Parents

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Student loans at 50?

According to a piece in the Washington Post by Ylan Q. Mui, student loans are not just for students.  The Federal Reserve Bank of New York released data that show that roughly 20% of student loans that are in default are owed by borrowers over the age of 50.  Ms. Mui attributes this to co-signing, to adults returning to college, and to the inability of borrowers to discharge student loans through bankruptcy.  Who knows.  Borrowers over 50 would have gone to college in the 1970s and 1980s and college was not so expensive then, nor were loans so easily available, so these debts are most likely not lingering from their undergraduate years.  And, note that the 20% figure is for loans in default, so it’s not just that they have the loans, it’s that they aren’t paying.

What does that mean for the hordes of new borrowers who are leaving college with average loans of $25,000 and facing a grim job market?  Student loans might affect life decisions like getting married and buying a home.  (Theories have been postulated that the decline in marriage rates is due in part to debt problems.) The loans certainly delay retirement savings since money is being diverted to repayment of debt.  Now, with data showing the impact on seniors, the real effects might be worse than we knew, at least for some families.

The clear takeaway:  avoid debt if you can.  If you have to include loans in your financial aid package, treat them with respect.  Make a financial plan for your future that shows what you expect to earn after college, what you will need to live on, what you can donate, and what you need for debt.  Parents:  no one will make your teenagers do this if you don’t.

 

Shocking report about Virginia colleges

Most parents don’t really know what is going on during four years of college.  We know what it costs, certainly, but beyond that, we only hear what is reported through the filter of our young adults.  We don’t see the opportunities not taken, the courses not offered, the ability of the teachers to connect.  Not that we necessarily should; our kids are on the road to adulthood and are those things really our job?

So when you read the report issued by the American Council of Trustees and Alumni, you will be shocked.

  • Over 33% of Virginia schools do not require math.
  • No Virginia schools require a course in economics.
  • Only two schools require a basic course (one) in American history or government.
  • The notion of a core curriculum as fundamental is only lip service.
  • At 22 of the 39 colleges, less than 50% of students graduate in 4 years.
  • At 17 of 39 schools, tuition and fess (notice this excludes room and board and living costs) now represent more than 40% of the median household income.
  • Facilities are significantly underutilized in terms of hours of average weekly use.
  • Most colleges require all sorts of testing of students before they are admitted.  Only a small handful of Virginia schools participate in any sort of academic accountability program once the students are enrolled.

Parents and students, are you getting what you are paying for? 

 

 

 

FAFSA Tips

Here are a few things to keep in mind while you are working on the FAFSA.

If this is your first time dealing with the FAFSA, it can be intimidating.  We suggest you run the FAFSA Estimator first.  It takes less time to fill out and it will give you a chance to get comfortable with the questions before the “test”.  It can be found at null

Decide who is in charge, parents or student?  The FAFSA will be in the student’s name, using his or her social security number, birth date, driver’s license and financial information.  But the real focus of the FAFSA is parental income and assets, and most parents prefer to handle that information themselves.

If your tax return for 2011 is not yet filed, don’t wait.  Go ahead and file the FAFSA now using good estimates and make corrections later.  Be conservative in your estimates; otherwise, the changes you make might yield some unwelcome surprises. 

Most of all, if you think you don’t need to file because there is no reason to, you might be mistaken.  Drop us a note and we’ll help you determine if filing is worth your time.

 

FAFSA for North Carolina Residents

The North Carolina General Assembly made significant changes in how the state of North Carolina awards state financial aid.  A single, new need-based scholarship will replace a number of old scholarship and grant programs.  Eligibility for this new scholarship will be based on the results of the FAFSA.  But here is the biggest takeaway: 

The new scholarship will be awarded first-come, first-served. That means you want to get your FAFSA in immediately if you expect to qualify for aid from the new program.  Students who are legal residents of North Carolina with EFCs of $15,000 or less and who meet the eligibility of the Pell Grant Program will be eligible.  Check with your school’s financial aid office for more details.  If you are unsure, call their office, this news is so new that many websites are not yet updated with current information.

This is only true for North Carolina residents.  Virginia residents can continue to observe priority deadlines of specific colleges and scholarship programs.  Always check the deadlines, and file sooner rather than later.  You can file the FAFSA without waiting for your 2011 tax return to be completed.  You do this by using estimated information and making corrections when the return is done.

 

Newspaper Readers – Calculator Report Here

NPC HANDOUT

Please follow the above link for our detailed report on Virginia schools’ net price calculators.  If you have any questions, simply drop us a note.  You can also subscribe to our free monthly newsletter using the button at the top of our home page.  Thank you to the Times-Dispatch and the Daily Progress.

 

Finding net price calculators

Colleges are required to have net price calculators on their websites, but they are not required to make them easy to find.  The best idea is to look under the Financial Aid section.  We put together the following table of clickable links to 27 Virginia colleges’ calculators. (Note: Links updated February, 2018 – please report a broken link here.)

Christopher Newport
William & Mary
George Mason
James Madison
Longwood
Norfolk State
Old Dominion
Radford
Mary Washington
Virginia
VCU
VMI
Virginia State
Virginia Tech
Randolph-Macon
Hampden-Sydney
Roanoke
Lynchburg
Emory and Henry
Hollins
Mary Baldwin
Randolph
Washington and Lee
Sweet Briar
Richmond
Shenandoah University
Hampton University

 

Deadlines Move Up

Most parents and teenagers know that deadlines are important when it comes to applying for college.  The “system” is built around a certain timing – start getting serious in the spring of junior year in high school, take tests, apply in the fall and winter of senior year, hear back in the spring, make a decision, and graduate.  It’s been that way for years.

But it is changing, subtly.  Students are applying earlier and earlier, and now, colleges are moving up application deadlines.  No longer is January 1 or February 1 the only important date.  Some schools are encouraging applications beginning as early as September!  The new popularity of Early Action programs (as opposed to Early Decision) means that most students will have at least one admissions decision by Christmas.

What does all this mean?  First, you have to know each of the deadlines for every school on your list.  You cannot assume it will be the same as last year, this is a rapidly changing area.  Second, merit aid may have its own deadlines, especially for early applicants.  Third, for families with juniors in high school, you need to be focused on college now.  Do not wait until the spring to get started. 

The entire calendar has shifted forward.  Get started sooner so the shift does not catch you off-guard.  For seniors, be meticulous about your deadlines.

 

Henrico College and Career Night

Thank you to everyone who stopped by our table at the Henrico College and Career Night.  Here are some websites that we talked about:

EFC Calculator:

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No-loan pledge schools:

http://projectonstudentdebt.org/pc_institution.php

Information on how generous colleges are with financial aid:

http://nces.ed.gov/collegenavigator/

If you run into any questions as you do your research on colleges and aid, please let us know.

 

Helpful Advice

The Wall Street Journal Sunday edition had a nice article on saving for college.  The idea was to give parents advice on what to do using a three-year countdown until college starts.  The advice was fine, but what happens so often with articles like this is that the advice has to be apply to so many readers that it is very generic.  It is certainly well-intentioned but even trying to follow some of it is daunting.  Here’s a sampling:

About 529 plans:  if your 529 plan is “underperforming” or is high-cost, you can roll it over to another plan but beware of the fees.

On financial aid:  start juggling money three years out so it won’t weigh as heavily in the financial aid calculations.  One year about, the article suggests that you “submit all necessary paperwork.”

On loans:  two years out, start looking at loan options – federal loans for students and parents and private bank loans which have variable or fixed rates.

The idea here isn’t to bash the article, it is fine for generic advice.  It is to ask is that advice helpful to you as a parent?  What specifically do you do with that, and is that a good use of your valuable time?

We believe that good guidance for college is targeted to your family’s situation, so that you know what to do when, and you can make informed decisions.  Contact us to find out what that means for you.

 

It’s Tuition Bill Time

Tuition bills for the upcoming fall semester are coming in now. If you haven’t seen one in the mail, check online through your student’s online ID, since larger schools often send bills electronically. Many schools offer different payment options, including electronic funds transfer from a checking account, credit card payment, and good old fashioned checks. Credit cards are not always the best option however, since there are often large service fees charged by the college’s credit card processor.

Writing a check is often the best option. It makes sense to limit giving out your bank account information, and a written check will provide easy documentation for tax considerations.

Many colleges offer payment plans. Payments can be spread out over a number of months and any charges to set up such a plan are relatively small. You may have to agree to electronic payment to use such a plan, but that might be worth the risk.

If you plan on using money in a 529 plan, you usually have three options. The withdrawal can be paid to the college, to the beneficiary, or to the account owner. You will want to choose the option that is easiest for you and best fits your needs. Generally speaking, payments directly to the college are least advisable since you lose control over the entire process. Remember to allow sufficient time for the withdrawal to be processed by the 529 plan.

If you have specific questions about your situation, please drop us a note and we’ll be glad to help.