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


Payment Strategy

Payment Strategy

I’M IN!!!


National Decision Day (May 1) and Open Enrollment commitments have come an gone and now it’s time to figure out how to pay. The deposit was sent in but there are remaining college costs.  Referred to as the “net educational costs,” these charges will soon appear on the college tuition bill hitting the mailbox in July. Costs that unless “resolved” will prevent access to a dorm, the start of classes and earning the right to call oneself a college student. Arrangements need to be satisfied before the billing due date generally in August.

The average student and family bound for college in September may now find themselves in a new stage of stress, figuring out how to pay their remaining educational cost. Like during the search and select stage of one’s college plan, developing a payment strategy is an immediate task for all students and families. A good payment strategy requires a plan that is based on the availability of resources for not one year but the financial needs over the course of a student’s four-year enrollment.

What Was I Awarded?

Double check the Financial Aid Award Letter to determine what has been provided in the form of tuition assistance. Resources from programs administered through the college, state agencies and the federal financial aid programs. Included can be merit scholarships, Institutional Grants, a Federal Direct Loan and/or Federal Work-Study. A state grant or private scholarship may also be included in the award letter is reported to the school.  The difference is known as the “net educational cost”, the amount due to the school.

  • Cost of Education
  • minus College and Private Scholarships
  • Need-Based Grants and Self-Help (Federal Direct Student Loan or Federal Work-Study)
  • the “Net Educational Costs” – I’m what’s owed to the school!

What Are My Resources?

Looking beyond the programs disclosed on the Award Letter, students and families have four primary resources to use to pay the net costs. They include savings, monthly discretionary funds, earnings on investments/insurance and education loans. A strong Payment Strategy may include one or more of these resources. Resources that when used will resolve the tuition bill.

Savings – Investments – Discretionary Funds

Savings, funds accumulate over time, as part of a 529 Plans, education savings accounts, insurance and investments programs can be used to assist in meeting college costs. Conversations with a financial adviser prior to taking a distribution are step number one when thinking of using a resource from this category.

Home equity is another valuable resource for parents looking to capitalize on the value of their home and how it can turn into a low-interest rate and resources for their student(s). Parents in putting their home to work should consult with their local lender or credit union.

Another choice, some time overlooked is the use of a monthly tuition payment plan. When consulting with parents the question I usually ask is have you been paying out of pocket for ice time, AAU sports, sports, dance or other enrichment type programs? Did you just pay off a car loan? Or do you have a relative or family member interested in supplementing the cost of school? If the answer is yes, a Tuition Payment Plan is a great payment strategy.

A Tuition Payment Plan is an interest-free program administered by the college or university and requires ten (10) monthly payments during an academic year. Payments are made from July to April, can equal the entire or a portion of the remaining net educational cost due to the school and many times carry a small application fee. A payment plan allows extended family members to also participate in making tuition payments without assuming any direct responsibility for a student’s educational cost.

Contributions from grandparents and relatives are also a very useful means of paying the educational cost, however, impacts on financial aid eligibility must also be considered.

College Loan Game

The college loan game is the process of looking to last resort resources to assist with meeting educational costs. They include loans that students and parents can seek to obtain including a home equity loan, Federal PLUS Programs and Private Education Loans.

Federal PLUS Program

Offered through the Federal Student Aid Office of the US. Department of Education, the Federal Direct PLUS Loan, commonly known as the parent PLUS loan is a credit-based loan available to parents of dependent undergraduate students.

Private Education Loans

Typically referred to the loan of last resort, a Private Education Student Loan is a credit-based loan available to a student to meet the net educational cost to attend school.

Creating Your Strategy

Before diving into using a private loan application, consider a few things. As stated, this is a four-year process requiring annual calculations and the forecasting of four-year financial needs. Adjusts and changes based a student enrollment status, modifications in educational expenses and changes to a family’s financial profile may require less or more resources. Multiple options can be used to establish and maintain a payment strategy. Unique family resources including offers to help from extended family members (i.e., grandparents) may require more in-depth conversations and decision making. A payment strategy can be call for using one or more resource or program outlined in this piece. Ultimately a student and family should put all of their resources to work to ensure the best financial decision that minimizes excessive and long-term debt and provides the best college option for the student.


This piece is intended to provide education and guidance on strategies to pay the remaining “net educational costs.” We recommend that students and families always consult with their investment, wealth manager or tax professional to determine the impact on any and all financial decisions.

It’s College Decision Time

It’s College Decision Time

The roller coaster ride is about to come to an end for many aspiring high school seniors. Acceptance and financial aid award letters have been arriving as part of the final leg of the college search and selecting process. This is it, who wants me and how much will they help me to meet the cost of attending? It is a pivotal point in the process. Students and parents need to work together to make a decision.  A decision that will catapult a student to their next level of academic and personal growth. This should be an exciting time, one not overshadowed by stress. Good communication, honest conversations and a lot of self-reflection can calm those tears.

Acceptance Letters

Each college or university will communicate their interest in welcoming a student to their campus through this letter (or email announcement). The communication will acknowledge the offer of Acceptance (general and/or honors) and guidelines on how to submit one’s deposit and deadline (generally on or before May 1). Many communications will also acknowledge the awarding of Institution Scholarship. These are tied to a student’s academic, personal character or talent. They’re referred to as President, Dean and/or by a Specific College. All questions related to the acceptance process should be communicated to the school’s Admissions Office. It is critical to adhere to specific deadlines requested by the school.

Financial Aid Award Letter

Here the college or university will communicate their offer to assist a student/family who has demonstrated ‘need” after filing the FAFSA (and other documentation). The Financial Aid Award Letter communicates all merit (talent) scholarships and all estimated financial aid, including institutional need-based grants, federal work student and federal loans. In many cases the structure of the award letter also services a pre-bill, disclosing the cost of attendance, aid awarded and the remaining Net Costs to Attend (see example).

Comparing Award Letters

 Although some award letters may appear to be similar, many will be ever so slightly different. The cost of attendance will be different, public, private, small, large institutions, while that actual awarding maybe night and day. Each institution has its own arsenal of resources to use to reward and recruit a student. The most important part of comparing award letters is to examine the distribution of aid between merit scholarships and need-based aid. Remember, Scholarships are awarded for academic and talent and are generally communicated as part of the Acceptance Process.

So, how do they compare? Is one school heavier on scholarships while another has none? Does another school offer a mixture of both scholarships, grants (need-based) and self-help (work and loans)? Using a Net Education Cost Worksheet, you can map out the different awards like the sample below.

Note: If an award letter includes a Federal PLUS Loan, one should be aware. This is a credit-based loan which requires credit approval and is not automatic!!  The practice of “pre-packaging” a Federal PLUS Loan into an awarded may present the appearance that the balance has been resolved, however, that is not guaranteed. Before a student and family commit to a college there needs to be a hard look at the net tuition costs and what if any resources are available before locking into private education loans.


Appealing an award, merit and/or need-based is a consideration that all families should evaluate.  In essence, asking for more tuition assistance is not out of the question. However, an appeal should be done based on quantifiable (tangible) factors. recent changes in a student’s academic and/or personal accomplishments at school or in the community. Changes to current and/or projected income since the filing of the FAFSA are valid reasons to appeal a financial aid offer. An appeal should begin with a phone call from the student and follow up with a letter detailing the specific reason(s) for the request.

The Final Decision

Ultimately the bottom line, choosing a college for an 18 years old student with wide eyes and the world at their feet is not an easy task. It requires a strong evaluation of the students wants, needs and expectations. It requires an honest discussion and evaluation regarding which choice will be the best for the student. Which choice will offer a student the greatest personal growth, strengthen one’s academic foundation for a career and yes, be affordable? It should not be based on one single variable or consideration. It is about where and how will the investment prepare a student for their next level in life. For if the investment hits the mark, then the selection will be a student’s “right fit”!!

Next Step – Developing a Payment Strategy

Tis the Season

Tis the Season

The joy of the holiday season is upon us all. Excitement and anticipation of the holiday season and the arrival of a new year, makes December a wonderful time. This holds true for high school seniors/parents and current college students. Making Santa’s “good list” for college admission decisions and awaiting the arrival of a “gift” in the form of an Acceptance Notification, can make the holiday’s a stressful time.  The holiday break is also a time when college students return from campus, many for the first time since departing home. Parents await the arrival in hopes of good tidings (grades) and a joy for a great first semester.

As we put word to paper, Admissions Departments at college and universities throughout New England and across the US are busy at work. They are gearing up for the fluid of Admissions Applications from high school seniors seeking to join their institutions. Some have already arrived through Early Action but e-mailboxes will be overflowing soon. Like Santa reading his list, college counselors will be burning the midnight oil to read “files” (mostly electronic), interrupt interview conversations and evaluate student profiles in hope of a match. Their work culminates with the delivery of the all-important communication, You Have Been Accepted!! Welcome to the Class of 2023.

Have You Filed the FAFSA?

In the November issue of the Route One Magazine, filing the Free Application for Federal Student Aid (FAFSA) we wrote about and its importance to the college planning process. The FAFSA is the primary catalyst for determining one’s eligibility for need-based financial aid. If not already submitted, time is now. Whether a student is considering a community college, 4-year public or private or a trade or professional school, the FAFSA is key to learning about financial aid and the question of affordability. If a student is considering enrolling in September of 2019, the FAFSA should be on the holiday list. Getting accepted might be is #1, but knowing if you can pay decides where one goes.

My 1st Semester Was a Blast

But what about your grades, asked Mom and Dad? For sure, the holiday break is a time when new college Freshman are quiz on how well they are doing, academically and personally. Discussions surrounding first semester grades, social interaction and one’s overall well-being are very common during the holiday break. As a parent of four and having navigated the “how are you doing” conversation more than once, parents need to be cautions when probing and sensitive to their process of trying to uncover the unknown. Yes, it is extremely vital to know how the new college student is doing, especially if assistance is needed, however, cracking the shell of a new independent students may require time and patients. Use different times during the break to create a conversation and watch body language as much as verbal communication to get a sense as to how things are going. In the end, everyone will celebrate to learn everything is fine.

Juniors Are Waiting Too                                                                               

Not to be left out of the celebration, rising Juniors (and parents) should use the holiday break to taking a pulse check on the college planning process. Working on building the college lists, prepping for ACT/SAT test dates and mapping out campus visits are just a few things to focus on during the break. Parents too should be using the time to sharpen their “financing college” pencil. Equal to making Santa’s “good list,” having the ability to cover the cost of enrollment makes for joyful outcomes. With the average cost of $30-$50K, Santa and his reindeers will not be delivering that kind of present next year. Rising Juniors and their parents should use the holiday break to talk about expectations. Those associated with attending and paying for college come September of 2020.

2019-2020 FAFSA

2019-2020 FAFSA


The Fall is upon us! Baseball is going into the playoffs, the gridiron and fall sports are in full swing and dance studios are beaming with ballerinas and tapers.  For parents of high school seniors, it’s time for college planning and answering the question, How Are We Going to Pay?

Important to this question is the Free Application for Federal Student Aid (FAFSA®). The FAFSA is key to helping to determine a student’s eligibility for need-based tuition assistance and should be completed by all students interested in attending college in next September 2019. The FAFSA calculates what a student and family can anticipate to be their contribution towards a students overall educational cost. Known as the EFC (Expected Family Contribution) this number along with other details analyzed through the FAFSA are used to determine eligibility for tuition assistance.  A measurement, a calculation that many students and families realize is not in the bank and may not be available to meet the Net Tuition Costs for a specific college and/or university.


The Free Application for Federal Student Aid (FAFSA) and its results are reviewed by many as part of the process of determining eligibility for need-based grants, self-help (loans and work-study) and in some case scholarships (merit and need-based eligibility criteria).  The FAFSA is used by colleges, universities, government agencies and private philanthropic organizations (scholarships) for the intent awarding assistance to students and families. The FAFSA is for students intending or enrolled in two or four colleges and universities, trade or professional school and graduate degree programs. Completing and submitting the FAFSA is a MUST for all college bound students and families looking for assistance with paying an educational tuition bill.


Knowledge is power! And in the case of paying for college, understanding how much a student/family will need to pay can be the difference in knowing what school on one’s list might be the most affordable. Completing the FAFSA, learning one’s EFC and using a college’s Net Price Calculator will strengthen the answer to the question, is this school a good fit? For a school may be an outstanding fit, academically and emotionally, however, if the numbers don’t work and to attend means $$$$$ in loans, maybe, just maybe it is not the right fit.


There are a few more factors that will factor into the affordability and right fit conversation.

  1. Do I understand the overall formula [Cost minus EFC = Need)?
  2. What type of merit scholarships and need-based financial aid will I receive?
  3. Do I have enough different schools in my search list?
  4. Do schools on the list know about the student?

Use the month of October to jump start the financial part of the college search and selection process. Applications will soon be on their way, financial aid and scholarship awards will follow. Understanding college cost and one’s financial picture now will make for happier times this Spring.

Just starting the college search process? Download your Free College Planning Checklist!!

The Scholarship Madness

The Scholarship Madness

College Scholarships – Sorting it Out

No, it’s not about the brackets. But right now students and families across the country are hearing from colleges and universities only to learn in some cases that additional resources are going to be needed to cover the remaining net tuition costs.

Scholarships are a financial resource critical to assisting students and families meet the cost of attending public, private and community colleges. Scholarships reward students for their talent and treasures, academic and personal performance (athletic, dance, voice, speech and visual design). The vast majority are based on qualifying “Merit” requirements and eligibility, while some also require the demonstration of “financial need” need”.

Scholarship Amounts – What You Need to Know

75% of all scholarship dollars awarded by colleges and universities are provided to prospective and returning students who match eligibility criteria set by the school, donor and other contributors. Scholarships are provided in a wide range of amounts, some one-time only and others are renewal. As part of reviewing one’s request for acceptance, schools will compare a student’s profile to programs available and determine matchs. School utilize these types of scholarships to reward students for their hard work and performance before and during college. Awards are acknowledged by the school through the communication of acceptance and financial aid information.

  • Athletic scholarshipAthletic and Performance Scholarships – students who receive these awards are normally notified in concert to a “signing event” once they accept and commit to the college or university. Specific requirements including NCAA guidelines and regulations must be adhered too.

Many colleges and universities also have separate programs that a student must apply for and meet requirements. These programs maybe offered by specific departments, majors and alumni. As an example, Syracuse University offers accepted students an opportunity to compete for The Maxwell Citizens Scholarship,  Students write and defend a “position” paper in a debate format. Students should dig a little deeper when review a schools website, applying for admissions and/or financial aid. Uncover a program, follow the guidelines and apply.

State Funded Scholarships

In each state there are publicly funded scholarship and grant programs which reward students for their academic accomplishments (GPA, State Testing Programs) and/or demonstrated financial need. Students generally apply through their Guidance Department and when filling the FAFSA.  Example: MassachusettsMaineNew York

Then you have what I refer to as the ”time invested – time rewarded” programs. See there are hundreds of scholarships provided by local, regional and national based foundations, philanthropic donors, civic & community organizations and corporations. But, one has to investigate, investigate to find and apply.

  • Local Programs are generally coordinated through the HS Guidance Department. Students need to obtain the “list” apply when needed or ask their Counselor, Do I qualify? These awards are generally distributed at Baccalaureate and Graduation events.
  • Regional and national programs can be found through digging through the internet using a search engines (ex: FastwebScholarshipsPeterson’s). However, many of these search assistance tool are also data mining, lead generation organizations. Those using these tools should be aware of their rights and how the organization will, if any use the information.

Not to be forgotten, many Employee Assistance Programs offer scholarship programs for the children of employees. The Human Resource Department in most companies is the key contact to question.

As Acceptance Offers and Financial Aid Award Letters arrive for high school seniors and transfer students, many are excited to find a scholarship as part of the communication. But, if a higher than anticipated Net Tuition Cost still remains, students and families should spend sometime focused on another version of March Madness.

One that just might payoff!!