans is available in the government’s Federal Student Loans: Basics for Students booklet.

Next Wednesday
Look right here for even more questions to get answered before you
borrow private student loans.

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com for free consultations about how to compare your college borrowing options.

After College: Look for Employers Offering Student Loan Repayment Assistance

You have or soon will complete your college commencement. Unless you’re about to begin graduate or professional study, you’re no doubt job hunting. If you have college debt, be sure to learn whether prospective employers offer student loan IMG_2287repayment assistance among their employee benefits.

Currently, only a few employers help employees pay down student loans. A recent survey found that just 4% of companies were doing this in 2017. But the number of companies offering this benefit is expected to grow in 2018, and some of America’s leading corporations — Aetna, Fidelity Investments, New York Life, Pricewaterhouse Coopers, Prudential, etc. — already provide it. So do some nonprofits and local governments such as the City of Memphis, Tennessee.

IMG_2288How does repayment assistance work on postsecondary debt? Your employer contributes a certain amount above and beyond the monthly payment you’re required to make. It’s contribution generally occurs on a monthly basis, although there may be annual and/or lifetime caps on its total contributions.

Employer-provided loan repayment assistance means your loans will be paid-in-full faster. Also, since the interest you pay is a product of how much you owe and for how long you owe it, it’ll also lower the amount of your lifetime earnings that you’ll devote to repaying your debt.

The Internal Revenue Service treats employer college debt payments as “taxable IMG_2289income” for the employees receiving this benefit, so put some money away to cover the increased federal income taxes you’ll pay on this amount. Nevertheless, any additional taxes you pay will be considerably less than what you’d spend if you paid 100% of your debt without employer assistance.

Why would an employer spend money to help repay its workers’ student loans? Think about it. Businesses in need of highly educated workforces gain a competitive advantage when recruiting the world’s most knowledgeable and skillful people — U.S. college graduates — 70% of whom borrowed while in school. Also, college educated employees are among the most mobile workers in today’s workforce but, being young and healthy, they often gain more from repayment assistance than medical, dental, or other types of benefits. So a company offering repayment assistance over a numbers of years also gives itself an advantage in retaining them.

You’ll likely earn less early in your career than at any other time. Employer-provided student loan repayment assistance can help resolve this while reducing your student debt, so carefully consider it as you evaluate prospective employers.

College Affordability Solutions brings 40 years of student loan experience to the table when consulting with ex-students about ways to manage their college debts. To arrange for a free consultation, email collegeafford@gmail.com.

Before and During College: Prepare for Rising Student Loan Interest Rates

The Federal Direct Loan Program (FDLP) provides 89% of all postsecondary educational loans. Unfortunately, FDLP loans will soon become more expensive to borrow.

FDLP interest rates are set every May for loans made from July 1 through June 30. The 2018-19 rates will be 0.6% higher than in 2017-18, making this the third year in aIMG_2154 row during which they have risen.

Note: FDLP loans are “made” from July 1 through June 30 if, during this period, any portion of their initial installments go directly to students or are applied applied to what they owe their institutions.

Higher rates increase borrowing costs. For example, what if the lower 2017-18 interest rates versus the higher 2018-19 interest rates were to remain in place for the next four years? Depending on the borrower’s choice of repayment plan, the total amount repaid to the FDLP under the higher rates would jump by up to:

  • $2,755 for undergraduates borrowing the maximum amount each year for four years;
  • $7,144 for parents borrowing the national average of $10,226 per year to help their undergraduates earn four-year degrees; and
  • $7,338 for two-year master’s degree students borrowing $25,000 per year.

Why are rates rising? Federal law ties the interest charged on each FDLP loan to the rate at which the government auctions off 10-year Treasury notes every May. The rates at which such Treasury notes are auctioned rises as the economy improves, which it’s been doing since late 2015, so FDLP interest rates have been rising, too.

And assuming there’s no economic recession for the next few years, future FDLP interest rates will climb even higher.

Good news? Federal law fixes FDLP interest rate until loans are totally repaid, so their interest rates never rise. This helps make FDLP loans better than the “variable rate” educational loans offered by many private lending institutions.

Still, rising FDLP rates make college less affordable unless borrowing is reduced. Fortunately, there are ways to do this and still get a quality education, including, but not limited to:

So make plans now, because it’s going to be more important than ever to minimize college debt for 2018-19!

College Affordability Solutions brings 40 years of personal college finance and student loan experience to it’s no-cost consultations with customers. Contact it at (512) 366-5354 or collegeafford@gmail.com for such a consultation.