10 $$$ Ideas for POCS (Parents of College-bound Students)

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Please welcome today’s special guest contributor, Wendy David-Gaines, blogger and author for Parents of College-bound Students (POCS).  Wendy and I are making a joint effort to help decrease student loan debt for parents and students relying on loans to finance their education.  Visit her website to read my article: 7 Tips to Help Your Child Decrease Loan Debt BEFORE Graduation. Enjoy!

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Status quo ideas

Both colleges and the government have sought to lower college costs for families by treating higher education as big business selling an expensive product which becomes a large consumer purchase. Colleges offer varying discounts to tuition in the form of institutional aid that reduce the cost of attendance (COA) or sticker price on a case-by-case basis. Federal and state governments developed financial aid programs to help eligible students pay their college bills.

Neither of these ways has been successful in making college more affordable. Costs continue to rise or have already surpassed a financial safety zone for students at all income levels. A tuition discount of $10,000 may seem generous but does not go far if faced with a $50,000 annual bill. Student and parent loans are considered part of financial aid. They help the bill get paid today but can add thousands of dollars in interest and fees to the principal that will have to be paid back.

Think tank ideas

A think tank recently addressed the problem of PLUS loans for parents of undergraduate students. Parent PLUS loan seen as parent trap describes the key recommendations for Parent PLUS loans reforms.

Higher education should enhance futures, not endanger them financially. Students need access to college but their college dreams shouldn’t put parents at financial risk.

The combined think tank report The Parent Trap and event discussing college affordability, inspired me to add my ten college affordability options for students.

Developing problems

Interest rates for federal student and parent loans are now tied to the market place so rates will rise as the economy improves, whether or not borrowers’ financial situation improves. Education debt follows students throughout their lives. For example, the government can seek repayment with social security benefits.

The federal government is developing a new college rating system with the hope of tying the rating to distribution of financial aid. This may hurt public colleges with lower graduation rates and higher loan default rates.

Fresh ideas

Families paying high college costs and loading on debt should not be the only answer to achieve necessary higher education and attain a financially secure future. Some new thinking for parents, students and public policy is a must to solve the college cost problem.

Here are my 10 fresh ideas for families to do now, plan for the future, and ask others to step it up.

1. Go sideways Many colleges collaborate with other schools to form a consortium. This allows students extra perks like taking courses at a more expensive college while paying the lower tuition at the school they attend. The practice of cross-college collaboration is growing, Inside Higher ED recently reported as colleges with tight budgets seek to share resources without merging. Parents may be familiar with the practice when multiple local schools do something similar with academic and extracurricular programs or bus service contracts.

2. Be savvy If colleges and governments treat higher education as a business purchase, so should students and their parents. Take a cue from savvy house and car (both of these costs also have hugely escalated) shoppers and turn down offers of admission from schools that don’t make it affordable to attend. All institutions need to fill their classrooms and consumers can and do influence product sales. Appeal too low financial aid awards: demonstrate desire to attend but make it clear attendance is impossible without affordability.

3. Go where you are wanted Best college/student fit means the place where students will thrive and receive best chance to achieve success. The most overlooked criteria is the degree in which the college wants the student. Schools show their appreciation with large institutional financial aid awards, honors programs, class choice priority, and special academic, cultural, research, internship, and employment opportunities.

4. Relocate States often substantially reduce public college tuition costs for residents. The catch is state requirements for residency must be met and student residence usually depends on parent state of residence. Parents wanting to provide their child a choice to attend a great public college in another state should begin researching a move to meet state residency requirements that could save thousands of college dollars.

5. Start early Parents can’t expect their child to do their best if he is not invested in the college process. Students should know college costs and their expected part in paying for their higher education. They need a strong work ethic for studies and a job. This article shows two middle-school students began a business with the goal of paying for college. They are staying motivated, making some extra spending money, gaining valuable skills, and adding to their college application activities resume.

6. Make it free Public education is not a new concept; it just ends at the12th grade. Yet a college degree is now valued the way a high school diploma used to be. President Obama has said it, economists have predicted it and the marketplace is demonstrating it. So urge your representatives to redirect a large portion of current financial aid to cover the cost of public community college tuition for two years. All students who seek an Associates Degree would get one free and the price could be easily covered according to an article in The Atlantic. The figures from the think tank and Department of Education data prove the math works.

7. Support new tax deductions There are some limited education tax deductions including provisions for interest on loans. What about a deduction for loan principal paid for college degrees? Many states allow a tax deduction for contributions to state-sponsored 529 college savings plans. In Nebraska, a bill was recently introduced to deduct principal paid on loans used to obtain a graduate degree for the first 10 years after a resident had earned the degree.

8. Create new civilian service option The government picks up the higher education tab in exchange for military service, trades community service for payment of student loans under programs like Americorp, and forgives student loans for working in certain professions like nursing, teaching, public service under specific conditions. Urge the government to develop a new but similar program with a broader civilian service commitment that would build back a strong and eager work force.

9. Ask others Encourage your child to find businesses, organizations and groups that want to invest in her. Take a lesson from new fund-raising sites and offer projects in exchange for donations to help pay for college. This also will build her college application resume.

10. Refuse loans Send a strong message to representatives that your family is not interested in financial aid that offers loans with high interest rates and fees. These things are not true aid but methods of paying. Interest and fees can add thousands to the cost of borrowing during repayment. Soon Congress will be reviewing the higher education law so let your voice be heard now.

Before the perfect storm of increasing college costs destroys your family’s finances, consider my $$$ ideas for POCS (Parents of College/college-bound Students) and head over for Jenny’s super tips to save you more!!!

Wendy David-Gaines, aka POCSmom, provides information and insights about the parent role in the college process to make it less stressful and more fun for the college-bound and their families. She is founder of POCSmom.com, author of Parents Of College Students survival stories, and Long Island mother of two children who have graduated from college with self-supporting jobs. She is the Long Island College Prep Examiner for examiner.com.

3 Steps during Student Loan Application Season

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January is the month where student loan applications become due.  Nearly eighty percent of law students rely on student loans to finance their education.  At large, the student loan debt of about 40 million Americans comes to around $30,000 per student, and we know that the debt load for law students is much, much more.

Making the decision to borrow might seem easy.  All you do is ask, it’s probably going to be approved, you attend classes, and about 6 months after graduation your terms kick in and your jaw hits the ground.  How did I end up owing so much?  Where did all this money go?  Borrowing should be far from an easy choice.  Take these three steps to help you research and create the best financial aid package for you.

1.      Search for as many scholarship opportunities as possible.  Remember to look in unique places for scholarships.  Go to your employer or the employers of friends or family who may offer scholarships or reimbursement plans.  Look to community organizations, fraternal orders, or bar associations.  Check with your school, financial aid office or with career counselors for additional scholarship opportunities.  Organize what you find by deadlines and make a goal to apply to a certain number of scholarships each week.

2.      Decrease how much you borrow.  Too often students take out more loans than they actually need.  Money is spent on electronics or parties rather than on education.  Do you really want to pay for last night’s kegger for thirty years?  Probably not.  Learn to budget and live for less.  Take measures to decrease your student debt prior to graduation.  Make an effort to negotiate your tuition and eliminate the charges the school includes into your tuition that you aren’t using (i.e. computer lab, gym fee, athletic tickets).  Take on part-time work (if it won’t cause your grades to suffer) to supplement your income.

3.      Research the loan market.  Private v. Federal loans?  What will work best for you?  As you may know, there were many changes made to the interest rates of federal student loans this past summer.  What your loan terms are this time will be different than loans you may have borrowed last year or earlier.  Be sure to read and understand the terms of your loan (which is well described in Chapter 5 of my book).  You might be able to find a private loan that has better rates, although the government often gives better repayment options – just be sure to weigh what will be better for you long-term.  Here is a helpful article when considering private loans.  If you do take out private loans, make sure you have a good credit score so that you can get the best interest rate as possible.

It may be a lot of work, but it’s definitely worth the time to prevent a lifetime of financial stress and hardship in the future.

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A New Year, A New You: 5 Resolutions for Law Students

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The clock has struck midnight, the crystal ball has dropped in Times Square, and the corks of champagne bottles have popped – it’s 2014!  It’s also that time of year for New Year’s resolutions.  Lose weight, quit smoking, try something new are just some of the more common resolutions, and most people ditch those plans by February.  The reason many New Year’s resolutions fail is because people tend to set too many and/or unattainable goals.  This can be overwhelming.  Avoid losing your gumption by choosing one resolution that is really important to you, creating a plan to reach that goal, and writing it down somewhere that can be a constant reminder. For all you law students out there, here are a few New Year’s resolutions designed just for you and tips on how to sustain them.

When you select your goal, try to make it time-specific, achievable, and measurable.  These are keys to making a successful resolution.  When you create your plan, write out small steps that you can take towards your end goal.  Small accomplishments can give you something to physically cross off, and will motivate you to stay on track as well as boost your morale.  Finally, write your goal and your steps down, and then place it somewhere you will see every day such as on the desktop of your computer, on your fridge or as an alert on your cellphone.

1.      Goal:  Improve class rank by the end of the spring semester. Achieving a high class rank will increase your chances of employment upon graduation.  Example Plan:  Drop extracurricular activities that are stretching you too thin.  Form a study group with those in the top ten percent of your class.  Tweak your study habits (check out Learning Your Learning Style for tips). Do one practice test every other week.   

2.      Goal:  Make Law Review or Moot Court.  Both are competitive, and will help your résumé and increase your job opportunities.  Example Plan:  Talk to whoever is in charge to find out when selections will be made as well as the requirements – this will give you your specific time and some of your steps.  Practice in mock trials or get a research assistant position to fine tune or improve your skills.

3.      Goal:  Pass The Bar.  Whether you’re a 1L or 3L, passing the bar is the ultimate goal to practicing law, and it’s never too early to think about it.  Example Plan:  Look up the state’s admission requirements and deadlines.  Invest in a good bar prep course.  Take courses that are tested – most of your 1L classes cover the MBE and MPRE, but electives may be needed for state-specific essays.  Read 4 Bar Exam Bargains While You’re Still in Law School and 4 Bar Exam Purchases That Got Me Through the Bar to get more ideas as you build your plan.

4.      Goal:  Acquire a scholarship for next year.  Free money will help lessen your financial stress during school and your burden upon graduation.  Example Plan:  Talk to your school’s admission office and career counselors, search online, and check with local and state bar associations to find out about opportunities and requirements.  Take steps to fulfill those requirements.  Determine a certain number of applications to submit each week or month.  Check out New Scholarship Opportunities for Law Students.

5.      Goal:  Create a budget and stick to it for 3 months.  Establishing a 3-month time frame is less overwhelming and you will be less likely to abandon it if you mess up a week or two.  Plus, after doing something for 3 months, it will probably turn into habit.  Example Plan:  Spend like you normally do for a set period (1 week or 1 month) or look at the previous month’s expenses and design your budget.  Pick an area that you can cut back (don’t cut back everything all at once – again, this can make it overwhelming).  Add a new area to cut back each month.  Clip coupons.  Read Barrister on a Budget:  Investing in Law School…without Breaking the Bank for specific budgeting plans and tips.

So, here’s to 2014 – a new year, a new you!  Cheers!

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