College Debt, Ways to Save, and Other Financial Aid Tidbits
Plan Smart for College 5175 Fox Ridge Rd. Roanoke, VA 24018
College Graduates Have More Debt Than Ever Before
New graduates are being boggled down with debt upon leaving college. Much of this debt could have been alleviated with proper planning by parents. Many parents and grandparents have made college investments with good intentions but in fact it has cost the student thousands of dollars. Many students currently in college and getting ready to enter college can reduce their college expenses dramatically just with a little planning. Our Certified College Planning Specialist can guide you to "plan smart" so you don't leave your children or your yourself smothered in debt.
Planning Strategies to Help Families Pay Less for College
College Credit Card Debt Statistics:
- 33% of current students who have credit card debt owe more than $5,000.
- 52% of students who have credit cards use them to buy college books and supplies.
- For undergrad students with a credit card, the average student carries a debt of $3,173.
- For graduate students the average credit card debt is $8,612.
- In 2008, 84% of all undergraduates had at least 1 credit card.
- The average student owns 4.6 credit cards. Over 50% have at least 4 cards.
Other College Debt:
- In 2007, the average undergraduate completed college with $22,700 in debt; this amount is increasing annually.
- 66% of college graduates have debt from college.
- Non-federal, unsubsidized loans represent 23% of all loans.
- Nearly half of twenty-somethings have stopped paying a debt, forcing lenders to "charge off" the debt and sell it to a collection agency, or had cars repossessed or sought bankruptcy protection.
- 19% of 18 to 34 year olds move back in with their parents to cut costs.
- Private lenders provide $14 billion in school loans.
- 43% percent of students in public four year institutions take out public student loans.
- 54% percent of students in private four year institutions take out public student loans.
There is no clear-cut information on the college debt is owed by parents as they borrow from many sources outside normal college loans. One can only assume the number is astronomical.
11 Ways to Find New Money for College
1) Financial Aid
2) Search for Great Financial Aid Packages
3) Look for Merit Cash
4) Read the College's Strategic Plans
5) Check Out Other Time Zones
6) Re-think Reach Schools
7) Play the Gender Card
8) Avoid Lending Gimmicks
9) Borrow From the No-Names
10) Play Sports at Small Schools
11) Appeal the Award
Ways to Reduce Cost by Taking Courses:
- Take Advance Placement AP courses in high school
- Attend community college for 2 years and then transfer
- Take CLEP courses
Ways to Save and Find Money for College
Consumer Tips to Save Money At College:
1) Be gentle with your books so they have a higher re-sale value.
2) Watch your cell phone bill
3) Don't pay full sticker price for college. According to the College Board the typical private school discounts tuition by 33.5%. Even public universities are offering a 14.7% discount. The Golden Rule - if you don't ask then you won't get the discount.
Facts About College Financial Aid
A Disturbing Trend
Some colleges are beginning to completely do away with merit aid. The Wall Street Journal reported on September 2, 2009 that the University of Texas is dropping out of the National Merit Scholarship Program. Texas had been second only to Harvard for the number of merit scholars enrolled. The university announced that all aid will be focused only on needs-based financial assistance as a result of the economic downtown. These type of school policies can leave middle-income families left hanging out on a limb unless they "Plan Smart for College"!
Do You Know Your Expected Family Contribution?
The U.S. Department of Education defines the EFC or Expected Family Contribution as the number that is used to determine your eligibility for federal student aid. The EFC is not the amount of money that your family must provide. Rather, you should think of the EFC as an index that colleges use to determine how much financial aid you would receive if you were to attend their school.
What is Needs Analysis?
This is the process of analyzing a student's financial need. It focuses on determining how much that particular family can reasonably be expected to contribute toward the education costs.
Our "Plan Smart for College" review will show your expected Financial Aid and
how you can best pay for each and every college you apply to!
Types of Grants or "Free" Money
Off all the aid available to students, the breakdown has been approximately as follows: loans work-study 58%, scholarships 2%, and grants 40%. Therefore, grants give students by far the best opportunity to obtain college money that will not have to be re-paid.
The Most Common Grants
1) Federal Pell Grants
2) Federal Supplemental Educational Opportunity Grants (FSEOG)
3) Academic Competiveness Grant (ACG)
4) National Science and Mathematics Access to Retain Talent Grants (National SMART Grant)
5) Teacher Education Assistance for College and Higher Education Grant (TEACH Grant)
6) State Grants
7) Institutional Grants
Federal Student Loans
■ Stafford Loans have low, fixed interest rates but lower borrowing limits, so students often need to find funding from other sources to meet their needs. They come in two forms:
Subsidized. No interest accrues on subsidized Stafford Loans while the student is enrolled, but the student must qualify by demonstrating financial need through the FAFSA.Unsubsidized. Interest does accrue on unsubsidized Stafford Loans while the student is enrolled, but nearly every student is able to borrow through the Stafford program regardless of need.■ Perkins Loans are obtained directly through the school, and have very limited availability. They have low, fixed interest rates but lower borrowing limits, so students often need to find funding from other sources to meet their needs.
■ PLUS (Parent Loan for Undergraduate Students) are federal student loans for parents of undergraduate students. PLUS loans have a fixed interest rate and higher borrowing limits than other federal loans.
■ Graduate PLUS Loans are federal student loans for Graduate or Professional Program Students that also have a fixed interest rate and higher borrowing limits than other federal loans. Grad PLUS loans are meant to supplement Stafford Loans. Make sure to borrow the maximum in Stafford Loans before using Grad PLUS.
Types of Federal Loans
Breakdown of College Financial Assistance
Money for college is not going to fall from the sky. "Plan Smart for College" to make sure you get your full share of available funds.
Loans 41%
Federal Loans 41%
41%Grants 49%
Institutional Grants 21%
21%Federal Grants 14%
14%Private & Employer Grants 7%
State Grants 7%
Other 10%
Educational Tax Benefits 6%
Work Study 1%
1%Other Federal Programs 3%
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* Personal and Private Loans are not included; it is nearly impossible to track how much of this type of borrowed money is used for college.
