Daily Aid 32: FAFSA EFC and the CSS Profile - How Much You Can Pay For College

Student Financial Aid News

From Inside Higher Ed:

At Shenandoah University, there have been a few senior-level administrators who have decided to forgo their raises altogether, placing the money in an emergency fund that is being used to help existing students who are struggling to afford to stay enrolled.

Commentary

I applaud anyone who is willing to take a pay cut - and forgoing a raise when inflation is eating away at the bottom line is effectively a pay cut - to help students stay enrolled. That said, it might be more cost effective for Shenandoah and other colleges to reduce the overall cost of education at the top line.

One of the things I think you’ll see become very prominent in the next year is a trend towards finding the most affordable solutions to pay for college possible. Everything from testing out of classes to early graduation to distance learning and online degrees is on the table as students, parents, and families try to figure out how to make college more affordable.

Looking at the many options before us, I’d suggest this strategy for right now.

1. Earn as many scholarships as you can. Free money can’t be beat. Scholarship Search Secrets, our free scholarship eBook, goes to “press” next week.

2. Start saving as early as possible. Save money like crazy. Cut back on discretionary expenses. Put money away. Use as many money saving strategies as possible.

3. File your FAFSA as early as possible. I’m almost done with the 2009-2010 FAFSA guide based on the draft FAFSA, and this year’s guide is going to be more detailed than ever, line by line.

4. Talk to your college about which courses you can test out of using CLEP exams or your school’s own credit-based exams. Prep, then test out of them to reduce cost per credit hour and get basic courses out of the way.

5. If you can manage the workload, work during the summer AND take either an online degrees/distance learning course or two, to earn some credits. If you’re not set up for an online education experience, check in at your local community college about credit transfer and take a class at night.

6. Only after you’ve been able to reduce the overall cost of your education should you look at borrowing money and taking out student loans.

One final piece of opinion: if you think that a community college offers a lower quality education than a traditional school, you’re almost certainly wrong. When I was working at AT&T back in 1998, I took a C++ course at Raritan Valley Community College, not too far from where I was living back then. The instructor for the course wasn’t some hack who couldn’t cut it in a traditional school - the instructor was a senior programmer at AT&T who moonlighted as a college professor. She was one of the best professors in computer science I ever had, because in addition to being able to teach, she was also able to explain the material in very concrete, practical terms. Her day job required her to make practical use of her knowledge on a daily basis, and for me, being able to ask very specific, task-related questions and get experience-based answers was invaluable.

Don’t overlook your local community college. You’d be surprised what you’ll find there.

Scholarship Update

The Student Loan Network $10,000 scholarship drawing is TOMORROW. Enter to win NOW.

Mail Bag

In the past few days, I’ve suddenly been swamped with calls and emails about a question on the CSS Profile, a fee-based financial aid form similar to the FAFSA used by some colleges. The specific question is how much are you willing to contribute towards the cost of education?

The answer I’ve been giving people is that this is a number the FAFSA already comes up with, called the Expected Family Contribution, or EFC. The EFC is based on a whole slew of questions about your family’s finances and represents the government’s guess about how much you can afford to pay for your education.

For some families, this is zero. If you receive a zero expected family contribution result from your FAFSA filing, put the same down on the CSS Profile. For some families, this is thousands of dollars. Chances are, your college will compare what you put in that line with your FAFSA results, so if you put down anything besides the EFC, you might be asked to justify it. In some cases, this will be easy to do - for example, the FAFSA does not take into account debt you currently carry, including mortgage and other debts. Thus, an EFC in the thousands might translate into more money per month than you can possibly afford.

Here’s how I’d suggest you tackle this. First, take your EFC, whatever it is, and break it into a monthly cost. If your FAFSA EFC is $24,000, then you have an effective monthly EFC of $2,000. Put together your personal budget and determine what the mandatory expenses are - rent/mortgage, utilities, etc.

Subtract only the mandatory expenses from your monthly EFC - thus, if you pay $900/month in rent, $100/month in utilities, $200/food (NOT dining out, just groceries), you have a mandatory expenses sum of $1,200. You need a place to live, food to eat, and heat so you don’t freeze to death in the winter.

Take your EFC minus your mandatory expenses, multiply by 12, and that’s what you should be able to contribute towards paying for college. In this example, that’s $2,000 - $1,200 ($800/month) * 12 = $9,600.

When you go before your college’s financial aid office, because mandatory expenses can be easily documented, you can show a simple budget worksheet to your financial aid officer to show why the EFC is wrong for you.

Daily Aid 31: How to cut your cost of college education in half

Student Financial Aid News

From all over the place - lenders are curtailing credit cards by increasing credit requirements and reducing available credit, including student credit cards. Defaults have been rising across the board on all forms of lending, but credit cards have been hit especially hard since the housing bubble burst. If you’re thinking about getting a credit card, you’ll want to do that sooner rather than later.

From NASFAA and USA Today:

“For months, the Wall Street credit crisis has made many families nervous that the widespread availability of student loans will dry up,” writes Michael Dannenberg in USA Today. “But no matter how many banks fail, there is no danger that families will be deprived access to federal student loans. None. The real danger during bad economic times is that tuition often skyrockets. Here’s why: A bad economy depresses state tax revenue. To meet state balanced-budget requirements, states cut funding for higher education. To make up those cuts, public colleges hike tuition. Competing private colleges see the increases and feel empowered to increase their tuitions markedly as well.”

Commentary

Expect tuition to rise across the board, at both public and private universities. Public schools will indeed take a bigger hit from declining state budgets, but private universities are certainly not immune. Plan on significant tuition increases - around 10% per year - over the next 3 years, and budget your financial aid plans accordingly.

Scholarship Update

Do Something Grants. Do Something is a directory of grants available for students who pursue social change and lack funding to do so.

Details at our free college scholarship search site.

News You Can Use

As part of my research into online degrees, I’ve stumbled across the CLEP, or College Level Examination Program, a program administered by the College Board that lets you test out of undergraduate coursework and receive credits for your exam results. About 2,900, or more than half, of the colleges in America will grant course credit for sufficiently high CLEP scores.

CLEP exams are $70 each whether you pass or fail. When you compare the cost of a CLEP exam to its equivalent credit hour cost at even a public university, a CLEP exam is a bargain as long as you pass, ideally on the first shot. Take a look at the list below; each of the subjects is between 3-12 credits, assuming a one semester course is 3 credits.

Now take the rough cost per credit hour - from $75 at community colleges to $600 for top schools - and you begin to see the massive cost savings that testing out of courses can yield. If you’re a very talented, smart student, you can rack up significant savings by testing out of as many courses (especially generic course requirements at liberal arts colleges) as your school will allow. Could you finish a 4 year degree in 3 years? Absolutely. Could you pay 25% - 50% less for a college education? Absolutely.

The catch, of course, is that you have to be able to pass the CLEP exams for each of the subject areas, and your school has to honor CLEP exam results with course credits. If you can do that and your school is willing to grant credits for CLEP results, then an incredibly affordable college education is easily within your reach. Consider using free services like iTunesU to supplement your reading and work towards CLEP exams.

Ask around at your college’s administration for how your school deals with CLEP credit. If you’re not in college yet, make that one of your admissions requirements - acceptance of CLEP results as course credit for as much course credit as you can rack up.

Composition and Literature

+ American Literature
+ Analyzing and Interpreting Literature
+ English Composition
+ English Literature
+ Freshman College Composition
+ Humanities

Foreign Languages

+ French Language (Levels 1 and 2)
+ German Language (Levels 1 and 2)
+ Spanish Language (Levels 1 and 2)

History and Social Sciences

+ American Government
+ Human Growth and Development
+ Introduction to Educational Psychology
+ Introductory Psychology
+ Introductory Sociology
+ Principles of Macroeconomics
+ Principles of Microeconomics
+ Social Sciences and History
+ U.S. History I: Early Colonizations to 1877
+ U.S. History II: 1865 to the Present
+ Western Civilization I: Ancient Near East to 1648
+ Western Civilization II: 1648 to the Present

Science and Mathematics

+ Biology
+ Calculus
+ Chemistry
+ College Algebra
+ College Mathematics
+ Natural Sciences
+ Precalculus

Business

+ Financial Accounting (New in 2007)
+ Introductory Business Law
+ Information Systems and Computer Applications
+ Principles of Management
+ Principles of Marketing

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Daily Aid 30: State of the student loan industry

Student Financial Aid News

From NASFAA and the Chronicle:

“This year’s growth in the Education Department’s direct-lending system could be replicated in 2009, possibly leaving the now-dominant bank-based system as the minority supplier of federal student-loan money by next fall, according to findings from a new survey of colleges,” The Chronicle of Higher Education reports. “The Web-based poll of 416 college financial-aid directors last week by Student Lending Analytics found that 6 percent of those currently using the bank-based system plan to switch to direct lending next academic year, and 29 percent are considering making that change. At the same time, the Education Department on Monday issued new statistical data detailing an increase in direct lending this year. Larry Zaglaniczny, vice president for governmental affairs at the National Association of Student Financial Aid Administrators, agreed that colleges will continue to flock to the direct-lending system if the Bush administration doesn’t quickly come through with additional aid for private student lenders.”

Commentary

The lending system is still not functioning anywhere close to optimal - a quick check of several major popular stocks in the student loan industry indicates that investors don’t believe the student loan industry has freed itself from the broader market dynamics. Here’s a chart of Sallie Mae (SLM), MRU Holdings (MRU), Nelnet (NNI), Student Loan Corp (STU), and First Marblehead (FMD):

The declines range from 81% for bellwether SLM to 96% for FMD. This is obviously not the picture of health for any industry, but especially financial services.

What does this mean for you? Come this December or January, when you’re applying for spring semester funding, federal student loans at your school such as the Stafford Loan may be through the Department of Education directly if your school changes over. This means that when you graduate, you’ll need to consider student loan consolidation to bring together multiple lenders into one payment later. The above stock chart also indicates that private student loans may still be difficult to obtain as well. Here at the Student Loan Network, we’ll do our best to help you, but be prepared for a general lack of availability of private student loans.

Be hunting for scholarships all the time, without exception. There are still plenty of scholarships out there and more opening up every day, like today’s featured scholarship. Be aggressive, be persistent, and be willing to work hard, and you’ll find the money you need for your education.

Scholarship Update

The MEFA 5th Annual Art Competition. Over $20,000 will be awarded via MEFA U.Fund College Investing Plans for winning students’ entries that best depict what they want to be when they graduate college.

In addition to the student contest winners, private, public and charter schools in Massachusetts will have an opportunity to win $500, $300 and $100 gift cards for school supplies. The winning schools will be selected based upon the highest percentage of eligible students who enter from each grade level.

Massachusetts students in grades 3, 4 and 5 have until 5:00 p.m. on November 21, 2008 to submit their artwork. First, second and third place prizes will be awarded in each grade level and winners will receive $5,000, $2,000 and $1,000 respectively.

Details at our free college scholarship search site.

Daily Aid 29: The credit crisis hits college campuses

Student Financial Aid News

From NASFAA and the AP:

“The credit crunch has officially arrived on campus,” the Associated Press reports. “In a new survey, private colleges report their students are finding it significantly harder to secure the private loans they need to pay tuition bills. More alarmingly, nearly half of colleges say some students have been forced to take time off or go part-time as a result. The survey, released Tuesday by the National Association of Independent Colleges and Universities, confirms anecdotal evidence that the federal financial aid system has held up reasonably well during the financial meltdown. But it paints a more troubling picture for students who need private loans to supplement their federal ones.”

Commentary

This is no surprise to anyone who has been a longtime listener and reader. We’ve talked about this day coming, and the bad news is that it’s only going to intensify as we enter 2009. Private student loans have already become harder to get, and as we enter 2009, more students than ever will be applying for college, more students than ever will be entering college, and more students than ever will be applying for financial aid from the same pool of dollars.

As pointed out in this BusinessWeek article, hedge funds may face a record redemption call on November 30 as investors are given a final chance in 2008 to redeem their holdings. What does that mean for you? If investors remain uncomfortable or shaky, they may pull a lot of money out of the market, further tightening credit and reducing the value of things like 401k and 529 plans.

Jim Cramer of CNBC made a good call - if you have money in a 529 plan and you need it in the next year or so, talk to your investment advisor about getting the money out of the market or at least shifting it to wherever your advisor thinks is the safest. Markets in the short term aren’t getting better and probably won’t for some time.

If you’re concerned about paying for college, make sure you complete your FAFSA after January 1, 2009 for the 2009-2010 school year. Make sure you’ve done your taxes. Make sure you’re applying for as many scholarships as you can. If you’re currently attending school and having a hard time making ends meet, consider taking a semester or two at a less expensive school or taking some online classes if they’re cheaper per credit hour. If you aren’t already on friendly terms with your college’s financial aid office, now is a great time to make friends with them. Do something nice for them, even if it’s just an email to say thanks for the thankless work. Make sure you’re on their radar so that down the road, if you need help, they will pick up the phone for you.

The message is this: right now, the markets and government are so tied up in the broad financial crisis that you as a student or parent are pretty much on your own. You are responsible for your financial aid, and you will ultimately be the deciding factor about how affordable college is. As much as we can here at the Student Loan Network, we’ll help you with as much information and services as we can, but ultimately, the final outcome is up to you.

That said, if you’re reading this blog post, I have full faith and confidence in you, because you already care enough about financial aid to want to do something about it, to want to read about it more than once a year, to want to tune into the Financial Aid Podcast. As you work through the financial aid maze and the financial crisis, please stay in touch and let me know how it’s going for you.

Scholarship Update

In just 8 days, we’re giving away $10,000 for our Halloween Scholarship. Have you entered? It takes just 47 seconds.

Daily Aid 28: FAFSA Secrets and Hidden Traps

A special blog post while I’m on the road to Arizona for a couple of days off - and yes, vacation for me is doing public speaking! I’ve been working on the 2009-2010 FAFSA guide for the coming year over the past week or so, learning the ins and outs of IRS tax code, the new draft FAFSA (which won’t be finalized until November), and a bunch of stuff that goes with it all. Some interesting lessons I’ve picked up so far:

The FAFSA has a LOT of undocumented gotchas, far more than the average student is probably prepared to deal with. For example, Question 23 on the 2009 FAFSA asks if you’ve ever received a conviction for illegal drug use while receiving federal financial aid. What the question doesn’t elaborate on anywhere is that the conviction has to be a federal or state conviction to disqualify you from financial aid. A local/municipal court conviction has no impact on your financial aid, but the question isn’t worded that way. The question doesn’t elaborate anywhere that if you’ve successfully completed an accredited rehab program, the conviction will be disregarded for the purposes of financial aid. The question also doesn’t make clear enough that you have to have received it WHILE receiving federal financial aid, so if you messed up in high school and have since cleaned up your act, that prior conviction is meaningless from the perspective of financial aid.

Why is this important, particularly when the form goes on to say you’ll get an additional worksheet in the mail to determine your eligibility? That kind of question is a showstopper. That kind of question is likely to cause someone to self-select out of the financial aid process, and in doing so, alter their future.

A lot of students fill out the IRS 1040EZ form, for those who file taxes. This may turn out to be a huge mistake, since the full 1040 contains three provisions that are important for college students. First, the full 1040 allows you two offsets to adjusted gross income, one for student loan interest paid and one for tuition and fees, that will reduce your AGI. Reducing your AGI has a direct impact on your financial aid - the lower your AGI, the more eligible you are. The full 1040 also has an AGI offset for moving expenses, which might impact you. If you’re an independent student, filing a full 1040 rather than a 1040EZ is absolutely essential, since your finances alone will impact the FAFSA and not your parents’ finances.

Here’s why this is a gotcha - nowhere on the FAFSA does it recommend you do a full 1040 rather than the 1040EZ. Yes, the EZ is “easier” from a paperwork perspective, but it may be costing you some serious money.

There are also new provisions for homeless students, unaccompanied homeless students, and students in danger of homelessness that will simultaneously open up opportunities for more students while also proportionally adding complexity to the financial aid office, so be aware that lines this coming year might be a little longer.

Overall, the FAFSA has changed quite a lot from previous years, and knowing some of the tricks to maximize your aid is what we’re all about in the new guide. I expect to have a beta available to you, my dedicated listeners and readers, by mid-November, with the full version going out with all the bells and whistles in January. As always, to thank you for reading and listening, you’ll get first crack at whatever I find, whatever inside secrets I can share with you to make the financial aid process easier.

Daily Aid 27: Give a little help to your friends

Student Financial Aid News

From MSNBC:

It’s prime college-visiting season for the high school class of 2009, which next fall will send the greatest number of graduates on to college in American history. But the souring economy and crisis on Wall Street are shrinking families’ college savings, and some parents wonder whether they will be able to afford tuition at the schools their youngsters are looking at. Around the country, students deciding where to apply may have to scale back their dreams. Some private schools worry they could lose business to public universities. Already, federal loan applications are up, and some schools are seeing more aid inquiries.

Commentary

It would not surprise me in the least to find out that state schools and other lower cost institutions are going to face record applications and competition for a relatively few coveted slots. As competition increases, those schools who guarantee enrollment to all qualified applicants may need to change policy or radically increase the number of seats available.

As for scaling back dreams, I continue to advocate for the idea that the bachelor’s degree is largely “brandless” in that its value is a commodity now, with so many students earning degrees. Whereas a bachelor’s degree from a name brand school 10 years ago might have gotten you in certain doors, today those doors are only open for students who bring something more besides just a degree.

As such, paying extra for a commodity makes no sense. If you can buy an iPod for $99 at Walmart or the same iPod for $199 at a top name brand department store, why would you pay more for the same thing? A college degree isn’t an iPod, true, but there are plenty of outstanding schools and experiences waiting for those who are willing and able to look beyond brand.

As always, the Student Loan Network will be here to help you as best as we can, not only with student loans, but also with our many free student resources.

From the Wall Street Journal:

State budget deficits are forcing already cash-strapped public universities to increase tuition, lay off employees and, in some states, cut enrollment.

The crisis couldn’t come at a worse time. More families are opting for state institutions as college tuition has soared, and the credit crisis has made it harder to get student loans. At the same time, college enrollment is expected to swell as laid-off workers retool and a record number of students graduate from high school.

Commentary

Expect state budgets to take a hammering in 2009. State budgets always lag the general economy because things like tax receipts are delayed by quarters or even years. 2009 will not be a pretty year for state budgets or state higher education. Expect tuition to increase, in some cases dramatically, as state schools need to fill gaps left by budgets.

If you want to reduce the impact, you need to band together with as many fellow students as possible and advocate heavily for your school by petitioning your state elected representatives repeatedly. Legislators prioritize to some degree on input by constituents, but enough noise can make them move at least a little. It’s unrealistic to think that higher education budgets will escape unscathed, but with a strong enough campaign, at least the damage can be mitigated. Set up a Facebook group to coordinate your efforts!

From TomDispatch:

Rates of stress, depression, and suicide invariably climb in times of economic turmoil. As Kathleen Hall, founder and CEO of the Stress Institute in Atlanta, told USA Today’s Stephanie Armour earlier this year, “Suicides are very much tied to the economy.”

Commentary

There is a real, human cost to economic turmoil. As the economic crisis continues, please be on the lookout for fellow students, coworkers, family members, and colleagues. Simple things like a pot luck dinner one night at someone’s apartment can make a world of difference and be the deciding factor between whether someone chooses to continue or gives up everything. As much as you can, reinforce your local community and social circle by letting people know you’re willing to lend a shoulder to lean on and an ear to listen. If you’re in a bad situation yourself, please go talk to someone. There are plenty of open options like the Samaritans who are willing to lend an ear, and even more in your many social networks.

We’re facing a bad time, unquestionably.

No one said we have to face it alone.

Scholarship Update

Micron Science and Technology Scholars Program. The Micron Science and Technology Scholars Program is a merit-based scholarship competition recognizing excellence in academics and leadership. Each year, the program awards a $25,000 college scholarship to six high school seniors for a total of up to $150,000. One male and one female student is selected from each of the following states: Idaho, Utah and Virginia.

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Daily Aid 26: How to understand how the economy is really doing

Eye on the Economy

I want to do a special today to give you some tools for understanding the market a little better, some things to keep an eye on, and some explanations so that when you see financial news in the headlines, you know whether it’s serious or hype.

When news outlets talk about the market, they’re most often talking about 3 different stock market measures - the Dow Jones Industrial Average, the Standard & Poor’s 500, and the NASDAQ. These are all stock measures. The Dow is a blend of 30 different companies that are prominent like Coca Cola, Google, GM, etc. It’s considered a bellwether of how corporate America is doing.

The S&P 500 is a measure of, unsurprisingly, 500 different companies around the country, some large, some growing to be large. It’s considered a bigger picture of corporate America since it includes smaller companies.

The NASDAQ is a measure of more than 3,000 smaller companies around the country, with an emphasis on smaller, growing businesses and especially technology companies. Since the first dot com bubble, the NASDAQ is considered a measure of how the more ambitious companies in America are doing.

The numbers themselves are weighted averages of the stock prices of each of the companies in the measures. For example, if you were to buy one share of stock in each of the 30 Dow Jones companies, it’d cost you whatever the Dow Jones Industrial Average was that day - so if the Dow is at 11,000, you’d need $11,000 to buy roughly 1 equal measure of ownership in each of the companies in the Dow Jones. It’s a little more complicated than that, but that’s close enough for the average non-economics nerd.

Typically, all three measures - called indexes - move together, meaning that when one declines - headlines saying the Dow lost 4% - the others probably did the same.

All three indexes are part of the stock market. The stock market itself doesn’t directly affect your financial aid except for investments that you have in things like 529 savings plans. The stock market is generally regarded as a measure overall of how the investors in our economy feel about how things are going.

However, the stock market is only one part of the economy. Remember that stocks are essentially a form of gambling - you place a bet that a company will grow by buying stock in that company, and if the company grows, the price of the stock goes up. Assuming all goes well, you sell the stock later at the higher price and pocket the difference.

There’s a second part which more directly affects your financial aid, and that’s the credit market. The credit market, instead of measuring companies like the stock market does, measures instead how easy or hard it is to borrow money. There are three measures in the credit market that are important as well.

The Federal Funds Rate is the rate at which banks can borrow money from the Federal Reserve Bank. If the Fed cuts rates, as you see in the headlines from time to time, it means that banks can borrow money from the government at a lower cost, which presumably gets passed on to you. The Prime Rate, which is what you see on a lot of mortgages, some private student loans, and student credit cards, is the Federal Funds Rate + 3%. If the Fed cuts rates, anything you’ve borrowed based on the Prime Rate gets a reduction in interest rates as well.

The 3 month LIBOR rate is the London Inter Bank Offering Rate. LIBOR is a measure of a bunch of banks in London and how much it costs for them to borrow money from each other. Normally, LIBOR is lower than the Federal Funds Rate because banks are willing to lend to each other at very low rates, knowing that they’ll get their money back. Unlike the Federal Funds Rate, no government has a say in what LIBOR is, so it’s a good measure of how much banks trust each other. You see LIBOR on a number of private student loans as well as mortgages and home equity loans.

There’s a measure called the TED spread, which is the difference between the 3 month Treasury bill rate and LIBOR. You’ll hear the TED spread mentioned a lot in financial outlets like CNBC and Bloomberg. Normally, the 3 month Treasury bill rate and LIBOR are very close, indicating that banks are staying competitive in borrowing money from each other and in fact would prefer to borrow from each other than from the government. When LIBOR starts to exceed the 3 month Treasury bill rate by significant amounts, it indicates a trust problem - banks don’t trust each other and would rather borrow from the government instead.

The last measure that I think is important is called the VIX, or volatility index. This is a measure created by the Chicago Board Options Exchange, and it’s based on the S&P 500 plus what investors are betting the S&P 500 will be like in 30 days. It’s, in other words, an attempt to predict the future, and the VIX is a measure of how fearful investors are. The VIX is a powerful and very obscure measure that tells a lot about what investors think the future holds. The VIX is a number, and the lower it is, the less volatile the market is, meaning that investors are calm and feeling good about investing in the next 30 days. When the VIX is high, it means investors are unsure, uncertain, and may behave irrationally, pulling money out of the markets or doing things that in normal times wouldn’t make a lot of sense.

To monitor these different measures, you have to go to a few places. Google Finance and Yahoo Finance both have great measures for the Dow, S&P 500, and NASDAQ. The CBOE VIX is only listed on Yahoo Finance for some odd reason. You’ll find LIBOR and the Federal Funds rates on Bloomberg, along with the TED spread.

One word of caution - when you start digging into this stuff, don’t fixate on any one number or stare too much at them. These measures of the market are best viewed as trends - what happened in the last week or month - rather than as discrete data points - zOMG the Dow fell 400 points! - and you’ll feel a little less panicked during rougher times if you watch trends rather than the daily numbers per se.

All of this stuff, by the way, is foundational stuff if you want to get involved in investing. As you save money for college or life after college, you really need to grab a book or two and read up on this for it to come together and be helpful to you. It will take a little time and reading, but it’s well worth it, since you’ll find that you’ll understand better what’s happening to your money.

More important, you’ll know when you see news headlines that there’s more behind the headlines and you can look at the real numbers to decide just how good or bad the news is for yourself.

Daily Aid 25: Surveying the economic landscape

Student Financial Aid News

From the Chronicle:

The Wal-Mart Foundation, the chain store’s philanthropic arm, announced today a $4.2-million grant to the Institute for Higher Education Policy, which will use the money to support programs that help students who are the first in their families to go to college succeed at minority-serving institutions.

The grant continues the philanthropy’s recent emphasis on helping first-generation students, including millions of dollars in grants, announced in February, to the Council of Independent Colleges, the American Association of Community Colleges, and 20 individual colleges.

Under the grant announced today, 30 colleges will each receive $100,000 awards from the institute as well as other forms of support.

Commentary

Great to see continued support for higher education from the private sector. One of the fears I’ve had about the scholarship world is that as the economy declines, so would scholarship commitments. Kudos to Wal-Mart for continuing to commit to higher education.

From NASFAA:

“As the financial world waits for frozen credit markets to thaw, higher-education officials say college students will face unprecedented scrutiny from private lenders as the United States reels from its sharp economic downturn,” eSchool News reports. “Students seeking to attend the nation’s largest universities whose loan applications come with credit-worthy cosigners likely will have little trouble obtaining financing, experts say–but community college students with scant or checkered credit histories might be driven to nontraditional payment policies. If loans become scarce, colleges might have to establish pay-over-time systems, in which students have an entire semester to pay for classes. Because that requires colleges to absorb the risk, instead of a third-party lender, some financial experts say many institutions would be reluctant to embrace such a model.”

Commentary

I think eSchool is overly optimistic in its assessment that even creditworthy students and families will have little trouble obtaining private student loans. Based on many of the fundamentals underlying the economy - metrics like the TED Spread, LIBOR, and the CBOE VIX, market instability remains a large issue and shows no sign of abating despite the best efforts of governments and industries.

This is one of the reasons I’m so absolutely adamant that you be hunting for scholarships all the time, that you be responsive and responsible in your education financing. In the worst reasonable case scenario, the mortgage debts that have caused much of the economic issues won’t finally clear out until late 2011 or early 2012; if you’re graduating between now and 2012, you owe it to yourself to graduate with as little debt as possible, because there’s no guarantee that the job market will have fully recovered and resumed strong growth. Graduating with minimal debt means less to repay once you enter the work force.

If things improve before then, even better for you - you’ll graduate with minimal debt and be that much better off.

Student Loan Network $10,000 Halloween Scholarship Open To Students

Quincy, MA –

What can you do in 60 seconds? Send a text message. Leisurely walk half a football field. Reheat a frozen pretzel or pizza, perhaps. The Student Loan Network has added “Apply for a $10,000 scholarship” to the list of things you can do in 60 seconds. The Boston-based financial aid company is holding a drawing for $10,000 on Halloween night, open to graduating high school students and current college students.

“We call it the Trick or Treat scholarship because so many scholarships and forms of financial aid require you to jump through all kinds of hoops just to even be considered. Our scholarship has no tricks at all, just a really short online application that takes 60 seconds,” said Student Loan Network president and CEO Joe Cronin, “with the treat being a large scholarship to help pay for college, especially in this economy.”

Students, parents, and families are encouraged to take a minute and enter the $10,000 scholarship by visiting:

http://www.studentloannetwork.com/10K/

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The Student Loan Network is one of the nation’s fastest growing providers of student loans and related information. A member of the Edvisors family of companies since 1998, we have connected 25 million students and parents with over $1 billion in scholarships, grants and federal, private and consolidation loan funding. To help make the confusing and stressful financial aid process easier, the Student Loan Network also delivers helpful information, including the award-winning Financial Aid Podcast, a multitude of financial aid-related blogs and the monthly Financial Aid Newsletter. Learn more about the Student Loan Network at www.StudentLoanNetwork.com.

Daily Aid 24: How Health Insurance May Affect Your Financial Aid

Student Financial Aid News

From Inside Higher Ed:

Evidence from New York State suggests that students realize how tough a budget year public higher education faces. Leaders of the Student Assembly of the State University of New York have endorsed a proposal — now slated to go to the full Student Assembly — that would call for modest annual tuition increases, The Times-Union reported. SUNY student leaders have traditionally opposed tuition increases, and the new policy would represent the first time that the Student Assembly has endorsed the idea of paying more. Students did put an emphasis on modest increases, but also said that they realized that potentially significant drops in state support leave the university system in need of revenue.

Commentary

An interesting move by a student group, but realistic, and not a bad idea. Rather than staunchly oppose any tuition increase, they’re acknowledging the university’s needs but asking the school to be moderate.

From the Chronicle:

Two universities that are considered leaders in a trend within higher education to offer more work/life benefits for employees have gone in the opposite direction and cut out health insurance for the families of graduate students.

According to an article in the San Jose Mercury News, the University of California at Berkeley and Stanford University will still offer health insurance to graduate students but have cut coverage for their families. The universities said extending coverage to students’ families simply cost too much.

Commentary

Expect more benefits at more schools to be trimmed back, eliminated, or have the price tag for said benefits go up or be unbundled from tuition. If you rely on benefits like these, expect to budget additional money in your financial aid to cover the new or increased costs. You may even need to take out additional student loan funds to cover the increased cost of health insurance if your coverage is dropped or your family’s coverage is dropped.

Scholarship Update

Greenhouse Scholars. All Scholars must also meet the following requirements: be a U.S. citizen or permanent resident of the U.S., be a legal resident of Colorado, be a high school senior in Colorado, have an unweighted GPA of 3.5 or above, demonstrate a strong interest and commitment to the community, demonstrate an ability to persevere through difficult circumstances, possess excellent leadership skills, and demonstrate financial need [annual household income no greater than $70,000]. All selected Scholars will receive a four-year renewable financial grant, but awarding financial grants is only the beginning of what Greenhouse Scholars offers. Our program provides mentorship and scholarship support, addressing each Scholar with our Whole Person approach. Through our program, Scholars have access to as much intellectual, academic and professional support as they do financial subsidies. The program includes: program mentors, peer mentors, internship opportunities, access to a network of professional liaisons, and our summer symposiums. The amount of the financial grant will be based on unmet educational costs after other forms of financial aid have been assessed. The grant will range from $4,000 - $20,000 over four years. The financial grant and participation in our program is renewable based on Scholars meeting a variety of program requirements. All applications must be emailed or postmarked by Tuesday, January 20, 2009. Complete applications include: essay questions, three letters of recommendation, a signed contract, and up-to-date transcripts.

Details at our free college scholarship search site.

Mail Bag

Lyra writes:

If I have multiple checking accounts (three accounts in three different states) will this have a negative impact on my personal credit? If the answer is yes, then should I close them immediately or over a period or time? Thanks!

Checking accounts have absolutely no impact on credit at all, as they’re not credit instruments. If you’ve got overdraft protection on them and you’re overdrawn on all three, that will generate a credit event, because overdraft protection is essentially a short term loan, but if you’re just using plain checking, it has no impact at all whether you have 1 checking account or 100.

Jen writes:

Good afternoon,I am currently a full time student.My financial aid advisors has don’t know the answer to my question,I am prayin that do.I am unable to aply for the parent plus aid,my mother does not reside in the u.s.and i have not spoken with my father in years.I am also unable to get the full pell grant,even though I claimed my own taxes last year,the school refuses to see me as an independent they keep tellin me I am a dependent because I am not 24 or over.what can I do when I file my own taxes as a dependent?

You need to ask your financial aid officer for a professional judgement dependency override. Document your lack of contact with your parents and that will get you classified as an independent. You will NOT be able to get a PLUS loan regardless, as that’s a Parent Loan for Undergraduate Students (PLUS), but you will qualify for additional Stafford Loan amounts.

Zack writes:

So, I’ve decided I want to go to school, the problem is I don’t have any money. I’m from Ontario (Canada) and our program for student loans is called OSAP. I would be able to get about 9000 (a max. of 12,000 if you qualify) per year, and I can get about $45,000 from the Bank of Montreal. Both of the loans come with an interest rate of prime plus 1 percent, and the loan from BMO requires I pay interest during the period of study and also requires a co-signer. I want to do this as independantly as possible and I was wondering what advice you could give a poor potential student so that I can afford to go to school!

You’ll want to investigate these international student financial aid resources:

http://www.InternationalStudent.com
http://www.InternationalScholarships.com
http://www.IEFA.org
http://www.InternationalStudentLoan.com

Bear in mind for the last resource, you’ll need a cosigner who is a citizen of the country in which the loan company resides. If you’re studying in the UK, a UK subject; in the US, a US citizen or permanent resident.