When A Scholarship Doesn’t Cover the Rest

The evaluations, comparisons, campus tours, and conversations are over. Hundreds of family’s and students have made their choice. We’re off to college.

Oh, what a minute…. Have got everything done? One being the tuition bill… and it’s on its way!

Parents of Sophomore and Juniors – read our article on Pre-Qualifying for College Costs

College tuition bills are on their way!

When scholarships and financial aid don’t cover every, students and families need to have a Plan B

Plan B

  • Continue to investigate and apply for scholarship programs; deadlines continue right through the summer and restart in the Fall. If you missed one or didn’t get selected, reapplying in the second, third, and fourth year of school.
  • If there is any doubt or questions regarding the information reported when completing the FAFSA, parents should contact the Financial Aid Office.
  • Family’s whose financial status profile has changed since the FAFSA (or CSS Profile) filing to the present needs need to inform their college or university. Reductions in earnings, loss of income, unexpected medical bills, and caregiving responsibilities may qualify for an appeal under the extenuating circumstance guidelines.
  • Consult with the Student Account – Bursars’ Office regarding the use of a 10 Month Payment Plan. Plans generally require an initial administrative fee payment – consider it an interest-free short-term payment program.
  • Then there are the loan programs!

Federal Direct Student Loan a loan that 99.9% of all financial aid awards include. The loan that has quietly been remained by some parents is the FAFSA loan. A low-interest, non-credit-based loan for undergraduate and graduate/professional students. Loan limits are staggered, starting at $5,500 for year one students and progressively higher in upper-class years. Projected fixed interest rates effective July 1, 2021, for the academic year 2021-2022 will be:

Direct Subsidized and Unsubsidized Undergraduate Loans – 3.73%
Direct Unsubsidized Graduate and Professional Loans – 5.28%
These loans also carry a yet to be announced Origination Fee (2020-2021 fee was 1.05%)

Federal Direct Federal PLUS Loan is the second education loan offered by the US Department of Education and US Treasury. Federal Direct PLUS Loan is available to creditworthy parents of undergraduate students. The loan can cover all or a portion of the remaining cost of education, and projected fixed interest rates for the upcoming academic year will be 6.28% (origination fee yet to be announced). Note this loan is subject to repayment and does not carry all of the benefits that the Federal Direct loan offers.

Private Educational Loans, commonly known as alternative student loans, are available to eligible students with many similarities to a standard consumer loan. A credit-based consumer loan where the student serves as the primary borrower along with a creditworthy co-signer. Loans rates are variable, and fixed interest rates starting as low as 1.22% (variable), 3.0% (fixed), and can range as high as 12% depending on the lender. Rates are set based on the creditworthy status of the student and co-signer and whether repayment begins immediately or payment is deferred while the student is in school. Before utilizing any loan, a family should exhaust all other resources and be highly concern with debt tolerance and excessive borrowing.

Spoiler #1 – a student with little or no credit will require a credit-worthy co-signer. No co-signer, no private loan!
Grandparents can contribute to 529 Plans but should not co-sign private loans

Find more program details and download the Education Loan Program Chart

Spoiler #2 – No matter how dreamy the college or university is; no matter how many tears – never touch Retirement Savings! 

 PLUS: Food for Thought

    •  Protect your first-year student and family from unforeseen liability and losses by putting in place important legal and medical documents.
    • Agree to a routine of communicating and monitor warning signs. Loneliness and issues associated with being a first-year student are not just study habits and academics. Talk, don’t hover, listen, don’t’ preach, call, don’t just text, and find a time when both are not rushing to get something done.

Learn more information, before, during, and after college at Pivotal College Years

Have Questions – Calm the Waters – Consult an Independent College Counselor

An experienced college counselor (who can fault me for banging my own horn) can help families develop and manage a customized college plan. Each plan should address a student’s individual needs, expectations, and abilities, plus a family’s capability to finance the educational costs.  A college counselor can considerably cut the stress by laying out clear timelines, unbiased guidance, and accountability for managing the overall experience. Using a holistic lens, a good counselor will connect all aspects of the college experience, finding, selecting, and financing the right college to career choice.

 

 

 

 

 

 

 

 

September Brief

September Brief

September 2022 – today’s high school Juniors – the pause button might be on as your student adjusts to the new classroom setting and class schedules. Still, I encourage you to provide time to talk about your student’s educational pathway after high school. If the conversation leans towards college after high school, click the button, and start the college planning process. Building and refining college lists, learning your family’s prequalified financing numbers, visiting college campuses (virtually now), and engage college representatives can be time-consuming. Providing time to plan and complete tasks will bring harmony to our already stressful days.

September 2021 –  there is no pause button for high school seniors considering college next September. College lists, campus conversations, and evaluation should be entering their final checklist stages. Here are three pressing assignments:

  • October 1 – The Free Application for Federal Student Aid is available for completion. All students (and families) considering enrolling in college in September of 2021 and interested in applying for financial aid must complete the FAFSA. Whether the student begins at Traditional Four-Year, Community College, and approved Technical and Professional Program, obtaining financial aid starts with the FAFSA. Read these helpful tips before starting.
  • Common Application, Essay, and Recommendations – All admissions application documentation and supporting material (art portfolios) should be nearing completion for HS Seniors at this time. Application submission for many schools will begin as early as November 1 (Early Action) and run right through to January 1 of 2021. Read important tips shared by Shelly Honeycutt, co-creator of Pivotal College Years.
  • Word on Test Score– if a student had the chance to sit for the exam, excellent. Consider including the score if it supports the student. If there is an opportunity to sit for October/November test, sign up and take the exam. If you can’t, don’t panic, colleges and universities know of the enormous challenges experienced by students this year. Press forward with GPA, rank, the other essential student differentiators!!

Today, September 2020 – If the current pandemic has caused a pause and the thought of returning to college is now top of mind, many options are available. Complete the degree started, tackle the Masters, or increase professional certifications through a single course.

Student Loan Repayment – lurching in the path of another storm is December 31, 2020. Unless there are other rulings from Washington, federal student loans placed on hold due to the pandemic will begin new or return on December 31. Student loan borrowers need to prepare for this change and if needed, investigate education loan consolidation or refinancing, especially if high-interest private loans are part of the picture.

September welcomes in the Fall and so much more…

CALMING THE WATERS – Are you feeling anxious? Have questions? Feel free to reach by text or telephone [617-240-7350], email at tom@getcollegegoing.com, or follow me on Facebook /getcollegegoing

Looking for a quality virtual (college planning) support during these uncertain times, Pivotal College Years, an affiliated partner of Get College Going,  is making the College Planning Portal for Families FREE to EVERYONE until December 31, 2020. EVERYTHING college before, during, and after, in one place.

Hello September

Hello September

Leaders of many major colleges and universities announced this week, May 18th that their campuses would once again have students attending classes and living in dorms. Ithaca College, Boston College,  Notre Dame, among many, are planning to be open for business this Fall. Modifications will be part of the openings with conditions geared to protect the wellbeing of students while allowing for in-person learning.

For students and families, this is welcoming news. As recent as last week, 64% of incoming and returning college students surveyed by The Chronicle of Higher Education indicated a strong desire to be back on campus. For parents, questions remain, many associated with the health of students as well as the cost to attend. Those related to social distancing and the use of masks will need to be defined; the return to campus will likely mean that cost will remain. Adjustments associated with financial aid appeals tied to COVID-19 and a family’s ability to meet tuition costs should remain ongoing; however, students and families need to prepare for the arrival of the first-semester college bill.

Students attending institutions where online learning will continue through the fall semester should be contacting their college or university to confirm college costs.

Paying the Bill

Due to the current pandemic, students and families should be analyzing their plan to pay the college bill. Parents should investigate all concerns related to changes in employment, income, and other credit-related needs that could affect consumer borrowing.

In 2008, the last time we experienced an economic credit concern, many educational lenders pulled out of the private student loan marketplace.   Many families experienced a ripple effect causing problems over secure critical resources to assist with meeting college costs.

We do not anticipate this happening as a result of COVID-19; Credit criteria, lender access, and overall availability of resources may be subject to change in the coming months.

Students and families who may require financing resources should calculate their net educational costs, gap, and, if needed, complete education loan applications early. Federal and private education loans are common resources used by first-year and returning college students/families. Students and families should consult with their college or universities financial aid website for information on the use of educational loans

Health Insurance: Students who will continue under the family health insurance plan should sign and submit a WAIVER to avoid being charged by the school.  

 COVID-19 Community Commitment: FREE Until 2021

Whether you are a Student, Parent or Educator looking for college planning support in uncertain times, Pivotal College Years is making the College Planning Portal for Families FREE to EVERYONE. EVERYTHING you need for college planning in one place.

Care Is Needed When Saying Yes to a 2020 College

Care Is Needed When Saying Yes to a 2020 College

Yes, these are unusual times for everyone, including millions of college-bound high school seniors and their families. Within the last two months, everything has turned upside down, affecting even the greatest of plans. Or so, one might think.

Financing one’s college education has become one of the top five most significant financial investments an individual will make in their lifetime and that of their parents. Choosing to go to college should be treated as an investment, one that doesn’t put the student or their parents at a financial risk.

But How?

Depending on where a student and their parents are in the college planning process, multiple strategies can apply. Plans should take into consideration college choices, financial resources, dependency on financial aid, and future goals. Wise steps are needed next today.

Seniors: Unfortunately, you are under the microscope, experiencing the most significant impact. You and your parents may have chosen a college, submitted a deposit, or you have been narrowing the list and were ready to pull the trigger. However, now as you compare financial aid awards and calculate the net cost, the gap has grown. In both cases, filing an appeal is your next step. Deposited or not, if your ability to meet the cost of one or more college on the list, a request is in order. You must convey the new, current financial status of the household and the specific reason (loss of or drop in income). The appeal is sent to the Financial Aid Office and copied to Admissions. Then give them time, monitor emails, and follow up.

Deposited Days Extended:  By now, most college-bound seniors know that the official May 1 Deposit Day is on the move. The vast majority of colleges and universities are moving their deposit date to June and a few even, July. For students and families who are evaluating the cost side of choosing, enrolling this is a helpful sign.

New Recruitment Practices: I’m not referring to athletics, all though they too are affected by the current COVID-19. I am speaking about potentially new recruitment practices coming to the forefront of higher education. The idea of schools reaching out past the deposit date to have a conversation about considering their campus. A practice generally unheard in higher education, but one that this Adviser feels its time has come. Maybe call re-inforces second or third might just be the best fit. A call the student can also make!!

Financing Resources: Traditional funding resources are still here. As is typical for this time of year is the exercise of finalization of payment strategies. What current savings or income as part of the financing plan and what if any future income, loans were going to be needed. Of course, now, for many families,  learn if an adjustment to merit and financial aid awarded will accrue and if it will be enough.

  • Family savings: Potentially hit the hardest due to the COVID-19; families may continue to have resources through 529 Plans, other college savings programs, and investment programs. It may be too early to learn of the overall effect COVID-19 has had on families.
  • Monthly payment plans: A program offered directly through the school, providing 5, 7, 10 installment payments over a semester or year. Most plans require a small application fee and are interest fees, a very cost-effective loan program. The question becomes, what resources within the current budget are available?
  • Federal Direct Student Loans: A loan extended to the student directly as part of the completion and filing of the FAFSA, awarded based on grade level and academic progression. A first-year student may be eligible to receive up to $5,500 with payments are due six months after graduation or early separation from school. The loan carries a fixed interest rate, which, based on current projections, maybe as low as 2.89%* for the coming academic year.
  • Federal PLUS Loan: A credit-based loan available to parents of a dependent student. This fixed-rate loan (projected to be as low as 5.44% for July 1, 2020, to June 30, 2021*) allows a parent to borrow a portion of or the entire remaining balance owed to the college or university. Payments begin 30-45 days following the disbursement of the full loan. The loan is repaid monthly between 5-20 years. Although not recommended, loan payments can be postponed during the student’s enrollment period. Interest accrues during the postponement and is either paid or added to the balance at the end.
  • Private Education Loans: A credit-based loan is provided through a small nucleus of lenders and credit unions and may be available to an eligible student and parents. Interest rates are based on the creditworthiness of the borrower and co-borrower if required (90% of undergraduate students require a co-borrower) and whether the loan will is repaid or deferred while the student is in school. The average fixed interest rate today can range from 3.99% to 12%. A private loan has become prevalent resources, but one that can be the most costly. It should only be one’s last resort!

Alternative Decisions: Looks like I will be the one to address the elephant in the room. Students’ first choice may not be their choice today. The decisions to select a top runner from the second or third row may be in the best interest of the student and their family. Shouldering the cost of high-interest private loans, allowing a parent to (never) think of using retirement savings to enroll in a school that yes, is the dream, but an investment risk needs to be studied, evaluated and questioned.  Moving to a top second and third choice may be the wises decision, a new first-year college student will make in their life!!

In such trying times, we are here to serve as a resource and provider of useful content from the college industry. Our team has walked thousands of families through the college process over the last few decades. Please feel free to call, text, or email your questions. We hope you find value in our information and welcome you to join us virtually.

Reference: Mark Kantrowitz March 11, 2020, Savingforcollege.com

Scholarship Sunday

Scholarship Sunday

Football on Sunday drives everyone’s competitive mojo. The game of hunting for scholarships requires some strategy and a lot of luck. Just like the game of football.

There are the classic plays and those that can surprise you. Some scholarship providers, schools, philanthropic and high schools, control the matching and awarding, while others require some tenacity on the part of the student to compete on talent and leadership.

Sampling of Offerings

Massachusetts Public Programs
Small Private
Big Private
Adult Students – Traditional & Community College
Early Grade Search

Get your game on and if you need a little more sideline help click and read more about the scholarship search!!
College Loan Game

College Loan Game

I hear my son/daughter can get a loan to pay their college tuition bill. I even hear they can be the primary borrower. Yes! True enough, however, there are a few more details.

The average student and family bound for college in September may find themselves in need of a way to assist in paying the remaining Net Educational Cost. College loans are part of the resource available to student and families to help supplement one’s ability to pay for school.

College Loans

Federal Direct Student Loan  

Loans, specifically the Federal Loan Programs have been a long-standing resource for students and families. Born out of the 1960s, updated and revised as the years have gone on, students and parents have been able to access the Federal Loan Programs as part of applying for financial aid. Today, the filing of the Federal Free Application for Student Aid (FAFSA) determines a student and family’s eligibility for need-based aid. The Federal Direct Student Loan (also known as the Federal Stafford Loan) is one resource awarded to students via this process. Packaged and disclosed on a student’s Financial Aid Award, 99.99% of all undergraduate and graduate students, dependent and independent receive some amount of Federal Direct Student Loans. Based on a student/family’s demonstrated need, a portion or all of the loan may be interest-free (subsidized) or interest due (unsubsidized) while the student enrolled. 4.53% is the interest rate for 2019-2020 with a 1.06% origination fee for undergraduate and graduate students. A Direct Student Loan is awarded a six months grace period after a student graduates or separates early and a wide range of repayment benefits to choice. Not a bad gig.

However, when the Federal Direct Loan is not enough, students and families must turn to other resources, including additional Federal and Private sponsored loan programs that require credit approval and are generally more expensive.

Federal Direct PLUS Loan

Offered to parents and managed primarily by the Financial Aid Office, the Federal PLUS Loan Program is a credit-based loan available to parents of dependent undergraduate students. Known in some circles as the Parent PLUS Loan, creditworthy parents can apply for a loan to help pay for school. Applicants must demonstrate good credit with no adverse credit for 90 days before the loan applications as well as no loan default, discharge, lien, and bankruptcy. The loan interest rate, set by the Federal Government is a fixed rate valid from July 1, 2019, to June 30, 2020 -7.08% with a 4,24% origination fee. Loan repayment begins with 30-45 days following the full disbursement of the loan and can be scheduled to run between 10 – 20 years.

Federal GradPLUS Loan

Grad PLUS loan is a credit-based loan available to independent graduate students. The loan is a credit-based loan with the student demonstrating creditworthiness, no adverse credit for 90 days before the loan applications, default, discharge, lien and bankruptcy. Applicants for these loans are required to complete the FAFSA, access their maximum Federal Direct Loan benefits before borrowing under the GradPLUS Program. An applicant can borrow up to their remaining net educational costs. The loan interest rate, set by the Federal Government is a fixed rate valid from July 1, 2019, to June 30, 2020 – 7.08% with a 4,24% origination fee. The loan is generally placed in an in-school deferment unless otherwise requested by the borrower. All GradPLUS Loans are eligible for a six (6) month grace period following their separation from school to establish a repayment schedule amortized between 10-20 years.

Private Education Loans

The rise in educational cost in the 1990s and throughout recent years opened up the need for alternative, private educational loans. Designed as a loan of last resort private educational loans fall into two categories, a private loan for students and one for parents. A private student loan is a credit-based loan available to a student who is enrolled at least half-time at 4-year public or private college or university*. Students who have no credit or minimum credit may be required to obtain a creditworthy co-signer. Interest rates are set based on variable and fixed rates, ranging from as low as 3.8% to 14%. Varies repayment programs are available including deferring the loan payment until six (6) months after the student separates from school. Most loan programs provide a co-signer release, which generally discontinues a parent’s (or other co-signer) financial obligation after 24 or 36 months of on-time. Loans are available through a national, regional lender and other institutions like AAA Northeast Bank.

Protecting the Co-Signer

Parents, grandparents, sibling, and relatives called upon to serve as a co-signer to assist a college student to secure education financing. The co-signer assists with determining eligibility and the interest rate. Typically, there is a co-signer release provision built into the terms of the loan. The release, generally after 36 months of on-time payments, allows the co-signer to be removed from the obligation. Unlike the Federal Direct Student Loan, a private educational loan does not carry a cancellation for death. If the unthinkable were to happen, the co-sign is held liable and will be called upon to pay the loan. Having worked on many in my career, attempting to overturn the lender’s policy is a hard road to travel. To protect the co-signer, all parties involved should consider the use of term-life insurance policy. The policy protects the co-signer during the in-school and initial stages of repayment. With the watchful eye of the holy spirit, a student has protection and resources as they grow old.

* Private loan programs for community college, continuing education, and professional development are available, but individuals need to check with their school for resources.

A private education loan specifically for a parent is also available through some national and regional lender. This loan program is similar to a standard consumer loan, credit-based in nature and where the parent enters repayment within 30-45 from disbursement.

Be a Wise Borrower

Before diving into a private loan application, consider a few things. As stated in another article on creating a payment strategy, this is an annual exercise that is part of a four-year experience. It warrants forecasting one’s four-year needs, the total cumulative cost of borrowing and how it factors into one’s career outcome. Adjusts and changes based on a student’s enrollment status, modifications in educational expenses and changes to a family’s financial profile may require less or more resources. Education Loans can be an expensive resource and should be used as a last resort. Buyer beware and when in doubt …ask questions, inquire and of course, call me