April 22, 2015 By

Why “Get scholarships!” is bad advice

Student-LoansWe had a great Twitter chat today about preparing financially for college, hosted by Experian. (You’ll find the tweets using #creditchat.)

I was distressed, though, that many believe people should look for scholarships as a way to reduce college costs. That’s not how it usually works.

If you have financial need, colleges typically deduct the amount of so-called “outside” scholarships from the free aid such as grants and their own scholarships that they otherwise would give you. Schools don’t have to reduce the loan portion of your package unless your outside scholarships exceed the grants and other free aid they were planning to bestow.

They’re not just being mean. It’s what federal financial aid rules require, according to FinAid. If you don’t have financial need, outside scholarships could reduce the merit aid a school would otherwise give you.

Does that mean you shouldn’t search and compete for outside scholarships? No. But it’s certainly not a reliable solution to the college affordability problem.

A better approach for students and families is to look for generous schools. Colleges themselves are the greatest source of scholarships, but most don’t meet 100 percent of their students’ financial need. Some meet 70 percent or less. If you want a better deal, look for schools that consistently meet 90 percent or more of their students’ need. College Board and College Data are among the sites that can help you find this information.

 

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January 15, 2015 By

What you need to know about paying for college

My recent Reuters columns have focused on some of the most common issues families face in trying to pay for college, from getting the most financial aid to how to cope when you haven’t saved enough. Read on, and please share these columns with people you know who might benefit.

Increase economic mobility by busting college myths

One way to improve economic mobility in the United States may be to fix the misconceptions that high-achieving, low-income teenagers often have about college.

Avoid easy-to-make mistakes on your financial aid application

One of the worst mistakes you can make with college financial aid is simply failing to file the all-important Free Application for Federal Student Aid. But there are plenty of other ways to mess up this application.

Last-minute moves to boost financial aid

Financial aid filing season starts Jan. 1. It may be too late to rearrange your finances this year, but here are some ideas for maximizing what you can get in future years. First, though, make sure your hopes are realistic.

What to do if you have not saved enough for college

Soaring college costs and stagnant incomes mean many families will not be able to save enough to pay for a typical undergraduate education. But there are still ways to find a college degree you can afford. The good news is that most people will pay significantly less than the sticker prices.

Busting the myths of haggling for college aid

My daughter learned this little ditty in preschool: “You get what you get, and you don’t get upset.” Parents who are convinced they can haggle their way to a better financial aid package might want to learn it, too.

No need for irrational fears of student loans

The next generation of college students has heard the message loud and clear about the perils of taking on too much student loan debt – so much so that many are unwilling to go into debt at all in order to attend college. The drawback to this wariness is that most of those who do not borrow are unlikely to get four-year degrees.

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November 18, 2014 By

What will you pay for college? Probably more than you think

Zemanta Related Posts ThumbnailI recently used the College Board’s “estimated family contribution” calculator to see how much we’ll be expected to pay when our (currently pre-teen) daughter heads off to college.

The answer? Roughly half our annual incomes. Each year.

No colleges actually charge the amount we’d theoretically be expected to pay. So our out-of-pocket costs would be somewhat less. But the exercise drives home how important it is to run these numbers, early and often, if you want a college education for your kids that doesn’t bankrupt you, and them.

Because I know how the formulas work, I was able to tweak some numbers to lower our EFC. Moving more money into retirement accounts and using savings to pay down the mortgage helped a lot with the federal formula, and helped some with the institutional formula (which, unlike the federal, counts home equity). We still wouldn’t get any need-based help from most colleges but could get some breaks if our daughter gets into one of the most-expensive elite schools. (The total cost of the average public college is $20,000 to $25,000; $40,000 for privates and $60,000 for elites.)

If we didn’t have a fat college savings account, we likely would steer our daughter toward public schools or privates willing to offer merit scholarships to reduce the total cost. It’s much better to start a college search knowing what you can afford than to have to tell your kid, dream school acceptance letter in her hand, that you can’t send her there. Or worse, that you will–and then never be able to retire.

For more about how financial aid formulas work, read my Reuters column this week: “A guide to figuring out the real cost of college.”

 

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October 7, 2014 By

Most colleges worry they won’t have enough students

Zemanta Related Posts ThumbnailGetting into an Ivy League school is basically a lottery for smart kids. There are no guarantees. Winning admission at many highly-regarded public universities is easier, but only by comparison. UCLA accepts about a quarter of its applicants, instead of the single digit acceptance rate at Harvard or Yale.

Look outside that privileged circle of “name brand,” well-known schools, though, and it’s a whole different universe. Most colleges are worried about getting enough students to enroll, not about how many they can turn away. The competition is particularly tough for small- to medium-sized private colleges that don’t have fat endowments. You can read “College is a now a buyer’s market,” my Reuters column this week, for more.

Here’s another fact you may have missed when reading breathless media accounts of “how hard it is to get into college”: where you go matters a lot less than your experience while you’re there. Elite schools apparently offer no advantage it comes to success in life.

I attended a small private college in the Pacific Northwest: Pacific Lutheran University. My alma mater recently named me one of its distinguished alumni. I was honored to be part of this impressive group, which included best-selling author Marissa Meyer and Air Force flight nurse/helicopter pilot Ed Hrivnak, who wrote the book “Wounded” about his experiences in Iraq and who was one of the first responders to the Oso landslide disaster in Washington state.

Research indicates a good reason for our success after school was the relationships we had with our professors. They weren’t far away creatures at the bottom of some cavernous lecture hall. They were accessible, they taught in small classrooms and they cared about our progress.

It’s only in the past few years that I’ve fully appreciated my college experience. For years I wondered if I should have attended a name-brand school. (I was accepted as a transfer student to Stanford, but opted not to go, since the financial aid office offered loans rather than the scholarships and grants I got at PLU.) Now I’m really glad I studied where I did.

So my advice to families contemplating college: open your eyes, and look beyond the name brands. There are some real gems out there that will be happy to have your kids and that will give them what they need to succeed.

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September 16, 2014 By

Regulators sue for-profit college chain

DrowningCorinthian Colleges–which includes the Everest, Heald and WyoTech schools–has just been sued by the Consumer Financial Protection Bureau for what regulators call its “predatory lending scheme.”

The CFPB alleges that the for-profit college chain exaggerated students’ job prospects to get them to take out private loans to cover its schools’ high tuition costs. The bureau says Corinthian then used illegal debt collection tactics “to strong-arm students into paying back those loans while still in school.”

The Bureaus wants the courts to halt these practices and grant relief to people who have taken out more than $500 million in private student loans.

As I wrote in my Reuters column “What to do when your college shuts down,” Corinthian is in the process of closing or selling its schools as part of an agreement with the U.S. Department of Education. People who have federal student loans have a shot at getting their debt discharged when a school closes, but those with private student loans are often stuck with the debt, even if they get no value from the education.

If you or anyone you know attended a Corinthian school, getting educated about your options is key. (The CFPB posted information for current and former students here.) So is alerting the CFPB if you feel you were deceived about the value of your education or your career prospects. You can file a complaint here.

 

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June 25, 2014 By

Gamers helping gamers…get into college

Zemanta Related Posts ThumbnailSamantha Castillo drove her family a bit crazy with her love for video games–and her criticisms of the ones that could be better. She loved educational games when she was little, for example, but found the games for older kids could be pretty dull.

So she jumped at the chance to learn game design from USC’s Game Innovation Lab when she was in high school. In return, the lab wanted high schoolers’ help in designing games to make it easier for first-generation students to apply for college.

“First generation” students are those whose parents haven’t gone to college. The knowledge gap between those parents, and the ones with college degrees, can be huge. Kids without parents to guide them through the application and financial aid processes are less likely to attend college, and less likely to get college degrees when they do. A big problem is “under-matching,” when the student settles for a much less challenging or selective school than the ones for which she’s qualified.

That could have been Castillo, who lives in a neighborhood where just getting through high school is considered an accomplishment. She had a vague idea that she might go on to community college, but wasn’t sure what that would involve.

So she asked a lot of questions, and helped to research the answers. Just the fact that the game developers listened to her and her opinions gave her more confidence.

Fast forward to today: Castillo is about to graduate USC with a degree in neuroscience. She credits the game lab, and working on its college application games, with the big step up in her ambition and accomplishment.

For more on Castillo, and the games, read my Reuters column this week: “To get into college, play a game or two.”

 

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May 20, 2014 By

Give a money-smart graduation gift

Zemanta Related Posts ThumbnailCash is by far the most popular graduation gift. Among those who gave a grad gift, 56.7% gave cash and 32.1% offered gift cards, according to last year’s National Retail Federation survey. But what if you want to give something a little more creative, a little more personal, and something that will help your grad get the right financial start?

I asked college consultants, personal finance experts and some recent graduates for ideas that would be both welcomed by the recipient and not too hard on the wallet. People on average spent $49 on graduation gifts last year, which won’t exactly buy a round-the-world trip…or even a decent e-reader. But that amount can buy things like experiences (which contribute more to happiness than stuff), a cooking class, a pretty good carry-on bag (the better to avoid checked bag fees) and several other ideas. For more, read my Reuters column this week, “Financially smart gifts for the new grad.”

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May 12, 2014 By

Money rules of thumb: College savings edition

Zemanta Related Posts ThumbnailA college degree today is what a high school diploma was 60 years ago, a college consultant told me. Meaning: the bare minimum for staying in the middle class.

There will be exceptions, of course, but your kid is unlikely to be one of them. So here, in my ongoing “rules of thumb” series (previous editions include retirement and cars), are a few guidelines about saving for college:

So here, in my continuing “Rules of thumb” series, are three guidelines regarding cars: – See more at: http://asklizweston.com/page/3/#sthash.BwXsoYOC.dpuf

Save yourself first. No one’s going to lend you money for retirement, so that has to remain your top priority–hard as that is for parents to hear. Think of it this way: by saving for yourself first, you’re reducing the odds that you’ll have to move in with your kid in old age. Trust me, she’ll appreciate that someday.

But save something. Even if it’s just $25 or $50 a month to start, putting something away for college helps solidify it as a goal–and anything you can save will reduce your child’s future debt load (since most financial aid is actually loans, not grants or scholarships).

Use a good 529 plan. Money saved in 529s is tax free when used for college education costs, and most of these state-run plans are pretty good these days, thanks to better investment options and lower fees. Morningstar runs an annual list of the best and worst plans.

The more you make, the more you’re expected to save. Federal financial aid formulas aren’t adjusted for regional differences in cost of living. There’s no exception made for families that have experienced hard financial times in the past. The higher your income, the more the formula expects you will have saved…to the point where someone with an income over $100,000 could be expected to fork over a third of it for college costs. There are ways to reduce college costs, but knowing the reality of financial aid formulas will help you to understand the maxim that “if you CAN save for college, you probably SHOULD.”

 

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April 28, 2014 By

Can you submit too many college applications?

Zemanta Related Posts ThumbnailI only applied to one college, and I opted for early decision. There’s no way I’ll let my daughter do the same thing.

Recognizing how much the world has changed is key to getting our kids launched right. These days, a half dozen applications may not be enough, as I write in this week’s Reuters column, “How many college applications is too many?” College consultants say there’s a rising level of unpredictability to admissions, which means you may want more than two safety schools, two matches and two reaches.

One issue I didn’t get into for lack of space was the public vs. private school aspect. Private school students typically have access to counselors who are essentially dedicated to getting them into good colleges. These counselors usually stay up to date not only on colleges’ statistics but also on their changing needs (that is, what they’ll be recruiting for next year). Private schools often subscribe to services like Naviance, which help students see exactly where they stand relative to the stats (GPA, class rank, test scores) of a college’s existing student body. With intel like that, private school students (and families who hire private consultants who offer the same services) can get a pretty good idea at where they have a good shot at getting in and where they don’t.

Public school students, by contrast, may be assigned a counselor who has 400 other kids in her caseload plus duties that have nothing to do with college admissions. Families may be on their own in trying to figure out where to apply.

The good news is that most colleges still accept most applicants–the Ivies and other highly selective colleges are a small fraction of the total number of higher learning institutions in the U.S. Also, there are sites such as Lynn O’Shaughnessy’s The College Solution and CollegeData.com to help sort through the options.

Still, if you’re not getting help in winnowing down your application list, it can make sense to err on the side of applying to too many colleges rather than too few.

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April 21, 2014 By

Does your kid need expensive SAT prep?

iStock_000014485809SmallBack when dinosaurs roamed the earth, I bought a fat paperback test prep book to help me study for the SAT (which, back then, was still known as the Scholarship Aptitude Test). I didn’t buy the book until after I’d already taking the SAT the first time. After studying, I took the test again–and did worse.

Not that I suffered for this experiment. I scored high enough to become a National Merit Scholar, which meant big bucks for college.

I recently asked a friend my age who was also a National Merit Scholar how he prepared for the test. He vaguely remembered being taught a few test-taking strategies in school. But that’s it.

The world’s changed in the past few decades. College is a lot more expensive and elite schools are a lot more competitive. High scores give kids an edge not just for admission but for all-important merit scholarships. Which is why SAT test prep is pretty much a given among upper-income parents. Even less affluent parents are spending hundreds or even thousands of dollars trying to boost their kids’ scores, as I write in my Reuters column this week, “Resist the urge to go overboard with test prep.” Not investing in test prep feels like a gamble that could leave your kid trampled in the dust.

These parents aren’t foolish or deluded. Scores matter, and most teenagers could use some help. My column mentions some free resources, and I highly recommend reading Debbie Stier’s book, “The Perfect Score Project: Uncovering the Secrets of the SAT.” Even if you can’t afford private tutors, you can do a lot to help your get your child ready for the test.

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