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College Talk Blog

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Student Loan Interest Rates Drop for 2020-21

Posted on July 3, 2020 at 9:45 AM Comments comments (16)
Federal student loan interest rates have dropped significantly for 2020-21. Students will pay 2.75% compared to 5.05% in 2019-20. Parent loan interest has dropped to 5.3% from 7.6% in 2019-20. Graduate student borrowers will be charged 4.3% compared to 6.6% in 2019-20.

Both dependent and independent students are eligible to borrow. Students can be full or part time and must carry a half-time load, which is six credits. 

The federal student loan program helps individuals and families fill in the gap between what college costs and any other grants or scholarships the student may have been offered. It makes it possible for students to attend 2 or 4-year colleges. The lower the cost of tuition of the college, the more likely the student can cover the cost with a federal student loan.

Loan payments for federal student loans begin six months after graduation or whenever the student drops below half time enrollment during a school year. Parent borrowers may elect not to go into repayment until the student has graduated. Borrowers may start repaying their loans while the student is still in college without penalty and early payment reduces the amount to be repaid.

Caviar College Dreams on a Shoestring Budget

Posted on June 16, 2019 at 11:14 AM Comments comments (21)
Parents who would not go to a Tesla dealer and say they want a Tesla for free think nothing of saying something similar when it comes to colleges. The bottom line about colleges is that nothing is free. Whenever you hear about a student who got a "Free Ride" to a college, there was a huge payment beforehand. That student and family had huge sweat equity and likely significant costs getting the student to the point that they could earn a "free ride" to college later.

The next time you hear about a free ride, realize it came after 12 or more years of hard work by the student and at least as many years work on the part of the parent mentoring the student and paying for enrichment experiences through their own sweat equity and time.

I use Tesla as the brand example for a car because it is one of the more expensive and prestigious. Prestige is the other thing about families expecting free college in the world in which we operate now. The same family who expects to find free college turns up their noses when I suggest some colleges for which their son or daughter could expect at least significant scholarship money and a possibility of full tuition. They reject those colleges because:
  • location is farther from home or objectionable for some other reason
  • the prestige factor is less than desirable for their expectations
  • the campus architecture is not pleasing to them
  • they know some "stupid" kids who got into that school (no kidding-I have heard this more than once)

The best strategy to save the most money on college costs is to foster sweat equity on the part of the student all through school and to support that student with summer experiences and facilitate after school and weekend program participation. It is also important for both parents and students to keep an open mind about college and think about college like other large purchases. 

When it comes to college, the bargains are the colleges that provide the best program at the most reasonable price along with generous merit scholarships. Those colleges may sometimes be well-known and prestigious but can also be less well-known but nonetheless high quality. Sometimes, a student may have to travel farther from home for a bargain...or it may be where the student lives. Flexibility, an open mind and freedom from the burden of feeling prestige is related to a high quality education is key to a less expensive outcome. 

Some of the happiest and most well-adjusted college outcomes I have seen have been in families where parents have explained the college cost budget to their kids just like they would for any other purchase. Those students know that a $75,000 per year college is out of reach without a HUGE scholarship offer. Those students are also more willing to do the work it takes to apply for scholarships to reduce college costs.

A Gift for Fathers

Posted on June 18, 2017 at 4:15 PM Comments comments (0)
When we look at most consumer products, we look at prices very early in our deliberation process. Both adults and teens do this. However, when looking at colleges, our emotions over-ride our good sense. Colleges, like cars and other products, have different levels of prestige, social status, building attractiveness and extra options like upscale living options, fancy fitness centers and other things that have nothing to do with academic quality.

Because we equate college quality and career success, we often throw caution out the window when considering colleges. People are afraid that if they are good consumers, their child will somehow lose out. This is not true.

Being a good consumer in college choice is a teachable moment for the parent and student. Generally graduate schools and employers care more about what the student achieves in college more than where. The best college fit is a college where the student will be academically comfortable and where parents will be financially comfortable.

Saving money on college costs begins at college selection. Colleges have reputations for being generous or not. Matching student achievement with colleges helps enhance student chances of winning scholarships.

Student Loan Interest Rates Rise for Students and Parents

Posted on May 28, 2017 at 4:48 PM Comments comments (0)
If you have a student headed to college this fall, you may want to check with your bank or credit union to see if they can beat federal student loan interest rates and benefits. The parent loan interest rate for 2017-18 is rising to 7% from 6.31% in 2016-17 and the student loan interest rate for 2017-18 is rising to 4.45% from the 3.76% charged in 2016-17.

While the interest rate for students is still reasonable, I noticed that some parents were beginning to skip the parent PLUS loan in favor of loans from their banks and credit unions two years ago.

Financial institutions have been offering plans that permit repayment schedules beginning after graduation similar those offered by the federal student loan program. Some of these loans offer both fixed and variable interest options aand skip the origination fee charged by the federal student loan.

Saving Money on College

Posted on August 23, 2016 at 11:10 AM Comments comments (1)
I talk to families everyday about college and managing college cost. It is always a surprise to them that the best way to contain cost is to put that in the plan first-before looking at any colleges. Unfortunately, many select a college and then think about how to minimize costs. To me, that is like going to the Mercedes dealer new car lot first and then worrying about how to pay for the car. Car buyers know to look at costs first and look for deals. College buyers should do the same.

There are college deals to be had...but you have to be willing to compromise. Just as you would if you were shopping for a car. Where are the deals? The deals in colleges are like the deals in cars. What college wants your kid really bad? That's a deal college for you. There are many other deals out there in higher education. Look for them first, then start thinking about where to apply. Don't do college financing backward; selecting a college and then looking for a deal. 

Students, Parents and College Costs

Posted on February 9, 2016 at 2:09 PM Comments comments (0)
Parents who want to pay less for college would do well to keep 3 things in mind:
  • college cost is not logical
  • there are deals out there
  • most students pay little attention to costs

It pays to include out of state colleges and private colleges in the mix of colleges a student considers. State colleges have lower tuition but also are less likely to give large sums of money away to incoming freshmen. Out of state colleges will sometimes give money to out of state students to encourage them to accept an admissions offer. Private colleges can be some of the most generous schools. Private colleges often give students scholarships that bring college cost down to public college levels.

It is not unusual for a student to get a better deal at a private or out of state college than they get from an in-state college. The key is it keep an open mind and keep the prospective college freshman aware of the amount parents can give or borrow to meet college costs.

How much does college cost?

Posted on February 6, 2016 at 12:00 PM Comments comments (1)
Parents love to ask how much college costs. Unfortunately, the answer is "it depends". College cost depends on the cost of the college, the academic and other accomplishments of the student, the merit scholarship and grant process of the college and when the student applies for admission.

College cost is very much an individual phenomenon. For example, a highly accomplished student can apply to a college, receive a merit scholarship and end up paying half the cost or nothing at all. An average student with high financial need might end up paying the same. Both students would receive different types of assistance and both would benefit from applying for scholarships and financial aid early.




In State Tuition at Out of State Colleges

Posted on June 3, 2015 at 12:03 PM Comments comments (0)
Many states have articulation agreements with neighboring states to allow their students to pay in-state tuition rates at an out of state college. The usual condition is that students
must enroll in a major not offered at a public college in their home state. Another condition is that students must apply for this opportunity and the allowable majors can change. States are not obligated to participate and can opt out of participating in agreements. Each state has a different sign up process and arrangement regarding which majors are applicable.

As an example, students who are legal residents of Virginia have the opportunity to study in 14 other states in 117 college majors at in-state rates if they are approved.
Students and parents can visit www.schev.edu for a detailed list. On the State Council of Higher Education for Virginia website, there are disclaimers now about the fact that North Carolina no longer participates and although Maryland participates, the University of Maryland does not.

Families engaged in a college search in any state should consult their state higher education agency for more information on opportunities in their state to study at colleges out of their state at in-state tuition rates.


In-state public colleges don't necessarily offer the best deals available

Posted on November 16, 2013 at 2:04 PM Comments comments (9)
So many parents tell their kids not to look at out of state and private colleges to save money on tuition. Unfortunately, they are doing just the opposite. Private colleges often have more money to offer in scholarship funds. Out of state colleges frequently offer reduced tuition as well as scholarship money to out of state students. But you must be present (apply for admission) to win.
 
The best strategy is to search for colleges that offer the best academic programs and are the best fit academically and in size and other features. Apply to 8-10 colleges and then wait for the offers to roll in with the understanding that all offers will be analyzed for the best deal.
 
Parents who restrict their children to in-state public colleges are not doing themselves any favors. Taking such a narrow view of colleges can cost students the scholarship support and tuition discounts they might have gotten if they had applied at a broader list of colleges. It can also mean a less positive outcome if the student has been kept away from colleges that had the best programs in their field.
 
 

What's the payoff on your college investment?

Posted on June 30, 2013 at 6:34 PM Comments comments (102)
College is an investment that pays off on average at 15% over the lifetime of a student. That's a great payoff. But some students get much less of a payoff because their chosen occupation pays less in relation to their investment.
 
Students and their families should consider the average salary for the occupation the student will pursue when deciding how much to invest on college costs.
 
For example, if an occupation in art or public service will pay on average $35,000 per year, the student could choose a college with a lower sticker price. Since many students borrow, the lower sticker price would result in more affordable student loan monthly repayments.
 
A student whose expected salary will be $70,000 could decide to invest a little more in college costs because he will be in position to pay more in monthly student loan repayments.
 
To further maximize investment in college, students should consider college a four year job interview. Meet individuals who are in the field. Network with them. Consider what they will be looking for and how to prepare. Look for intern and summer job opportunities in your field. Focusing on future job prospects now is another way to make college payoff later.