College Financial Aid Advisors

When should you think about repaying your student loans? I always tell my students and parents to start thinking about payment before they ever receive the money, because student loan debt can affect the student and the family’s financial situation for many years to come. Be acutely aware of how much money you borrow, borrow only what you need, and understand exactly how much it will cost you to repay these loans. If you are a college student who just graduated, there is a little more urgency in this thought process. You may start receiving payment due notices before the end of the year, and need to have a sound strategy in place before then. Since most students take out numerous student loans over the course of their college career, it can become overwhelming trying to figure out the total amount due and keep on top of the monthly payments. One possibility you will want to research now is student loan consolidation. Student loan consolidation is the process of taking all of your outstanding student loans and bundling them into one. It may be similar to consolidating your credit card payments. You may have a number of credit cards at different interest rates from different credit card companies, and decide that it is getting too complex to manage. You take out a personal loan to cover the cost of those debts and then make monthly payments on the personal loan. The same principle is true with your student loans, but you must first be sure to separate your debt into federal student loans and private student loans because they cannot be mixed for consolidation. A Direct Consolidation Loan allows you to consolidate or combine multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. There is no application fee to consolidate your federal student loans. Loan consolidation for these loans can greatly simplify loan repayment by centralizing them into one bill. It can also lower monthly payments by giving you up to 30 years to repay your loans. There might be additional access to alternative repayment plans you would not have had before, and you could be able to switch any variable interest rate loans to a fixed interest rate if you believe that interest rates are going to increase. Although it might seem like a no-brainer, there are downsides to consider. Increasing the length of repayment might mean that you end up making more payments and paying more in interest. You could also be in danger of losing some of your original borrower benefits. Depending on your original loan, this might include interest rate discounts, principal rebates, or some loan cancellation benefits. Similar benefits and potential negatives apply to the consolidation of private student loans. That is why now is definitely the time to think about loan consolidation, so you can make decisions that are best for your individual financial situation.

The summer before your senior year of high school should definitely be packed with fun, but also with a steady stream of college application activities. If you are applying to any colleges using an early action or early decision application, you need to check their deadlines and make sure you have enough time to complete all the necessary requirements. If you have not yet visited any college campuses, make that a top priority for this summer. An on-site visit is really the best way to get a feel for the campus itself. While there may not be as many students there during the summer, you should still be able to meet with some department personnel, the admissions office, and the financial aid office. You should be prepared to obtain information from all of these resources. After your trip, write down all the answers you receive to your questions as well as your overall impressions of the school, to help you make better decisions once you begin applying. Here are a few questions you definitely want to ask the financial aid office during your college visits: • What does it really cost to attend this college? Although they probably cannot provide an exact figure for how much it will cost you, they do have a very good handle on what current students spend to attend. Of course, you want to hear about the tuition, room and board, and meal plans, but you also want to find out how they apply to the typical student. How much are students paying for books and fees? Do most students live on campus and participate in the meal plan? What is the cost of living in the surrounding community so you know how much of an entertainment budget you might need? During your trip, also be sure to keep track of your costs, so that you can allow for several trips back and forth from home during the year. • What is the typical financial aid package? Again, this will be different for every student, but try to understand how much money is available for merit-based and need-based awards, and determine whether you might qualify for either. Get a firm grasp on how much of their financial aid is through the federal work-study program or federal student loans. Confirm that the amount of financial aid you receive will be consistent for all four years. • What is the average student loan burden upon graduation? How much do students typically borrow to attend this school? Other questions to ask include how many students continue after their freshman year, what percentage of students graduate in four years, and what percentage of students find employment in their chosen career fields? These answers provide good indicators of the school’s ability to educate and graduate accomplished students. The campus visit can be both fun and serious. Make sure you have your questions in mind so you can get the answers you need.

Last week I discussed some of the surprising results uncovered in the Discover Student Loans Annual Survey. Now Discover has taken that information one step further and developed a new interactive tool that proves college is still worth it, despite the rising costs. The idea for the tool evolved from the survey’s finding that 95% of the parents surveyed felt college was either very important or somewhat important. This finding has been backed up by independent data which shows that a college education leads to higher income and lower unemployment. But is it possible to put more of an accurate personal picture on those statements? Turns out it is. The website provides statistical background information from the Bureau of Labor Statistics on the financial benefits of a college education, presented by overall employment rate and gender breakdown. Those with a college degree stand to make $20,000 more per year on average than someone with only a high school diploma. This is especially true for women, whose employment numbers and income jump significantly with each degree earned. The major concern is that college tuition rates have soared, leading to a very small percentage of parents who say they can afford all of their child’s education. Website visitors can see how tuition has increased over the past ten years, and also look at states with the highest annual tuition. So the challenge is trying to justify college costs by looking at future earnings potential. The survey also revealed that 44% of parents would be more likely to fund their child’s education if the child majors in a field that has a higher likelihood of employment. Majors, potential earnings and job growth are all factors that can affect the return on education, so the site also offers information on various jobs in terms of potential growth and annual median pay. There is a link to a video about which college majors land the highest-paying jobs, but the most personalized portion of the site is the interactive tool, Major Payoff. First up you can select and compare average salaries for various college degrees of your choice. Then click on one of the majors to gain insights into average salary, industry and more. In the upper left is an icon which will add each major to a queue you can use for comparison purposes. Discover also provides a link to their $2500 scholarship contest that you can use to help pay for some of those college costs. It’s easy to enter and you earn bonus entries for sharing. No purchase or student loan necessary to enter or win.  Winners will be randomly drawn on September 7, 2015, December 7, 2015, and March 7, 2016. High school seniors and undergraduate students can enter to win through February 29, 2016. Knowing how much a college education can cost and having the ability to project future earnings should be a valuable tool in the college decision-making process.

Now that most high school seniors have decided which college they will attend in the fall, the final pieces of the puzzle can fall into place. Families should know what the expected tuition and related costs will be; they will probably have a financial aid offer in place, and should know if their student will receive any outside scholarships. If there is any gap between expenses and financial aid/scholarships, the remaining amount of money must come from savings or other resources. Most likely, the family will turn to student loans. After determining how much is available through the federal student loan program, the next option to research is private student loans. While federal student loans are funded by the federal government and have standard terms and conditions for all borrowers, there is a great deal more latitude in private student loans. These loans are made by a lender such as a bank, credit union, state agency, or a school, and the terms and conditions can vary from one lender to another. Here are some of the things you should look out for when considering private student loans: • Fees: Check the contract details very carefully when signing for a private student loan. Some companies will add on fees which could increase your out-of-pocket costs or accrue interest over the life of the loan. Discover Student Loans is a good example of a private lender that does not require any loan application fees, origination fees, or late fees. • Interest Rates: Interest rates will vary among lenders and could make a difference in the ultimate amount of money you will repay. Make sure you understand whether the interest rate you are agreeing to is fixed for the life of your loan, or if it will vary as market interest rates change. Discover currently offers both types of interest rates so you can choose the approach that is best for your specific financial situation. • Coverage: Check to determine if your private student loan covers 100% of your school-certified college costs such as tuition, housing, books and other expenses. Discover will allow you to borrow up to 100% of your cost of attendance minus other financial aid. • Service Center Location: When you have a question about your student loans, you want to be able to understand the answer. All of Discover’s Student Loan Specialists are based in the U.S. and are available 24 hours a day to assist you. • Repayment Options: Some private lenders may require you to start repaying your student loans while you are in college, while Discover offers the choice of in-school or deferred repayment options. • Rewards: Everyone likes to get a little something extra. With Discover, if you earn a 3.0 GPA or better, you can receive a full 1% cash reward on each new student loan. Never rush into a decision about your student loans without first checking your options. It might pay to discover the differences there are in private student loans.

Do you have a “new” member of the family? It may look like the child you sent off to college four years ago, but this is a college graduate who is quickly taking on all the characteristics of becoming an adult! Yay, you’ve done a good job in raising a child who had the knowledge and tenacity to graduate from college, so here are a few more tips to help you help your new adult get on the right track financially: • Don’t Revert to Your Old Habits: Let your graduate know that you respect him/her as an adult and set up new rules for living together. Clearly lay out your thoughts regarding job expectations – turn the tables around so that you stop giving your child an allowance and start collecting some rent. You don’t do your child any favors by continuing to provide financial support for years on end. This is part of the transition from student to adult, and there are new skills which will have to be learned. • Have a Serious Talk About Student Loans: Don’t wait until the bills start coming due to have a serious discussion on this topic. Gather information about all of the outstanding federal student and parent loans, as well as any private student loans you may have used. Find out what the monthly payment is on each and discuss who will be responsible for payment. If necessary, take the time to look into loan consolidation or income-based repayment plans. These have pros and cons, and you must make decisions together that are based on your individual financial situation. • Set Up a Budget: Help your graduate figure out how much money will be needed on a monthly basis for rent, student loan payments, car payments and insurance, gasoline, health insurance, and other expenses. This will lead to a serious discussion of the type of job that is needed to cover these costs. • Get Ready to Kick Your Child Out of the House! Yes, this sounds terrible and, no, it doesn’t have to be done right away. Your child just moved back in and you might be thrilled about that, but there should be a clear-cut understanding of how long this opportunity will last. Let your child know that he or she has a year or two to find a job, get on track financially, and move on to the next phase in life. It will be another sad transition, but it is what you have all been working for all these years. Definitely take time and celebrate this terrific achievement, but don’t let your graduate rest on his or her college laurels all summer. Continue your role as parent and provide solid input and advice on how to make financial decisions based on information. This could be some of the most important advice you give, if your now-adult learns how to handle money responsibly and gets a head start on life!

It’s easy to wax nostalgic at this time of year. Most colleges are holding their graduation ceremonies, and the high school celebrations aren’t far behind. For these classes of seniors it can be both a time of looking back fondly on what has been accomplished so far, and looking forward with eager anticipation to the next steps in your life. Once the celebrating is over, here are a few things high school seniors can do this summer to prepare for college: • Get Serious About Money: Up until now, you probably haven’t had to worry too much about money. Your parents covered all of the expenses at home, and you might have gotten a job to earn a little spending money. In just a few short months, though, you are going to be more responsible than ever for managing your own money, so it’s best to get a start on learning how to do that now. Find out how your parents budget for household income and expenses, and ask if they can help you prepare a budget for yourself. Try to think about all the extraneous expenses that will come along with being on your own, like gasoline, snacks, laundry, late-night lattes, books, and entertainment, and try to figure out if you will have enough money to cover it all. • Learn About Student Loans: Have a frank discussion with your parents to find out how much of your education is being financed with student loans, then find out the details regarding who will be responsible for their repayment. If federal student and parent loans are not enough to cover all of your college expenses, help your parents investigate private student loan options like Discover Student Loans. You’ll want to find a company that is easy to work with, and that also has competitive interest rates and payment terms. This is good experience you can use later on when you are thinking about taking out a mortgage to purchase a home or condominium. • Keep Looking for Scholarships: One way to extend your finances and reduce your debt burden is to find “free” money that is available through college scholarships. You might think you are done with this process, but there are many additional scholarships you can apply for once you have completed your freshman year or decided on a major. Keep doing research to find out about these opportunities, and put any deadlines in your calendar so you won’t miss out on a potential source of revenue. For many students, it also helps to find a job during the summer. Of course, you do want to leave yourself some time for having fun with your high school friends, but if you can save some money now you might not have to borrow as much as you thought once you start classes. It’s an exciting time – be sure your financial priorities are in order before moving on to the next phase.

Each generation develops different ways of paying for college. The Baby Boomers might have relied on college savings accounts, decided not to go at all, or used the G.I. Bill. Gen Xers might have worked a few jobs over the summer to pull down enough money to cover expenses. But Millennials face a different set of financial circumstances, and are forced to forge new paths on the road to a higher education. While college costs are increasing at a rapid pace, money to pay for it is harder to find. Parents and grandparents who might have started 529 Savings Plans watched in horror as the value of those accounts diminished with the economic crisis. Federal cut-backs and sequestration cast an uneasy pall over college financial aid. And student loans, often the only way to pay for college expenses, are receiving a lot of negative publicity. But the Millennials are incredibly resilient, and find new ways to deal with the question of how to pay for college: • Community Colleges are a Bigger Part of the Education Process: With the higher expenses of traditional colleges, community colleges are more attractive as one of the initial steps in the education process. According to the Institute for College Access & Success, the good news is that the vast majority of community college students do not borrow federal loans at all, and the few who do borrow do not take out large loan amounts. Although the vast majority (82%) of full-time community college students does rely on some type of financial aid to cover some of their costs, they are finding ways other than borrowing to make up any short-falls. • Student Loans Are Part of the Puzzle: For those attending the higher-cost four year universities, federal and private student loans are still an important piece of the payment puzzle. In a policy brief entitled, “The Student Debt Review,” Ben Miller of New America stated that the average college graduate with a bachelor’s degree owes almost $30,000 in student loans. The Millennials are using their degrees to obtain jobs that will help them repay these loans, investigating loan consolidation and income-based repayment options, or thinking about careers in public service which might allow them to have their loans forgiven after ten years of payments. • Financial Aid Affects College Choice: PwC’s report on “Millennials and College Planning” found that 60 percent of Millennials said that financial aid is a deciding factor in their school choice. The Millennials are looking closely at their financial aid packages and making decisions accordingly. • Mom and Dad are Helping: A USA TODAY/Bank of America Better Money Habits survey found that today’s young adults are three times as likely to say they got a lot of financial help from their parents as when their parents were starting out. It’s a whole new world but, when it comes to college, clearly the Millennials have found their own paths to figure out ways to pay for it.

It’s May and time for college commencements! Congratulations to all the newly-crowned college graduates. You have worked hard to get to this point and deserve to take some time and pat yourself on the back for this achievement. The months ahead will be very exciting as you move on to the next phase of your life. It may involve travel, a new job, getting back together with old friends, or starting a new relationship. Whatever path you take, money is certainly going to be a crucial factor in any decisions you make. You might have relied heavily on your parents to make financial decisions while you were in college, but now it is time for you to take control of your own financial situation. Here are some smart financial tips to get you started in the right direction: • Get a Handle on Your Student Loan Situation Now: You might think it is still early and you have six months before you have to start worrying about repaying your student loans, but you will be surprised at just how quickly that time will pass. It is best to understand your situation now, so you can take some time to make decisions. Talk to your parents about how much they plan to contribute, and how much they expect your to repay. Put together a complete list of all your federal and private student loans, and find out what the repayment terms are on each. Calculate the total amount of monthly payments that will be due. If it is more than you think you will be earning, you may need to think about an income-based repayment plan or student loan consolidation. • Draft a Real World Budget: You may think you lived on a budget in college because your parents gave you an allowance or covered your expenses, but that was nothing compared to real world expenses. Try to put together a realistic expectation of how much money you will be able to earn in these first few years after graduation. Take into consideration any living expenses, car and transportation costs, health insurance, and entertainment opportunities, as well as your student loan payments. If expenses exceed income, there are only two choices – increase income or decrease expenses. • Watch Out for Easy Credit: It may seem easy to take out an auto loan or apply for a few credit cards to get you over any initial money shortages, but you do not want to start spiraling down into a debt cycle while you are so young. Interest builds up quickly, and it could soon take all of your disposable income just to keep up on payments. Try to control your purchases, or buy only within your means, so you can build a good credit rating for future use. This is a very exciting time, and you should enjoy it, but don’t make poor financial choices that will just make things more difficult for you in the future.

Far from the “slackers” and “dudes” that sometimes come to mind when thinking about the younger generation, today’s young adults aren’t necessarily all that unwise when it comes to making money decisions. Because their family might have experienced some radical financial difficulties while they were growing up, the Millennials might have some different opinions about money, but they are still trying to use it wisely. To help ease the transition into family-based financial decisions, here are a few money moves every Millennial should consider: • Pay Attention to Those Student Loans: These don’t have to be the albatross that hangs around your neck for your entire adult life, weighing down every financial move you make. Student loans can’t be ignored and they won’t go away. Failure to make payment could affect every aspect of credit for you and your family. If you don’t repay your federal student loans, you could even face having your wages garnished or lose your federal tax refunds. Sit down and assess how many student loans you have, find out how much money is due on each, and work out a payment plan. Try to determine whether loan consolidation makes sense for you. This could result in one payment for federal loans and one for private student loans, but you have to weigh the pros and cons of each. • Find a Financial Coach: It can be difficult trying to sort out everything you need to know about owning or renting a home, saving for retirement, or paying for your own children’s college education. That is where it can be helpful to seek out the advice of a financial coach who understands your needs. USA Today says that today’s financial planners are beginning to focus less on “asset management” and more on “goal achievement” in order to better assist their Millennial clients. • Get a Plan: Nashville-based iQuantifi surveyed hundreds of people younger than 35 and found out that while almost three-quarters of the Millennials do have financial goals, only 20% of them have a plan in place to back up those goals. This may feel a little counter to the Millennials’ free-flow approach to decision-making, but it can be very helpful in getting your financial life on the right track. • Learn to Trust Someone: Fidelity recently found that 39% of the Millennials do worry about finances, but 25% don’t really know who to turn to for advice. Fortunately, you have the greatest information resource literally at your fingertips. Use all those social media and internet skills you have accumulated to talk to your social circle about financial decisions. Ask them what they are doing and how that is working out for them; find out who they go to for advice and get input on whether they think that person could be helpful for you. It may feel a little uncomfortable at first to put any effort into managing money, but the long-term rewards will be well worth any time you invest now.