Use these tips while you live on campus and even after you transition to the world of work!

10 Cyber-Security Tips to Keep College Students Safe from Identity Theft

Here’s the YouTube Video I did on 10 cyber-security tips to keep college students safe from identity theft . Please watch and share!

Now here’s the script:

It’s a fact that college students are very vulnerable to identity theft. Why? Well, it’s because students have an illusion of safety while living on campus AND a lack of knowledge about how cyber criminals work.
Here are 10 ways to keep your identity AND your wallet safe while you are earning your degree.

Number one: Don’t carry your checkbook or social security card in your purse or backpack. Keep them in a secret place in your dorm room and be sure to always lock your door!

Number two: Don’t use public wifi for anything financial like banking or paying for on-line purchases. If you can’t use secure wifi, use your data plan instead.

Number three: Keep your computer, tablet and phone locked with a password or a biometric key like a thumbprint.

Number four: Cut up or shred any pre-approved credit card offers or un-needed financial papers.

Number five: Avoid plugging into USB charging stations in public places. Identity thieves can alter these outlets with spyware to see everything you type, like user names and passwords. Small, affordable back-up batteries are a safer option for re-charging.

Number Six: Update the virus protection on your computer regularly, and be sure to use strong passwords.

Number Seven: Learn to recognize email phishing scams from internet thieves pretending to be your bank, credit card company, or even your school. Thieves have learned to create very convincing fake emails, right down to the artwork. Never click on links in emails that seem to be from your financial institutions. Always go right to their websites to confirm the information you saw in the email.

Number Eight: Use caution when using debit cards. New chip and pin debit cards are available, but many stores do not have chip readers at their check-out counters. This means that the new debit cards will still have the old-style easy-to-hack magnetic strips on the back for quite a while. So, be aware that you at most danger of having your personal information stolen when you are told to swipe your debit card and enter your pin.
For years hackers have been compromising check-out security by installing nearly invisible magnetic card readers and tiny cameras around pin pads to see what numbers you press. Armed with your PIN and the information on your card’s magnetic strip, thieves can easily make enough purchases to empty your whole bank account. Some security experts advise covering your typing hand with your other hand to keep the spy camera from seeing your fingers on the number pad.

Since debit card security may be weak for some years to come, you’ll want to get a real credit card as soon as you turn 21 and are still a full-time student. Real credit cards have strong consumer protections built in and are NOT linked directly to your bank account. Make sure to always pay off your new credit card in full each month.

Number Nine: Carefully examine your credit card and bank statements. Report discrepancies immediately.

Number Ten: After getting your first real credit card, you should access the most effective way to keep thieves from hurting you financially, even if they have stolen your personal information.

Here’s how: The three big credit bureaus that report on your credit-worthiness to potential lenders or employers, will allow you to lock up or “freeze” your credit records.
With these records frozen, identity thieves cannot steal money from you by opening new credit in your name. Freezing costs from $3-10 dollars at each bureau and only takes about 15 minutes of your time. Even when your credit is frozen, you can use your credit card just as you do normally.

You can temporarily thaw your credit whenever you need to provide access to employers or to take out a new loan. I hope this list will help you stay cyber-safe on campus and even in your life after college. Be careful out there!

College is a good time to establish good credit.

Build Good Credit While in College

Yes! College students CAN build good credit histories and scores while in college!

Check out my YouTube Video first. More info below!

You might think that college students can’t get credit during the traditional four years of college after high school. And therefore, can’t build any credit record at all! Fortunately, there are strategic ways to work around the obstacles and graduate with a healthy credit history and a good credit score.

Parents can be a huge help to their students by teaching them about how credit works in the larger financial picture of a lifetime. Saving for the future and using money wisely in the present can improve one’s ability to borrow money for important purchases like a car, a house or an education. Lending companies need to know that a borrower will pay back the loans in a timely fashion.

After explaining how credit works, parents can help their college student by allowing him or her to ride on the parent’s credit coattails. This may involve co-signing for the student’s first car loan or by allowing the student to be an “authorized user” of a parent’s credit card. Both these credit building techniques involve a “trust and verify” relationship between the parent and the student. By this I mean that the parent must actively monitor the use of credit in each case.

Co-signing for a teenager’s car loan is the same as if the parent bought the car, because the parent stands to have his or her credit severely damaged if the student does not make timely payments. So “trust and verify” may mean parents must check each month that the payment has been made. Yes, a lot of trouble but a meaningful lesson in adult-style responsibility for a college student.

When a parent allows their college student to be an authorized user on a parent credit card there must be an agreement that each purchase must be cleared with the parent in advance. Alternately, there might be a budget for small purchases and only purchases outside of the budget would need to be cleared. Lots of ways to handle “trust and verify” for authorized users.

Another important method to build good credit history is the management of student loan interest that accrues during college. In the case of Federal Unsubsidized student loans, interest starts accruing from the day the loan is disbursed. Most undergrads who borrow for their college education will take out this kind of loan. They can choose to allow the interest to accrue all during college and through the six month grace period after graduation. The day that repayment must start, the accrued interest will be capitalized and added to the total loan amount. Most students allow this capitalization to take place, but smart parents will encourage their students to take this valuable opportunity to build a stellar credit history by paying the accruing interest off monthly as soon as the loan is disbursed. Making the interest payments in a timely fashion will not only look good to the credit bureaus, but will help the student make a seamless transition to actual loan repayment after graduation.

Parents can help their student access his or her credit report from the three big credit reporting agencies for free once a year from AnnualCreditReport.com. Actual credit scores are offered through the credit reporting companies for a small fee. A student can watch how his or her credit score grows each year when credit is properly managed. Ultimately, the parent should help their responsible student take advantage of current law that allows students to get their very own credit cards as soon as they turn 21 and are still in college. After the student has one or two credit cards and understands how responsible use of credit cards can actually build an even better credit record, parents can and should help their student freeze his or her credit at each of the reporting agencies. Freezing credit can greatly reduce damage from identity theft. Frozen credit can be thawed very quickly when it comes time to get a car loan or even to get a mortgage for a house. Credit checks by potential employers and landlords can also be done through credit thawing.

Here are some good links:

http://www.clark.com/credit-freeze-and-thaw-guide?_ga=1.121657539.951237444.1465839166

http://www.creditcards.com/credit-card-news/help/10-ways-students-get-good-credit-6000.php

https://www.creditsesame.com/blog/why-you-need-to-teach-your-kids-about-credit/

http://www.creditcards.com/credit-card-news/help/10-ways-students-get-good-credit-6000.php

 

Difference between these two loans could means big bucks.

Subsidized and Unsubsidized Student Loans. What’s the Difference?

Watch this video and avoid MEGO:

 

And now, the story behind MEGO!

My Eyes Glaze Over. This used to be the trademark teenage response to all things dull and boring. Such as math, french literature, and especially money issues. Today’s approximation for MEGO would be “meh”.

So as I thought about making a video to explain the difference between Federal Direct subsidized and unsubsidized student loans….guess what happened…yep MEGO!

BUT WAIT! If you, dear reader, are in the hunt for more college money, you must understand student loans. Why? Because when college bills are looming, it may be that there is no choice but to take out some student loans.

If you were offered subsidized loans and unsubsidized student loans in your college’s financial aid award letter, then it’s time to know the difference between these loans. You’ll need to know how to use their attributes strategically.

Most importantly use these Federal Direct subsidized and unsubsidized student loans FIRST (they have certain dollar amount limits) before considering any private student loans.

These are the best student loans you can get. Here’s why:

Federal Direct student loans offer the best repayment programs. Watch some of my other videos on this subject for more info.

Here is an example:

Really, after all this, you could not be blamed for drifting into MEGO and thinking about cute puppy videos.

Here’s one:

You’re welcome!

Behind the curtain are seldom noticed benefits of Parent Plus Loans

The Secret Sauce In Parent Plus Loans

February 2016 – I challenged myself to do a video explaining Parent Plus Loans in under 3 minutes. Here it is:

In the process I learned something about this loan that makes it remarkable. There are features affecting Parent Plus Loans in the current structure of the Education Department’s loan repayment plans that could allow almost all low income families to send their children to college free or nearly free…no matter how high the cost of attendance. In fact, the higher the cost of attendance, the more families further up the income scale can participate!

Yup! Parents can legally borrow money to pay for their child’s college education UP TO the “Cost of Attendance” minus any scholarship or grant money their child receives for each year of undergraduate study.

Colleges: Let’s Just Make-up a Cost-Of-Attendance!

The cost of attendance is whatever the college says it is (!), and includes tuition and fees, room and board, books, personal supplies and travel. Students, on their own, can borrow subsidized and unsubsidized federal student loans up to certain limits each year of undergraduate study. The total amount is capped at $31,000. That’s not nearly enough for four years at most private non-profit institutions or larger state universities. It’s barely enough for smaller public colleges either, even if the student lives at home. Most students can borrow additional funds from private lenders, but the repayment terms are not nearly as good as Federal student loans.

“Adverse Credit” Is What We Say It Is!

Most parents are eligible to take out Parent Plus Loans to help their students. The only thing standing in the way of getting these loans is if the parent-applicant has “adverse credit” as revealed through a credit report.

After much negotiation, rule-makers recently came up with new definitions of “adverse credit” regarding Parent Plus Loans. Applicants will be considered to have an adverse credit history if he or she has debts greater than $2085 that are 90 or more days delinquent as of the date of the credit report, or any debts that have been placed in collection or charged off in the previous two years.

Some provisions for extenuating circumstances, like having large medical bills, are available. And, having a co-signer who is not the student and who does not have adverse credit, can overcome most obstacles to obtaining a Parent Plus loan.

Predatory Lending?

Demand for Parent Plus loans has been rising steadily, barely dented by the new adverse credit rules. The harm caused to low and moderate income families by this loan has been rising as well. The trouble is that there are no limits in place regarding a parent’s ability to repay their Parent Plus loans. Credit counseling, which would help parents understand this loan, is either ineffective or unavailable. Or both.

Parents with very low incomes can and do borrow enormous amounts to pay for their child’s education. Interest rates for Parent Plus loans are currently at 6.84% for the 2015-16 school year. There is an origination fee of about 4% for each Parent Plus loan. Interest rates change for new loans every year according to a formula based on the 10-year Treasury yield. The Department of Education is the lender, and has an ever- increasing number of parent-borrowers in some stage of financial distress due to these loans.

Finally, The Secret Sauce… But, You Have To Dig For It!

Back in 2005, in an effort to unify the terms of income dependent repayment plans, the Department of Education made the Parent Plus loan eligible for one of the more borrower-friendly repayment plans through the transformative power of loan consolidation. But few parents know about this path to making their child’s college dreams come true (without wrecking the family’s finances). Here’s the scoop and it’s available for viewing on the Department of Education’s student loan website. https://studentaid.ed.gov/sa/repay-loans/understand/plans
Here’s a screen shot of the important part (lower right corner):
Screen Shot 2016-02-14 at 6.10.44 PM
Borrowers of one or more Parent Plus loans can consolidate their loans into a Federal Direct Consolidation Loan in order to be eligible for the Income Contingent Repayment plan. This strategy applies only to those borrowers who started repayment in 2006 or later. It’s important to note that Parent Plus loans should not be consolidated with any other types of Federal loans. Doing so causes non-Parent Plus loans to lose their eligibility for more favorable repayment plans like IBR, PAYE and REPAYE. Federal Direct Consolidation is a free service offered by the Department of Education.

Under the Income Contingent Repayment plan, most borrowers get lower monthly payments (as compared to regular Parent Plus payments). These payments are determined by a formula which includes a percentage of the borrower’s adjusted gross income, the borrower’s family size, and the amount of the loan left to pay. Some very low-income borrowers could even end up with zero dollar monthly payments for the entire length of the loan!

The repayment period for ICR is 25 years. At that time any remaining principal and interest balance would be forgiven. However, today’s rules would tax the forgiven amount at the borrowers future tax rate.

Bonus! – Meaningful Use Of Public Service Loan Forgiveness

Also, under the Income Contingent Repayment plan, former Parent Plus borrowers with new Federal Direct Consolidation loans can take full advantage of the Public Service Loan Forgiveness program. Parent-borrowers working in public service jobs may be able to get a substantial portion of their loans forgiven in as little as 10 years with no tax consequences.

Oh, And Let’s Throw In “Married-Filing-Separately”!

In 2012, President Obama mandated that the ICR plan would no longer require married borrowers to declare the income of both spouses, as long as the parent-borrower files taxes separately. That move by the President made the Parent Plus loan even more flexible when consolidated into the ICR plan.

The Hazard Of Omission

Some education writers and experts may opine that the Parent Plus loan is a hazard for borrowers. Well yes, it will continue to be a hazard if the Education Department doesn’t tell everyone about the repayment plan that can potentially help so many borrowers.

Why not advertise the heck out of it? The Parent Plus consolidation-to-ICR feature is not a mistake. It was put there to help parent-borrowers, wasn’t it? Surely those who negotiated this feature knew they had designed a way for low-income families to send their children to the same colleges as wealthier families. Right?

But, even if these parent-borrowers do get a taxpayer-funded deal for their children, they are not going to have an easy journey. For 25 years they will have to make on-time payments, follow the rules carefully, keep every scrap of paperwork, and stay on top of any changes. What’s more, they will have to be their own experts and advocates in the face of recalcitrant loan servicers.

Not many people have this level of discipline. I know I would slip up who-knows-how many-times during a quarter century of payments. And it’s well known that loan servicers can trip borrowers up at any moment for no good reason.

So, here is a list of several things that could happen if word gets out about the Parent Plus loan being almost a free ticket to college for low income students. For this list I am putting my mind on the “free-range” setting, which is good for a laugh or two. Mull these over:

1. The private loan industry would be crushed. Sorry about that! (Not!)

2. Private non-profit colleges would be less (or not at all) motivated to use their endowments to help low-income students. No more grants and scholarships, just go get a Parent Plus loan!

3. More low-income students would feel empowered to apply to top colleges. Colleges would find it easy to admit well-qualified students from across the socio-economic spectrum (no strain on the endowment funds!).What a concept!

4. Colleges of all types would accelerate increases in their stated costs of attendance, but wealthier families would force a reversal of this trend. At least for top-ranked schools.

5. The Department of Education would become permanently linked with the IRS. For a preview of this, see the President’s new College Scorecard. Eventually, all Parent Plus borrowers would have their loan payments automatically deducted from their paychecks or tax refunds thus reducing mistakes and the need for interaction with loan servicers.

Sound far fetched? Maybe.

But seriously, could the Parent Plus Loan be the pathway to universal low-cost college in America? And is that even a good thing?

Let me know what you think by commenting below this post. Or, contact me at TheCollegeMoneyMom@gmail.com

You CAN be smarter than your student loan servicer!

Are you smarter than the average student loan servicer?

The Consumer Financial Protection Bureau wants to make you smarter about your student loan repayment options. Basically the message is: We at the CFPB can’t solve all the student loan servicing problems, so you’re going to have to do it yourself. Here’s the best interactive learning tool we have, now please use it wisely.

Thus the Repay Student Debt Tool was created…and released to almost no fanfare. So here’s a little video to explain it. Warning to the legal community: there are some handy dandy DIY lawyer letters included in the Repay Student Debt Tool. Enjoy!

If you run all the scenarios on this decision-tree-formatted program, you WILL be smarter than the average loan servicer. Face it, you clearly have some college education, evidenced by your ownership of some amount of student debt. Plus, you are really motivated to keep yourself out of the mess you’ve been hearing your friends complain about.

The Consumer Financial Protection Bureau (CFPB) has been fielding thousands of these complaints at their Student Loan Ombudsman office.

Here are some of them:

Borrowers were being told either mis-leading or completely wrong information about repayment programs that they were eligible for and which could keep them out of default.

Borrowers attempting to pay down some of their loans early had payments applied to the wrong loan.

Borrowers making partial payments sometimes found the loan servicers were applying the money in such a way as to maximize late fees.

When borrower’s accounts got transferred from one loan servicer to another, as often happens, there was no notification, causing payments to be lost or misapplied.

Even if the borrower’s account remained at the same loan servicer, the borrower could get conflicting answers from different agents. Information that could have been helpful was lost in the shuffle.

There were complaints about lost paperwork, processing errors, and missing billing statements. And on and on…

Meanwhile, the student loan debt problem in the U.S. has gotten so bad that a large percentage of student debt holders were no longer participating in our economy in the form of purchasing homes, autos or major appliances.

To make matters worse, borrowers desperate to get help with their student loan problems started looking outside the realm of unhelpful student loan servicers. And who popped up to fill that need? You guessed it, student debt relief scamsters! (snark follows) “Why yes, just give us an up-front fee and we’ll straighten out all your problems. We’ll sign you up for repayment programs which, oh never mind, are provided completely free to federal student loan borrowers by the Department of Education. And if you act right now, you can get all your federal student loans consolidated into one tidy lower interest private loan! We just won’t mention the fact that you will lose all the rights, protections, privileges and possible forgiveness offered to federal student borrowers.” Scamsters just gotta scam.

So who can we blame for this whole student loan mess and the downright broken student loan repayment system? (Warning: rant ahead!)

Well, the original sin was the creation of the student loan system. This made it easy for completely inexperienced young people to get their hands on staggering amounts of money for college and lifestyle.

As soon as the educational industrial complex got wind of this endless stream of federal cash, the taps were turned to full-on, and rusted in place that way. Thus commenced tuition increases, huge building programs, bulging budgets for staff, researchers, and every kind of amenity for students.

Of course the interest on the loans (to be repayed by the same inexperienced students after graduation) was creating a huge profit for the banks that were issuing the federal loans. The Department of Education (DOE) took notice of this phenomenon and by 2010 took back control of these loans and all the interest.

Right about that time, it became clear that the economy was in a stall and debt-saddled young people weren’t able to buy houses or start families. But, hey, the DOE was doing just fine, thank you. By 2013, the DOE was clearing nearly $40 billion dollars a year in student debt interest.

Along came the most costly of the new repayment programs. The White House ordered up PAYE, the Pay As You Earn repayment plan. This plan would essentially be an interest only gift for low and moderate income recent grads. Original loan amounts would begin disappearing from the DOE coffers and continue through year 20 of repayment. Bad for the DOE’s bottom line.

This very same agency of the U.S. government, the DOE, was also charged with hiring the loan servicers to collect payments from student loan borrowers. The attempt to hire quality servicing companies with well-trained employees has been half-hearted… and that’s being generous. One could be suspicious that all the troubles borrowers have experienced with student loan servicers was an attempt to bring in more revenue in late fees resulting from screw-ups and bad customer service.

But that would be a conspiracy theory…I’ll cast my vote for the stupidity theory instead!

 

FAFSA with use 2 year old tax data.

President Changes FAFSA to Give Families Better College Affordability Information.

This change in the FAFSA start-date starting on October 1st 2016, along with the recently announced College Scorecard system, are game changing aids for families with college-bound children.

All at once, families will have the information they need to make college lists that are actually affordable for their financial circumstances. The College Scorecard is a complementary tool that will allow a family to use their actual federal financial aid eligibility to compare school costs before their student applies.

Never before has this been possible, and it makes me wonder why the college financial aid system ever got to the point where students were applying blindly to schools they could not afford if they were accepted. When you think about it, that’s pretty much the definition of a disfunctional system. Hate to put it so bluntly, but there you have it.

There has been a lot of fear on the part of institutions of higher education everywhere. Changing the FAFSA start-date encountered a lot of political push-back. It took a lame-duck president, looking for legacy, to pull the plug on this systemic bottleneck.

This change will cause a rapid re-examination of business plans in colleges across the country. Recruitment, budget cycles, processing aid applications and issuing awards all must happen a lot earlier.

At this time we are in the one year countdown. Next year on October 1, 2016, if all goes well, the very first “early” FAFSA applications will be filed.

Will the FAFSA-only colleges be ready? There could be a tsunami of applicants, many of whom had never considered filling out the FAFSA because of it’s complexity. There might be a lot more Pell Grant recipients, who knows? The whole FAFSA system may slow down or even malfunction (like you know what!) under the weight of applications. But, in the long run processes will smooth themselves out. Meanwhile college students will be making “aid aware” college choices that might keep the Student Loan Monster at bay!
But still, the question remains: why did we, the parents, allow such a crazy system to persist for so long? Hmmmm….

The new College Scorecard has brand new data.

Obama to Colleges: College Scorecard, it’s what you get when you shoot down my College Ranking Plan!

The new College Scorecard website was built on a data dump the size of Mt. Denali…in fact, it’s like data heaven for college data geeks!
HA! Try to put THIS genie back in the bottle.
Watch my video for a demonstration of College Scorecard’s main features.

 

Well, if this isn’t some fine payback by the Obama administration for all those who scuttled the President’s new college rating plan. And it’s so sincere and sounds so well-meaning that even the opposition is mumbling grudging kudos. But the word is out on colleges that don’t live up to their promises.

So much data, in such an easy-to-use format, built for mobile devices, rolled out just in time for students and their families to make critical decisions about colleges. Whatever the quality of the data, there will be some significant changes in the world of higher education. Tah dah!

Just in my ramblings around this new College Scorecard website at collegescorecard.ed.gov, I could not resist making a search for all medium and large “for-profit” schools. I kind of knew what the results would be, but it was worse than I thought. Apparently, nobody bothered to tell the University of Phoenix that their search results would show that EVERYONE who had attended their schools on all their campuses made salaries of $53,400 dollars after 10 years. Yep, everyone. Clerical error? Or, maybe Phoenix wants it that way.

And then I was wondering about where that data on the salaries of former students came from. And how about the data showing how former students were progressing with their loan repayments?
Well, turns out this info is new, never before seen in public. The federal government, apparently working for the common good, decided to combine the data from federal student loan borrowers with data from their tax records. This data produced lots of useful information. Some of it makes certain schools look good and some of it is very damaging for others. The data is out there for all to see and use.
I didn’t get to vote on the idea to combine this information, nor on the distribution of it. Did you?
Supposedly the personal identifiers have been removed from the data. Hope so.
Here are the assurances of privacy put forth in the data documentation for College Scorecard:

“All National Student Loan Data System (NSLDS) and Treasury elements are protected for privacy purposes; any data not reported in order to protect an individual’s privacy are shown as PrivacySuppressed.”

Is “Privacy Suppressed” what they really meant to say?

I don’t know about you, but I felt like my privacy was suppressed when my data was compromised at Target and at Home Depot!

Here’s hoping for the best with this new website.

Hey, it’s better than doing nothing…maybe.

Details of the upcoming REPAYE student Loan Repayment plan.

PAYE and REPAYE

Is this the last you’ll hear about student debt repayment? Don’t bet on it! The politicians must have their say and so shall I. Before I start my rant, please watch my video so you’ll be up to speed.

So, this new REPAYE plan will allow millions more student loan borrowers to have much lower monthly payments and get the remainder of their loan balances forgiven in a few decades. Now these poor borrowers can get on with their lives, start families and buy houses. Good for the economy, right?
Well, not so much. Actually, this REPAYE plan and all income-based repayment plans which include forgiveness, simply shift the burden of ever-more-costly higher education to the taxpayers and remove the risk from the students and institutions. So no one has any incentive to control costs or reduce borrowing. Not a good idea!

As I write this blog post, the news is awash with Hillary Clinton’s “College Compact” proposal. More burden-shifting! Even if she does get elected, I cannot see how this gets enacted. Spoiler alert: the proposal gets hacked to death by the Republican congress.

The real fix for the problem of spiraling college costs is to delink getting a degree or certificate from the need for student loans. So, just how can we do that? How about changing the delivery system. In fact, that’s already happening. The delivery system for higher education is morphing into a blend of on-line and classroom instruction. The cost for this delivery system could be far cheaper than the mess we have today. The delivery system for specific job training is also getting ready for prime time. It will be nothing like 1950’s style trade schools. Today’s jobs require students to have a solid grasp of math, science, reading and communications skills. Forward-thinking employers are already setting up schools to educate their future employees. Students will learn specific skills that allow them to transition to jobs immediately after graduation. Aspects of a broader education will be woven into the curriculum to prepare students for future managerial jobs. Or at least, that is the hoped-for outcome.
Education prognosticators say that a college education or job certification is a necessity the young person’s future, and for the future of our country. This education and training needs to be efficiently delivered and efficiently received by the students. To that end, many young people who are ready to take basic college courses as early as the beginning of high school can receive free higher education through dual enrollment. These are courses that can get students free college credits that transfer to their state’s four-year universities, making student loans much less necessary. Dual enrollment for both college courses and job certification should be free in all states. Many states are well on the way to this goal.
The student loan system should have been phased out years ago before it got out of control. But, there is big, BIG money involved, both for the government (6.7% average loan interest) and for the schools. Especially the for-profit schools. This big money is the source of the push-back against new less costly delivery systems for higher education.
With parents and students getting very worried about student loans, it’s only a matter of time before the student loan bubble deflates. New loan repayment programs like PAYE and REPAYE will continue to push the problem off onto future taxpayers. Sadly, those taxpayers could be the very students who are thinking about taking out student loans right now.
To them I say “Don’t do it…find another way! No more student loans!”.

Consolidate and Stay Cool!

Consolidate Student Loans to Stay Organized and Pay Less!

A young friend of mine just graduated from college and, even has a brand new well-paying job! And that’s not all, he’s newly married! What a lucky guy!

What’s not lucky is that he has student loans. In just 6 months he’ll be out of his grace period and will have to start paying those loans back.

What are his options?

The first thing he might want to consider is consolidating his loans.

Let’s say his loans are all federal direct loans and that some are subsidized and some aren’t. These loans were made in different school years for different amounts and at different interest rates.

So, even though he’ll probably have his loans grouped with one servicer by his lender (the U.S. Education Department), keeping up with all those different loans requires a lot of attentiveness. Mistakes can easily be made by the borrower. Or even by the servicer…shocking, right?

Consolidate Student Loans and Stay Organized

Consolidating his loans would give my young friend a far simpler repayment picture. His interest rates would be averaged and weighted into a rate nearly the same as if he had kept them all separate. Not only that, but he would gain access to at least one of the new affordable repayment plans.

Consolidate Student Loans and Get Affordable Payments

So far, the very newest repayment plan is not quite finalized, but is nearly certain to be available in December of 2015. It’s called the Revised Pay As You Earn plan, or REPAYE for short. My friend would be eligible for REPAYE and it might keep his payments down enough for he and his wife to save for their first house, and to start a family.

He would have been eligible for REPAYE’s more borrower-friendly older cousin, the PAYE plan, IF he had not gotten that well-paying job right out of college. Thanks to his new paycheck, he will not be poor enough in comparison to his student debt to get on the PAYE plan. Moreover, the ratio of wealth to debt for my friend gets even worse under REPAYE because the fed’s calculation of HIS income will include his wife’s income as well. Who knew he should have borrowed more? Just kidding!

But, no matter! Getting your student loan payment down to 10% of your JOINT discretionary income is still a wonderful thing! And, since my friend only has undergraduate loans, any remaining balance will be forgiven after 20 years. The forgiven amount could be taxable that year as income, but it’s likely this tax threat could be gone in the future, thanks to congressional efforts.

If my friend decides to consolidate all his student loans into a single Federal Direct Student Loan for simplicity’s sake and then decides to enter the REPAYE plan, he will have to understand one important fact. As a participant in the plan, he is obligated to send in a form which verifies his family’s joint income EVERY SINGLE YEAR. If he forgets the verification form, he will be placed in an alternate version of the REPAYE plan until he is jolted awake by the higher payments!

The new REPAYE plan will allow many more borrowers to get affordable payments as well, no matter when they got their loans and no matter how much money they earn. The older borrowers will need to get some of their “non-direct” federal loans, such as FFEL, consolidated into Federal Direct Consolidation loans. The biggest thing for older borrowers to remember is that Parent Plus loans cannot be included in these new Federal Direct Consolidation loans. And, even if an earlier consolidation loan paid off a Parent Plus loan, then that consolidation loan is considered “tainted”. It cannot be included in the borrower’s new Federal Direct Consolidation loan, whose purpose it is to access the REPAYE plan.

So you might be wondering why this latest round of cleverly acronym’d student loan repayment plans has come to be a dinner party topic. Here it is: REPAYE clamps down on the excesses of PAYE. Simple as that.

People had begun to game the system. Doctors, lawyers and other high student loan borrowers figured out that they could combine the generous features of PAYE with the Public Service Loan Forgiveness program (PSLF). In 2017, the first of many lucky borrowers will have hundreds of thousands of student loan debt forgiven. The forgiven amounts will not be taxed.

All this system-gaming has given colleges the idea that they can raise their tuitions to match the benefits of the PAYE plan and PSLF program. Taxpayers will be on the hook for the ever-spiraling debt and tuition crisis at private non-profit colleges AND to some degree at public universities.

The cry has gone up to politicians and higher education policy-makers: Put the brakes on PAYE! So REPAYE was invented, and here we are on the brink of it’s implementation.

We can only hope that this time they got it right. I’m taking bets starting now! Who’s in?

Dual enrollment saves money!

Dual enrollment programs help high school kids get free college credits!

Please watch my video, then read on:

Now here’s where I get to share some other insights, and/or just plain rant.

I’ll admit I was concerned when my 10th grade daughter announced that she wanted to take some dual enrollment classes at the local state college. That meant my little girl would be sitting in classes with real college students, half of whom were working adults taking night courses.

Sounded scary, but I let her do it because I would be driving her there and back until she could drive herself. I didn’t doubt that she could do the work, and that proved true. Thank goodness!

Her big thrill was that she could complete courses in one semester that would have taken two semesters in her high school.

Her second big thrill was that, unlike high school, she wouldn’t be asked by her college professors to make “ridiculous, time-wasting projects” like poster-board maps, plastered with pictures cut out of magazines!

MY big thrill was the realization that she was getting free college credits! WooHoo! Free money toward one of our many state universities, should she decide to stay in our state for college. YAY!

Eventually my daughter gathered almost enough dual enrollment courses that when combined with her AP classes would have produced an Associate’s degree. She would have received this degree from our local state college in the week prior to her own high school graduation. While she did not (for other reasons) complete her Associate’s degree, many high school students before her time have done it. Many more high schoolers will collect their AA’s through dual enrollment in the future.

What a boon to the families of these hard-working, ambitious young students! With two years of college completed, students in our state (and many other states) can transfer right into a 4 year public university and start their remaining two years! The families of these students are NOT on the hook for the cost of those first two years of college education. Ding, ding, ding…we have some winners here!

Now, in my research for this video, I read a lot of good material from many sources on the subject of dual enrollment. But it wasn’t coming together until I stumbled on a wonderful resource. This is the website of The Education Commission of the States, a national organization created in 1965 and funded by the 50 states, the District of Columbia, and several territories.

This organization was founded to “track state policy trends, translate academic research, provide unbiased advice, and create opportunities for state leaders to learn from one another”.

Here is the link to the section of ECS that contains a database on dual enrollment:

This information was gathered from all the states and collated by an enthusiastic young woman named Jennifer Dounay Zinth. She has done a fabulous job, and the product is absolutely enlightening. I enjoyed comparing my state’s dual enrollment policies to that of other states. I also liked the State Profiles on this topic that you can access by clicking on a particular state in a map of the U.S.

Using this database allowed me to realize how much work is left to be done on dual enrollment to make it universally available in the U.S.

Thus far, ALMOST NOTHING is standardized, not even WITHIN certain states! A few states, like Florida, have their dual enrollment acts together. But, overall, the picture is pretty sad.

So here is my rant:

Attention all you so-called “Education Leaders” attending the next ECS convention from all your various states: Before you settle down in a comfy lecture hall in the duly appointed city, and before you tuck into that sumptuous luncheon, try to concentrate on this one little request from me:

Fix Dual Enrollment!

Why? We need all educational efforts to point our kids in the right direction with all the right tools for a reasonably good future life. Right?

AND, we also want these efforts not to destroy family finances when it comes time for college.

Dual enrollment, done right, can help…SO JUST FIX IT… please!