Student Loan Update + Wedding News

I looked at the date on my last blog entry, and can’t believe it’s been so long since I’ve written anything. So many things have been happening…

On a personal note, the most important thing that’s happened to me is that my son Chris got married. It was a beautiful wedding and my son and his new wife Nicole are very happy. Here’s a photo of the lovely couple.

Nicole and Chris

In addition to my son’s wedding, I’ve been writing two ebooks on financial aid for students, as well as working on some other projects for Christian College Parents. The writing is going well, but it hasn’t left much time for other things, like my blog!

Several things over the last few weeks have caught my attention, however, and I wanted to share them with you.

FIRST THE GOOD NEWS:

President Bush has signed legislation to help parents and college students with their student loans.

HIGHLIGHTS of the College Cost Reduction and Access Act:

· Monies received by institutions from selling their student loans must be used to provide more loans for students

· Temporarily removes medical bill payment delinquencies up to 180 days as a reason to reject parent applying for PLUS loans for their children’s tuition

· New subsidized Stafford loans interest rate dropped to 6%

And that’s just the beginning!

· The new maximum Pell Grant scholarship is now $4,731, up $490 from last year. This is the first in a series of increases to eventually raise the grant by $1090 by 2012.

· The interest rates for unconsolidated student loans taken out before July 1, 2006 has now dropped to 4.21 percent. You can get a fixed rate of 4.25 percent and combine all your student loans into one payment by getting a consolidation loan now. (Those loans taken out after July 1, 2006 won’t be eligible for this rate because they are at a fixed rate of 6.8 percent.)

· Even if your local bank has stopped issuing consolidation loans, you can still get one through the federal government’s Direct Loan program.

THE NOT-SO-GOOD NEWS:

Although government undergraduate student loans should be available to people who have filled out the FAFSA and qualify, private loans and loans through the Parent Loan for Undergraduate Students (PLUS), available to parents and graduate students are harder to come by.

Why is that?

· PLUS loans require a credit check, something the undergraduate student loans through government programs do not. Higher credit scores are required for these loans as a result of the subprime mortgage crisis.

· Credit score requirements for private loans will be even higher since they are not guaranteed by the federal government.

· Lenders make more money on loans for four or more years of college than they make on loans for two years of college.

This means that people with less than wonderful credit scores, low to moderate income, and/or plan to attend trade schools or community colleges will be the ones that have a harder time paying for college.

These are the very people who need the most help. If we want an educated citizenry with the knowledge and skills needed in today’s world, we need to make education easier to get, not harder.

If you are still trying to figure out how to finance this fall’s college education, here are some things to try:

· Contact your financial aid office. If you have not filled out the FAFSA, ask them if your child could still get government aid, if you did fill it out now.

· Ask the financial aid office if any scholarships or grants have become available that your child might qualify for.

· Ask if your child could get in the work/study program.

· Ask them if you could pay with an installment program over several months.

· PRAY

I don’t guarantee that any of those options will result in new funding, but it doesn’t hurt to ask. You just might be pleasantly surprised.

What about you?

Have you been affected by the student loan crunch? If so, please leave me feedback on how you’re coping with the situation.

Blessings,

Bonnie

Student loans-good and bad news

Recently I read two very different articles about student loans. The first one was all about the bad news concerning student loans and the second one was all about the good news. I sure was glad to read the second one!

BAD NEWS-

First I read a Newsday article by Carrie Mason-Draffen that appeared in The Houston Chronicle entitled Student loan market pinched. It said that the “subprime mortgage meltdown and the ensuing credit-market crunch have slowed lending and cooled investor interest in securities, including those backed by student loans.”

MORE BAD NEWS-

The article went on to say “In addition, the federal government has cut billions of dollars in subsidies to lenders who make federally guaranteed student loans.” According to the article, this makes lenders less likely to offer the federally guaranteed loans.

You wouldn’t think that there would be any good news after that, would you?

GOOD NEWS-

However, an article written by Stacy Teicher Khadaroo for The Christian Science Monitor, called Amid loan worries, a silver lining for students, states that the credit crunch in the private sector will push some students to apply for the federal loans with interest rates that can be half that of the private loans. The article also said that “Almost half of college students fail to collect all the federal loans – fixed at 6.8 percent – that they are eligible to receive.” In other words, because of the publicity that the credit crunch is receiving, students and their parents are finding out about the federal loans for which they qualify and saving themselves a lot of money in interest. WHOOPEE! That’s what I’ve been talking about!

So what about the problem regarding the federal loans?

MORE GOOD NEWS AND SOME BAD NEWS

The good news, according to the same article, is that, the federal loan system has “’impressive backstops…to make sure there’s loan availability,’” according to Robert Shireman, executive director of the Project on Student Debt in Berkeley, California.

However, it seems that these backstops are not completely ready to be used, if it becomes necessary. The story goes on to say that “Congressional education committees have urged Secretary of Education Margaret Spellings to make sure those ‘backstops’ are ready if needed. Under a lender-of-last-resort provision, 35 guaranty agencies would be obligated to serve as lenders if any problem arose. But that’s never been implemented before, and requires work to be made operational.”

EVEN MORE GOOD NEWS-

“Financial aid officers are eager to help students sort through the confusing news,” says the Christian Science Monitor article (emphasis mine). See that? “Financial aid officers are eager to help.” When approached the right way, most financial aid officers are eager to find a way that all accepted students can go to their colleges. Unfortunately, some parents start thinking that the financial aid officers are their opponents, especially if their students don’t get the financial aid packages that they wanted. I think this is a very harmful attitude, because, after all, financial aid officers are just people doing their jobs, limited by the resources they are given by their colleges.

As Christians, we always want to apply the Golden Rule when we interact with other people. You and I both know this isn’t always easy, especially when a big stressor, like money, is involved. However, I’ve found that using the Golden Rule will also yield better results, all other things being equal.

Not that I always manage to do this, but I do try. Right now I’ve got someone I need to apologize to because I didn’t treat her as I would want to be treated, because she didn’t treat me the way I wanted to be treated. And I was big time stressed at the time. I know that’s not a legitimate excuse, but I’m human.

God’s been working on me about this for a couple of days. First, my Beth Moore Bible Study homework included the verse: “Let your conversation be always full of grace, seasoned with salt, so that you know how to answer everyone.” (Colossians 4:6)

Then today at church the pastor talked about forgiving people, even if you think they were wrong and you were right. Boy, that struck home with me. So I decided that I not only had to forgive her, but that I also needed to apologize for being less than Christian in my reaction to her.

BACK TO STUDENT LOANS-

So there you have the good news and the bad news about the state of student loans today. I think the good news somewhat negates the bad news. However, with bad news being what sells papers, it’s often hard to find the good news of a situation. However, I’ll always give you the good news with the bad news, if I possibly can. In addition to the things I’ve learned through experience, and the eighteen months I spent doing research on the issues facing Christian high school and college students and their parents, I continue to monitor the news regarding these issues.

QUESTION FOR YOU-

Is anyone facing situations that have been affected by what’s going on with student loans? Please add a comment. Sharing could help others facing a similar situation, especially if you’ve found a good solution.

NEW EBOOK COMING-

I apologize for not blogging much lately. I’ve been working on an ebook, (tentatively-titled “The 10 Things You Absolutely Have to Know about Financial Aid) , and it’s taken up some of my blogging time. I’ll let you know when it’s ready (soon), and how you can get a copy.

Blessings,

Bonnie

Increase Your College Financial Aid

Last time I told you I’d give you some ethical ways of increasing college financial aid and decreasing the EFC (Expected Family Contribution). I’ve been researching this and there are ways that I feel a Christian can do this without feeling that they are doing something unethical. This is somewhat like tax planning, which can also go both ways – some “tax planning” borders on illegal and can be definitely unethical. As Christians we want to steer clear of anything like that.

Since the FAFSA (Free Application for Federal Student Aid) is a snapshot of a certain day in terms of assets, you can control the assets somewhat. If you are planning on making a large purchase in the near future and you’ve been saving some cash for this, you might want to go ahead and buy that big purchase so the cash is gone. I wouldn’t say to go out and buy things just so you have less cash, but buying something a little earlier than you planned is another thing entirely.

If you’re going to owe the IRS, one of the things you could do is pay your taxes before you fill out the FAFSA. You need to do your taxes, or at least estimate them, before filling out the FAFSA, so you’ll know if you owe taxes. I know it’s normal to wait to pay until you absolutely have to, but in this instance, it might be better to go ahead and pay, if you have the cash. If you’re going to have to put your tax payment, or anything else, on a credit card or loan, then it won’t help with the EFC, because they don’t take debt into consideration.

While, it would be financially positive for the EFC to pay the taxes before you fill out the FAFSA, don't let that be a reason that you put off completing the FAFSA. You don't want to miss a deadline or miss college-funded financial aid because they've run out. (See last blog.)

If you’re looking at long-term savings, then consider that a larger percentage of your child's assets than your assets will be included in the EFC . If you’re wondering whether to put something in your name or your child’s, putting it in your name will save you money, as far as the EFC is concerned. Of course, if it’s already in your child’s name, I don’t think you can legally move it.

Which brings me to this important note: I’m not an accountant, a financial planner or a lawyer, so before you do anything that might impact you financially or legally, you should consult a professional.

I hope everyone is getting their FAFSA’s done without a lot of hair-tearing. If you have questions about federal financial aid or filling out the FAFSA, you can call toll-free 1-800-4-FED-AID (1-800-433-3243) or go to Completing the FAFSA, a 68-page ebook, prepared by the federal government, with lots of answers to your questions.

Blessings,

Bonnie

Three College Financial Aid Secrets

Last blog I shared FINANCIAL AID SECRET #1 - You can appeal the amount and type of financial aid, even if a college hasn’t awarded you any.

In this blog I will tell you how to appeal your student's financial aid package(s). I will also share two more financial aid secrets.

Appealing Financial Aid Packages

If you believe that the FAFSA (Free Application for Federal Student Aid) doesn’t reflect your correct financial situation the first thing you need to do is include a letter with each college application. (The colleges probably won’t pay any attention to the letter when they are putting together your first financial aid offer, but you can refer to it when you appeal the financial aid packages.)

One reason the FAFSA might not reflect your financial situation could be large medical bills or some other expense that isn’t part of the FAFSA. Or your job situation might have changed since the last year, which is what the FAFSA is based upon. The colleges should take these things into account when they are putting together a financial aid package, but you can’t assume that the first financial aid package reflects these factors.

Appealing your financial aid package will mean that you will have more paperwork to do. You will have to send the colleges the evidence of whatever you’re claiming makes it impossible to pay the EFC (Expected Family Contribution). You may have to send them copies of your tax return too. And you will have to do this for each college you are considering.

When I was appealing my daughter Kat’s financial aid package, I sent huge packages full of copies of doctor bills and prescription receipts as well as tax returns to four colleges. By the time my daughter was applying to colleges my husband was ill with ALS, so we didn’t have an EFC of $20,000 to challenge, as we did with my son's first EFC. However, appealing Kat's financial aid packages did make a difference, especially in the kind of aid she received. (Grants vs loans) One college took the information we gave them and actually had the Federal Aid Office change our SAR (Student Aid Report) and EFC. Most deal with it internally.

Even if you don’t have huge medical bills or have lost your job, you may still find the EFC is more than you can afford. Most people in this situation aren’t poor, but they don’t have the extra funds that the EFC assumes. They are middle-class, hardworking people who have too much money to be considered economically disadvantaged, but not enough money to be able to write out a check for many thousands of dollars.

So challenge your EFC if it’s way out of line with what you can really afford. It doesn’t cost you more than time and postage, but it could make a difference of thousands of dollars in financial aid. It could also make a difference in whether your student receives scholarships and grants instead of loans.

FINANCIAL AID SECRET #2 - Be sure you get this information to them by the deadlines that they give you. In many cases being late is the same as not doing it at all.

FINANCIAL AID SECRET #3 - The earlier you get all financial aid information done, including the FAFSA, the better. The same goes for the college applicatons, because the financial aid that comes from each individual college (as opposed to state or federal aid) is given until it runs out. If you are one of the last ones to apply and get accepted, you may not get as much aid as you would have if you'd applied and gotten accepted earlier.

Blessings,
Bonnie

Welcome to Christian College Parents

Hi! I'm Bonnie McGrane, CEO and one of the founders of Christian College Parents, an organization for Christian parents of high school and college students.

Through this blog I plan to address the concerns and issues of Christian parents who are helping their children go through the arduous process of selecting, getting admitted to and finding funding for the special college that is just right for them.

When I was a high school student back in the late 60's the process was nowhere near as difficult. I applied to one college -- Vanderbilt University -- early decision and got admitted. I hate to admit it, but it was easier to get accepted to the college of your choice back then, because fewer people went to college. Now a college degree has become what a high school degree was then -- absolutely necessary to get a decent job. The cost of Vanderbilt has increased approximately 2000% since my freshman year. When I graduated I had a loan to repay, but the payments were only about $17/month. Now I read about students who graduate $100,000+ in debt. All of these factors makes the process a lot harder and a lot scarier to navigate.

That's where Christian College Parents can help. Our goal is to make life easier for parents who are helping their students with the whole big selection, application, and funding college process. One of the ways I'll be doing that is through information, but I also will be offering Christian support during this hair-yanking-out time.

And I'll be going through the process for the third time. My daughter Kat is transferring next Fall so I'll be reporting on our journey through the maze.

What are your biggest concerns and questions about the process? Let me know and I'll address them in future blogs.

Blessings,
Bonnie