I bet you'll be surprised about how studentloans REALLY work. Here's what I mean.
On Monday, NY Attorney General Andrew Cuomo announced a settlement with the College Board over its former loan practices.
That's right, that's the same College Board that tortures high schoolers with the SAT, the CSS/Profile financial aid form and other familiar items. Apparently the Board was making money from sources otherthan test registration fees, like lending to students.
Attorney General Cuomo had a problem with the way in which the College Board was conducting this business.
Mario's Number One Son found that the College Board gave discounts to certain colleges, breaks related to prices paid by the financialaid offices for software and other services.
How did these colleges earn this special pricing from the College Board? By placing College Board loansin their list of recommended, or "preferred" lenders.
In other words, the College Board was alleged to have"bribed" (my word, not Cuomo's) these colleges into advertising the student loans offered by the College Board.
"Loans are hard enough to come by these days; thelast thing we need are deceitful arrangements likethis one that stand squarely in the way of students and parents getting the facts," said Cuomo.
And I bet you thought the company that issues the SAT was a non-profit or educational institution, right?
Nope, they're in business like everyone else involved in higher education. They're out to make a buck.
Not that there is anything wrong with that, of course. College Pete and I make a nice living advising parents of college-bound kids how to slash their college expenses. Everyone is entitled to make a few dollars (no matter who is President)!
The real issue is the deceptive manner in which the College Board, and the colleges themselves, allegedly made their money (they admitted no wrongdoing, not surprisingly).
When you go to apply to college, understand the main point made by this blog - that college is a BUSINESS.
This knowledge should effect almost everything you do regarding your student's college education, including where you apply for admission, how you apply for financial aid, how you apply for other scholarships and how you negotiate a financial aid award letter, among others.
If you don't understand this, you're setting yourself up to over-pay needlessly for your student's college education. You could be forcing your son or daughterto attend a "cheaper," less-desireable college than if you paid attention to the business of college.
This is exactly what we talk about in our free community workshops, "How to Pay for College Without GoingBroke or Raiding (what's left of) Your Retirement Savings."
Tonight's is sold out but we have a few more in Miami,Weston, Boca Raton and Parkland in the next 7 days.After that, it's too late - we shut down for the year.
The workshop is for parents of college-bound students. If you have a college-bound Senior, you're on life support if you haven't done anything to prepare for college costs. If you have a Junior, know that this is the most critical year for college funding purposes. If you have a Sophomore, everything he or she does now leads up to Junior year, the most important year of high school.
If you have a friend who's struggling with howto pay for college, send them a link to this post and tell them about our workshops in Miami, Boca,Weston or Parkland, too! They'll like this email better than a lump of coal in their stocking, promise!
Registration info is at:
http://www.CollegePlanningAdvice.com/events
Tuesday, December 9, 2008
Wednesday, October 15, 2008
The Surprising Reason High Income Earners Receive Thousands in College Financial Aid!
You will not believe this email, but bear with me.
"College Pete" and I constantly talk about howeven millionaires should apply for college financial aid, even if they think they won't qualify.
Before I get to the story I read today, let me give you a little background on college admissions. Background that you'll never hear anywhere else.
Are you familiar with US News and World Report? This magazine is at the top of the heap when it comes to ranking colleges and universities.
Many admissions heads obsess over their rankings, particularly the colleges in the fourth, third andeven second tiers, trying to figure out how to move up in rankings. Better rankings equals more applicants, more enrolled and the ability tocharge higher tuition and fees.
Like it or not, that's the way it is.
Many ambitious, upwardly-mobile colleges will do all sorts of things to improve their standing with US News. Some offer "bribes" to good students by way of merit scholarships to pry them away from Ivy League or other highly competive schools. This funding is doled out withoutregard to the family's financial picture. And it's heaped upon students with grades and scores that are not"Ivy-caliber", too!
Now check out what Baylor University did. Apparently,the SAT's of last year's incoming freshman classwas worse than that of the previous year. This would look bad in US News.
So Baylor did something creative to counter their impending drop in the rankings. They bribed their accepted, incomingfreshmen to re-take the SAT!
Yes, you read that right! Baylor offered a $300 book credit to any freshman who sat for the SAT again. And, if the student increased his or her score by 50 points, therewas another grand in it for them. About 177 qualified for even more scholarship funding.
Of course, Baylor denies that they created their SAT contest because of the US News rankings.
My point is the college financial aid game works in ways that non-insiders can't possibly understand. Even parents who make "deep" six figure, or higher, incomes can save thousands off college costs, if they know the rules ofthe game.
So take away two points from this post - do your research about what schools over this kind of aid (and what their standards are) and do NOT blow off applying for financial aid if you think you earn too much money, because you never know!
Best,
- Andy
P.S. Want more info on "How to Pay for College WithoutGoing Broke or Raiding What's Left of Your RetirementPortfolio?" We've got three more college funding workshops this month and they're than 77% booked up.
I ran last night's at Nova Southeastern and I counted only three available seats. Thank god we had 6 no-show families!"College Pete" is running one at the Posnack JCC in Davie, 6:15 and there are still 8 available slots. Then I'm doing workshops on Thursday night, 8:00 pm at the Weston Y and Saturday, 10:15 am at The Sagemont School, Upper Campus.
P.P.S. You can check availability and locations at:
http://www.CollegePlanningAdvice.com/events
or call 954.659.1234 ext. 201.
Andrew Lockwood, J.D.
College Planning Specialists of Florida, Inc.1825 Main SteetWeston, FL 33326
http://www.collegeplanningadvice.com/
954.659.1234
Co-author, "Never Pay Retail for College,"
Co-host, "The College Planning Power Hour"WFTL Sports, 1400 AM, ESPN Radio
"College Pete" and I constantly talk about howeven millionaires should apply for college financial aid, even if they think they won't qualify.
Before I get to the story I read today, let me give you a little background on college admissions. Background that you'll never hear anywhere else.
Are you familiar with US News and World Report? This magazine is at the top of the heap when it comes to ranking colleges and universities.
Many admissions heads obsess over their rankings, particularly the colleges in the fourth, third andeven second tiers, trying to figure out how to move up in rankings. Better rankings equals more applicants, more enrolled and the ability tocharge higher tuition and fees.
Like it or not, that's the way it is.
Many ambitious, upwardly-mobile colleges will do all sorts of things to improve their standing with US News. Some offer "bribes" to good students by way of merit scholarships to pry them away from Ivy League or other highly competive schools. This funding is doled out withoutregard to the family's financial picture. And it's heaped upon students with grades and scores that are not"Ivy-caliber", too!
Now check out what Baylor University did. Apparently,the SAT's of last year's incoming freshman classwas worse than that of the previous year. This would look bad in US News.
So Baylor did something creative to counter their impending drop in the rankings. They bribed their accepted, incomingfreshmen to re-take the SAT!
Yes, you read that right! Baylor offered a $300 book credit to any freshman who sat for the SAT again. And, if the student increased his or her score by 50 points, therewas another grand in it for them. About 177 qualified for even more scholarship funding.
Of course, Baylor denies that they created their SAT contest because of the US News rankings.
My point is the college financial aid game works in ways that non-insiders can't possibly understand. Even parents who make "deep" six figure, or higher, incomes can save thousands off college costs, if they know the rules ofthe game.
So take away two points from this post - do your research about what schools over this kind of aid (and what their standards are) and do NOT blow off applying for financial aid if you think you earn too much money, because you never know!
Best,
- Andy
P.S. Want more info on "How to Pay for College WithoutGoing Broke or Raiding What's Left of Your RetirementPortfolio?" We've got three more college funding workshops this month and they're than 77% booked up.
I ran last night's at Nova Southeastern and I counted only three available seats. Thank god we had 6 no-show families!"College Pete" is running one at the Posnack JCC in Davie, 6:15 and there are still 8 available slots. Then I'm doing workshops on Thursday night, 8:00 pm at the Weston Y and Saturday, 10:15 am at The Sagemont School, Upper Campus.
P.P.S. You can check availability and locations at:
http://www.CollegePlanningAdvice.com/events
or call 954.659.1234 ext. 201.
Andrew Lockwood, J.D.
College Planning Specialists of Florida, Inc.1825 Main SteetWeston, FL 33326
http://www.collegeplanningadvice.com/
954.659.1234
Co-author, "Never Pay Retail for College,"
Co-host, "The College Planning Power Hour"WFTL Sports, 1400 AM, ESPN Radio
Thursday, October 9, 2008
10 College Funding Mistakes to Avoid
Top 10 College Funding Mistakes Made By Parents of College-Bound Teens
By Andrew Lockwood, J.D., CollegePlanningAdvice.com
If you have a child applying to college, this is an exciting and stressful time for both of you. One of the most worrisome issues facing parents today is how to pay for a four year college or university. Fortunately, there is more than $137 Billion available from the Federal Government, the states, colleges and universities, private foundations and other organizations. Your challenge is to figure out how to access these funds.
Many families fail to take advantage of the numerous financial aid and other college cost cutting opportunities available. For the uninformed, ill-prepared family, the unfortunate results can range from being forced to take out high fee, high rate college loans, tapping equity built up in their homes or dipping into retirement savings. But with diligent research, you can significantly minimize or flat-out eliminate these undesirable outcomes.
To help navigate the overly complicated regulations of the Department of Education, I offer
“College Pete and Andy’s 10 College Funding Mistakes to Avoid.”
Mistake #1: Most middle and upper-middle class parents assume they won't be eligible for financial aid because they own a home and make more than $100,000, $150,000 or more per year.
Mistake #2: Focusing time and energy on a private scholarship search instead of spending time trying to qualify for “need-based” financial aid.
Mistake #3 - Assuming only minority students, athletes, and academically gifted students receive financial aid.
Mistake #4 – Applying to a college without regard to how their child’s high school record compares to the statistics of the existing student body of that college.
Mistake #5 – Blindly assuming that all colleges and universities have similar amounts of resources and will award the same scholarships, grants and other aid across the board.
Mistake #6 - Not understanding the difference between "included assets" and "exempt assets" for purposes of filling out financial aid forms.
Mistake #7 - Believing that it doesn't matter where they keep their money; it's all counted in the same way.
Mistake #8 – Believing their CPA or tax preparer is qualified to fill out financial aid forms.
Mistake #9 - Waiting until January, or worse, after January, of their child's senior year of high school to start working on your college financial aid planning.
Mistake #10 – Relying on their child’s college advisor, guidance counselor or BRACE Advisor for help with the financial aid process instead of consulting a specialist.
Andrew Lockwood is the co-founder of Weston-based College Planning Specialists of Florida. He and his partner, Peter “College Pete” Ratzan, co-authored the recently-released college funding book, Never Pay Retail for College. Lockwood and Ratzan conduct free college funding workshops, ”How to Pay for College Without Going Broke or Raiding Your Retirement Portfolio” throughout South Florida. For dates, times, locations and seating availability, visit www.CollegePlanningAdvice.com or call 954.659.1234 ext. 299.
By Andrew Lockwood, J.D., CollegePlanningAdvice.com
If you have a child applying to college, this is an exciting and stressful time for both of you. One of the most worrisome issues facing parents today is how to pay for a four year college or university. Fortunately, there is more than $137 Billion available from the Federal Government, the states, colleges and universities, private foundations and other organizations. Your challenge is to figure out how to access these funds.
Many families fail to take advantage of the numerous financial aid and other college cost cutting opportunities available. For the uninformed, ill-prepared family, the unfortunate results can range from being forced to take out high fee, high rate college loans, tapping equity built up in their homes or dipping into retirement savings. But with diligent research, you can significantly minimize or flat-out eliminate these undesirable outcomes.
To help navigate the overly complicated regulations of the Department of Education, I offer
“College Pete and Andy’s 10 College Funding Mistakes to Avoid.”
Mistake #1: Most middle and upper-middle class parents assume they won't be eligible for financial aid because they own a home and make more than $100,000, $150,000 or more per year.
Mistake #2: Focusing time and energy on a private scholarship search instead of spending time trying to qualify for “need-based” financial aid.
Mistake #3 - Assuming only minority students, athletes, and academically gifted students receive financial aid.
Mistake #4 – Applying to a college without regard to how their child’s high school record compares to the statistics of the existing student body of that college.
Mistake #5 – Blindly assuming that all colleges and universities have similar amounts of resources and will award the same scholarships, grants and other aid across the board.
Mistake #6 - Not understanding the difference between "included assets" and "exempt assets" for purposes of filling out financial aid forms.
Mistake #7 - Believing that it doesn't matter where they keep their money; it's all counted in the same way.
Mistake #8 – Believing their CPA or tax preparer is qualified to fill out financial aid forms.
Mistake #9 - Waiting until January, or worse, after January, of their child's senior year of high school to start working on your college financial aid planning.
Mistake #10 – Relying on their child’s college advisor, guidance counselor or BRACE Advisor for help with the financial aid process instead of consulting a specialist.
Andrew Lockwood is the co-founder of Weston-based College Planning Specialists of Florida. He and his partner, Peter “College Pete” Ratzan, co-authored the recently-released college funding book, Never Pay Retail for College. Lockwood and Ratzan conduct free college funding workshops, ”How to Pay for College Without Going Broke or Raiding Your Retirement Portfolio” throughout South Florida. For dates, times, locations and seating availability, visit www.CollegePlanningAdvice.com or call 954.659.1234 ext. 299.
Monday, September 22, 2008
What to do after you've submitted your financial aid application
"College Pete" here -
I had a student call me the other day, wondering how we might be able to assist her in finding a student loan to pay for her current tuition bill. This student attends a local private university, and fortunately for her she’s in her last year in college. Her EFC is under $2,000, and her FAFSA was filed way back in March.
The school had asked for Verification of her financial aid application. All this means is that the Financial Aid Office wants to actually see your tax returns for the Base Income Year (the year prior to high school graduation), as well as confirm your family information. She delayed in providing this info to the school by at least several weeks, and now, with her first tuition payment due within 30 days, the school’s financial aid office is saying that they are still processing her application and will notify her “soon” of her final award. Meanwhile, if she doesn’t pay her bill on time she will face a late penalty.
A few lessons from this situation:
1. If your EFC is below $4,000 you should fully expect that the school will ask for Verification. According to Sallie Mae, 30% of all FAFSA applications are randomly verified, but the rate for submissions with EFCs below $4,000 is dramatically higher. If you wish to receive any federal financial aid (i.e. grants, free money and even federal loans), verification must first be completed. Ignore the financial aid office’s requests at your own peril. This student should be eligible for a Pell Grant of as much as $4,000 per year or more. That’s money left on the table because she delayed in providing the verification forms to the school. And Pell Grant money is First In, First Out, so any delay endangers her likelihood for an award.
2. Financial aid goes to the student/family who continues to follow up on the application. Once the application is submitted, the family must contact the financial aid office to make sure they have everything they need. Financial Aid Officers deal with a ton of paperwork; you don’t want your file buried at the bottom of the pile.
3. Private student lenders continue to ditch the market, making it harder to find a student loan from a bank. Loans are still available from companies like Chase and Wells Fargo, but even these banks require more stringent credit ratings to get the best rates (5%), along with a co-sign.
By ignoring the Verification request from the financial aid office, this student has taken the process down to the wire, and as a result she may forfeit her Pell Grant. Her eventual financial aid package will likely include a loan, but it may not be processed in time to avoid the late penalty.
So make sure you submit your financial aid application early (FAFSA for 2009-10 opens on January 2) to qualify for maximum aid, be prepared for Verification because it might happen, and be sure to Bird-Dog your application once it has been submitted.
- Peter "College Pete" Ratzan
www.CollegePlanningAdvice.com
I had a student call me the other day, wondering how we might be able to assist her in finding a student loan to pay for her current tuition bill. This student attends a local private university, and fortunately for her she’s in her last year in college. Her EFC is under $2,000, and her FAFSA was filed way back in March.
The school had asked for Verification of her financial aid application. All this means is that the Financial Aid Office wants to actually see your tax returns for the Base Income Year (the year prior to high school graduation), as well as confirm your family information. She delayed in providing this info to the school by at least several weeks, and now, with her first tuition payment due within 30 days, the school’s financial aid office is saying that they are still processing her application and will notify her “soon” of her final award. Meanwhile, if she doesn’t pay her bill on time she will face a late penalty.
A few lessons from this situation:
1. If your EFC is below $4,000 you should fully expect that the school will ask for Verification. According to Sallie Mae, 30% of all FAFSA applications are randomly verified, but the rate for submissions with EFCs below $4,000 is dramatically higher. If you wish to receive any federal financial aid (i.e. grants, free money and even federal loans), verification must first be completed. Ignore the financial aid office’s requests at your own peril. This student should be eligible for a Pell Grant of as much as $4,000 per year or more. That’s money left on the table because she delayed in providing the verification forms to the school. And Pell Grant money is First In, First Out, so any delay endangers her likelihood for an award.
2. Financial aid goes to the student/family who continues to follow up on the application. Once the application is submitted, the family must contact the financial aid office to make sure they have everything they need. Financial Aid Officers deal with a ton of paperwork; you don’t want your file buried at the bottom of the pile.
3. Private student lenders continue to ditch the market, making it harder to find a student loan from a bank. Loans are still available from companies like Chase and Wells Fargo, but even these banks require more stringent credit ratings to get the best rates (5%), along with a co-sign.
By ignoring the Verification request from the financial aid office, this student has taken the process down to the wire, and as a result she may forfeit her Pell Grant. Her eventual financial aid package will likely include a loan, but it may not be processed in time to avoid the late penalty.
So make sure you submit your financial aid application early (FAFSA for 2009-10 opens on January 2) to qualify for maximum aid, be prepared for Verification because it might happen, and be sure to Bird-Dog your application once it has been submitted.
- Peter "College Pete" Ratzan
www.CollegePlanningAdvice.com
Monday, June 2, 2008
When the so-called "experts" like Kiplingers steer you wrong
I'm extremely irritated so I'll be quick with this post.
I see why so many parents never even bother
to apply for financial aid! 53% of all eligible families never even
bother to apply, according to the College Board.
Why? They're being told
that they make too much money by the so-called
experts - this is why I call 'em "schmexperts"!
Check out this clip. Some well-intentioned "friend"
of mine sent me a video from Kiplingers about
college financial aid.
This woman, Janet Bodnar, does a decent job
explaining why you may want to save in your
name, not your child's, but then she lets loose a
colossal, "gi-normous" 100% false statement:
If you make a lot of money, like more than a
hundred grand, you probably won't qualify for
aid!
Sweet mother of all things holy! How ridiculous is
she?
This video appeared in an article on MSN.com.
The article talks about how Harvard and Yale
are giving away money for parents making up
to 180K and 200K, respectively!!!
Hello?
This is what College Pete and I are talking about
when we tell you, don't listen to the
"schmexperts," listen to US. Our advice is
frequently 180 degrees opposite to your
typical trusted advisors, CPAs, guidance
counselors, BRACE Advisors, and now,
Kiplingers!
Our advice: EVERYONE should apply for
financial aid! Case in point - you can go to
Harvard (a $50,000 per year school,) for
$18,000!
OK, I'm done with my rant.
Later.
- Andy
P.S. If you want to watch this video, here's
the link to Weston's article:
http://articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/GraduateFromHarvardDebtFree.aspx
(You may have to cut/paste all of the code intoyour browser - sometimes these links don't work.)
P.P.S. I don't want you to think that I have anything against Liz Pulliam Weston. I happen to think she's a solid journalist and find her columns to be on point, without exception.
I see why so many parents never even bother
to apply for financial aid! 53% of all eligible families never even
bother to apply, according to the College Board.
Why? They're being told
that they make too much money by the so-called
experts - this is why I call 'em "schmexperts"!
Check out this clip. Some well-intentioned "friend"
of mine sent me a video from Kiplingers about
college financial aid.
This woman, Janet Bodnar, does a decent job
explaining why you may want to save in your
name, not your child's, but then she lets loose a
colossal, "gi-normous" 100% false statement:
If you make a lot of money, like more than a
hundred grand, you probably won't qualify for
aid!
Sweet mother of all things holy! How ridiculous is
she?
This video appeared in an article on MSN.com.
The article talks about how Harvard and Yale
are giving away money for parents making up
to 180K and 200K, respectively!!!
Hello?
This is what College Pete and I are talking about
when we tell you, don't listen to the
"schmexperts," listen to US. Our advice is
frequently 180 degrees opposite to your
typical trusted advisors, CPAs, guidance
counselors, BRACE Advisors, and now,
Kiplingers!
Our advice: EVERYONE should apply for
financial aid! Case in point - you can go to
Harvard (a $50,000 per year school,) for
$18,000!
OK, I'm done with my rant.
Later.
- Andy
P.S. If you want to watch this video, here's
the link to Weston's article:
http://articles.moneycentral.msn.com/CollegeAndFamily/CutCollegeCosts/GraduateFromHarvardDebtFree.aspx
(You may have to cut/paste all of the code intoyour browser - sometimes these links don't work.)
P.P.S. I don't want you to think that I have anything against Liz Pulliam Weston. I happen to think she's a solid journalist and find her columns to be on point, without exception.
Monday, April 14, 2008
College Pete on AP exam tips
May is approaching, and that can mean only one thing.
Horse racing? NBA Playoffs? Mother’s Day? The answer is "yes" to each of those, but this piece will discuss something equally, if not more thrilling - AP Exams!
I’m not much of a horse guy although I do try and catch the Derby and Preakness each year. As for the NBA, the Heat’s playoff hopes departed long ago, around the same time Santa did, and besides the games begin way too late in the evening. As for Mother’s Day, it’s one of the most important calendar events, especially for Hallmark. Seriously, treat your Mom well (and your wife!), especially on Mother’s Day.
Why do I bring up all these distractions when our focus is on AP exams? Because it’s symbolic of the mentality that many students apply to the AP season and AP courses in general. An AP course is an opportunity for a student to not only boost his or her weighted GPA with a strong grade, but it’s also a way to earn college credit if (big IF) by scoring a 3, 4 or 5 on the AP exam in May.
Some students work hard all year long in an AP course and make all kinds of excuses to avoid taking the AP exam. Bad move! Admissions committees don’t like to see that. Other students don’t properly prepare for the exam because they’re distracted by other events like those mentioned above, not to mention Prom, end of school, spring football, cheerleader tryouts, senioritis, etc. If you’re a solid performer day-to-day in your AP class, you should be expected to earn a good grade on the exam. But this does not happen automatically. Instead it requires preparation.
Many AP teachers offer prep classes on weekends about one month prior to the exam date. Don’t miss these classes! If your teacher doesn’t do this, ask him to reconsider.
Andy and I always harp on families of college-bound kids to research how generous they are with their financial aid. You can save money through AP credits, too!
When selecting colleges and universities, be sure to research how they treat AP credits. Many schools will award actual credits toward graduation depending on your score, whereas others will allow the student to place out of entry-level courses. If it’s the former, then you can lower your total cost of attendance with a strong AP score. Some schools will only accept scores of 4 or 5, whereas others will accept a 3. This information is readily available on each school’s website.
Students should take advantage of the AP Program and its benefits. It pains me to see a student with excellent grades but no AP courses on his transcript. College admissions offices will view this student as an underachiever, one who does not rise to the challenge. On the flip side, some students overburden themselves with too many AP courses than they can handle, resulting in poor performance. Sometimes the school guidance offices encourage students to load up on APs, since AP enrollment looks good for the school. Earning a ‘C’ in an AP course is NOT like earning an ‘B’ in a regular course, even if the impact on your GPA is the same. If you cannot earn a ‘B’ or ‘A’ in an AP course, then you should not enroll in that class.
Final word: for those students taking AP exams in May, good luck! And just remember, no matter how well you do, your mother will still love you, so treat her well come Mother’s Day.
-Pete
P.S. We've got three workshops on "The Dirty Little Secrets About College Financial Aid" this week - Wednesday the 16th, Thursday the 17th and Saturday the 19th. The workshops are 100% free and teach you how to lower your out of pocket cost of college by thousands, if not tens of thousands of dollars per year! They are free but limited by room size, so register today online: http://www.CollegePlanningAdvice.com!
- Peter "College Pete" Ratzan
Horse racing? NBA Playoffs? Mother’s Day? The answer is "yes" to each of those, but this piece will discuss something equally, if not more thrilling - AP Exams!
I’m not much of a horse guy although I do try and catch the Derby and Preakness each year. As for the NBA, the Heat’s playoff hopes departed long ago, around the same time Santa did, and besides the games begin way too late in the evening. As for Mother’s Day, it’s one of the most important calendar events, especially for Hallmark. Seriously, treat your Mom well (and your wife!), especially on Mother’s Day.
Why do I bring up all these distractions when our focus is on AP exams? Because it’s symbolic of the mentality that many students apply to the AP season and AP courses in general. An AP course is an opportunity for a student to not only boost his or her weighted GPA with a strong grade, but it’s also a way to earn college credit if (big IF) by scoring a 3, 4 or 5 on the AP exam in May.
Some students work hard all year long in an AP course and make all kinds of excuses to avoid taking the AP exam. Bad move! Admissions committees don’t like to see that. Other students don’t properly prepare for the exam because they’re distracted by other events like those mentioned above, not to mention Prom, end of school, spring football, cheerleader tryouts, senioritis, etc. If you’re a solid performer day-to-day in your AP class, you should be expected to earn a good grade on the exam. But this does not happen automatically. Instead it requires preparation.
Many AP teachers offer prep classes on weekends about one month prior to the exam date. Don’t miss these classes! If your teacher doesn’t do this, ask him to reconsider.
Andy and I always harp on families of college-bound kids to research how generous they are with their financial aid. You can save money through AP credits, too!
When selecting colleges and universities, be sure to research how they treat AP credits. Many schools will award actual credits toward graduation depending on your score, whereas others will allow the student to place out of entry-level courses. If it’s the former, then you can lower your total cost of attendance with a strong AP score. Some schools will only accept scores of 4 or 5, whereas others will accept a 3. This information is readily available on each school’s website.
Students should take advantage of the AP Program and its benefits. It pains me to see a student with excellent grades but no AP courses on his transcript. College admissions offices will view this student as an underachiever, one who does not rise to the challenge. On the flip side, some students overburden themselves with too many AP courses than they can handle, resulting in poor performance. Sometimes the school guidance offices encourage students to load up on APs, since AP enrollment looks good for the school. Earning a ‘C’ in an AP course is NOT like earning an ‘B’ in a regular course, even if the impact on your GPA is the same. If you cannot earn a ‘B’ or ‘A’ in an AP course, then you should not enroll in that class.
Final word: for those students taking AP exams in May, good luck! And just remember, no matter how well you do, your mother will still love you, so treat her well come Mother’s Day.
-Pete
P.S. We've got three workshops on "The Dirty Little Secrets About College Financial Aid" this week - Wednesday the 16th, Thursday the 17th and Saturday the 19th. The workshops are 100% free and teach you how to lower your out of pocket cost of college by thousands, if not tens of thousands of dollars per year! They are free but limited by room size, so register today online: http://www.CollegePlanningAdvice.com!
- Peter "College Pete" Ratzan
Friday, April 11, 2008
It's money time for incoming college frosh
In financial aid, spring is "show me the money" season. College financial aid offices mail their award letters this time every year. If you're the parent of a college-bound student, try to fast forward two or three years to think about when you'll be in these shoes.
For incoming freshmen, the award letters can be the deciding factor in terms of where they end up in college. then, deposits are due by May 1. (For returning upperclassmen, this is the time to see how this year's award stacks up against last years, but I'm going to focus on incoming freshmen in this blog. )
So now is the time to analyze the offers. Be careful, particularly when it comes to "renewability." In other words, if you're awarded a grant or scholarship for your first year of college, understand what it takes (the minimum GPA) to receive that scholarship your sophomore, junior and senior years.
If you're offered loans, pay careful attention to the terms of each loan. Although reading these disclosures are not exactly riveting, it's important to understand exactly how the loan works - the rate, when can it adjust, how much it can adjust, is there any forgiveness or deferral option, etc.
Avoid unpleasant surprises by preparing years ahead of time. The best time to start your college planning is sophomore year of high school! Yes, sophomore year. This way, you'll be happy when you open your letters come spring of your senior year!
We offer free workshops that teach you "How to Pay for College Without Going Broke." Check out our dates/times/locations on our website:
www.CollegePlanningAdvice.com
For incoming freshmen, the award letters can be the deciding factor in terms of where they end up in college. then, deposits are due by May 1. (For returning upperclassmen, this is the time to see how this year's award stacks up against last years, but I'm going to focus on incoming freshmen in this blog. )
So now is the time to analyze the offers. Be careful, particularly when it comes to "renewability." In other words, if you're awarded a grant or scholarship for your first year of college, understand what it takes (the minimum GPA) to receive that scholarship your sophomore, junior and senior years.
If you're offered loans, pay careful attention to the terms of each loan. Although reading these disclosures are not exactly riveting, it's important to understand exactly how the loan works - the rate, when can it adjust, how much it can adjust, is there any forgiveness or deferral option, etc.
Avoid unpleasant surprises by preparing years ahead of time. The best time to start your college planning is sophomore year of high school! Yes, sophomore year. This way, you'll be happy when you open your letters come spring of your senior year!
We offer free workshops that teach you "How to Pay for College Without Going Broke." Check out our dates/times/locations on our website:
www.CollegePlanningAdvice.com
Wednesday, April 2, 2008
Can you still get into a Florida public university?
"College Pete" forwarded an alarming story to me a few hours ago. Even though both of us are out of town, the story was so important that I wanted to pass it onto you.
It appeared in today's Miami Herald. The header - "Budget cuts lock more out of state universities."
The story profiles some outstanding South Florida's college-bound students who cannot beg, borrow or steal their way into a state college, thanks to budget cuts and enrollment freezes! Kids with excellent grades (top 5% in the class) and leadership positions (class president, yearbook editor) cannot get into to "safety" schools anymore! Another student (3.4 GPA, varsity baseball captain, newspaper editor-in-chief) cannot get into University of South Florida.
The article is posted below.
So if your child is a high school junior or even a 10th grader, don’t wait another second and register for one of our workshops at http://www.collegeplanningadvice.com/wkshpsched.htm.
* The Five Greatest Myths About How the Financial Aid Process REALLY Works;
* Three Critical Questions You Must Ask Each College Before You Even Think About Applying;
* How much money your neighbors ACTUALLY have saved up for college and where you stand; and
* The "dirty little secret" about Florida Pre-paid and Bright futures.
Here's the article.
Top Florida high school students once considered Florida International University a ''safe'' fallback for those rejected by more-elite colleges like the University of Florida. Now that a budget crisis has forced drastic cuts at all 11 state universities, that's no longer the case.
Freshman enrollment is capped at the previous year's level for the first time in recent memory. Admission standards are rising, and many students find themselves squeezed out of a system they had long taken for granted.
Consider high school senior Ashley Casal, 18: class president at Miami Beach Senior High; yearbook editor; community volunteer; likely top 5 percent of her graduating class. Not enough to get her into FIU.
''I was really disappointed,'' Casal said. ``It's been really hard this year. Everybody has been feeling it.''
University-bound high school students like Casal know the routine: Take college-level classes, do your service hours, round out the package with an interesting hobby and a compelling essay. Not long ago, a Florida kid with all of the above and decent test scores could count on getting into a state school.
Not anymore.
''They're doing everything they're being told they need to do,'' said Cindy Woodring, continuing education advisor at Coral Springs High. ``They're either deferred or denied college acceptance.''
Carolyn Roberts, chairwoman of the Florida Board of Governors, said today's high school juniors and seniors will be most affected by the cutbacks.
''Students not only are prevented from attending the universities from which they are qualified to attend, it also means that if they are accepted, they are sitting in classes that are very crowded and dealing with advisors who are overworked,'' Roberts said.
FIU President Modesto ''Mitch'' Maidique said making it harder for Florida students to get into state colleges will hurt the state's ability to compete globally.
''We're taking a step backward,'' Maidique said, ``because if you reduce the number of folks who go into the pipeline, you reduce the number of students exiting the pipeline.''
For today's high school juniors and seniors -- and the school advisors who help them plan their path into higher education -- there are fewer certainties when it comes to getting into a Florida university.
''It's their party,'' said Pam Kirtman, the continuing education advisor at Nova High in Davie. ``They can invite who they want.''
The only sure bet, Kirtman said, is a community college.
For a student who dreamed of growing up to be a Gator or a Seminole, community college can be a tough sell. Still, it's an option advisors more often pitch lately because students who earn an associate's degree from a community college are guaranteed admission to a state university -- though not necessarily the university of their choice -- to finish their four-year degree.
That's a strategy Vanessa Jaramillo, a senior at Beach High, is considering. Denied acceptance at FIU, she is hoping to spend some time at Miami Dade College and then transfer to either FIU or the University of Miami.
''It's definitely been stressful,'' said Jaramillo, an honors student who also serves as class secretary. ``I felt really bad for some kids. They were really having a rough time.''
Enrollment continues to rise at both Miami Dade College and Broward Community College. Both expect capped university enrollments to send even more recent high school graduates their way in the fall.
While community colleges will keep their doors open, they, too, are in a budget crunch. Students are encouraged to register as early as possible to get the classes they need.
BCC spokeswoman Jillian Printz said the college is ``looking very carefully at how we expand sections, how we use space, how we use our facilities to serve enrollment growth.''
Victoria Hernandez, MDC's director of governmental affairs, said the college may not be able to offer enough classes to meet demand.
''At some point, we have to ask: What is the breaking point for Miami Dade College?'' she said. ``As it is, our classes are full.''
Sonja Miller, the College Assistance Program advisor at Miami Norland Senior High, said besides urging students to consider community college, she also is encouraging them to explore colleges and universities in other states. In some instances, the out-of-state alternatives are cheaper than their Florida counterparts, she said.
''There are students who want to stay in Florida but can't,'' she said. ``Our children are literally being forced out of the state.''
Miami Norland scholar-athlete Michael Allen applied to three colleges last semester -- two in-state and one in Washington, D.C.
Allen, who has a 3.4 GPA, is taking three advanced placement classes this year. He's is captain of the varsity baseball team and editor-in-chief of the student newspaper.
But Allen did not get into the University of South Florida. He hadn't heard back from Florida Atlantic University and Howard University, and he plans to apply to Florida A&M University.
''We hear it all the time: The number of applicants is going up, especially in the major schools,'' Allen said.
Although high school seniors are the ones dealing with last-minute decisions and rejection letters, juniors are worrying too.
''It's really hard,'' said Anais Alfonso, 17, of Hollywood. The Nova High junior, who is considering a career in nursing, said she has stopped thinking in terms of where she wants to go. Now, she's looking for schools that will admit her with at least a half scholarship.
Nova High school senior Zachary Rosen, who lives in Miramar and will attend Florida Gulf Coast University in Fort Myers, advised juniors to start their application process as early as possible.
''It could be too late for them,'' said Zachary, 18, pointing out that students need to work on their academics well before junior year. ``I would be talking to the freshmen.''
Kirtman, the Nova High advisor, said she urges parents not to attach their egos to where their kids go to college, and assures kids that there are many places where they can flourish.
''I make it really, really clear to them that their success in life and their happiness as a person isn't hinged on where they go to college,'' she said.
College Pete and I talk about this stuff 4-5 times per month...see, we weren't making it up!!!! Wake up and smell the coffee - stop blowing off your college planning!
http://www.collegeplanningadvice.com/wkshpsched.htm
It appeared in today's Miami Herald. The header - "Budget cuts lock more out of state universities."
The story profiles some outstanding South Florida's college-bound students who cannot beg, borrow or steal their way into a state college, thanks to budget cuts and enrollment freezes! Kids with excellent grades (top 5% in the class) and leadership positions (class president, yearbook editor) cannot get into to "safety" schools anymore! Another student (3.4 GPA, varsity baseball captain, newspaper editor-in-chief) cannot get into University of South Florida.
The article is posted below.
So if your child is a high school junior or even a 10th grader, don’t wait another second and register for one of our workshops at http://www.collegeplanningadvice.com/wkshpsched.htm.
* The Five Greatest Myths About How the Financial Aid Process REALLY Works;
* Three Critical Questions You Must Ask Each College Before You Even Think About Applying;
* How much money your neighbors ACTUALLY have saved up for college and where you stand; and
* The "dirty little secret" about Florida Pre-paid and Bright futures.
Here's the article.
Top Florida high school students once considered Florida International University a ''safe'' fallback for those rejected by more-elite colleges like the University of Florida. Now that a budget crisis has forced drastic cuts at all 11 state universities, that's no longer the case.
Freshman enrollment is capped at the previous year's level for the first time in recent memory. Admission standards are rising, and many students find themselves squeezed out of a system they had long taken for granted.
Consider high school senior Ashley Casal, 18: class president at Miami Beach Senior High; yearbook editor; community volunteer; likely top 5 percent of her graduating class. Not enough to get her into FIU.
''I was really disappointed,'' Casal said. ``It's been really hard this year. Everybody has been feeling it.''
University-bound high school students like Casal know the routine: Take college-level classes, do your service hours, round out the package with an interesting hobby and a compelling essay. Not long ago, a Florida kid with all of the above and decent test scores could count on getting into a state school.
Not anymore.
''They're doing everything they're being told they need to do,'' said Cindy Woodring, continuing education advisor at Coral Springs High. ``They're either deferred or denied college acceptance.''
Carolyn Roberts, chairwoman of the Florida Board of Governors, said today's high school juniors and seniors will be most affected by the cutbacks.
''Students not only are prevented from attending the universities from which they are qualified to attend, it also means that if they are accepted, they are sitting in classes that are very crowded and dealing with advisors who are overworked,'' Roberts said.
FIU President Modesto ''Mitch'' Maidique said making it harder for Florida students to get into state colleges will hurt the state's ability to compete globally.
''We're taking a step backward,'' Maidique said, ``because if you reduce the number of folks who go into the pipeline, you reduce the number of students exiting the pipeline.''
For today's high school juniors and seniors -- and the school advisors who help them plan their path into higher education -- there are fewer certainties when it comes to getting into a Florida university.
''It's their party,'' said Pam Kirtman, the continuing education advisor at Nova High in Davie. ``They can invite who they want.''
The only sure bet, Kirtman said, is a community college.
For a student who dreamed of growing up to be a Gator or a Seminole, community college can be a tough sell. Still, it's an option advisors more often pitch lately because students who earn an associate's degree from a community college are guaranteed admission to a state university -- though not necessarily the university of their choice -- to finish their four-year degree.
That's a strategy Vanessa Jaramillo, a senior at Beach High, is considering. Denied acceptance at FIU, she is hoping to spend some time at Miami Dade College and then transfer to either FIU or the University of Miami.
''It's definitely been stressful,'' said Jaramillo, an honors student who also serves as class secretary. ``I felt really bad for some kids. They were really having a rough time.''
Enrollment continues to rise at both Miami Dade College and Broward Community College. Both expect capped university enrollments to send even more recent high school graduates their way in the fall.
While community colleges will keep their doors open, they, too, are in a budget crunch. Students are encouraged to register as early as possible to get the classes they need.
BCC spokeswoman Jillian Printz said the college is ``looking very carefully at how we expand sections, how we use space, how we use our facilities to serve enrollment growth.''
Victoria Hernandez, MDC's director of governmental affairs, said the college may not be able to offer enough classes to meet demand.
''At some point, we have to ask: What is the breaking point for Miami Dade College?'' she said. ``As it is, our classes are full.''
Sonja Miller, the College Assistance Program advisor at Miami Norland Senior High, said besides urging students to consider community college, she also is encouraging them to explore colleges and universities in other states. In some instances, the out-of-state alternatives are cheaper than their Florida counterparts, she said.
''There are students who want to stay in Florida but can't,'' she said. ``Our children are literally being forced out of the state.''
Miami Norland scholar-athlete Michael Allen applied to three colleges last semester -- two in-state and one in Washington, D.C.
Allen, who has a 3.4 GPA, is taking three advanced placement classes this year. He's is captain of the varsity baseball team and editor-in-chief of the student newspaper.
But Allen did not get into the University of South Florida. He hadn't heard back from Florida Atlantic University and Howard University, and he plans to apply to Florida A&M University.
''We hear it all the time: The number of applicants is going up, especially in the major schools,'' Allen said.
Although high school seniors are the ones dealing with last-minute decisions and rejection letters, juniors are worrying too.
''It's really hard,'' said Anais Alfonso, 17, of Hollywood. The Nova High junior, who is considering a career in nursing, said she has stopped thinking in terms of where she wants to go. Now, she's looking for schools that will admit her with at least a half scholarship.
Nova High school senior Zachary Rosen, who lives in Miramar and will attend Florida Gulf Coast University in Fort Myers, advised juniors to start their application process as early as possible.
''It could be too late for them,'' said Zachary, 18, pointing out that students need to work on their academics well before junior year. ``I would be talking to the freshmen.''
Kirtman, the Nova High advisor, said she urges parents not to attach their egos to where their kids go to college, and assures kids that there are many places where they can flourish.
''I make it really, really clear to them that their success in life and their happiness as a person isn't hinged on where they go to college,'' she said.
College Pete and I talk about this stuff 4-5 times per month...see, we weren't making it up!!!! Wake up and smell the coffee - stop blowing off your college planning!
http://www.collegeplanningadvice.com/wkshpsched.htm
Wednesday, March 26, 2008
The Surprising Way an Acceptance to a Top College Can Shatter Your Student’s Dreams
Here’s an all-too-common scenario for parents of college-bound students this time of year, both here in Broward County, Florida and across the country.
Q: I'm a senior and accepted to Columbia University. I just received my financial aid award but we were offered only a high fee, high rate loan that we can’t afford. Why?
A: Each spring, we receive distress calls from parents, heartbroken by their child’s acceptance into her dream school! The student has performed admirably: achieved high grades in challenging classes; extra-curricular activities; mastered the SAT and submitted college applications well before deadlines.
The good news is acceptance into a top choice college. But elation turns to depression when the financial aid award arrives – five weeks before the school requires a commitment and a scant five months before college starts. In this case, the entire award was a Parent Loan for Undergraduate Students (PLUS) loan.
The family in this example did not understand the Department of Education’s eligibility rules for financial aid. More importantly, they failed to position their finances to maximize their eligibility.
I could tell from the award letter that this family’s Expected Family Contribution (EFC) was too high. The EFC is generated when you fill out your financial aid forms (the FAFSA and the CSS Profile, typically.) This unfortunate “award" is typical for families whose EFC's are higher than the cost of attendance for a highly-selective school. The most frustrating thing was that this situation could have been easily avoided.
How? By planning ahead so that you’re not blind-sided like the family in this example. Calculate your EFC by sophomore or junior year at the latest. This way you can implement a financial plan to pay for every college on your student's list before the applications are even submitted. Although your initial EFC will often be an impossibly high number, do not despair – your EFC is controllable. The lower your EFC, the more aid you’ll receive. Schools like Columbia will fall within your reach.
The other half of the equation is understanding that some schools, particularly private, selective schools, have more money to offer than others. They award differently – some give more grants than loans. Finally, you should be aware that almost all schools reward grants and scholarships on “need,” not based on academic achievement (merit). This is critical information you must have before submitting your applications.
Understand that college financial planning is equally critical as admissions counseling and SAT preparation. After all, what good is it to bust your behind to get into the best college you can, only to learn that you go because you can’t afford it?
Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “The Dirty Little Secret (More Dirty Than Eliot Spitzer’s!) About Florida Pre-Paid Plans and Bright Futures” He hosts the “College Planning Power Hour” radio show Sundays, 10:00-11:00 AM on WFTL Sports, ESPN Radio, 1400 AM (online at http://www.collegeplanningradio.com/). More information is available at http://www.collegeplanningadvice.com/.
Q: I'm a senior and accepted to Columbia University. I just received my financial aid award but we were offered only a high fee, high rate loan that we can’t afford. Why?
A: Each spring, we receive distress calls from parents, heartbroken by their child’s acceptance into her dream school! The student has performed admirably: achieved high grades in challenging classes; extra-curricular activities; mastered the SAT and submitted college applications well before deadlines.
The good news is acceptance into a top choice college. But elation turns to depression when the financial aid award arrives – five weeks before the school requires a commitment and a scant five months before college starts. In this case, the entire award was a Parent Loan for Undergraduate Students (PLUS) loan.
The family in this example did not understand the Department of Education’s eligibility rules for financial aid. More importantly, they failed to position their finances to maximize their eligibility.
I could tell from the award letter that this family’s Expected Family Contribution (EFC) was too high. The EFC is generated when you fill out your financial aid forms (the FAFSA and the CSS Profile, typically.) This unfortunate “award" is typical for families whose EFC's are higher than the cost of attendance for a highly-selective school. The most frustrating thing was that this situation could have been easily avoided.
How? By planning ahead so that you’re not blind-sided like the family in this example. Calculate your EFC by sophomore or junior year at the latest. This way you can implement a financial plan to pay for every college on your student's list before the applications are even submitted. Although your initial EFC will often be an impossibly high number, do not despair – your EFC is controllable. The lower your EFC, the more aid you’ll receive. Schools like Columbia will fall within your reach.
The other half of the equation is understanding that some schools, particularly private, selective schools, have more money to offer than others. They award differently – some give more grants than loans. Finally, you should be aware that almost all schools reward grants and scholarships on “need,” not based on academic achievement (merit). This is critical information you must have before submitting your applications.
Understand that college financial planning is equally critical as admissions counseling and SAT preparation. After all, what good is it to bust your behind to get into the best college you can, only to learn that you go because you can’t afford it?
Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “The Dirty Little Secret (More Dirty Than Eliot Spitzer’s!) About Florida Pre-Paid Plans and Bright Futures” He hosts the “College Planning Power Hour” radio show Sundays, 10:00-11:00 AM on WFTL Sports, ESPN Radio, 1400 AM (online at http://www.collegeplanningradio.com/). More information is available at http://www.collegeplanningadvice.com/.
Saturday, March 15, 2008
The True Cost of College According to Two New Yorkers
Here's an article from two writers with the NY Daily News. Pay attention to the numbers they cite for "other," miscelleneous costs. For Florida costs, these numbers are essentially the same.
After you read the piece and you're still looking for answers about how to pay for college without going broke, I suggest you attend our next free workshop on college planning. Call our office or check our website for information.
***********************************
Saturday, March 15, 2008
What does college really cost?
By George Chin and Alice Murphey
Monday, March 10th 2008, 4:00 AM
You've read the eye-popping numbers about the cost of college: up to $50,000 a year for tuition, students graduating with six-figure debts.
What does college really cost?
The short answer is it depends on three key factors: where you go, how careful you budget and how much financial aid you receive.
The latest annual survey from the College Board, which tracks higher education trends, puts the average cost of a year of private college at $32,307 for 2007-08. But that's the national average for a particular type of college.
These are the more expensive, high-reputation private schools and out-of-state public universities, where you'll have to pay to live in a dorm or off-campus.
There are far less expensive choices, such as the City University of New York's four-year and community colleges, where you'll likely live at home while studying. CUNY's Peter F. Vallone Academic Scholarships can defray the costs further, awarding up to $1,250 to students with at least a B average enrolling from any New York City high school. Students accepted into CUNY's William E. Macaulay Honors College on the Upper West Side get free tuition, a $7,500 academic stipend and a laptop.
Whatever school you choose, remember: When you are figuring out what college will cost, look beyond admissions materials, which may only list tuition, fees, and room and board.
College students do not live by tuition alone. There are textbooks to pay for, not to mention transportation, coffee, phone calls, laundry, etc. It adds up. How much? We estimate a minimum of $4,000 a year. Generally, to calculate your yearly tab if you live at home, add $5,500 to $6,000 to tuition and fees. If you live away at school, tack at least $11,000.
Be sure to read the colleges' financial aid materials or Web sites when breaking down the cost of attendance. Colleges figure those costs when deciding whether to award you financial aid, including not only tuition, fees, and room and board, but allowances for books, supplies, transportation to classes, extracurricular activities and personal costs.
According to the College Board, expect to pay, on average, $921 to $988 for books and supplies; $6,875 to $8,595 for room and board (in a dorm or off campus); $768 to $1,284 for transportation, and $1,311 to $2,138 for miscellaneous expenses - depending on the type of institution.
It's hardly chump change, but you will still need to budget carefully. If you don't want maxed-out credit card bills slapping you during finals, spend smartly.
By now you've probably filed your Free Application for Federal Student Aid and have your estimated family contribution. You have an idea of college costs. Family contribution and cost are the key factors in a college's calculation of aid. The mathematical formula is simple: Cost - estimated family contribution = need.
The college financial aid office's role is to tap into the many forms, programs and sources to help you meet that need. We refer to that process as packaging. It results in a financial aid award letter outlining what you can expect.
In the coming weeks, we'll explain how to evaluate these aid packages to see which realistically match your family's ability to pay for your higher education.
Your Money columnists George Chin and Alice Murphey are the former and current directors of financial aid for the City University of New York. They've each advised students about managing college costs for more than 30 years.In figuring costs, look far beyond tuition and room and board.
*****************************************
Check out our free workshops that give you ideas you can use right away to maximize the financial aid you'll receive - there's more than 130 Billion of Federal Aid available for your college-bound student...learn how to get your fair share! Call our office at 954.659.1234 or visit our website, www.CollegePlanningAdvice.com.
After you read the piece and you're still looking for answers about how to pay for college without going broke, I suggest you attend our next free workshop on college planning. Call our office or check our website for information.
***********************************
Saturday, March 15, 2008
What does college really cost?
By George Chin and Alice Murphey
Monday, March 10th 2008, 4:00 AM
You've read the eye-popping numbers about the cost of college: up to $50,000 a year for tuition, students graduating with six-figure debts.
What does college really cost?
The short answer is it depends on three key factors: where you go, how careful you budget and how much financial aid you receive.
The latest annual survey from the College Board, which tracks higher education trends, puts the average cost of a year of private college at $32,307 for 2007-08. But that's the national average for a particular type of college.
These are the more expensive, high-reputation private schools and out-of-state public universities, where you'll have to pay to live in a dorm or off-campus.
There are far less expensive choices, such as the City University of New York's four-year and community colleges, where you'll likely live at home while studying. CUNY's Peter F. Vallone Academic Scholarships can defray the costs further, awarding up to $1,250 to students with at least a B average enrolling from any New York City high school. Students accepted into CUNY's William E. Macaulay Honors College on the Upper West Side get free tuition, a $7,500 academic stipend and a laptop.
Whatever school you choose, remember: When you are figuring out what college will cost, look beyond admissions materials, which may only list tuition, fees, and room and board.
College students do not live by tuition alone. There are textbooks to pay for, not to mention transportation, coffee, phone calls, laundry, etc. It adds up. How much? We estimate a minimum of $4,000 a year. Generally, to calculate your yearly tab if you live at home, add $5,500 to $6,000 to tuition and fees. If you live away at school, tack at least $11,000.
Be sure to read the colleges' financial aid materials or Web sites when breaking down the cost of attendance. Colleges figure those costs when deciding whether to award you financial aid, including not only tuition, fees, and room and board, but allowances for books, supplies, transportation to classes, extracurricular activities and personal costs.
According to the College Board, expect to pay, on average, $921 to $988 for books and supplies; $6,875 to $8,595 for room and board (in a dorm or off campus); $768 to $1,284 for transportation, and $1,311 to $2,138 for miscellaneous expenses - depending on the type of institution.
It's hardly chump change, but you will still need to budget carefully. If you don't want maxed-out credit card bills slapping you during finals, spend smartly.
By now you've probably filed your Free Application for Federal Student Aid and have your estimated family contribution. You have an idea of college costs. Family contribution and cost are the key factors in a college's calculation of aid. The mathematical formula is simple: Cost - estimated family contribution = need.
The college financial aid office's role is to tap into the many forms, programs and sources to help you meet that need. We refer to that process as packaging. It results in a financial aid award letter outlining what you can expect.
In the coming weeks, we'll explain how to evaluate these aid packages to see which realistically match your family's ability to pay for your higher education.
Your Money columnists George Chin and Alice Murphey are the former and current directors of financial aid for the City University of New York. They've each advised students about managing college costs for more than 30 years.In figuring costs, look far beyond tuition and room and board.
*****************************************
Check out our free workshops that give you ideas you can use right away to maximize the financial aid you'll receive - there's more than 130 Billion of Federal Aid available for your college-bound student...learn how to get your fair share! Call our office at 954.659.1234 or visit our website, www.CollegePlanningAdvice.com.
Thursday, March 13, 2008
Avoiding Unpleasant Surprises During College Financial Aid Award Season
This time of year, college-bound students start receiving financial aid award letters from the schools they have applied to. Here’s a typical question asked of us during our free workshops in “financial aid award season:”
Q. We're confused about our son's financial aid award from (Extremely Competitive) University . Our Expected Family Contribution (EFC) is $15,000, but the cost of college around $44,000. The financial aid office offered us only loans. What happened?
A. Here's how the system works: Most financial aid is based on “Need,” calculated as follows: COA-EFC = Need. (COA stands for cost of attendance: tuition, room, board and other incidentals). So the lower your EFC, the higher your Need. The higher your Need, the more aid you receive. But hang on – there are plently of nuances behind this simple formula.
Less than 3 percent of colleges meet 100 percent of Need. Here in Florida, the range is from 30% to approximately 85% of need. The elite, private schools tend to be the most generous, since they have the largest endowments.
But it’s not just the raw percentage of Need that is important; it’s critical to understand how Need is met – what percentage is “free” aid – grants vs. how much is“self-help” - loans and work-study. This mixture varies tremendously among the schools. Some offer 100% grants - Harvard and other Ivy’s,notably; others 85% free, 15% loans. A good ratio here in Florida is 60% free; 40% loans.
So it’s confusing when considering a private school that meets less than 100% of Need: If the COA is $50,000 and EFC is $20,000 - Need is $30,000 (COA-EFC). Many families mistakenly expect an award of $30,000. But if school meets, on average, only 80% of the Need ($24,000), the remaining 20% or $6,000 is additional money the family must cough up. So this family's "adjusted" EFC becomes $24,000.
I realize that this stuff is hard to understand at first blush. Most likely, you’ve never had this explained to you. That’s why we run free college planning workshops several times per month.
But here’s an important point to take away from this post: it’s critical where you apply to college. Some schools have more attractive financial aid packages than others. That’s why we recommend that you start the planning process in Sophomore year of high school; Junior year at the latest. Start by calculating your EFC, and understand that there are legal, ethical and moral ways to lower that number so you maximize your financial aid award letter. Start your planning early so you’re pleased, not depressed, when you receive your award letters.
Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. He co-hosts “The College Planning Power Hour” each Sunday morning, 10:00-10:00 am, WFTL Sports 1400 AM, ESPN Radio. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “3 Critical Questions You Must Ask The Financial Aid Office Before You Apply:” More information is available at www.CollegePlanningAdvice.com.
Q. We're confused about our son's financial aid award from (Extremely Competitive) University . Our Expected Family Contribution (EFC) is $15,000, but the cost of college around $44,000. The financial aid office offered us only loans. What happened?
A. Here's how the system works: Most financial aid is based on “Need,” calculated as follows: COA-EFC = Need. (COA stands for cost of attendance: tuition, room, board and other incidentals). So the lower your EFC, the higher your Need. The higher your Need, the more aid you receive. But hang on – there are plently of nuances behind this simple formula.
Less than 3 percent of colleges meet 100 percent of Need. Here in Florida, the range is from 30% to approximately 85% of need. The elite, private schools tend to be the most generous, since they have the largest endowments.
But it’s not just the raw percentage of Need that is important; it’s critical to understand how Need is met – what percentage is “free” aid – grants vs. how much is“self-help” - loans and work-study. This mixture varies tremendously among the schools. Some offer 100% grants - Harvard and other Ivy’s,notably; others 85% free, 15% loans. A good ratio here in Florida is 60% free; 40% loans.
So it’s confusing when considering a private school that meets less than 100% of Need: If the COA is $50,000 and EFC is $20,000 - Need is $30,000 (COA-EFC). Many families mistakenly expect an award of $30,000. But if school meets, on average, only 80% of the Need ($24,000), the remaining 20% or $6,000 is additional money the family must cough up. So this family's "adjusted" EFC becomes $24,000.
I realize that this stuff is hard to understand at first blush. Most likely, you’ve never had this explained to you. That’s why we run free college planning workshops several times per month.
But here’s an important point to take away from this post: it’s critical where you apply to college. Some schools have more attractive financial aid packages than others. That’s why we recommend that you start the planning process in Sophomore year of high school; Junior year at the latest. Start by calculating your EFC, and understand that there are legal, ethical and moral ways to lower that number so you maximize your financial aid award letter. Start your planning early so you’re pleased, not depressed, when you receive your award letters.
Andrew Lockwood, J.D. is co-owner of College Planning Specialists in Weston. He co-hosts “The College Planning Power Hour” each Sunday morning, 10:00-10:00 am, WFTL Sports 1400 AM, ESPN Radio. His firm offers free workshops on topics such as “5 Myths About Qualifying for Financial Aid” and “3 Critical Questions You Must Ask The Financial Aid Office Before You Apply:” More information is available at www.CollegePlanningAdvice.com.
Saturday, March 8, 2008
College Pete and Andy Debut College Planning Radio Show!
This just in -
College Pete and I have launched our radio show, "The College Planning Power Hour." We cover all sorts of 'insider' information about college financial aid, student loans and how to find grants, scholarships and other free money for college. We also cover the greatest myths about college financial aid, including the false belief that families with high, six figure incomes cannot qualify for financial aid!
We'll also feature the "S.A.T. Word of the Day" with our resident "S.A.T Godfather," Michael El-Deiry. Each week the Godfather will enlighten our vocabulary with a fresh S.A.T. vocabulary word and try to stump us.
Since we're on ESPN Radio, we'll also come up with college sports related trivia and other stuff. For example, next week is "Selection Sunday" for the NCAA men's basketball tournament. We'll be joined by Andy Katz, ESPN college basketball reporter who will go over his picks for "March Madness." Then, we'll share OUR picks for the schools invited to the "big dance" (based on how generous each college is with financial aid.) Fun!!!
We air each Sunday, 10-11:00 am on WFTL, 1400AM - ESPN Radio. You can listen online at: www.CollegePlanningRadio.com.
College Pete and I have launched our radio show, "The College Planning Power Hour." We cover all sorts of 'insider' information about college financial aid, student loans and how to find grants, scholarships and other free money for college. We also cover the greatest myths about college financial aid, including the false belief that families with high, six figure incomes cannot qualify for financial aid!
We'll also feature the "S.A.T. Word of the Day" with our resident "S.A.T Godfather," Michael El-Deiry. Each week the Godfather will enlighten our vocabulary with a fresh S.A.T. vocabulary word and try to stump us.
Since we're on ESPN Radio, we'll also come up with college sports related trivia and other stuff. For example, next week is "Selection Sunday" for the NCAA men's basketball tournament. We'll be joined by Andy Katz, ESPN college basketball reporter who will go over his picks for "March Madness." Then, we'll share OUR picks for the schools invited to the "big dance" (based on how generous each college is with financial aid.) Fun!!!
We air each Sunday, 10-11:00 am on WFTL, 1400AM - ESPN Radio. You can listen online at: www.CollegePlanningRadio.com.
Saturday, March 1, 2008
There is $130 Billion Available For Financial Aid, But...
Here's an article that appeared recently the school paper of Palo Alto. It details that, although there is a huuuuuuuge amount of financial aid out there ($130 Billion), receiving it is more competitive than ever.
When you're done with the article, mosey on over to www.CollegePlanningAdvice, which has important information you can use to see how you can get the inside track on qualifying for your share.
Here's the piece:
College tuition prices out of controlIncreasing college tuition places more stress on college bound students
Posted Mon Jan. 28, 12:42:16 PST 2008By Kevin Harvey of The Campanile
As most Palo Alto High School students know by now, the competition involved with college admissions is enormous and steadily increasing. Of the 2008 national graduating class of 3.2 million students, about 30 percent will attend a college or university, the largest number in United States history.
Many students resort to the help of private college counselors for guidance, reassurance and such preparation as aid in essay and application writing.
Last year, over 120,000 high school seniors applied to colleges and universities with the help of a private counselor. This increasing competition allows colleges and universities to raise their tuition and application prices.
As the competition and tuition prices continue to increase, the number of students who are able to attend colleges and universities will decrease. However, according to The College Board, there is more than $130 billion available for financial aid this coming year.
Despite this, financial aid will continue to be increasingly difficult to receive because of the increasing number of eligible applicants.
Private colleges and universities are being run like corporations, striving to gain profit and forgetting about providing their services for a reasonable fee. Universities are raising their tuition prices because they can, due to demand.
The price of tuition among private universities increased by 6.3 percent this year, while public colleges increased tuition by a drastic 6.6 percent, according to The College Board.
Moreover, The College Board recently announced that it will no longer support the Federal Family Education Loan Program, one of the largest student loan providers in the nation. After Oct. 15, the College Board refused applications.
According to The College Board, students should expect to pay between $95 and $1,404 more
for tuition this year than last year, depending on the type of college or university.
In 1990, the tuition price for an undergraduate student living on the campus of Stanford University was $14,280 per year. The tuition price increased about 300 percent to an astonishing $44,267 for the 2008 academic year.
Many people assume that this is because Stanford is expanding their facilities and needs to increase tuition prices to compensate.
These assumptions are incorrect. Almost all universities in the United States pay their expenses, including their staff members' salaries, with the fees they charge for application papers. The fee that they charge attending students for tuition is almost entirely for profit.
However, many universities, such as the University of Michigan at Ann Arbor, are trying to prevent undergraduate tuition prices from increasing. But graduate school tuition prices have heavily increased to compensate for the profit lost through keeping the undergraduate tuition relatively low.
As tuition prices increase rapidly, many students apply for financial aid, but most students who apply for aid do not end up receiving it. This problem is most common among middle class families because their income is not low enough to make them completely dependent on financial aid, but not high enough to prevent them from struggling with payments and tuition costs.
If colleges and universities lowered their tuition costs, they would allow more students that were
previously dependent on financial aid to attend.
This would raise profit margins because universities would have more students attending who pay lower tuition costs.
This story originally appeared in The Campanile on January 28, 2008.
###
Want inside information on financial aid and "How to Pay for College Without Going Broke?" Visit www.CollegePlanningAdvice.com.
When you're done with the article, mosey on over to www.CollegePlanningAdvice, which has important information you can use to see how you can get the inside track on qualifying for your share.
Here's the piece:
College tuition prices out of controlIncreasing college tuition places more stress on college bound students
Posted Mon Jan. 28, 12:42:16 PST 2008By Kevin Harvey of The Campanile
As most Palo Alto High School students know by now, the competition involved with college admissions is enormous and steadily increasing. Of the 2008 national graduating class of 3.2 million students, about 30 percent will attend a college or university, the largest number in United States history.
Many students resort to the help of private college counselors for guidance, reassurance and such preparation as aid in essay and application writing.
Last year, over 120,000 high school seniors applied to colleges and universities with the help of a private counselor. This increasing competition allows colleges and universities to raise their tuition and application prices.
As the competition and tuition prices continue to increase, the number of students who are able to attend colleges and universities will decrease. However, according to The College Board, there is more than $130 billion available for financial aid this coming year.
Despite this, financial aid will continue to be increasingly difficult to receive because of the increasing number of eligible applicants.
Private colleges and universities are being run like corporations, striving to gain profit and forgetting about providing their services for a reasonable fee. Universities are raising their tuition prices because they can, due to demand.
The price of tuition among private universities increased by 6.3 percent this year, while public colleges increased tuition by a drastic 6.6 percent, according to The College Board.
Moreover, The College Board recently announced that it will no longer support the Federal Family Education Loan Program, one of the largest student loan providers in the nation. After Oct. 15, the College Board refused applications.
According to The College Board, students should expect to pay between $95 and $1,404 more
for tuition this year than last year, depending on the type of college or university.
In 1990, the tuition price for an undergraduate student living on the campus of Stanford University was $14,280 per year. The tuition price increased about 300 percent to an astonishing $44,267 for the 2008 academic year.
Many people assume that this is because Stanford is expanding their facilities and needs to increase tuition prices to compensate.
These assumptions are incorrect. Almost all universities in the United States pay their expenses, including their staff members' salaries, with the fees they charge for application papers. The fee that they charge attending students for tuition is almost entirely for profit.
However, many universities, such as the University of Michigan at Ann Arbor, are trying to prevent undergraduate tuition prices from increasing. But graduate school tuition prices have heavily increased to compensate for the profit lost through keeping the undergraduate tuition relatively low.
As tuition prices increase rapidly, many students apply for financial aid, but most students who apply for aid do not end up receiving it. This problem is most common among middle class families because their income is not low enough to make them completely dependent on financial aid, but not high enough to prevent them from struggling with payments and tuition costs.
If colleges and universities lowered their tuition costs, they would allow more students that were
previously dependent on financial aid to attend.
This would raise profit margins because universities would have more students attending who pay lower tuition costs.
This story originally appeared in The Campanile on January 28, 2008.
###
Want inside information on financial aid and "How to Pay for College Without Going Broke?" Visit www.CollegePlanningAdvice.com.
Tuesday, February 26, 2008
College Planning Interns BANNED at State-Sponsored Financial Aid Event
College Planning Interns BANNED at State-Sponsored Financial Aid Event – Event Officials Threaten, Intimidate Interns, Rip Literature, Call Police
Here's a press release we just issued about the outrageous events this weekend.
For Immediate Release
Weston, Florida, February 23, 2008 – Officials at “Countdown to College,” a state-sponsored financial aid event, muzzled a local college planning firm that attempted to shed light on the sponsors behind the event.This weekend, the state of Florida featured the “Countdown," a series of financial aid form assistance workshops ostensibly designed to help parents of college-bound teens fill out the Free Application for Financial Aid (FAFSA). Unbeknownst to the attendees, however, the events were underwritten by student loan companies. When student interns hired by CollegePlanningAdvice.com, a Weston-based college planning firm, showed up at the event to distribute information urging families to consider other sources of college funding – including free, need-based grants and scholarships - they were met by angry, outraged organizers. Event officials moved swiftly to intimidate the teenaged interns with threats of calling the police, tearing up their flyers and banning them from the parking lot.
“This event was held in a public forum. These cowardly officials shamelessly violated the interns’ rights to free speech under the 1st amendment!” said Andrew Lockwood, J.D., co-owner of CollegePlanningAdvice.com. ”But the true victims were the families who were coerced into applying for high fee, high debt student loans when unknown alternatives were available.”
Lockwood and Peter Ratzan, M.B.A. co-owners of CollegePlanningAdvice.com, were shocked once they learned that event which was sponsored by USA Funds -- a student loan guarantor—and Citicorp - a student lender - would steer cash-strapped and uninformed families to risky, high cost and unsubsidized private student loans without offering an alternative solution to their college funding crisis.
"There are better, even free ways to pay for college, if you know the "rules of the game" about how federal grants are given, and to whom. There's more than 80 Billion dollars of need-based aid available through the financial aid system,” said Razan. “Andy and I were shocked to learn that we would not be allowed to present that information to the families at the Countdown. Wouldn’t you think that this would be information that they’d want to know?”“We just wanted to make sure that parents found out that there was a legitimate alternative to burdening their children with deceptive, low "teaser" rate payments that, after they adjust, create late payments, non-payments, defaults and ruin your student's credit rating for the indeterminate future" said Lockwood.
“Unfortunately, here’s what happened instead,” said Ratzan: "The parents filled out their FAFSA. Then, they pushed a button and learned what their Expected Family Contribution (EFC) is. This is a critical number - it’s the dollar amount that parents are expected to pay according to the FAFSA."
"For most parents, the EFC is not pretty,” said Lockwood. “The EFC is usually several thousand dollars per year, per child. Parents freak out. Then, at the ‘Countdown,’ vulnerable parents rushed to apply for high fee, high rate student loans, solely because they did not see any alternative to incurring this debt! For these student lenders, signing borrowers was like shooting fish in a barrel, but with a machine gun!” said Lockwood.“The key to avoiding being pigeon-holed like this is to start the college planning process by sophomore or junior year. This is one area where procrastination can cost you literally thousands of dollars of lost aid and high interest payments,” said Ratzan.
Lockwood and Ratzan offer free college planning workshops that encourage parents to reduce or flat-out eliminate high fee, high interest rate debt. Details are available at: http://collegeplanningadvice.comLockwood and Ratzan co-host “The College Planning Power Hour” radio show, Sundays, 10:00-11:00 AM on ESPN Radio AM 1400, starting March 2, 2008. Their firm, CollegePlanningAdvice.com is located in Weston, Florida and helps parents “Pay for College Without Going Broke.”
For more information and/or an entertaining interview, please contact Andrew Lockwood, J.D. at 954.659.1234 or info@collegeplanningadvice.com
Here's a press release we just issued about the outrageous events this weekend.
For Immediate Release
Weston, Florida, February 23, 2008 – Officials at “Countdown to College,” a state-sponsored financial aid event, muzzled a local college planning firm that attempted to shed light on the sponsors behind the event.This weekend, the state of Florida featured the “Countdown," a series of financial aid form assistance workshops ostensibly designed to help parents of college-bound teens fill out the Free Application for Financial Aid (FAFSA). Unbeknownst to the attendees, however, the events were underwritten by student loan companies. When student interns hired by CollegePlanningAdvice.com, a Weston-based college planning firm, showed up at the event to distribute information urging families to consider other sources of college funding – including free, need-based grants and scholarships - they were met by angry, outraged organizers. Event officials moved swiftly to intimidate the teenaged interns with threats of calling the police, tearing up their flyers and banning them from the parking lot.
“This event was held in a public forum. These cowardly officials shamelessly violated the interns’ rights to free speech under the 1st amendment!” said Andrew Lockwood, J.D., co-owner of CollegePlanningAdvice.com. ”But the true victims were the families who were coerced into applying for high fee, high debt student loans when unknown alternatives were available.”
Lockwood and Peter Ratzan, M.B.A. co-owners of CollegePlanningAdvice.com, were shocked once they learned that event which was sponsored by USA Funds -- a student loan guarantor—and Citicorp - a student lender - would steer cash-strapped and uninformed families to risky, high cost and unsubsidized private student loans without offering an alternative solution to their college funding crisis.
"There are better, even free ways to pay for college, if you know the "rules of the game" about how federal grants are given, and to whom. There's more than 80 Billion dollars of need-based aid available through the financial aid system,” said Razan. “Andy and I were shocked to learn that we would not be allowed to present that information to the families at the Countdown. Wouldn’t you think that this would be information that they’d want to know?”“We just wanted to make sure that parents found out that there was a legitimate alternative to burdening their children with deceptive, low "teaser" rate payments that, after they adjust, create late payments, non-payments, defaults and ruin your student's credit rating for the indeterminate future" said Lockwood.
“Unfortunately, here’s what happened instead,” said Ratzan: "The parents filled out their FAFSA. Then, they pushed a button and learned what their Expected Family Contribution (EFC) is. This is a critical number - it’s the dollar amount that parents are expected to pay according to the FAFSA."
"For most parents, the EFC is not pretty,” said Lockwood. “The EFC is usually several thousand dollars per year, per child. Parents freak out. Then, at the ‘Countdown,’ vulnerable parents rushed to apply for high fee, high rate student loans, solely because they did not see any alternative to incurring this debt! For these student lenders, signing borrowers was like shooting fish in a barrel, but with a machine gun!” said Lockwood.“The key to avoiding being pigeon-holed like this is to start the college planning process by sophomore or junior year. This is one area where procrastination can cost you literally thousands of dollars of lost aid and high interest payments,” said Ratzan.
Lockwood and Ratzan offer free college planning workshops that encourage parents to reduce or flat-out eliminate high fee, high interest rate debt. Details are available at: http://collegeplanningadvice.comLockwood and Ratzan co-host “The College Planning Power Hour” radio show, Sundays, 10:00-11:00 AM on ESPN Radio AM 1400, starting March 2, 2008. Their firm, CollegePlanningAdvice.com is located in Weston, Florida and helps parents “Pay for College Without Going Broke.”
For more information and/or an entertaining interview, please contact Andrew Lockwood, J.D. at 954.659.1234 or info@collegeplanningadvice.com
Tuesday, February 19, 2008
Warning About Florida's "College Countdown"
Weston, Florida, February 19, 2008 -
We're very uptight about the State of Florida-sponsored "Countdown to College," a series of college financial aid form assistance workshops throughout Florida. The promotion is designed to help parents of college-bound teens fill out the Free Application for Financial Aid (FAFSA).
Although the event seems helpful on its face, we at CollegePlanningAdvice.com advise attendees to scratch below the surface to learn the true incentive of the event sponsors.
Check out who's sponsoring these events. USA Funds - a lender! Citicorp - another lender!!!.
Correct me if I'm out of line - wouldn't it be nice for your student to go to college without borrowing money from high fee, high rate lenders? Wouldn't it be great if you didn't burden your student with deceptive, low "teaser" rate payments that, after they adjust, create late payments, non-payments, defaults and ruin your student's credit rating for the indeterminate future?
I can predict exactly what will happen at these events. Parents will fill out their FAFSA. Then, they'll push a button and learn what their Expected Family Contribution is - in other words, the dollar amount that they will be expected to pay according to the FAFSA.
It won't be pretty. This number will be several thousand dollars per year, per child.
Parents will freak out. Then, I bet you dollars to donuts that these parents will rush to apply for high fee, high rate student loans, because they will not see any alternative to borrowing for college.
And with the friendly student lenders lurking nearby, these parents are fish in a barrel.
If you are the parent of a sophomore, junior, or, in some cases, a senior, you still have time to prevent yourself from being coerced like the attendees of the "Countdown." There are better, even free ways to pay for college, if you know the "rules of the game" about how federal grants are given, and to whom.
For more information, attend one of our three, free workshops this month:
* Tuesday, February 26th, 6:15 pm - Southwest Regional Library, Pembroke Pines;
* Wednesday, February 27th, 6:15 pm: West Regional Libary, Plantation; and
* Thursday, February 28th, 8:00 pm: West Broward Family YMCA, Weston.
Details are available at:
http://collegeplanningadvice.com
The workshops are free and nothing will be sold or "pitched." (There will be no loan applications to fill out, either.)
The secret to avoiding high fee, high rate and high payment student loans is to position yourself to qualify for maximum aid by Sophomore or Junior Year. But even if your child is a Senior, there are still alternatives to student loans.
Lockwood and Ratzan co-host "The College Planning Power Hour" radio show, Sundays, 10:00-11:00 AM on ESPN Radio AM 1400, starting March 2, 2008. Their firm, CollegePlanningAdvice.com is located in Weston, Florida and helps parents "Pay for College Without Going Broke."
For more information call 954.659.1234 or "info@collegeplanningadvice.com"
We're very uptight about the State of Florida-sponsored "Countdown to College," a series of college financial aid form assistance workshops throughout Florida. The promotion is designed to help parents of college-bound teens fill out the Free Application for Financial Aid (FAFSA).
Although the event seems helpful on its face, we at CollegePlanningAdvice.com advise attendees to scratch below the surface to learn the true incentive of the event sponsors.
Check out who's sponsoring these events. USA Funds - a lender! Citicorp - another lender!!!.
Correct me if I'm out of line - wouldn't it be nice for your student to go to college without borrowing money from high fee, high rate lenders? Wouldn't it be great if you didn't burden your student with deceptive, low "teaser" rate payments that, after they adjust, create late payments, non-payments, defaults and ruin your student's credit rating for the indeterminate future?
I can predict exactly what will happen at these events. Parents will fill out their FAFSA. Then, they'll push a button and learn what their Expected Family Contribution is - in other words, the dollar amount that they will be expected to pay according to the FAFSA.
It won't be pretty. This number will be several thousand dollars per year, per child.
Parents will freak out. Then, I bet you dollars to donuts that these parents will rush to apply for high fee, high rate student loans, because they will not see any alternative to borrowing for college.
And with the friendly student lenders lurking nearby, these parents are fish in a barrel.
If you are the parent of a sophomore, junior, or, in some cases, a senior, you still have time to prevent yourself from being coerced like the attendees of the "Countdown." There are better, even free ways to pay for college, if you know the "rules of the game" about how federal grants are given, and to whom.
For more information, attend one of our three, free workshops this month:
* Tuesday, February 26th, 6:15 pm - Southwest Regional Library, Pembroke Pines;
* Wednesday, February 27th, 6:15 pm: West Regional Libary, Plantation; and
* Thursday, February 28th, 8:00 pm: West Broward Family YMCA, Weston.
Details are available at:
http://collegeplanningadvice.com
The workshops are free and nothing will be sold or "pitched." (There will be no loan applications to fill out, either.)
The secret to avoiding high fee, high rate and high payment student loans is to position yourself to qualify for maximum aid by Sophomore or Junior Year. But even if your child is a Senior, there are still alternatives to student loans.
Lockwood and Ratzan co-host "The College Planning Power Hour" radio show, Sundays, 10:00-11:00 AM on ESPN Radio AM 1400, starting March 2, 2008. Their firm, CollegePlanningAdvice.com is located in Weston, Florida and helps parents "Pay for College Without Going Broke."
For more information call 954.659.1234 or "info@collegeplanningadvice.com"
Monday, February 11, 2008
The Latest Crisis Affecting Florida College Students
Today's Sun-Sentinel front page headline screamed about the latest crisis. No, I'm not talking about Beyonce's "Thunder-Thigh" Grammy outfit - it's amazing that Tina Turner's 69 year old legs looked better - I'm giving you the 411 on how the dream of an affordable college education is vanishing for as many as 60,000 Florida students!
The headline: "Enrolling in College Gets Harder. Good grades, high scores no match for budget cuts."
So in the spirit of the Grammys, I'd thought I'd offer my own performance, even if it does exploit a family member whom I love.
http://videopostcard-004.com/X.asp?5674054X1920
P.S. If you or someone you know is worried about affording college in Florida or anywhere else, may I humbly suggest you attend our free workshop, "How to Pay for College Without Going Broke."
We're running them twice this week - Tuesday in Coconut Creek; Wednesday in Tamarac. See our website for details:
www.CollegePlanningAdvice.com
The headline: "Enrolling in College Gets Harder. Good grades, high scores no match for budget cuts."
So in the spirit of the Grammys, I'd thought I'd offer my own performance, even if it does exploit a family member whom I love.
http://videopostcard-004.com/X.asp?5674054X1920
P.S. If you or someone you know is worried about affording college in Florida or anywhere else, may I humbly suggest you attend our free workshop, "How to Pay for College Without Going Broke."
We're running them twice this week - Tuesday in Coconut Creek; Wednesday in Tamarac. See our website for details:
www.CollegePlanningAdvice.com
Saturday, February 9, 2008
Good News for a Change!
Here's a story by Insider Higher Ed about the House bill on Financial Aid. It's a good bill that calls for some important changes to the financial aid process.
*******************************************************
House, Focusing on Cost, Approves Higher Education Act
The House of Representatives on Thursday overwhelmingly approved legislation to renew the Higher Education Act that would toughen regulation of the student loan industry and simplify the process of applying for federal financial aid, among many other things. But while the legislation touches on an enormously broad range of issues and programs, the debate and discussion surrounding the measure focused heavily on the rising prices of college and the increasing difficulty students and families have paying for a higher education.
The House bill (H.R. 4137), known as the College Opportunity and Affordability Act, represents Congress’s most aggressive efforts yet to pressure colleges to contain both their own internal costs and what they charge to students. In drafting the bill, Democratic leaders cast their lot with Republicans who have been pressing the issue for a decade, greatly increasing what colleges would have to report on their finances and agreeing to create lists designed to embarrass colleges that increase their tuitions significantly.
Under the legislation, the 5 percent of institutions in each sector (public, private, for-profit, two-year, four-year, etc.) that raise their tuitions by the highest percentage over a three-year period would have to create “quality efficiency task forces” to analyze why the colleges are raising prices more than their peers. Institutions on the list would also be required to report to the education secretary on the factors contributing to the price increases.
On top of those provisions, Thursday’s debate over the Higher Education Act legislation was dominated by the bipartisan embrace of several amendments — opposed by college leaders — designed to intensify the scrutiny of college spending and prices. Lawmakers, for example, approved amendments Thursday that would require colleges to (1) give prospective students information about what their tuitions are likely to be over multiple years and (2) report to the Education Department annually about how much of their endowments they spend on “reducing the costs of instruction offered by such institution, including the specific amounts expended for grants and other aid to reduce the amounts charged for tuition, fees, textbooks, meals, room and board.” An amendment that would have gone further — requiring a minimum payout from all college endowments — was withdrawn by its author, Rep. Peter Welch (D-Vt.), on Wednesday.
“Last year, by enacting a $20 billion increase in federal student aid – the largest increase since the G.I. Bill of 1944 – this Congress took an historic step to help American families pay for college,” said Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee. “Now we are redoubling our commitment to college students and parents by reining in skyrocketing tuition prices and making our whole system of higher education far more consumer-friendly.”
“Despite the considerable federal investment — or perhaps, in part, because of it — colleges and universities have increased tuition and fees year in and year out,” said Rep. Howard P. (Buck) McKeon of California, senior Republican and Miller’s counterpart on the House education panel. “The increases have come in good economic times and in bad, with steady enrollments and surging enrollments. It seems the only thing consistent about college costs is that they’re going up, and fast. With this bill, we hope to change that.”
The overarching agreement between leaders of the two parties over the centrality of the cost issue reflected the general consensus with which the key piece of legislation, which governs most federal higher education programs, was both drafted in recent weeks and discussed on Thursday. The day’s debate was largely devoid of drama — the final margin of the vote was 354-58 — and the only real moments of contention came at the very start, when Republicans balked that the Democratic-controlled Rules Committee had declared most of the potentially controversial amendments (most of which came from Republicans) to be “out of order” Wednesday night.
Only 4 of the 27 amendments cleared for consideration on the House floor Thursday came from Republicans, with the Rules Committee blocking votes on such core GOP issues as restricting aid for undocumented/illegal immigrants and endorsing David Horowitz’s Academic Bill of Rights, as well as McKeon’s plea to have the Education Department explore the damage being done to the student loan industry by last fall’s Congressionally mandated subsidy cuts and the current credit
crunch.
Those moves prompted Republicans to bemoan what they characterized as a disruption of the bipartisan approach the committee’s leaders had used in crafting the underlying bill. “Why are Republicans being shut out of a bipartisan bill” by a “heavy-handed majority?” McKeon asked on the House floor, as he complained about the Democratic majority’s rejection of one of his amendments and those from several of his colleagues. McKeon said that the strict limits on amendments “taints the bipartisanship of the underlying bill.”
Once that unpleasantness was done, very little else disturbed the general geniality and accord of Thursday’s discussion. Even the few contested votes on amendments generated little in the way of discord from lawmakers across the aisle that separates the two parties. The only major disagreement came on an amendment that would have allowed borrowers to discharge private student loans after five years in bankruptcy.
Advocates for students supported the provision, which was proposed by Rep. Danny Davis (D-Ill.), because they say expensive and private student loans have become a major source of financial turmoil for borrowers and should be treated like many other forms of consumer loans, which can be discharged in bankruptcy.
But opponents said such a change could serve to drive up the cost of private loans for all borrowers because such loans would become riskier for lenders and therefore made at higher interest rates. “This would help a small number of people, but hurt a larger number,” said Rep. Ric Keller (R-Fla.), who heads the House’s postsecondary education committee. Although the bankruptcy provision appeared to win approval in an early-afternoon voice vote, it failed by a margin of 236 to 179 when lawmakers had to put their votes on the record.
“We are disappointed that the House chose to stand with big banks instead of students who fall victim to predatory private student loans,” said Luke Swarthout, higher education advocate for the U.S. Public Interest Research Group.
Other amendments approved on the House floor Thursday would direct the Education Department to study the pros and cons of allowing federal aid to flow to students who attend college less than half time, and urge the U.S. Education Department and the Internal Revenue to collaborate so that information that citizens submit on their tax returns can be used when they apply for federal financial aid. “I hope that both of the bureaucracies involved will really heed this,” Rep. John Doggett (D-Tex.) said of the latter amendment, which he sponsored.
The Underlying Bill
The Higher Education Act bill, which gives most federal college programs the authority to operate for five years and was last renewed (because of repeated false starts since then) in 1998, touches on an enormously wide range of issues. Among many other things, the legislation would:
Give the Education Department significantly more authority to regulate private student loans, as part of a broad set of provisions — prompted by last year’s investigations into illegal inducements given to colleges by lenders — aimed at cracking down on the behavior of lenders
and college officials in making loans to students.
Dictate that colleges craft plans for giving their students legal ways to download movies and music, and that institutions explore technologies to stop illegal peer to peer file sharing. This provision had been strongly opposed by several college groups, especially since those promoting it based their arguments largely on data about campus downloading that have since been shown to be seriously flawed.
Bar the U.S. Education Department from issuing regulations governing higher education accreditation, designed to ensure that colleges are measuring student learning outcomes. Education Secretary Margaret Spellings vehemently opposes the provision (leading the White House to “strongly oppose” the bill) and will try to alter it when House and Senate negotiators meet to craft a compromise version of the Higher Ed Act legislation in coming weeks. The legislation would also create a new federal position, an “ombudsman,” to intervene in disputes related to accreditation.
Extend to three years from two the period the federal government uses to calculate the rate at which student loan borrowers default, but delay implementation of the change until 2012 and raise some of the rates at which penalties against institutions with high rates kick in.
Set a ceiling on the maximum Pell Grant of $9,000, and allow for students to receive Pell Grant funds year-round, instead of just during the traditional academic year.
Require states to maintain their financial support of higher education and allow the Education Department to withhold some funds to states that cut their college appropriations — an idea endorsed by some college officials but strongly opposed by many state legislators.
Make some much-sought changes in the Academic Competitiveness Grant Program, including making the much-maligned grants for low-income students available to part-time students and those seeking certificates as well as degrees, and taking the education secretary out of the business of deciding whether high school programs are of sufficient academic rigor to quality students for the grants, leaving that decision instead up to state officials.
Mandate that textbook publishers expand the information they provide to faculty members about pricing and changes from past editions, and that colleges put information about required boooks in their course schedules to help students shop for books more cost effectively, among other provisions aimed at easing textbook prices.
Crack down on diploma mills by directing the Education Department to publish lists of accredited institutions and accreditation agencies, among other things.
Make several changes designed to make it easier for students to get information about their financial aid awards and to generally simplify the process by which students — particularly those from low-income families — can qualify for federal financial aid.
Establish a loan fund to help colleges and universities damaged or otherwise impaired by natural disasters such as the 2005 hurricanes in the Gulf Coast.
Toughen standards for teacher education programs.
Leaders in the Senate and the House both said they hoped lawmakers from the two chambers could meet soon to work out differences between their respective versions of the Higher Education Act legislation and get a compromise version to President Bush, who has expressed concerns about both versions but not threatened to veto either one.
*******************************************************
House, Focusing on Cost, Approves Higher Education Act
The House of Representatives on Thursday overwhelmingly approved legislation to renew the Higher Education Act that would toughen regulation of the student loan industry and simplify the process of applying for federal financial aid, among many other things. But while the legislation touches on an enormously broad range of issues and programs, the debate and discussion surrounding the measure focused heavily on the rising prices of college and the increasing difficulty students and families have paying for a higher education.
The House bill (H.R. 4137), known as the College Opportunity and Affordability Act, represents Congress’s most aggressive efforts yet to pressure colleges to contain both their own internal costs and what they charge to students. In drafting the bill, Democratic leaders cast their lot with Republicans who have been pressing the issue for a decade, greatly increasing what colleges would have to report on their finances and agreeing to create lists designed to embarrass colleges that increase their tuitions significantly.
Under the legislation, the 5 percent of institutions in each sector (public, private, for-profit, two-year, four-year, etc.) that raise their tuitions by the highest percentage over a three-year period would have to create “quality efficiency task forces” to analyze why the colleges are raising prices more than their peers. Institutions on the list would also be required to report to the education secretary on the factors contributing to the price increases.
On top of those provisions, Thursday’s debate over the Higher Education Act legislation was dominated by the bipartisan embrace of several amendments — opposed by college leaders — designed to intensify the scrutiny of college spending and prices. Lawmakers, for example, approved amendments Thursday that would require colleges to (1) give prospective students information about what their tuitions are likely to be over multiple years and (2) report to the Education Department annually about how much of their endowments they spend on “reducing the costs of instruction offered by such institution, including the specific amounts expended for grants and other aid to reduce the amounts charged for tuition, fees, textbooks, meals, room and board.” An amendment that would have gone further — requiring a minimum payout from all college endowments — was withdrawn by its author, Rep. Peter Welch (D-Vt.), on Wednesday.
“Last year, by enacting a $20 billion increase in federal student aid – the largest increase since the G.I. Bill of 1944 – this Congress took an historic step to help American families pay for college,” said Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee. “Now we are redoubling our commitment to college students and parents by reining in skyrocketing tuition prices and making our whole system of higher education far more consumer-friendly.”
“Despite the considerable federal investment — or perhaps, in part, because of it — colleges and universities have increased tuition and fees year in and year out,” said Rep. Howard P. (Buck) McKeon of California, senior Republican and Miller’s counterpart on the House education panel. “The increases have come in good economic times and in bad, with steady enrollments and surging enrollments. It seems the only thing consistent about college costs is that they’re going up, and fast. With this bill, we hope to change that.”
The overarching agreement between leaders of the two parties over the centrality of the cost issue reflected the general consensus with which the key piece of legislation, which governs most federal higher education programs, was both drafted in recent weeks and discussed on Thursday. The day’s debate was largely devoid of drama — the final margin of the vote was 354-58 — and the only real moments of contention came at the very start, when Republicans balked that the Democratic-controlled Rules Committee had declared most of the potentially controversial amendments (most of which came from Republicans) to be “out of order” Wednesday night.
Only 4 of the 27 amendments cleared for consideration on the House floor Thursday came from Republicans, with the Rules Committee blocking votes on such core GOP issues as restricting aid for undocumented/illegal immigrants and endorsing David Horowitz’s Academic Bill of Rights, as well as McKeon’s plea to have the Education Department explore the damage being done to the student loan industry by last fall’s Congressionally mandated subsidy cuts and the current credit
crunch.
Those moves prompted Republicans to bemoan what they characterized as a disruption of the bipartisan approach the committee’s leaders had used in crafting the underlying bill. “Why are Republicans being shut out of a bipartisan bill” by a “heavy-handed majority?” McKeon asked on the House floor, as he complained about the Democratic majority’s rejection of one of his amendments and those from several of his colleagues. McKeon said that the strict limits on amendments “taints the bipartisanship of the underlying bill.”
Once that unpleasantness was done, very little else disturbed the general geniality and accord of Thursday’s discussion. Even the few contested votes on amendments generated little in the way of discord from lawmakers across the aisle that separates the two parties. The only major disagreement came on an amendment that would have allowed borrowers to discharge private student loans after five years in bankruptcy.
Advocates for students supported the provision, which was proposed by Rep. Danny Davis (D-Ill.), because they say expensive and private student loans have become a major source of financial turmoil for borrowers and should be treated like many other forms of consumer loans, which can be discharged in bankruptcy.
But opponents said such a change could serve to drive up the cost of private loans for all borrowers because such loans would become riskier for lenders and therefore made at higher interest rates. “This would help a small number of people, but hurt a larger number,” said Rep. Ric Keller (R-Fla.), who heads the House’s postsecondary education committee. Although the bankruptcy provision appeared to win approval in an early-afternoon voice vote, it failed by a margin of 236 to 179 when lawmakers had to put their votes on the record.
“We are disappointed that the House chose to stand with big banks instead of students who fall victim to predatory private student loans,” said Luke Swarthout, higher education advocate for the U.S. Public Interest Research Group.
Other amendments approved on the House floor Thursday would direct the Education Department to study the pros and cons of allowing federal aid to flow to students who attend college less than half time, and urge the U.S. Education Department and the Internal Revenue to collaborate so that information that citizens submit on their tax returns can be used when they apply for federal financial aid. “I hope that both of the bureaucracies involved will really heed this,” Rep. John Doggett (D-Tex.) said of the latter amendment, which he sponsored.
The Underlying Bill
The Higher Education Act bill, which gives most federal college programs the authority to operate for five years and was last renewed (because of repeated false starts since then) in 1998, touches on an enormously wide range of issues. Among many other things, the legislation would:
Give the Education Department significantly more authority to regulate private student loans, as part of a broad set of provisions — prompted by last year’s investigations into illegal inducements given to colleges by lenders — aimed at cracking down on the behavior of lenders
and college officials in making loans to students.
Dictate that colleges craft plans for giving their students legal ways to download movies and music, and that institutions explore technologies to stop illegal peer to peer file sharing. This provision had been strongly opposed by several college groups, especially since those promoting it based their arguments largely on data about campus downloading that have since been shown to be seriously flawed.
Bar the U.S. Education Department from issuing regulations governing higher education accreditation, designed to ensure that colleges are measuring student learning outcomes. Education Secretary Margaret Spellings vehemently opposes the provision (leading the White House to “strongly oppose” the bill) and will try to alter it when House and Senate negotiators meet to craft a compromise version of the Higher Ed Act legislation in coming weeks. The legislation would also create a new federal position, an “ombudsman,” to intervene in disputes related to accreditation.
Extend to three years from two the period the federal government uses to calculate the rate at which student loan borrowers default, but delay implementation of the change until 2012 and raise some of the rates at which penalties against institutions with high rates kick in.
Set a ceiling on the maximum Pell Grant of $9,000, and allow for students to receive Pell Grant funds year-round, instead of just during the traditional academic year.
Require states to maintain their financial support of higher education and allow the Education Department to withhold some funds to states that cut their college appropriations — an idea endorsed by some college officials but strongly opposed by many state legislators.
Make some much-sought changes in the Academic Competitiveness Grant Program, including making the much-maligned grants for low-income students available to part-time students and those seeking certificates as well as degrees, and taking the education secretary out of the business of deciding whether high school programs are of sufficient academic rigor to quality students for the grants, leaving that decision instead up to state officials.
Mandate that textbook publishers expand the information they provide to faculty members about pricing and changes from past editions, and that colleges put information about required boooks in their course schedules to help students shop for books more cost effectively, among other provisions aimed at easing textbook prices.
Crack down on diploma mills by directing the Education Department to publish lists of accredited institutions and accreditation agencies, among other things.
Make several changes designed to make it easier for students to get information about their financial aid awards and to generally simplify the process by which students — particularly those from low-income families — can qualify for federal financial aid.
Establish a loan fund to help colleges and universities damaged or otherwise impaired by natural disasters such as the 2005 hurricanes in the Gulf Coast.
Toughen standards for teacher education programs.
Leaders in the Senate and the House both said they hoped lawmakers from the two chambers could meet soon to work out differences between their respective versions of the Higher Education Act legislation and get a compromise version to President Bush, who has expressed concerns about both versions but not threatened to veto either one.
Thursday, February 7, 2008
Why Surprising Amounts of Free College Aid Are Available For You
Here's a piece that I came across today, from Inside Higher Ed. It picks up on a theme College Pete and I have been talking about forever - that it actually may cost you less out of pocket at an elite, private, "high ticket" private school than if you were to enroll at a cheaper, Florida (or other state) college.
This article examines why from the angle of a trend in Congress to demand a certain percentage of endowment be allocated to lower-income students. Enjoy!
(For a schedule of our upcoming free workshops, "How to Pay for College Without Going Broke," go to our website: http://www.collegeplanningadvice.com/ or call the office directly, 954.659.1234.)
Degrees of Wealth and Generosity
If there’s a fun (or depressing) game for college presidents these days, it might be imagining: What could I do with Harvard University’s endowment — or just the earnings on its endowment? With members of Congress and other critics raising questions about why the wealthy institutions need so much, more attention than before is focused on the funds in Cambridge, New Haven, Palo Alto and a few other select locations.
MaryAnn Baenninger, president of the College of St. Benedict, in Minnesota, looked at it this way: With just the $6 billion in last year’s earnings on the endowment (not touching a penny of the original), she could pay for tuition, room and board for every one of her 2,000 students — for the next 85 years. Unlike some in Congress, Baenninger isn’t advocating an endowment raid and has no expectation that Drew Gilpin Faust, Harvard’s new president, is about to send her a check.
But the fact that earnings alone could cover all costs for enrolling at a small college for so long (admittedly at today’s rates) drives home why the endowments look so obscenely large at some institutions. But is the relationship between endowment spending rates and generous financial aid policies as clear as some say it is?
The link is talked about with increasing frequency. When powerful senators asked colleges with large endowments for information about their policies, they suggested that higher spending rates would lead to more generous aid. Sen. Max Baucus, a Montana Democrat who is chairman of the Senate Finance Committee, praised the colleges that have recently made aid more generous and said that he wanted to understand how colleges could “use their endowments to make certain that talented young folks in Montana and across the country aren’t left out of the classroom.”
And in her higher education platform, Hillary Clinton raised the issue. “Hillary is challenging some of the most selective schools in the U.S. to further expand access for low-income and minority students by spending a greater percentage of their endowment annually on recruiting more low-income students and students of color, supporting them so that they graduate and growing the pipeline of students that are prepared to compete for admission to the most selective schools,” the position paper says. “The endowments of the 12 wealthiest universities total $155 billion and in recent years and have gotten tax-free returns of almost 20 percent.
These elite institutions benefit tremendously from their tax-exempt status as well as from federal student financial aid and research grants.
A closer look at three colleges — all of them with endowments large enough to be receiving Congressional scrutiny — suggests, however, that the relationship between endowment spending rates and access for low income students is limited, if it exists at all.
Arguably one of the most generous financial aid packages in American history’s (Harvard University’s latest offering) came with a spending rate that is significantly below the level being kicked around as an acceptable minimum (5 percent). An institution that is less wealthy than Harvard (Cornell University) increased its spending rate significantly — to 5 percent — in part to offer more generous aid, but will not come close to Harvard’s level. And an institution with much less money, less generous aid packages and lower spending rates — Smith College — actually enrolls far more low-income students than do wealthier institutions that (as in Harvard’s case) adopt policies Congress likes to praise or (in Cornell’s case) increases the spending rate on its endowment.
Consider Harvard, whose aid policies have been praised by the same members of Congress who are saying that colleges need to explain why they don’t have a 5 percent endowment spending rate. In December, Harvard announced an aid policy under which students from families with incomes of up to $60,000 will pay nothing, while those with incomes of up to $180,000 would be assured of paying no more than 10 percent of family income — and without loans in aid packages. Harvard’s announcement set off a wave of policy shifts from colleges — but with just a few exceptions, the policies didn’t come close to Harvard’s level of aid.
So how did Harvard afford that level? With a high spending rate? Actually, the spending rate that produced that largesse was 4.6 percent — the kind of rate seen as inadequate by the same lawmakers who praise Harvard’s aid plan.
Last week, Cornell University became one of the institutions trying to play catch-up with Harvard’s aid bonanza. It took Cornell a while, in part because it is much less wealthy than Harvard (their respective endowments are $5.4 billion and $34.6 billion). But Cornell also tends to enroll a greater share of low-income students (not to mention twice the total number of undergrads) and thus any increase in aid promises has greater ramifications. So when Cornell announced its plan, it featured loan caps (but not loan elimination) at the $75,000 and up family income level. But Cornell and Harvard will end up spending about the same on financial aid under their new plans (about $120 million annually).
For Cornell, with its smaller endowment, to spend that amount, it is increasing its spend rate to 5 percent from 4.7 percent — reaching the level senators want. But is spend rate the relevant factor? Compare the $120 million financial aid cost to the endowment earnings of the two universities in the last year. If the two universities were to finance all of their aid budgets from endowment earnings, that $120 million would make up 2 percent of Harvard’s earnings but 11 percent of Cornell’s earnings. That suggests that the relevant factor isn’t spend rates but wealth to start with.
But the Smith example suggests that equally important may be the question of who gets admitted. More than 13 percent of Cornell undergraduates receive Pell Grants. But at Smith, more than 23 percent of students receive Pell Grants, and the formula used by the college for endowment payout is based on an average of 4.75 percent, with some modest adjustments based on the market. Both Smith’s endowment and student body are a fraction of those at Cornell and Harvard.
From an aid policy perspective, not only is Smith not in a position to compete with Harvard, but it isn’t able to be need blind in admissions. Each year a small share of the Smith class is admitted on a need-aware basis — meaning that the final slots go to those who can pay.
So if Smith’s spending rate isn’t what Congress is demanding and its aid policy doesn’t come close to Harvard’s or even the places pushing to keep close to Harvard, what is the key to enrolling low-income students in larger numbers? The answer, according to Smith, has nothing to do with endowment spending rates or even aid policies. To enroll more low-income students, you need (this will sound obvious) to recruit and enroll them.
Audrey Smith, dean of enrollment at Smith, said that the success there comes from an institutional commitment and also the idea that “women’s colleges have sought talent broadly for a long time.”
Ultimately, she said, the key is “thinking more about the potential” of students in admissions decisions and not just going after those with “perfect preparation at the secondary level.” In admitting such students — who may have lower test scores or have never attended prestigious high schools, the college looks for “the ability to take full advantage of an environment like this one,” but not at numerical measures.
Smith is able to provide aid that it gives to students based on the “intergenerational equity” of not spending too much of its endowment in any one year, Smith said.
But the key issue is who gets admitted, she said, not the endowment payout rate — and especially not the endowment payout rate at the places with mega-billions that attract the attention of Congress. Of the public discussion of late linking endowment payout rates to access issues, Smith said: “In all honesty, it just adds to the longstanding frustration that I have that a place like Smith and so many others can do a wonderful job and make a difference in the lives of students, but the spheres of influence in Congress are focused on a small number of institutions and on other issues.”
#End#
College Pete and I will be keeping close track of this trend! For a schedule of our upcoming free workshops, "How to Pay for College Without Going Broke," go to our website: http://www.collegeplanningadvice.com/ or call the office directly, 954.659.1234.
This article examines why from the angle of a trend in Congress to demand a certain percentage of endowment be allocated to lower-income students. Enjoy!
(For a schedule of our upcoming free workshops, "How to Pay for College Without Going Broke," go to our website: http://www.collegeplanningadvice.com/ or call the office directly, 954.659.1234.)
Degrees of Wealth and Generosity
If there’s a fun (or depressing) game for college presidents these days, it might be imagining: What could I do with Harvard University’s endowment — or just the earnings on its endowment? With members of Congress and other critics raising questions about why the wealthy institutions need so much, more attention than before is focused on the funds in Cambridge, New Haven, Palo Alto and a few other select locations.
MaryAnn Baenninger, president of the College of St. Benedict, in Minnesota, looked at it this way: With just the $6 billion in last year’s earnings on the endowment (not touching a penny of the original), she could pay for tuition, room and board for every one of her 2,000 students — for the next 85 years. Unlike some in Congress, Baenninger isn’t advocating an endowment raid and has no expectation that Drew Gilpin Faust, Harvard’s new president, is about to send her a check.
But the fact that earnings alone could cover all costs for enrolling at a small college for so long (admittedly at today’s rates) drives home why the endowments look so obscenely large at some institutions. But is the relationship between endowment spending rates and generous financial aid policies as clear as some say it is?
The link is talked about with increasing frequency. When powerful senators asked colleges with large endowments for information about their policies, they suggested that higher spending rates would lead to more generous aid. Sen. Max Baucus, a Montana Democrat who is chairman of the Senate Finance Committee, praised the colleges that have recently made aid more generous and said that he wanted to understand how colleges could “use their endowments to make certain that talented young folks in Montana and across the country aren’t left out of the classroom.”
And in her higher education platform, Hillary Clinton raised the issue. “Hillary is challenging some of the most selective schools in the U.S. to further expand access for low-income and minority students by spending a greater percentage of their endowment annually on recruiting more low-income students and students of color, supporting them so that they graduate and growing the pipeline of students that are prepared to compete for admission to the most selective schools,” the position paper says. “The endowments of the 12 wealthiest universities total $155 billion and in recent years and have gotten tax-free returns of almost 20 percent.
These elite institutions benefit tremendously from their tax-exempt status as well as from federal student financial aid and research grants.
A closer look at three colleges — all of them with endowments large enough to be receiving Congressional scrutiny — suggests, however, that the relationship between endowment spending rates and access for low income students is limited, if it exists at all.
Arguably one of the most generous financial aid packages in American history’s (Harvard University’s latest offering) came with a spending rate that is significantly below the level being kicked around as an acceptable minimum (5 percent). An institution that is less wealthy than Harvard (Cornell University) increased its spending rate significantly — to 5 percent — in part to offer more generous aid, but will not come close to Harvard’s level. And an institution with much less money, less generous aid packages and lower spending rates — Smith College — actually enrolls far more low-income students than do wealthier institutions that (as in Harvard’s case) adopt policies Congress likes to praise or (in Cornell’s case) increases the spending rate on its endowment.
Consider Harvard, whose aid policies have been praised by the same members of Congress who are saying that colleges need to explain why they don’t have a 5 percent endowment spending rate. In December, Harvard announced an aid policy under which students from families with incomes of up to $60,000 will pay nothing, while those with incomes of up to $180,000 would be assured of paying no more than 10 percent of family income — and without loans in aid packages. Harvard’s announcement set off a wave of policy shifts from colleges — but with just a few exceptions, the policies didn’t come close to Harvard’s level of aid.
So how did Harvard afford that level? With a high spending rate? Actually, the spending rate that produced that largesse was 4.6 percent — the kind of rate seen as inadequate by the same lawmakers who praise Harvard’s aid plan.
Last week, Cornell University became one of the institutions trying to play catch-up with Harvard’s aid bonanza. It took Cornell a while, in part because it is much less wealthy than Harvard (their respective endowments are $5.4 billion and $34.6 billion). But Cornell also tends to enroll a greater share of low-income students (not to mention twice the total number of undergrads) and thus any increase in aid promises has greater ramifications. So when Cornell announced its plan, it featured loan caps (but not loan elimination) at the $75,000 and up family income level. But Cornell and Harvard will end up spending about the same on financial aid under their new plans (about $120 million annually).
For Cornell, with its smaller endowment, to spend that amount, it is increasing its spend rate to 5 percent from 4.7 percent — reaching the level senators want. But is spend rate the relevant factor? Compare the $120 million financial aid cost to the endowment earnings of the two universities in the last year. If the two universities were to finance all of their aid budgets from endowment earnings, that $120 million would make up 2 percent of Harvard’s earnings but 11 percent of Cornell’s earnings. That suggests that the relevant factor isn’t spend rates but wealth to start with.
But the Smith example suggests that equally important may be the question of who gets admitted. More than 13 percent of Cornell undergraduates receive Pell Grants. But at Smith, more than 23 percent of students receive Pell Grants, and the formula used by the college for endowment payout is based on an average of 4.75 percent, with some modest adjustments based on the market. Both Smith’s endowment and student body are a fraction of those at Cornell and Harvard.
From an aid policy perspective, not only is Smith not in a position to compete with Harvard, but it isn’t able to be need blind in admissions. Each year a small share of the Smith class is admitted on a need-aware basis — meaning that the final slots go to those who can pay.
So if Smith’s spending rate isn’t what Congress is demanding and its aid policy doesn’t come close to Harvard’s or even the places pushing to keep close to Harvard, what is the key to enrolling low-income students in larger numbers? The answer, according to Smith, has nothing to do with endowment spending rates or even aid policies. To enroll more low-income students, you need (this will sound obvious) to recruit and enroll them.
Audrey Smith, dean of enrollment at Smith, said that the success there comes from an institutional commitment and also the idea that “women’s colleges have sought talent broadly for a long time.”
Ultimately, she said, the key is “thinking more about the potential” of students in admissions decisions and not just going after those with “perfect preparation at the secondary level.” In admitting such students — who may have lower test scores or have never attended prestigious high schools, the college looks for “the ability to take full advantage of an environment like this one,” but not at numerical measures.
Smith is able to provide aid that it gives to students based on the “intergenerational equity” of not spending too much of its endowment in any one year, Smith said.
But the key issue is who gets admitted, she said, not the endowment payout rate — and especially not the endowment payout rate at the places with mega-billions that attract the attention of Congress. Of the public discussion of late linking endowment payout rates to access issues, Smith said: “In all honesty, it just adds to the longstanding frustration that I have that a place like Smith and so many others can do a wonderful job and make a difference in the lives of students, but the spheres of influence in Congress are focused on a small number of institutions and on other issues.”
#End#
College Pete and I will be keeping close track of this trend! For a schedule of our upcoming free workshops, "How to Pay for College Without Going Broke," go to our website: http://www.collegeplanningadvice.com/ or call the office directly, 954.659.1234.
Tuesday, January 29, 2008
The Dirty Little Secret About Student Loans
If you pay attention to this kind of thing, the airways are flooded with student loan solicitations this time of year from student lenders such as Astrive and Monticello (a/k/a First Marblehead, written about previously). “$40,000 in Two Days!” “Better Rates if Your Parents Co-Sign!”
Before you sign your life away, take a deep breath and consider what you might be getting yourself into.Most parents and college-bound students do not realize that student borrowers are not-so-distant cousins to headline-making borrowers with subprime mortgages.
Many experts, present company included, believe that the student loan market is poised to experience the devastation currently affecting the subprime mortgage.
Granted, I don’t know too many folks up at night thinking about the commonalities shared by college students and subprime mortgage holders. I am and, let me tell you, the similarities are alarming. For starters, student borrowers and subprime mortgage holders are ill-advised on financial matters (present company excluded, of course) - specifically, the consequences of their borrowing decisions.It is not exactly news that that adjustable-rate mortgages (ARMs) resetting to high interest rates are the main culprit behind late payments, defaults, foreclosures and ruined credit.
Here’s how it works - mortgage companies offer low teaser rates to get homeowners in the door, but frequently, the initial required payments are not even enough to pay the interest on the loans. It gets worse.Next, when the ARM adjusts upward, homeowners are forced to refinance to try and make their monthly payments. This worked for years, because it was relatively easy to qualify for new mortgages, but this rosy scenario screeched to a halt simultaneously with the collapse of the secondary mortgage market, slumping real estate values and a slowing economy.
The result: subprime borrowers were denied credit, were forced to stay in their unpayable loans and pushed into default or, unfortunately, foreclosure.Right here in Florida and across the country, college graduates burdened by student loans face similar problems. Just like the mortgage companies, student lenders offer a low teaser rate which adjusts upward (it’s almost always up, not down, unfortunately!) after the introductory period.
Next comes the inevitable late payments, non-payments, defaults and ensuing credit problems. It’s a slippery slope!The result - payments get jacked up a few years after the loan originated. And the new spiked payment almost always catches the borrower by surprise. Just like their subprime borrower counterparts, student loan holders are unable to make payments once the loan adjusts upward.
In most cases borrowers of both student loans and subprime mortgages claim that they were misled about the terms of their loans. They cry that the lenders withheld vital information, or glossed over important information. To their credit, and in response to these claims, lawmakers are starting to call for increased disclosures and information from the student lending industry.
Don’t hold your breath, however. This could take years. Your best bet to protect yourself is using your own brain – asking the right questions, listening to the answers. “What is the interest rate?” “When can the loan adjust, if at all?” “What happens if I can’t make a payment?” To be fair, many student lenders offer this information voluntarily, which helps borrowers make better choices. But this is the exception, not the rule.
Another favorable trend is that many colleges and universities have become more proactive and supportive in educating students about all the details surrounding student loans. Many schools have made available a “borrowing consultation” offered by their financial aid advisor. And in some instances, particularly among the elite higher education institutions, the financial aid packages feature little or even no loans, opting instead for “free” money awards – scholarships and grants.
Harvard is one such institution leading the way.It’s clear that there is no easy solution for this problem. However, it’s imperative to be mindful of the example set by the subprime mortgage meltdown, and avoid the consequences that accompany irresponsible and borrowing and lending.
College Pete and I are extremely debt-adverse and strongly urge you to do anything possible to minimize, or flat-out eliminate, borrowing for college. Needless to say, working with us is the best way you can battle this monster, if we do say so ourselves!
Before you sign your life away, take a deep breath and consider what you might be getting yourself into.Most parents and college-bound students do not realize that student borrowers are not-so-distant cousins to headline-making borrowers with subprime mortgages.
Many experts, present company included, believe that the student loan market is poised to experience the devastation currently affecting the subprime mortgage.
Granted, I don’t know too many folks up at night thinking about the commonalities shared by college students and subprime mortgage holders. I am and, let me tell you, the similarities are alarming. For starters, student borrowers and subprime mortgage holders are ill-advised on financial matters (present company excluded, of course) - specifically, the consequences of their borrowing decisions.It is not exactly news that that adjustable-rate mortgages (ARMs) resetting to high interest rates are the main culprit behind late payments, defaults, foreclosures and ruined credit.
Here’s how it works - mortgage companies offer low teaser rates to get homeowners in the door, but frequently, the initial required payments are not even enough to pay the interest on the loans. It gets worse.Next, when the ARM adjusts upward, homeowners are forced to refinance to try and make their monthly payments. This worked for years, because it was relatively easy to qualify for new mortgages, but this rosy scenario screeched to a halt simultaneously with the collapse of the secondary mortgage market, slumping real estate values and a slowing economy.
The result: subprime borrowers were denied credit, were forced to stay in their unpayable loans and pushed into default or, unfortunately, foreclosure.Right here in Florida and across the country, college graduates burdened by student loans face similar problems. Just like the mortgage companies, student lenders offer a low teaser rate which adjusts upward (it’s almost always up, not down, unfortunately!) after the introductory period.
Next comes the inevitable late payments, non-payments, defaults and ensuing credit problems. It’s a slippery slope!The result - payments get jacked up a few years after the loan originated. And the new spiked payment almost always catches the borrower by surprise. Just like their subprime borrower counterparts, student loan holders are unable to make payments once the loan adjusts upward.
In most cases borrowers of both student loans and subprime mortgages claim that they were misled about the terms of their loans. They cry that the lenders withheld vital information, or glossed over important information. To their credit, and in response to these claims, lawmakers are starting to call for increased disclosures and information from the student lending industry.
Don’t hold your breath, however. This could take years. Your best bet to protect yourself is using your own brain – asking the right questions, listening to the answers. “What is the interest rate?” “When can the loan adjust, if at all?” “What happens if I can’t make a payment?” To be fair, many student lenders offer this information voluntarily, which helps borrowers make better choices. But this is the exception, not the rule.
Another favorable trend is that many colleges and universities have become more proactive and supportive in educating students about all the details surrounding student loans. Many schools have made available a “borrowing consultation” offered by their financial aid advisor. And in some instances, particularly among the elite higher education institutions, the financial aid packages feature little or even no loans, opting instead for “free” money awards – scholarships and grants.
Harvard is one such institution leading the way.It’s clear that there is no easy solution for this problem. However, it’s imperative to be mindful of the example set by the subprime mortgage meltdown, and avoid the consequences that accompany irresponsible and borrowing and lending.
College Pete and I are extremely debt-adverse and strongly urge you to do anything possible to minimize, or flat-out eliminate, borrowing for college. Needless to say, working with us is the best way you can battle this monster, if we do say so ourselves!
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