The College Solution » Student Loans

My Most Popular College Blog Posts of 2011

Lynn O'Shaughnessy — Mon, 02 Jan 2012 01:14:52 +0000

I want to give a big thanks to all of my regular visitors — and the new folks too — who helped to make 2011 the best year ever for The College Solution! I know 2011 was my best year because I use Google Analytics to keep track of how many people visit my college blog.

Now that we’re in a new year, I used the analytic tool today to see what my most popular college blog posts were for 2011. If you missed them the first time, I thought you might enjoy reading them.

1. Don’t Believe the Sticker Price: The Most Expensive Colleges in the Country

I wrote this post in July after the U.S. Department of Education released its list of the most expensive state and private colleges and universities in the country. Seven of the 10 priciest institutions are art schools and music conservatories. Unless you’re wealthy, I’d stay away from these schools.

I took a look at the most popular college majors and discovered which ones have the best and worst unemployment rates. Architecture majors seems to face the lousiest prospects while medical technology technicians enjoy the best.

3. Do You Know the Difference Between a College and a University?

In this May post, I explain the difference between universities and colleges. I firmly believe that if more students understood the differences, more undergrads would be enrolling at colleges.

4. Best and Worst Paying College Degrees

I personally don’t believe you should choose college majors just because of potential pay and frankly most students can’t qualify for the best-paying jobs because most of them require math skills.

4. Grinnell College: A College Admission Success Story

This was a story about a kid from St. Louis who won the educational lottery when got into Grinnell College, which is among a few dozen schools in the country that offer the best financial aid policies.

5. 10 Great Ways to Shrink the Cost of College

The best way to cut college costs is to be an educated consumer. You an start by checking out these money-saving tips.

6. 30 Liberal Arts Colleges In or Near Cities

I wrote this post because so many teenagers want to attend college in a city. Many liberal arts colleges, including that pair that my kids attend(ed) are not near urban areas, which is what turns off some teenagers who believe (rightly or wrongly) that they have to live in cities during college. I wrote this post for these kids. You should also read the next day’s post where I include the liberal arts schools that I had overlooked : More Liberal Arts Colleges In Or Near Cities

7. Anatomy of a Stingy College and a Generous One

This was one of my favorite blog posts of the year. I compare two Pennsylvania schools — Muhlenberg College and Drexel University – to explain why it’s important examine the financial aid policies of individual schools. FYI, Drexel is the stingy school.

8. Getting Into College With Learning Disabilities

David Montesano, a college consultant in Bellevue, WA, wrote this great guest post for high schools students with learning disabilities. You’ll find a lot of helpful advice on this topic.

9. What is the Best Student Loan?

The best college loan for students is the Stafford Loan. I provide a link to a bunch of my student loan posts.

10. Financial Aid and Divorce

I write about a teenager with divorced parents who blew it when developing her list of schools. The blog posts shares how different schools treat families of divorce.

Lynn O’Shaughnessy is the author of The College Solution, an Amazon bestseller, and a financial aid workbook, Shrinking the Cost of College: Great Ways to Cut the Price of a Bachelor’s Degree, which is only available on her website.

Confusing Financial Aid Awards: Where’s the Money?

Lynn O'Shaughnessy — Wed, 09 Nov 2011 15:50:31 +0000

One of the frustrations of applying to college is the confusing nature of many financial aid awards.

Even when a teenager has received a puny financial aid award, schools don’t necessarily want families to know this. Some parents will look at a misleading financial aid award and think their child has won scholarships to cover much of the cost of college. What they might have actually received is an award stuffed with loans.

I blame a lot of the confusion on the jargon-laced terminology and unhelpful formatting that many college financial aid offices use. Why do plenty of financial aid offices insist on cranking out misleading financial aid awards? Gosh, could it be that some of these letters are marketing tools meant to obscure the real price of colleges?

Here is an example of a misleading award. You might assume that the student is receiving $27,550 for school, but it’s actually $19,500 if you subtract the loans and the work study. And it might actually be $18,500 if that campus visit credit is truly a one-time deal. The financial aid award also doesn’t disclose what the actual cost of the college is, which is obviously a crucial piece of information.

Poor Financial Aid Award Letter

A Better Financial Aid Award

There is no reason why colleges can’t do better. That’s why it’s good news that the federal Consumer Financial Protection Bureau and the U.S. Department of Education has released its own prototype of a model financial aid award. You can see it below:

Financial Aid Award Prototype

Here’s what I like about this simple model award letter:

At the top, it provides the costs of this school.
It clearly separates the grants and scholarships from the loans.
It shares what federal loans (the best kind) that the student would qualify for.
It includes what private loans would be necessary if families can’t cover the tab after federal student loans.
Super important: it reveals what the loan tab would be upon graduation, as well as the estimated monthly payments.

What Do You Think?

The bureau is seeking input from families on this prototype. Here is where you can express your opinion about the model financial aid award letter. Regardless of what the final award proposal looks like, colleges would not be obligated to use the template and I think that would be a shame. Congress cshould pass a law that forces all schools to use a standardized letter.

Families want and deserve a standardized financial aid form. In a survey for Fastweb, a scholarship search engine, 84% of parents said they wanted standardized aid letters.

What do you think?

Lynn O’Shaughnessy is the author of The College Solution, an Amazon bestseller, and the workbook, Shrinking the Cost of College: Great Ways to Cut the Cost of a Bachelor’s Degree. Follow me on Twitter and Facebook.

States With the Highest and Lowest Student Debt

Lynn O'Shaughnessy — Thu, 03 Nov 2011 04:56:50 +0000

Student loan debt is at its highest level ever.

That’s the conclusion of a new report released on Thursday by The Project on Student Debt.

Two thirds of students in the class of 2010 graduated with college debt that averaged $25,250, which is the highest it’s ever been. Students mostly borrowed through federal loans, but at least 22% of the student debt came from riskier and more expensive private college loans.

States With the Highest Student Debt

Students from the Northeast and Midwest got slammed the hardest. I’m assuming that’s because more students in those regions attend private colleges and universities. In the chart below, you will see what the average student borrower from the class of 2010 owed.

States With the Lowest Student Debt

The states where students graduated with the lowest debt were in the West and the South. In these two regions, students are far more likely to attend public universities that are lower priced.

A Look At California

If you’re a Californian, you might be surprised to see California on the list of the lowest debt states. I know I was. Keep in mind, however, that these figures were generated by students who typically started college in the mid 2000′s. The prices weren’t nearly as high back then.

After financial aid, the price of a University of California education can be staggering for low and middle-income families. As you can see from the chart below that I pulled off the UC website, a family making $20,000 a year is somehow expected to pay $9,400 for one year of college!! Yeah, right.

Hall of Shame: Private Schools With the Highest Student Debt

Finally, the Project on Student Debt’s report included a list of schools with the highest student loan debtors. Students of the private schools listed below graduated with debt ranging from $40,400 to $55,250. That’s mind boggling! I should note that on this list are five art schools and five Catholic institutions. I did not consider this surprising since art schools are notoriously stingy and so are many medium-sized Catholic universities. Consider yourself warned.

Public Universities With the Highest Student Debt

Here are the public universities that produce graduates with the most debt. The public school debt ranged from $29,800 to $45,350.

Lynn O’Shaughnessy is the author of The College Solution and she also writes a college blog for CBSMoneyWatch.com and US News & World Report. Join her on Facebook.

How to Avoid a Student Loan Disaster

Lynn O'Shaughnessy — Fri, 28 Oct 2011 05:49:27 +0000

Most of the teenagers who visit my college blog aren’t thinking yet about how they are going to come up with the cash to pay off any future student loans.

High school students and their parents are more focused on getting into good schools. I don’t blame them, but payback time is inevitable. And that’s when it’s going to get ugly for some graduates. Nearly 9% of student borrowers have defaulted on their loans. Unlike nearly all other debt, you can’t wiggle your way out of repaying student loans.

While all this sounds ominous, there is a safety net for students who borrow through the federal government. If you possess federal student loans, and in particular the Stafford or Grad Plus loans, you can pay back them back based on what you are making rather than what you owe.

Student Loan Safety Valve

The income-based repayment plan (IRB) is an incredible deal for students who naturally worry about whether they will find jobs after graduation. The IBR is principally designed for graduates who are unemployed or underemployed and struggling with paying back their loans.

This repayment program is on the verge of getting even better thanks to a White House announcement on Wednesday that will extend the program to roughly 1.6 million more Americans.

The current loan repayment program permits borrowers to make lower payments if their loan payments exceed 15% of their discretionary income. If the debt isn’t repaid in 25 years, it will be dismissed.

Obama’s plan, which will take effect sometime in 2012, will allow borrowers to participate if their loan payments exceed 10% of their discretionary income. Their loans would be entirely dismissed after 20 years. Here is an example from the press release announcing the improved repayment program:

You’re probably wondering how you or someone you know might qualify. What, after all, represents 15% or 10% of somebody’s discretionary income? No worries here. You can use the federal IBR calculator to determine your eligibility and what your new payment would be.

I used the calculator and assumed that the borrower made $20,000 in income and had $25,000 in outstanding debt. In this case, the borrower would pay just $45 a month.

Taking Advantage of the Repayment Plan

Sadly, most borrowers don’t know that the repayment program even exists. Only 450,000 borrowers are currently participating in the program even though millions of Americans are eligible. If you know someone who can benefit, please pass the word.

Way Off the Subject:

As a lifelong St. Louis Cardinal fan, I have to mention one more thing: Friday is game 7 of the World Series. I already bit my fingernails off during Game 6 so I don’t know how I’ll be able to handle watching the final game. But nonetheless, go CARDINALS!!

Lynn O’Shaughnessy is the author of The College Solution and she also writes a college blog for CBSMoneyWatch.com and US News & World Report. Join her on Facebook.

Talking About College on National TV

Lynn O'Shaughnessy — Mon, 22 Aug 2011 14:23:52 +0000

On Friday I was one of the guests on The Early Show on CBS talking about who should be responsible for paying for college — students or parents.

Obviously, the answer for most families is both parents and students. So the CBS segment didn’t break any new ground nor was it particularly illuminating, but it was great to be on national TV. It was a fluke that I was able to be on the show. A producer emailed me last week asking if I was going to be in New York City. When the producer sent the email I happened to be on a plane heading to NYC.

Here is the CBS segment. Sorry, but you have to watch a commercial first.

Who Should Pay For College and How?

I’m also sharing some photos of my experience at CBS. My daughter Caitlin insisted that I take some pictures and I did even though I felt like a dork. Here are the photos:

I asked my friendly driver if he liked driving celebrities around. He said most of them were very nice and his No. 1 favorite is Bill Cosby.

Don’t try to take a photo of yourself in a mirror. It doesn’t work. I was sitting in the makeup/hair room. They redid my makeup and brushed out my hair and started over. I guess I shouldn’t have even attempted to do it myself at the hotel.

The green room, where guests wait, was stocked with food, but no one was eating anything. By the way, the green room is blue.

Also waiting to appear on air was a woman who is The Early Show’s British royal family expert. She had a British accent and her phone matched her pink dress. A tall, skinny guy, who is the show’s movie expert, was also waiting to go on.

This is where the guests get “miked up.” To the right is the door to the studio. Not thrilled with my photo below.

Also in the segment was my friend Zac Bissonnette, the author of Debt Free U, who is working on another book. We have talked before and emailed each other many times, but we had never met so it was great seeing him in person. Zac, who paid his way through college, just graduated from the University of Massachusetts, Amherst.

Here is the actual set. I could only take a quick photo during the commercial because they don’t allow flash photography during the show and I couldn’t figure out how to turn it off.

Before I knew it, the 3 1/2-minute segment was over and a producer escorted us outside to the drivers, who whisked us back to our hotels.

Lynn O’Shaughnessy is the author of Shrinking the Cost of College workbook. She also writes a college blog for CBSMoneyWatch and US News. Follow her on Twitter.

Who Will Pay What for College?

Lynn O'Shaughnessy — Wed, 20 Jul 2011 14:56:49 +0000

The majority of families end up borrowing for college. But when parents and teenagers talk about how they are going to divide up that responsibility, they rarely possess a good idea of what this debt burden is going to mean for them when the bills come due.

That’s why I’m recommending a tool from SimpleTuition, an aggregator of private student loans, that allows families to anticipate what the borrowing costs will be in the future for the student and the parents. The tool is called the College Cost Adjuster. You have to register on the site to use it, but I think it’s worth it.

To use the College Cost Adjuster, simply type in the name of a university and SimpleTuition will automatically fill in the average cost of attendance of the institution. You will see a variety of ways to pay for the school listed including savings, scholarships, parent loans, home equity loan, work-study, private student loans and federal student loans.

What I really like is the tool’s monthly payment adjuster. You can manipulate the bar so that it will show you how much the monthly payments will be for the parents and the child by adjusting their financial responsibility. Baylor University is the example that I’m showing. The only figure I added manually was a hypothetical $8,000 scholarship.

Here’s what I saw on the screen:

The next screen is the most valuable one because it allows you to move a slider bar to adjust what percentage of the debt burden will be assumed by the parents and the child. When you move the bar you can see the consequences of the change of the debt distribution and the sources of college funds will automatically adjust in real-time. Students can also view an estimate of the salary they will need to make to meet the expected payments for all student loans, which can be very sobering.

To see what kind of costs you face in the future you can use a one-year debt figure or a four-year figure. In the example, I used the four-year figure because it’s the realistic one.

In this example, I adjusted the slider so the monthly payments of the student and parents would be nearly identical.

Bottom Line:

Using the College Cost Adjuster can lead to better financial decisions. And sometimes the best decision will be forgetting about a school that’s going to cost too much.