Sunday, August 20, 2006

After College, A Life without Debt?

Student loans, for more than half those attending college, are the new paradigm of college funding. Consequently, student debt is, or will soon be, the new paradigm of early to middle adult life. Gone are the days when the state university was as cheap as a laptop and was considered a right, like secondary education. Now higher education is, like most social services, a largely privatized venture, and loans are the chief way that a majority of individuals pay for it.

Over the past decade, there has been an avalanche of criticism of the "corporatization" of the university. Most of it focuses on the impact of corporate protocols on research, the reconfiguration of the relative power of administration and faculty, and the transformation of academic into casual labor, but little of it has addressed student debt. Because more than half the students attending university receive, along with their bachelor's degree, a sizable loan payment book, we need to deal with student debt.Printed with permission from Dissent Magazine.

The average undergraduate student loan debt in 2002 was $18,900. It more than doubled from 1992, when it was $9,200. Added to this is charge card debt, which averaged $3,000 in 2002, boosting the average total debt to about $22,000. One can reasonably expect, given still accelerating costs, that it is over $30,000 now. Bear in mind that this does not include other private loans or the debt that parents take on to send their children to college. (Neither does it account for "post-baccalaureate loans," which more than doubled in seven years, from $18,572 in 1992-1993 to $38,428 in 1999-2000, and have likely doubled again).

Federal student loans are a relatively new invention. The Guaranteed Student Loan (GSL) program only began in 1965, a branch of Lyndon B. Johnson's Great Society programs intended to provide supplemental aid to students who otherwise could not attend college or would have to work excessively while in school. In its first dozen years, the amounts borrowed were relatively small, in large part because a college education was comparatively inexpensive, especially at public universities.

From 1965 to 1978, the program was a modest one, issuing about $12 billion in total, or less than $1 billion a year. By the early 1990s, the program grew immodestly, jumping to $15 billion to $20 billion a year, and now it is over $50 billion a year, accounting for 59 percent of higher educational aid that the federal government provides, surpassing all grants and scholarships.

The reason that debt has increased so much and so quickly is that tuition and fees have increased, at roughly three times the rate of inflation. Tuition and fees have gone up from an average of $924 in 1976, when I first went to college, to $6,067 in 2002. The average encompasses all institutions, from community colleges to Ivies.

At private universities, the average jumped from $3,051 to $22,686. In 1976, the tuition and fees at Ivies were about $4,000; now they are near $33,000. The more salient figure of tuition, fees, room, and board (though not including other expenses, such as books or travel to and from home) has gone up from an average of $2,275 in 1976, $3,101 in 1980, and $6,562 in 1990, to $12,111 in 2002. At the same rate, gasoline would now be about $6 a gallon and movies $30.

This increase has put a disproportionate burden on students and their families -- hence loans. The median household income for a family of four was about $24,300 in 1980, $41,400 in 1990, and $54,200 in 2000. In addition to the debt that students take on, there are few statistics on how much parents pay and how they pay it. It has become common for parents to finance college through home equity loans and home refinancing. Although it is difficult to measure these costs separately, paying for college no doubt forms part of the accelerating indebtedness of average American families.

Students used to say, "I'm working my way through college." Now it would be impossible to do that unless you have superhuman powers. According to one set of statistics, during the 1960s, a student could work fifteen hours a week at minimum wage during the school term and forty in the summer and pay his or her public university education; at an Ivy or similar private school, the figure would have been about twenty hours a week during term.

Now, one would have to work fifty-two hours a week all year long; at an Ivy League college, you would have to work 136 hours a week all year. Thus the need for loans as a supplement, even if a student is working and parents have saved.

The reason tuition has increased so precipitously is more complicated. Sometimes politicians blame it on the inefficiency of academe, but most universities, especially state universities, have undergone retrenchment if not austerity measures for the past twenty years. Tuition has increased in large part because there is significantly less federal funding to states for education, and the states fund a far smaller percentage of tuition costs.

In 1980, states funded nearly half of tuition costs; by 2000, they contributed only 32 percent. Universities have turned to a number of alternative sources to replace the lost funds, such as "technology transfers" and other "partnerships" with business and seemingly endless campaigns for donations; but the steadiest way, one replenished each fall like the harvest, is through tuition.

Source: http://www.alternet.org/story/40440/

Thursday, August 17, 2006

Push for Student Debt Relief Greets Small Victory

With student debt on the rise, activists recently employed public pressure to convince a federal panel laden with corporate representatives to drop a recommendation that more families take on private loans for education, a move they argued would exacerbate student debt.

The recommendation was made by the secretary’s Commission on the Future of Higher Education, which was formed by the US Department of Education last September in order to design a “national strategy” to increase access to higher education, including changes to the financial-aid system. The Commission is made up of professors, university presidents and representatives from companies such as IBM, Kaplan and the nonprofit lending company EduCap.

The Commission will issue a final report in mid-September, according to Department of Education spokeswoman Samara Yudof.

In a previous draft of the report, the Commission recommended that families look to private loans to fund education costs in order to free “scarce public funds to focus on aid for economically disadvantaged students and families.”

But the Commission dropped the text after student associations and advocacy groups called for its dismissal, said Jay Bhatt, president of the American Medical Student Association, which lobbies on issues ranging from reduced resident work hours to policies that make medical school more affordable.

Source: http://newstandardnews.net/content/?action=show_item&itemid=3542

Wednesday, August 16, 2006

ACB Bank, RMIT in student loan deal

HCM CITY — The Asia Commercial Bank and Australia’s RMIT International University Viet Nam signed an agreement yesterday to offer students preferential loans. The agreement applies to students taking English courses in the diploma, undergraduate and postgraduate degree programmes.

A secured loan amount may be up to 100 per cent of the collateral value, and unsecured loans are available for VND200 million.

The monthly preferential interest rate will be 0.05 per cent lower than the normal one, according to ACB general director Ly Xuan Hai.

The debtors of unsecured loans will repay 30 per cent of the loan while studying at the university and the remaining 70 per cent after graduation.

Hai said his bank also would provide financial services including international credit cards and money transfer for student study overseas.

"RMIT students can work at our bank during their practical and apply for a job after graduation," said Hai.

Last year, ACB won three awards, including Best Bank in Viet Nam given by Euromoney magazine, Best Retail Bank in Viet Nam by The Asian Banker magazine and the Bank of the Year given by The Banker magazine.

Source: http://vietnamnews.vnagency.com.vn/showarticle.php?num=02BUS160806

College loans extend nearly to retirement

Will I still be paying off my student loans when I'm 64?

It's a question that certainly never occurred to Paul McCartney, but is becoming a possibility for some students and recent graduates. Spurred by recent waves of student-loan consolidations and lengthened loan terms, student borrowers are pushing scheduled payoff dates into their 40s, 50s and even 60s.

Over the past two years, millions of current students and graduates consolidated their federal student loans to lock in record-low interest rates. As they did so, virtually all borrowers took their lenders up on an option to extend the payment period of their loan -- from a 10-year payoff term to one of 20 or 25 years, or even longer. The result was much smaller monthly payments, but for a much longer time.

"Everyone pretty much goes for the maximum, which can be 30 years," said Tom Lustig, vice president of PNC's Education Loan Center. "One-hundred percent, really, are taking the maximum term."

Extended payment periods are attractive because borrowers' monthly payments drop substantially. On a federal loan of $20,000 -- just above the national average loan amount for a four-year undergraduate degree -- a borrower with a 4.75 percent interest rate would pay $210 per month on a 10-year loan, versus $129 per month for a 20-year loan.

For graduate and professional students with high loan balances, the difference is even more dramatic. On a federal loan of $60,000, a borrower would pay $629 per month at 4.75 percent interest over 10 years, versus $313 over 30 years.

Of course, those smaller monthly payments come at a cost of higher total interest payments. The $20,000 borrower would pay more than $5,800 more in interest for the extra 10 years, and the $60,000 borrower would pay nearly $37,200 more for the extra 20 years.

Those extra interest amounts frighten Victoria Racz, 28, who is getting her doctorate in international relations from the University of Pittsburgh.

Racz already has about $29,000 in student loans from her master's degree. When she's done with her doctorate, her loans will total $50,000 or $60,000 or more, depending on how long she takes to complete her degree.

"I don't like debt," she said. "It really makes me uncomfortable."

Though she could qualify for a deferment since she's in school, she's still paying her loans and is about two years ahead of schedule. But she knows that paying off loans for her doctorate will probably take her into middle age, at least.

"I'll probably be at least 40, unless I marry that really, really handsome dentist in my dreams," she said.

Dave Jang, 27, knows more about student loans than most. He has consolidated twice, and can quote interest rates and repayment plans at will.

"I have to," he said of his encyclopedic loan knowledge. "I have a quarter-million dollars."
Jang graduated this spring from medical school at Tufts University near Boston, and just started a residency in emergency medicine at the University of Pittsburgh Medical Center with about $260,000 in student loans.

He needn't start paying until he finishes his residency; then he'd like to pay them off in 10 years. But he knows that's a steep financial path, even for a doctor. "If I do the 10-year plan, it's $2,800 per month, which is like a mortgage," He said.

What worries financial experts is that student-loan payments might come at the expense of an actual mortgage, or saving for retirement or a child's college fund.

"We don't really know what effect this (run-up and stretching-out of student debt) is going to have, financially and psychologically," said Robert Shireman, executive director of the Washington's Project on Student Debt. "Paying off those student loans can be a signal to start saving for retirement, or start putting away money. We're pushing those off in the future and we're going to see different patterns."

Indeed, twenty-somethings today often have a different view on debt than their parents. New options for 50-year mortgages, 10-year car loans and 30-year student-loans can make debt a life sentence.

"If you look at the way financial transactions are structured these days, the likelihood that you'll ever pay them off is slim," said John Lamb, co-author of an upcoming edition of "Solve Your Money Troubles."

Source: http://www.commercialappeal.com/mca/lifestyle/article/0,1426,MCA_521_4918904,00.html

Using Home Equity to Pay Off Student Loans Is Rarely Wise

We have a total of $69,000 in education debt. We also have a home worth $400,000 and our mortgage balance is $266,000, plus a home equity loan with a balance of $14,500.

We make a good salary, have excellent credit, pay all our bills on time, and, if gas weren't so darn high, we would have a decent amount of discretionary income.

We make extra principal payments when we can. The problem is that interest rates on our school loans are climbing, and payments are getting higher and higher.

We're wondering whether we should take out another home equity loan to pay off the student loans.

That would obviously leave us with less equity, which could limit the price we could pay on the house we plan to buy in three to five years.

But it would also decrease our monthly loan payment significantly and we would be able to deduct the interest on the home equity loan. (We can't deduct student loan interest because we make too much money.)

Does a home equity loan make sense in this case?

Answer: Generally speaking, trading student loan debt for home debt isn't a great idea.
Student lenders typically are much more flexible than mortgage lenders, with a wider variety of repayment options. You also can get a deferment or forbearance if you lose your job or otherwise encounter a financial hardship. This respite from payments can last as long as three years on many student loans.

Compare that with what would happen if you couldn't make your mortgage payments. Within a year, and usually much less, your home lender would start foreclosure proceedings.

In addition, most student loan debt can be consolidated. This would allow you to lock in your current interest rate and perhaps lengthen the repayment term to lower your monthly payments.

A longer loan means you would pay more interest over time, but it could help ease the monthly crunch you're feeling.

All that said, not being able to deduct the interest on your student loans is a significant disadvantage.

If you're confident you'll be able to make the payments, then you might consider paying off at least some of your student loan debt with home equity borrowing.

You should, however, limit your total borrowing -- all your home equity loans plus your primary mortgage -- to no more than 80% of the value of your house.

You want to keep at least a 20% equity cushion in your home whenever possible, as a last-resort emergency fund and also to protect yourself in case of declining home values. (You don't want to be faced with having to sell your home and owing more than it's worth.)

Given the loans you already have, you should be able to pay off $39,500 of your student loans with home equity debt. Then you could consolidate the remaining $29,500.

Source: http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=2633&cat=44-0-0

Scrambling for Financial Aid? Avoid These Common Mistakes

BOSTON, Aug. 15 /PRNewswire/ -- Tuition costs are skyrocketing,interest rates are rising and there's one month until the 2006-2007academic year. College students and parents are scrambling to find loansthat best fill the "gap" -- the amount of money needed for college costsnot covered through financial aid and personal savings.

Shockingly, thesize of the gap is projected to reach $35.7 billion this year. "'Back to School' means more than dorm furniture and supplies -- itincludes determining the best way to pay for college," said Kevin Walker,co-founder and CEO of SimpleTuition, Inc.
(http://www.simpletuitiondotcom), acompany helping parents and students easily compare education financingchoices. "As students and parents determine how to best finance remainingcosts, many do so with little time or knowledge on how to find and comparethe loans to best fit their needs."

Parents report feeling overwhelmed with the amount of information onfinancing options. Loans come with different terms and benefits, andborrowers find it difficult to compare on an 'apples-to-apples' basis. Withthe clock ticking, students and parents to rush into loan decisions, whichleads to mistakes and "buyer's remorse".

With the average undergraduate student loan debt approaching $19,000,most families can no longer cover their costs with just one loan (likemortgages or car loans) and, thanks to limits on federal loans, often endup with three to four loans each year. By graduation, students have upwardsof 10 different loans.

A few things to remember when reviewing college loan options:

Get Creative About Sources for Direct Payment
Even if you've been saving since your child was an infant, it isusually not enough to cover the costs of four years of college -- afrustrating realization for many.
But you may be surprised to findadditional resources -- think about the savings by having a child away fromhome and revisit assumptions about college-related expenses (used books,off-campus living).

Even a thousand dollars in now can save substantiallylater. Remember: All Loans Are Not Presented Equally Each loan comes with different options including fees, repaymentlengths, total loan amount, consolidation options, credit requirements andeligibility, and lenders promote each differently in a quest to get yourattention. Be sure to review all the terms and benefits to ensure you'rechoosing the best loan for the long haul.

Avoid Buyer's Remorse:
Start Early Many parents put off decisions until the last minute. Then, in a panic,they rush and pick the lender that their friend used, go with a big brandor local bank, charge their credit cards, dip into their 401(k) and eventake out home equity loans. Start early and be diligent in researchingloans from multiple sources.

Evaluate Financing Options Carefully Optimize lower-cost loans (Stafford and Perkins) before adding privateloans, which tend to cost more. Remember the "four year cost" of borrowing,choices made for freshman year are likely to be a reality in subsequentyears. A rule of thumb: multiply freshman year borrowing by five for theaggregated impact of college borrowing.

Balance the borrowing betweenparent and student. Parents may be reluctant to add to their debt, but evena small amount of additional borrowing can save the future graduatesubstantially.

Source: http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-15-2006/0004416144&EDATE

Tuesday, August 15, 2006

The degree or the house

QUEENSLAND now has a university degree that will cost a full-fee-paying student a staggering $230,000.

Nine others will cost full-fee Australian students more than $100,000.
This compares with the average home mortgage in Australia of $220,000.

The 2007 Good Universities Guide, available today, says a fully paid place in medicine at Bond will cost $233,100 from next year. Full-fee medical places at Griffith University will cost $160,000, dental science at the University of Queensland will cost $152,261, and veterinary science $129,718.

Bond University emerged as a surprise star performer in the guide, being the only university out of 39 in Australia to receive five stars in six of the most important categories surveyed, including graduate starting salaries, getting a job, teaching quality and overall satisfaction.

Bond vice-chancellor Professor Rob Stable said the $233,100 medical degree was good value because it was 4½ years long, compared with seven years in other institutions.
"This saves up to $20,000 a year in living costs for students, and they are working that much sooner," Professor Stable said. "Families see it as a good investment."

Professor Stable said Bond University admitted 84 students to its undergraduate medical degree this year out of 350 applicants.

Only 3 per cent of the students are from overseas, far below the 10 per cent average of other medical schools.

"We are very conscious of the shortage of doctors in this country," Professor Stable said.
Under the Federal Government's rules, medical students can access up to $100,000 in student loans.

While Bond is a private university, Opposition education spokeswoman Jenny Macklin said Labor would put an end to full-fee places for Australian undergraduates at public universities.
"No ordinary 18-year-old or their family can pay anything like these sums for a degree," she said. "John Howard misled Australians when he promised in 1999 there would be no $100,000 degrees."

Like many students in the Bond medical course, Lucas Wheatley, 23, of Broadbeach, is funding his degree with help from his parents, a student loan, personal loan and a part-time job.
Mr Wheatley said few students were worried about paying back their debts when they started work on about $50,000 a year.

"Everyone is more concerned about passing the course," he said. "Everyone has made sacrifices to join the course, but it's worth it."

Source: http://www.news.com.au/couriermail/story/0,23739,20144177-3102,00.html

10 Things Your College Student Won't Tell You

1. "Sure, I've cheated. Who hasn't?"Blame it on Enron or blame it on Martha Stewart — the fact is that cheating has reached an all-time high on today's college campuses, with 70% of students now admitting to some form of it. Incidents involving unsourced material from the Internet in written work have quadrupled in the past six years, yet 77% of students don't consider it cheating or "very serious.""Some students have justified it to themselves," says Donald McCabe, founding president of the Center for Academic Integrity. "They'll say it's the faculty's fault if they're too lazy to stop it."

Mobile devices exacerbate the problem; students can text-message answers to one another or use camera phones to post exams online. Spark-Mobile, a service from study-guide publisher SparkNotes, lets students send in text-message queries and get crib notes in seconds. But that's just one of many such services: GradeSaver.com grants access to sample essays for $6 a month, while RentACoder.com lets computer-science students outsource homework to India for around $20. The companies say their sites weren't designed to help students cheat, but "it's impossible to police," admits RentACoder founder Ian Ippolito.

2. "Everyone knows that 'studying abroad' is one big party."Congress recently passed a resolution dubbing 2006 the "Year of Study Abroad." "We want the next generation of adults to be in touch with their national and global citizenship," says Jessica Townsend-Teague, program manager at the Commission on the Abraham Lincoln Study Abroad Fellowship.

But despite good PR, study-abroad programs are often less than rigorous, and underage drinking is rampant. "It's necessary for the image of study abroad to shift from a 'party hearty' experience to a very serious national priority," Townsend-Teague avers. It's also a matter of safety: "Students go from being unable to drink legally to countries where alcohol is free-flowing," says Gary Rhodes, director of the Center for Global Education at Loyola Marymount University. "Some students have died while abroad."

Schools are doing their part to protect students, requiring better orientation and urging them to avoid countries deemed unsafe by the State Department. But Townsend-Teague advises students to think before they act: "Take a moment to be very sober about what we can and cannot do to rescue a student overseas."

3. "I'd stay here forever if I could get you to pay for it."Brian Bordeau graduated this spring from the State University of New York at Binghamton. He says it wasn't a big deal, but admits everyone else thought it was — he'd been in school for seven years. "Honestly, I'd rather come to school again next fall," he says. "I really like it here."

Bordeau isn't alone: Just 53% of students enrolled in standard undergraduate programs get their bachelor's degree within five years. Changing majors, transferring schools and good old slacking off can all result in extended enrollment. One of the obvious downsides is the added financial burden of an extra year or two in school. But there are hidden costs too.

"You lose a lot of money in loan interest and forgone wages by taking that fifth or six year to finish," says Jacqueline King, director of the American Council on Education Center for Policy Analysis.

If you plan to pay your child's way through college, King suggests setting a firm timetable. When Bordeau was forced to take out loans to pay for tuition during his sixth year, he began to buckle down and hit the books. "This year I paid for it," he says. "That motivated me to finish."

4. "College life can be hazardous to my health."Parents of college students often worry about their children's well-being — and for good reason. The university experience can be marred by physical and mental health issues ranging from anorexia and communicable diseases to depression.But the most serious concern for parents and educators is suicide, which accounts for an estimated 1,100 student deaths each year.

Fortunately, most schools now have counseling and intervention programs, but they differ widely. Some colleges ask those who've disclosed thoughts of suicide to withdraw — a policy that can inadvertently keep students from seeking help. The University of Illinois has developed another approach: protecting a student's "right to be in school," but requiring those who have threatened or attempted suicide to attend assessment sessions.

"If a student says he wants to take his own life, those statements should always be taken seriously," says Paul Joffe, chair of the Suicide Prevention Team at the University of Illinois. The program is aggressive, but it works: UI's suicide rate has decreased by 45% since it began 21 years ago and is around half that of other Big Ten schools.

5. "My résumé isn't the only thing I have posted on the Internet."Social-networking sites are wildly popular among college students, providing a forum for meeting and chatting with friends, posting photos, and writing about their lives and interests. But search Facebook — as some employers do to screen job candidates — and you'll find photos of underage drinking, partying and scantily clad college kids. "There are students who work like crazy on their GPA, but don't think twice about what they're posting on Facebook," says Lauren Steinfeld, chief privacy officer at the University of Pennsylvania.

College athletes have been particularly brazen. In a recent incident involving Northwestern's girls' soccer team, pictures on Webshots.com showed rookies blindfolded and in their underwear performing sexually suggestive acts. The team was temporarily suspended, and some members await further disciplinary action.

"It's hard for anyone over the age of 30 to truly understand what is going on at college these days without seeing it for themselves," says Bob Reno, founder of BadJocks.com, a sports-scandal site. And these days, it seems, "seeing it" is just a mouse click away.

6. "Just because I was a straight arrow in high school, doesn't mean I will be in college."the statistics are pretty scary: Each year 2.8 million college students drive drunk, and 1,700 die from alcohol-related injuries. Nearly half a million engage in unprotected sex, and almost 100,000 students are victims of alcohol-related sexual assault or date rape.

But alcohol isn't the only substance that's a problem. Use of narcotics other than heroin is back up to record levels among college students, and there's a newer trend causing concern: 29% say they have used prescription drugs recreationally. These include pain relievers like Vicodin, which can lead to respiratory and liver failure, and amphetamines such as Ritalin and Adderall, which can result in cardiac arrhythmia and coma — and can lead to harder drugs. Students using these stimulants are 20 times more likely to try cocaine.

Ironically, while drug use in high school is also up, drinking there is at an all-time low. According to the latest UCLA survey, fewer than half of last year's incoming college freshmen say they drank beer as high school seniors. And while that's surely good news, it remains to be seen whether the trend holds once these students hit campus.

7. "My grades are none of your business."Even though parents may have taken their child on campus visits, helped her move into her dorm and are now picking up the tuition bill, they could be denied access to their child's college records. Want to see if your son failed math? Wonder if your daughter has been ill? Depending on a given school's policy, you may have to get your college kid to sign a consent form.

Some schools grant access to parents of students who are claimed as dependents; there's also an exception permitting disclosure in the case of a medical emergency, such as a suicide attempt or testing positive for tuberculosis. "Nobody should get the impression that anything is absolutely confidential," says Steinfeld, at the University of Pennsylvania. Each school's approach to these exceptions is different, and the policy is usually detailed on the university's web site.

8. "I'll do just about anything for money."It's no surprise that college students are strapped for cash, but what they'll do to earn it can be shocking. From being poked and prodded in lab tests to handing over their DNA, students will do almost anything that pays.

Participating in research studies and surveys is one way to earn cash without committing to a steady gig. Fliers advertising participation in an experiment — worth anywhere from $7 to $80, depending on the task and time commitment — adorn campus bulletin boards and psych-department web sites. "I have to get my money somehow," says Yale senior Elizabeth Friedlander, who averages three experiments per month — so far including two MRIs.

For an even bigger payout, young women have begun donating their eggs to infertile couples: An "elite" ovum harvested from a healthy female at a top university can fetch anywhere from $10,000 to $35,000. "You'll see ads in all the Ivy League newspapers," says Debora Spar, a professor at Harvard Business School and author of The Baby Business. "Some women donate for money, some out of a sense of altruism, and most for a complicated mix of both motives." But the process is relatively new and virtually unregulated. "In other medical fields, we know the long-term effects," Spar says. "Here there's less information."

9. "I'm up to my ears in credit card debt..."No one said college would be cheap — tuition is up 95% from a decade ago at four-year public institutions and 74% at private schools. The cost of books, room and board is also on the rise. But many students who graduate with debt have only themselves to blame: Experts say the idea of living within one's means now seems alien to many students and cite growing pressure to keep up with classmates by purchasing expensive clothes, cars and gadgets. The average college senior now has six credit cards and a $3,200 total balance.

The effect is profound: 11% of college students frequently pay less than their monthly minimum, which can make it difficult to rent an apartment, obtain a car loan or even get a job. "Debt strangles their ability to become adults and make good career choices," says Tamara Draut, author of "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead." In fact, 17% of young adults significantly alter their career path because they're so far in the red so early; Draut says that often "the door is locked" to fields like teaching and nursing, since salaries are too low to support young grads carrying heavy debt.

10. "...so I'll be moving back home after graduation."On graduation day students are ready for the real world, and parents are finally off the hook, right? Not necessarily. Currently, in 13 million households — up 70% from 2000 — parents are financially supporting children 18 and over, whether they live at home or not. It's a trend that experts don't expect to end anytime soon.

What's more, even working adult children are struggling to make ends meet — and they're moving back home in droves. They're called "boomerang kids," and eight million homes currently house them, according to MacroMonitor, a market-research program operated by Consumer Financial Decisions. "They're not dependent according to taxes, but they're sleeping on the couch, running up the utilities and using the ice box," says Larry Cohen, director of CFD. "The nest isn't quite empty."

Source: http://www.smartmoney.com/10things/index.cfm?story=september2006&pgnum=2

Money, a student's first test

THE moment of truth arrives in thousands of households this week and nerves are strained to snapping point. A-level results will be published and, depending on grades, school-leavers will choose their universities for the autumn.

But after the euphoria of exam success comes the harsh reality of financing the cost of at least three years' study. While some have parents who are happy to bankroll them, many students will have to meet their education bills themselves through part-time work and loans.

With tuition fees alone rising to as much as £3,000 a year from next month, the majority of students are expected to use a new package from the Student Loan Company to defer payment of this bill. Those who do not take this option must pay their fees upfront each year.

Under the loan scheme, students will be able to borrow enough to cover their annual tuition fees, with payments made direct to the university by the SLC.

On top of the tuition fees loan is a maintenance loan to help with accommodation, books, travel and so on. Payments are made each term into students' bank accounts.

Both loans allow students to defer making repayments until at least the April after they leave university --including those who drop out - but only when they start earning £15,000 or more a year.

Interest starts clocking up as soon as the loan is issued at a rate set annually and based on the Retail Prices Index - currently 3.2% but dropping to 2.4% in September - far cheaper than bank personal loans, which start at about 6%.

From September, the maximum annual maintenance loan is £6,170 for students living away from home and studying in London, £4,405 outside London, and £3,415 if living at home.

The loan amount is cut in the final year because it is not intended to be used for support after graduation. All students can borrow 75% of the maximum amounts, no matter the level of their family income. The remaining 25% is means-tested.

Because the loan rate is set at the Retail Prices Index, graduates effectively pay back exactly what they borrowed, with no profit taken by the SLC. This makes it an attractive proposition, even for students who do not need a loan to finance their studies. The SLC says 81% of students opt for the loan.

Source: http://www.thisismoney.co.uk/saving-and-banking/student-finance/article.html?in_article_id=411702&in_page_id=52&ct=5

Monday, August 14, 2006

Students face mounting debt

DENVER - An increasing number of college graduates are getting a crash course in economics, thanks to the monthly payments they have to make on their student loans.

The trend is present at Fort Lewis College, where the number of graduates burdened with debt from student loans has grown by 11 percent since the 2000-01 school year.

Almost four out of 10 people who take out student loans won't be able to manage the debt burden, according to Student Debt Alert, a national campaign that seeks to raise awareness about the sharply increasing levels of debt.

"Thirty years ago, we were talking about one-third of students taking out loans to pay for school and two-thirds getting government grants. Now, it's totally flip-flopped," said Cory Nadler, a campus organizer for Colorado Public Interest Research Group in Denver. PIRG chapters around the country are sponsoring the Student Debt Alert project.

Nadler's group released a report last week that showed student debt rose much faster than inflation or even health-care costs over the last decade.

The average debt load for four-year college graduates who took out loans jumped 107 percent between 1993 and 2004, to $19,200. Over the same period, health-care costs jumped 56 percent, while inflation in the Denver-Boulder area was 38 percent. (The Denver-Boulder area is the closest area to the Four Corners studied by the Bureau of Labor Statistics, the government office that tracks inflation.)

"I think what this report highlights is that higher education is getting a lot more expensive than most other things in our society," Nadler said.

Jack Klumpenhower, a spokesman for Fort Lewis, said, "We do have a feeling that students are increasing their reliance on loans significantly."

Last school year, 60 percent of students had loans. In the 2000-2001 year, only 49 percent took out loans. The average debt load for Fort Lewis graduates who took out loans last year was $16,966, compared to $14,102 in 2001.

Students are turning to loans as state support declines, Klumpenhower said. The state gave about $5 million to Fort Lewis students in scholarships and grants in the 2000-2001 year, but state support plummeted to $890,000 last year.

At the same time, tuition was going up. The tuition increase is being held to 2.5 percent at all state schools this year.

The biggest problem is the growth of the private loan industry, said Elaine Redwine, Fort Lewis financial aid director.

Source: http://durangoherald.com/asp-bin/article_generation.asp?article_type=news&article_path=/news/06/news060812_3.htm

Sunday, August 13, 2006

It's not too late to seek aid for college costs

You might weep the day you leave your son or daughter in a college dormitory for the first time, but wait until you take a look at the first bill for tuition, room and board.You could be moved to a different kind of tears.About this time of year, that bill arrives.

And it's a shocker: Maybe $20,000 for some schools, to be paid right then and there. And that's just half of it.

Around New Year's, its mate will arrive.But there are ways to get through this trauma--to break it down into more manageable pieces.-- Discovering free moneyLast spring, when the financial aid offer arrived empty--or small--you might have thought the matter was settled. You knew what you were going to have to pay, it wasn't pleasant, but that was that.Many people believe the financial aid letter is the last word on whether you will get any kind of help paying for college.

But you'd be making a mistake to assume the door is shut--even now. That's especially true if your family income is low, and your child has qualified for a Pell grant.

Typically, these grants--or free money--from the federal government are available to people with incomes under about $40,000. If you qualify and haven't sought a Pell grant, you can still go to the financial aid office and ask for one.

But if you've already been offered a Pell grant, you may be able to obtain even more aid.
The federal government is introducing two new scholarships this year. Students entering their first year of college can receive up to $750 in an Academic Competitiveness Grant. And students in their second year may land up to $1,300 if they have maintained at least a 3.0 grade point average.

Students in their junior and senior years may quality for another $4,000 each year through a National Science and Mathematics Access to Retain Talent Grant, or SMART grant.Both new grants go to strong students, and are provided in addition to a Pell Grant of up to $4,050 a year. The higher the cost of a school's tuition, the higher the Pell Grant.

To qualify for the Academic Competitiveness Grant the first year, a student had to go through a "rigorous high school program." There are guidelines at www.studentaid.ed.gov, but colleges are still interpreting them, said Carl Buck, vice president of college funding solutions at Peterson's. He suggests students assume they are eligible, request a grant from their college financial aid office, and --if necessary--ask a guidance counselor from your high school to state you've had a rigorous education.

To get the SMART Grant, you need to study math, science, computer or engineering, or a foreign language that's national-security related, Buck said.

Souce: http://www.chicagotribune.com/business/sns-yourmoney-0813college,1,3505891.story?coll=chi-business-hed

SUSAN TOMPOR: PERSONAL FINANCE: Cash for school is all about the hunt

Students who are scouring around for extra cash for college must ditch the notion that there's no real money to be found in scholarships unless you're, say, a super-brain who can win a prestigious Intel scholarship or, say, a super-goof who can pull off creating a prom dress out of duct tape.

There's money in the more mundane, too.

Mark Kantrowitz, 39, admittedly is one of the super-brains who won a slew of scholarships, awards and fellowships -- including the Westinghouse Science Talent Search (now the Intel Science Talent Search), the Courant Institute Prize for Mathematical Talent and the MIT William L. Stewart Jr. Award.

But he's also one of my favorite people to talk to about how to get money for college. He's the creator and publisher of FinAid.org -- a solid source on financial aid, scholarships and student loans.

His new book, which will be available next month, is called "FastWeb College Gold" (Collins, $21.95). It's a step-by-step guide that can help cash-strapped parents and teens figure out the higher-education money maze -- and yes, find scholarships.

Source: http://www.freep.com/apps/pbcs.dll/article?AID=2006608130563

Friday, August 11, 2006

NextStudent's PLUS Loans Let Parents Help With College Costs Now and Throughout the Year

PHOENIX, AZ -- (PHOENIX, AZ -- (MARKET WIRE) -- August 11, 2006 -- Many parents who want to help their children with college costs are not aware that funds still are available before the fall semester begins. With PLUS Loans -- Parent Loans for Undergraduate Students, funds up to the full cost of college with rates as low as 6.25 percent are available throughout the year through Phoenix-based NextStudent, the premier education funding company.

NextStudent's federal PLUS Loans features a 6.25 percent interest rate when accompanied by a 2 percent rate reduction following the first 48 months of on-time payments and an additional .25 percent reduction when borrowers repay with Auto Debit.

With PLUS Loans parents are able to borrow up to the full cost of their children's education expenses, less financial aid received. Parents may borrow costs for 2006-07 all the way through May 31, 2007. Reimbursement is available to those parent borrowers who already paid education expenses for their children. PLUS Loans are available throughout the year and costs for education can include tuition and fees, housing, supplies and transportation.

Parents will find it easy to receive a federal PLUS Loan since the loans are not based on financial need. Easy, fast preapproval is available, making PLUS Loans the perfect choice for parents whose children need funds to pay for the upcoming fall semester.

The federal PLUS Loan Program through NextStudent gives you more:

-- 3 percent cash rebate on the remaining principal balance after the
first 12 months of consecutive on-time payments.

-- Simple Application Process with E-Signature. Apply online and qualify
in minutes. A "second look" feature is available for borrowers who are
denied initially due to unresolved credit problems.

-- PLUS Credit Resolution Team at NextStudent has an 87 percent rate of
success resolving borrowers' credit problems, resulting in funded PLUS

-- Flexibility with PLUS Loan repayment options, including deferred
repayment when a student is enrolled at school at least six credits.

Federal PLUS Loans through NextStudent may be tax-deductible and the loans are eligible for federal loan consolidation. Repayment terms on PLUS Loans usually are 10 years and start within 60 days of the loan's final disbursement. And there are no prepayment penalties.

NextStudent's federal PLUS Loan Program is available to parent borrowers now and throughout the year. Parents are able to get much needed college funds for their children just weeks before the fall semester. Great terms and benefits along with reasonable interest rates make PLUS Loans the right choice.

Source: http://www.marketwire.com/mw/release_html_b1?release_id=153277