Listen now:

Weekly Financial Aid Roundup

FFEL termination

Perkins Loan changes

FAFSA changes

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
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Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Scholarship Update

Student Loan Network $10,000 Scholarship is in TWO WEEKS

News You Can Use

Scholarship daily tasks
- Check calendar each day to see what deadlines are coming up
- Search for and put 2 new scholarships on your calendar each day – takes 5 minutes
- Check your dedicated scholarships inbox
- Check your dedicated scholarship searches in Google reader

Scholarship weekly tasks
- Set aside 2 hours every week, like a Sunday afternoon, and
- Apply for 2 scholarships
- Send thank you notes to any awards that have contacted you, positive or negative
- Update your scholarship contacts database

Free Stuff Friday

Replens moisturizer

Aviary image editor

PureVia sweetener

Random House Advance Copies

2 GB flash drive

Breakfast at Ikea this weekend

Ashley Tisdale party accessories

Google Docs templates for everything

More of Rachael Ray’s pet food

Make your heart explode with Venom

Free Song of the Week

This week, identify the musician who’s rapping.

Last week’s song was from the cheesy martial arts movie Kickboxer.

Paul Hertzog
“Stone City” (mp3)
from “Kickboxer”
(PERSEVERANCE RECORDS)

Buy at iTunes Music Store

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Weekly Financial Aid Roundup

US Bank exiting student lending.

An alternative student loan proposal.

Questionable issues at the FSA Ombudsman office?

California IOUs for student aid?

Scholarship Search

A refresher on using Twitter to find scholarships.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Free Stuff Friday

Nivea stuff from WalMart. Part 1 | Part 2

Paper towels from WalMart.

Ziploc Pack and Go containers

McDonalds has free Mocha drinks on Mondays until August 3rd, between 7 AM and 7 PM.

5 issues of Oprah’s magazine.

15 songs on iTunes from Lollapalooza bands

Purina Beneful magazine

Aveda hand relief

Free Song of the Week

Today we’ll have some fun. There will be a song in the show, and the first 5 people who correctly identify what movie it’s from and post the movie on the Scholarship Points Fan Page on Facebook will get an extra 20 points. Listen to it, tell me what movie it is, and in addition to the regular 20 points for this episode, you’ll also get 20 extra points – but it will be the first 5 people only.

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Weekly Financial Aid Roundup

Online degree effectiveness.

Decline in scholarship funding.

Student credit cards take another hit.

Scholarship Update

Congratulations to Karalynn Moran who won our $2,500 Scholarship Points award for June.

Operation Homefront.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

News You Can Use

Income Based Repayment kicks off.

Free Stuff Friday

RJO Futures commodities wall chart.

Cloud Star foldable water bowl.

10 free patriotic songs from Amazon.

Forbes magazine.

Caribou Coffee samples.

Sephora makeup kit.

M&Ms dispenser.

Free Song of the Week

All 5 service branch anthems.

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Listen now:

Weekly Financial Aid Roundup

Changes to the FAFSA.

Changes to Veterans benefits.

Scholarship Points Update

We’re getting ready to start revamping Scholarship Points. Add your thoughts about what’s working and what’s not. We’re going Seth Godin Tribes style here.

Also, Scholarship Points referral points awards will be going from 20 points per referral to 30 points.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Scholarship Update

Scholarship seekers and Internet enthusiasts alike are going to love Microsoft’s newest campaign, Create Your own Internet PSA. Can you think of an affliction or problem that Internet Explorer 8 can solve? Can you create a really fun acronym for said affliction? Then you’re halfway there. Now you just need to film your own Public Service Announcement (PSA) and you’ll be entered for a chance to win a $2,500 scholarship!

Details at our free college scholarship search site.

Student Loan Network $10,000 scholarship.

Mail Bag

In the mail bag this week: Carol asks about scholarships. Marilyn asks about grad school. Jason asks about post-bac.

Free Stuff Friday

Free coffee at Borders.

Yoplait Whips.

Tasters Choice Coffee Stick.

Havaianas Flip Flops.

Digital Photo Pro Magazine and HD VIdeo Pro Magazine.

Kiplingers Personal Finance Magazine.

Redken 10,000 blondes hair dye giveaway.

$10,000 from the Student Loan Network.

Free Song of the Week

Whitney Steele, Last Love

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Carol writes:

I just read your e-book on finding scholarships. My son is finishing his sophomore year in HS. Is it really appropriate to be applying for scholarships now, when he hasn’t even applied yet to college and doesn’t know where he is going? I didn’t realize they awarded scholarships to younger students. Carol in NH

Even if the scholarships aren’t necessarily open, it’s a great idea to identify ones he is or will be eligible for. That said, there are plenty of scholarships for as early as 4th grade. Try the procedures in the book and see how they work for him!

Marilyn writes:

I am a parent who listens alot since I have 2 gilrs in school. I really appreciate your sight. First off, my girls have Stafford Loans since 2005.and they are going to grad school Should they be contacting the dept of ed for lower rates? Secondly for this past year, 2008-2009, I have a plus loan at 8.5% and I have just started paying.on it. Is it possible to get that reduced?My dauhter is starting vet school and I cat find many scholarships……any ideas..in state 35000$ a year….help.. Marilyn in St. Louis

The girls going to grad school will automatically get the lower Stafford loan rates as the loans are certified – no need to worry about the grad school ones. The existing loans are either variable for the 2005 ones (and first half of 2006) which auto-adjust, and ones after that are fixed rate based on rates at the time of disbursement.

For PLUS loan rates, you can knock off 0.25% if you consolidate the PLUS loan, as student loan consolidation has a maximum statutory rate of 8.25%. Beyond that, unfortunately, there are no rate reductions available, at least for now. If the government succeeds in eliminating the federal student loan companies as the President has declared, there probably won’t ever be rate reductions available again.

For vet school – plenty of scholarships. Have you tried our free Scholarship Search Secrets eBook?

Jason writes:

Hi, I am taking some CS courses at Georgia State University post-baccalaureate to increase my chances of admission to a CS graduate program and also to ease the transition back to school (since I didn’t go straight to graduate school).

My question for you is: what are the best, if any, scholarship opportunities for post-bac students such as myself.

Jason in Georgia

Good question – have you checked out GSU’s site for post-bac awards?

Google for:

post-baccalaureate scholarships site:gsu.edu

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Listen now:

Weekly Financial Aid Roundup

Student loan consolidation and Treasury Bills

Scholarship Update

AORN Foundation Scholarship Program. To provide scholarships to students who are pursuing a career in perioperative nursing and to registered nurses who are interested in and committed to perioperative nursing to continue their education by pursuing a bachelor’s, master’s or doctoral degree in nursing or a
complementary field. The number of awards and amount of the awards will be determined annually. Awards are not renewable. The scholarships will be applied to educational expenses including tuition, fees and books. Winners will be required to submit grades and invoices for these allowable expenses corresponding to each semester no later than August 1, 2010.

Details at our free college scholarship search site.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Eye on the Economy

Jobs and college degrees

News You Can Use

More details on student credit cards.

Free Stuff Friday

22 free songs from Nylon Magazine in iTunes

Quortek keychain flashlight

100 recycled business cards

Redbox and Picture Me 8×10 portrait

Esquire magazine

Quickbooks Starter Edition for Windows

Walmart and Tampax

Free Song of the Week

Rebecca Loebe, Over Again

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Weekly Financial Aid Roundup

529 plans getting hammered.

Scholarship Update

Scholarships begging for applicants on MySpace.

In the interest of providing additional opportunities to potential students, the Florida Association of Postsecondary Schools and Colleges has once again moved the deadline for submission for a $1,000 or $5,000 Dade Medical College scholarship to June 30th, 2009. There is still more than $130K available for various programs of study at the Miami and Hialeah campuses of the college, including Diagnostic Cardiac Sonography, Diagnostic Medical Ultrasound, General Radiologic Technologist and more.

Details at our free college scholarship search site.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

News You Can Use

Income based repayment scaling.

Focus on Financial Aid

Oh Canada?

Free Stuff Friday

Burt’s Bees.

All National Parks. Visit such parks as the Grand Canyon, Yosemite and Rocky Mountain National Park for absolutely free from June 20-21 (Father’s Day weekend), July 18-19, and August 15-16.

Ending today: underwear from Victoria’s Secret.

Green Hill CD of easy listening.

Report cards for baseball cards.

A small can of smell from Glade.

Free Song of the Week

Douglas Spotted Eagle, Doolitsaada

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Weekly Financial Aid Roundup

Last Friday, the credit card bill was signed into law by President Obama. Farewell, student credit cards as we know them.

California’s kind of imploding, budgetarily-speaking.

Consequences of CCRAA and anti-FFEL legislation surfacing now.

Figuring out that you can’t spend what you don’t have, Congress looks at a national sales tax to make every part of your life 10% more expensive.

Scholarship Update

We’re nearing the end of the month. Make sure you’re a participating member of Scholarship Points, as we draw our $1,000 and $2,500 scholarships on or about May 31, 2009.

Also, I’m giving out to podcast listeners and followers a sneak preview of the 6th edition of Scholarship Search Secrets, our free eBook. This version has two new secrets that are relatively advanced, plus some edits and updates.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Mail Bag

Mary on Twitter asked about the pros and cons of student loans

Free Stuff Friday

Garden gloves from Chesapeake Bay Foundation

Small coffee at Borders 5/28-5/31

Yogi tea sample

Sopapillas or a bowl of queso at On The Border

Lego Club Jr 2 year membership

Bottle opener from Blue Moon Brewing

From July 13th – July 17th, Baskin-Robbins is giving all Do Something members free Soft Serve.

MCA screwdriver set

Business card metal carrier

Free Song of the Week

Rich Palmer, It’s All Good

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Weekly Financial Aid Roundup

Goodbye, student credit cards.

A perspective on student loan programs.

Impending bank failures.

Scholarship Update

Google has a photo contest running. $7,500. Details at our free college scholarship search site.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Special Report: The Student Loan Reform Congressional Hearing

How cool are you?

Notes and comments from the hearing.

Free Stuff Friday

Cycle Magazine

Quiznos

Garnier Moisturizer via Walmart

American Photo Magazine

Elizabeth Berg’s Year of Pleasures book

10,000 miles from United Airlines

It’s beyond funny. Runpee.com

Free Song of the Week

Jonathan Coulton, I Feel Fantastic

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From George Miller and the House Committee on Education and Labor:

On Thursday, May 21, the House Education and Labor Committee will hold a hearing to examine proposals that will make historic increases in college aid by enacting reforms that will make the nation’s federal student loan programs more reliable, effective and efficient for students, families and taxpayers.

One of the proposals the committee will examine is President Obama’s FY 2010 budget proposal, which would increase the Pell Grant scholarship and other forms of student aid by almost $100 billion over ten years – and at no cost to taxpayers. The President’s plan would be paid for by ending the subsidies the federal government currently pays to lenders in the federally-guaranteed student loan programs and re-directing those savings back into additional aid for low- and middle-income students.

Congressman Miller and his staff have invited you, Financial Aid Podcast listeners, to tune in for a live video Webcast of the event on Thursday morning at 10 AM Eastern.

Click here on Thursday morning to tune in. If your computer has trouble playing the broadcast, install the free VLC software.

Regardless of your politics, it’s so very cool that a Congressional committee is reaching out to you, the listeners of the Financial Aid Podcast. I say it often, but not often enough – thank you for listening and tuning into the show. Without you, none of this – including an acknowledgement of our digital community by COngress – would ever have happened. Thanks for sharing the Financial Aid Podcast with your friends and family.

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Weekly Financial Aid Roundup

8 colleges with no tuition

Focus on Financial Aid

A compendium of our library.

Before College

Scholarship Search Secrets – eBook and video detailing how to use Google and other free tools to find scholarships

Finding Financial Aid – a short eBook outlining the overall financial aid process

Applying To College

FAFSA Guide eBook – a guide to the Free Application for Federal Student Aid, or FAFSA, with line-by-line help

How To Read Financial Aid Award Letters – a guide to decoding the award letter and determining what aid you’ll receive

In College

How To Find Cheap Textbooks – a guide to saving as much money as possible on expensive college textbooks

Personal Finance First Aid Kit – a guide to helping you manage your budget quickly and easily

After College

How to Write a Killer Cover Letter – a guide to an essential part of the job hunting process

Credit Card Debt Reduction Plan – a guide to reducing your credit card bills

All of our eBooks are free and free to distribute. If you know of any groups, organizations, clubs, or offices on campus that would especially benefit from these guides, please give them away.

Beer Money

Go make some money with other people’s free stuff.

Rant

Is college a lemon?

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Scholarship Update

The mission of the Ohio Travel Association Scholarship Grant is to foster the travel and tourism/hospitality related education of an Ohio student and thereby promote professionalism within the industry. A $1,000 scholarship will be granted to a qualified, full-time (12 or more credit hours) student after the completion of their freshman year (36 hours completed (quarter system)/30 hours completed (semester system) with a minimum 2.5 GPA) and may be renewed for the following two years. As part of the scholarship program, the recipient will be invited to various OTA events throughout the year. Deadline is June 15, 2009.

Details at our free college scholarship search site.

Plus our next $10,000 scholarship.

Free Stuff Friday

Kellogg’s All Bran

Bag of popcorn from Yahoo

Mobile phone case from Celltonica

Free album from Coldplay

Saturday, May 30 is free ice cream day at Walmart

Light smoothie at Orange Julius

CD from River Lee Jazz Band

DiGiorno Pizza Flatbread Melts

Free Song of the Week

Duwende, Young Leaders of Tomorrow

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Lots of free stuff.

Take a look at your local Craigslist, especially if you live anywhere near a college or university. If you’re in the City of Boston, for example, you can’t sneeze without hitting a college.

Start looking through all the free listings in the area for items that might be of value to someone – furniture, electronics, etc. You’ll find, especially in larger cities, that there are plenty of students who are moving back home for the summer or after graduation that have large items they just don’t want to ship.

Here’s two ways to earn some money with other people’s stuff.

1. The obvious: find free stuff in good condition – especially smaller stuff – and resell it. You can use eBay, Craigslist, or whatever avenue you want. If you have the ability to store and save stuff, all the better. Take the same goods you’re getting from college students in the spring, hold them over the summer, and resell them to students (you know students need them, obviously) in the fall.

2. If you itemize your tax deductions each year, this is an ongoing opportunity to save yourself a ton of money. With a car or truck and a few gallons of gas, find and collect free stuff like clothes, furniture, and other goods needed by local homeless and transitional shelters in your area. Scoop up the goods, then bring them to your local community centers that accept donations, collect your tax receipts, and save huge on your 2010 taxes. Your community will benefit, the people most in need will benefit, and you’ll benefit.

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Weekly Financial Aid Roundup

Amazon Kindle DX.

Elimination of Student Credit Cards

Scholarship Update

Check out our pile of featured scholarships!

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Focus on Financial Aid

Student loan enrollment status change

Never sign something you don’t understand.

Free Stuff Friday

Ringtonica Dental Floss

100 Free Applications for Mac OS X

Free Hellmans Mayonanaise

Energizer hearing aid sample

Dove hair care stuff

Head and Shoulders too

Staples Career Stimulus Program – 20 resumes and 40 business cards for free

Aerie free towel

Scrubbing Bubbles pack

Free Song of the Week

George Winston, Variations on Canon

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Slides:

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Don’t sign anything you don’t understand.

Take a look at that student loan form and read through it. See the pages of fine print after the initial application page? Read those pages. If you don’t understand something in those terms, don’t sign the loan application, because the moment you do, you are contractually and legally bound to terms you don’t understand. You cannot appeal them or get them modified later on, and the law regarding loans is quite clear: if you voluntarily signed a loan application, you are bound by the terms and conditions of the loan, even if you have no idea what they are.

This is how so many students get into financial trouble later on in life. Student loans do not come with standard consumer protections, like the ability to get loans discharged in bankruptcy. That’s just one of the many terms in the fine print of nearly every student loan out there.

Read and understand the loan terms before you sign on the line. If you don’t understand something, ask. Ask your financial aid officer, ask in our free financial aid discussion boards, but ask before you sign, because once you’ve signed, you can’t unsign.

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Student Financial Aid News

From Inside Higher Ed:

With Congress poised to give the White House a smoother path to push its plan to end the lender-based student loan program, President Obama warned Friday that he was girding up for a fight with banks and their “army of lobbyists.” Obama’s 2010 budget proposal in February included an aggressive plan to make all new federal student loans out of Federal Direct Student Loan Program, using tens of billions of dollars in savings from eliminating the competing Family Federal Education Loan Program to ensure a stable and steadily growing stream of funding for the Pell Grant Program, the chief source of federal need-based financial aid. The administration was banking on the fact that while many colleges use and support the lender-based guaranteed student loan program, the prospect of a Pell entitlement, which they have long coveted, would outweigh their reservations.

Commentary

Not much news here except that the use of reconciliation in the budget process will likely accelerate the timetable for changes. What impact will this have? For the immediate future, none – any changes to student lending will not become active until at least July 1, 2010. Stay tuned, of course.

From NASFAA:

“For the first time since 2006, Tufts University this year looked at how much aid it could afford to give students when considering about 5 percent of its applicant pool,” Bloomberg reports. “After reviewing 15,039 applications, Tufts accepted about 3,800 students without regard to their ability to pay, said Lee A. Coffin, dean of undergraduate admissions. The school, in Medford, Massachusetts, then reconsidered 750 applicants and offered admission to another 150, including about 100 whose ability to pay full tuition was deemed a plus, he said. For Tufts to take any student’s finances into account is another indication of how colleges throughout the U.S. are responding as endowment values plunge and operating budgets come under pressure, said Jonathan Reider, director of college counseling at San Francisco University High School.”

Commentary

Expect this rather obvious trend to continue. At the end of the day, a college is a business and needs to remain cash positive. If that means more students who can pay “sticker price”, then that’s what we’ll see in college admissions.

What you see in college tuition is consumerism writ large – students want first class facilities and amenities with their education, colleges want to compete for the best students, have to pay top dollar to provide the amenities, staff, and faculty, and tuition goes up. That’s been the mantra for decades in higher education. As the economy contracts severely, colleges are still paying top dollar but things like financial aid, alumni donations, and government grants are receding. Colleges can either rein in their costs or change the composition of their student bodies to increase the number of people who can and will pay full price. I would expect this trend to continue.

Scholarship Update

Ruth Ashton Taylor Academic Scholarship: The Good News Foundation is awarding a $5,000 academic scholarship—as well as a mentor—to an exceptional students who demonstrates she not only has the desire to become a television journalist, but the determination to uphold the standards set forth by the profession.

Details at our free college scholarship search site.

News You Can Use

How do you pick, as a parent or student, an investment that will do well for saving for college in the long term?

Disclaimer: I am not a financial analyst, stock broker, or certified financial planner. Take any and all advice with a grain of salt and consult a qualified financial professional before making any significant changes to your finances.

GIven how tumultuous the economy has been over the past couple of years, a lot of the advice that was dispensed during the boom for saving for college just flat out doesn’t apply during the bust. So what does work? What should you be looking for? Here’s some starter tips.

1. Determine your appetite for risk. Is your goal to have every dollar you invest be there on high school graduation day? If so, you’ll want to avoid anything not FDIC insured (or NCUA insured). Capital preservation – meaning you never lose any money you save – comes at the expense of little or no growth. If you’re lucky, you’ll earn pennies on the dollar saved – but you will never lose what you put away. Look at certificates of deposit (CDs), FDIC savings accounts, and federal government bonds like FDIC bonds and Treasury savings bonds.

2. Want to go gambling? Learn to use tools like Google Finance to see how various types of investments perform over time – and look at longer time periods like 5 and 10 year terms to see how things look overall. Research before you buy!

3. Determine your timeline. The closer you get to needing the money, the more conservative you should be if you’re investing with risk. Stocks and equities may be a good idea when a child is 2 years old, but when they’re 17 years old, you want to aim for minimal risk. As time goes by, shift more and more money into lower risk places.

4. There is no free lunch. Above all else, there is no shortage of scammers and snake oil salesmen promising every kind of benefit under the sun for you if you buy their products, from books to seminars to recommended investments. Absolutely be looking around to learn more about saving and investing, but be aware that qualifications for writing a book these days are virtually non-existent, and qualifications for holding your own investment seminars and other commercial ventures are even lower.

If it sounds too good to be true, it is.

What would be the strategy I would recommend to my friends and family? A three part strategy:

1. Set up conservative savings vehicles like CDs, bonds, etc. to minimize risk and maximize preservation of capital. There’s very little reason to go speculating in the market when you can get income via other means. Those limited investments I would make – gambles – in the stock market would go towards mutual funds with very low fees and dividend payouts.

2. Look at some basic online affiliate marketing you can do through sites like Commission Junction and Shareasale (disclosure: paid link). Take any money you earn through these relatively passive means – and we’re talking monthly checks of $50-$200, not quit your day job money – and divert them all to your savings vehicle from step 1. Never let any money earned through this secondary job be spendable.

3. Hunt for scholarships like crazy from the moment that you’re eligible to do so. For some students, this is as early as third or fourth grade. Enter competitions, contests like ScholarshipPoints.com, and apply for every scholarship you’re eligible for as often as you can. Any scholarship money you get should be plowed into the conservative savings vehicle in step 1.

Does this perform better than stock market investments? Do the math. If you invest $1,000 at 6% for 10 years (with no additional deposits), you’ll have $1,819.40 assuming your investments maintain that 6% return. If you choose to save at 2% but win a $500 scholarship every year, at the end of the same 10 years you’ll have $6,760.40 and no risk to your college money. When it comes to saving for college, finding scholarships and saving them in a conservative, no-risk savings vehicle is the way to go, and the advice I’d give to anyone whose future I cared about. It’s very hard work, unquestionably, but the rewards are worth it, especially compared to gambling in the stock market.

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Weekly Financial Aid Roundup

A new article looking at the differences in interest rates for various graduate student loans over at GradLoans.com.

Scholarship Update

National Geographic’s Galapagos Exploration award, plus ScholarshipPoints.com drawings in just 6 days.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

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News You Can Use

Exactly how much should you borrow in student loans?

Focus on Financial Aid

Selective Service and you.

Free Stuff Friday

Whole Foods free lunch bags.

Schick Quattro razor.

Nivea body wash from Walmart.

Fairview sunscreen.

Sunflower seeds for gardening.

Free photo card for Mother’s Day from Kodak.

Notepad and pen from CSO.

Dogswell dry dog food.

9 free short story audiobooks from Barnes and Noble.

And finally some tips for vodka besides drinking it. Got a bottle of really terrible vodka? Here are some tips, including putting it in a spray bottle and using it as an insecticide.

Free Song of the Week

Bob Gentry, Upside Down

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Student Financial Aid News

From the Chronicle:

“The percentage of students taking out private loans has increased by nine percentage points over the past five years, from 5 percent to 14 percent, according to a new analysis of Education Department data that was released last week,” The Chronicle of Higher Education reports. “The biggest jump in borrowing occurred at for-profit institutions, where the share of students with private loans grew from 14 percent to 43 percent in the years from 2003-4 to 2007-8, according to the analysis, which was prepared by the Project on Student Debt. … Among students taking out private loans, 26 percent did not use federal loans, up from 22 percent in 2003-4.”

Commentary

Not using federal student loans like the Stafford loan isn’t a great idea. Federal student loans come with things like a 3 year deferment entitlement which lets you postpone payments (at the cost of accrued interest) for up to 3 years if you run into hard times.

That said, private student loans are marketed well, and more importantly, during this down economy, are significantly less expensive with excellent credit than their federal student loan equivalents – for now.

Take a look at posted loan rates:

Stafford subsidized loans: 6.0% fixed
Stafford unsubsidized loans: 6.8% fixed
PLUS loans: 8.5% fixed
Best case scenario private student loans: 2.75% (Prime -0.5%) variable
Worst case scenario private student loans: 14.44% (1 month LIBOR +14%) variable

If you have the ability, due to fantastic, stellar, sparkling credit to take out a private student loan at 2.75% versus a Stafford loan at 6.0%, it doesn’t take a Ph.D. in math to figure out the better deal.

Virtually all private student loans are variable rate loans, which all but guarantees their rates will be higher at some point in the future, and lower again at another point in the future. If you have the ability and discipline to do so, borrow a private student loan as long as rates remain significantly below federal student loans – then when private student loan rates start to creep up within a percentage point or two of federal student loans, talk to your school’s financial aid officer about borrowing federal student loans to cover the full repayment of the private student loan.

If you know you don’t have the discipline and diligence to monitor student loan interest rates that frequently, then take out a federal student loan, as the interest rates are fixed, locked in, and never change. For a couple of years, they’ll be a higher cost in terms of interest rate than private student loans, but for a few years after that, they’ll be lower cost as the market naturally fluctuates.

Scholarship Update

Blue Ocean Institute and Lindblad Expeditions are pleased to announce the Kalpana Chawla Ocean Journey Scholarship. This scholarship will provide high school or college students with an enriching, hands-on field study experience at sea. The winner(s) of the Kalpana Chawla Ocean Journey Scholarship will embark on a 10-day Lindblad Expeditions voyage to the Galapagos Islands in the presence of scientists, naturalists, and researchers. Alongside these skilled specialists, they will use state-of-the-art exploration tools to take part in discovering stunning natural environments as they pursue their interests in marine biology, biodiversity, or oceanography. The expedition departs on July 10, 2009. Activities include snorkeling, exploring the islands on Zodiacs and gaining intimate views of Galapagos wildlife.

Details at our free college scholarship search site.

Question of the Week

We’ve talked a lot about innovating, saving money, earning more money, and now I want to hear from you.

As a student, what are you doing to earn extra money while in school? What’s working well for you? Job? Second job? Online affiliate marketing? Share your success stories!

Leave your answer in the comments!

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Student Financial Aid News

From the New York Times:

They bought into the notion that if they went to college — never mind the debt — their degree would lead to a lucrative job. And repaying their student loans would never be a problem. But the economic crisis has turned those assumptions on their ear as thousands of recent graduates have been unable to find jobs or are earning too little to cover the payments for loans that are sometimes as high as $50,000. The result has been rising default rates for student loans. And unlike other debts, student loans cannot easily be renegotiated.

Commentary

We’ve been talking about how much to borrow as far back as Episode 463, way back in February of 2007, and reran the numbers later on, and came up with this statement:

Never borrow in total more than your estimated first year’s after tax earnings.

Let’s walk through exactly how to compute this.

First, go to the Bureau of Labor Statistics. Go to the National Compensation Survey. Find your state where you expect to live after graduation.

Identify the metro area if applicable. Here, we’ll use Boston, headquarters of the Student Loan Network.

Find your presumed occupation after graduation. Let’s say for example Public Relations Specialist.

Choose All Years for the most comprehensive data.

You get a data point: 30.92. This is the average hourly wage of a PR specialist in the Boston area. Multiply this times 40 for earnings per week, and times 52 for weeks in a year, and you get $64,313.60.

Now, apply a tax calculator to this number to find out your after tax earnings. Here’s an example calculator. You’ll need to know your state and federal income tax rates – for federal, most students earn between $32,000 and $78,000, which is the 25% tax bracket. Add in any local taxes if you know them.

Surprise – at $40,493, your actual take home pay is 37% less than what your gross salary is, courtesy of the government.

This number – the net pay, take home pay number – is the amount of money you have to live on every year and pay all of your bills with. This is the number that should not be more than you borrow in total student loans for your entire education, because as this example shows, relying solely on gross salary to compute how much you borrow leaves out the sizeable chunk that Uncle Sam takes out of your pocket before you even see it.

This is the borrowing rule of thumb: do not borrow more than your first year’s estimated take home pay for all your student loans, and this tutorial guides you through exactly how to compute that.

Scholarship Update

The Tampa Bay Advertising Federation is offering a $1,000.00 scholarship to one high school or college student enrolled in an advertising, marketing, graphic design or mass communications curriculum at any accredited school in Hillsborough, Pasco or Pinellas Counties. Graduating college students and graduating high school students who plan to pursue a degree of higher education are also eligible to apply.

Details at our free college scholarship search site.

Mail Bag

Dragoneer and Matthew Ebel asked on Twitter:

I’m apparently being denied tuition loans because I never registered for Selective Service, aka “the Draft”. Dragoneer: Draft Dodger. It’s a law? I’m 29, and I never heard of the !@#$ing thing until 20 minutes ago. How the hell am I supposed to know?

I have very little familiarity with Selective Service beyond the registration requirements, so I asked the financial aid community. Here’s what they said, in aggregate. Full names have been withheld.

I have a disabled student in the same situation. He didn’t know he needed to register because he thought his disability made him exempt. I had him write a letter explaining the situation, and I override the selective service match every year. I think that a letter from the student explaining why he did not register is sufficient documentation. – S

Unless the student never visited a US Post Office and never watched TV (where PSAs used to appear occasionally), he will likely have a difficult time whenever he tries to say that his failure to register wasn’t ‘knowing’. We’ve only used that at schools where I’ve worked for students who became citizens or permanent residents. – M

This is an individual call by the school he is attending. So, it does not matter how many opinions you get, only one counts. The Selective service advisory letter will tell if they have record of sending him correspondence. That is often a major factor for me. – T

We require that they also explain where they were and what they were doing between the ages of 18-26. Did he get the letter from the Selective Service (that they send to all males when they are turning 18)? When did he get a driver’s license? When did he register to vote? Those are all times when you would be notified to register with selective service. Just because someone didn’t know at 18 doesn’t mean they couldn’t know later. Also, we would possibly ask them to get us a letter from the Selective Service. The Selective Service sends out confirmations of if THEY sent a letter to the student and it was not returned to them. So we would require a lot more documentation.

However, I know colleagues of mine at other schools simply have a student check a box on a letter that says “it was not knowing and willful” and leave it at that. – T

Our student’s father had a rare immune disorder, similar to the “boy in the bubble”, so our student was home schooled as to minimize his father’s exposure to germs. We had him get a letter from the Selective Service which quoted Section 12(g) of the Military Selective Service Act (40 App. U.S.C 462(g), which is the text you were referencing. In addition we asked him to sign an affidavit explaining why he didn’t register, thus supporting his claim that it was “not knowing and willful”. – C

He can contact Selective Service for an Advisory Opinion Letter. The form can be downloaded at www.sss.gov.

He explains on the form why he didn’t register, sends the completed form to Selective Service, and waits for the response (@ 4 weeks). Then he takes the response to the college he’s attending.

In general, such responses state that it’s up to the institution granting the benefit (in this case, the school, since he is applying for a loan); when it’s up to the school he must also provide the institution with an explanation as to why he didn’t register.

In 20 years, I’ve only seen one Selective Service response where the student was told he absolutely was not eligible for the benefit, but I also had one student who told me he didn’t want to get drafted so he deliberately didn’t register. Unfortunately, I could not in good conscience grant him federal aid, since it was “knowing and willful”. What is sadder is that the draft had been abolished, and he wouldn’t have been drafted anyway, absent an act of Congress.

When it’s up to the school to make a final determination, it really depends on the school. – P

He needs to get a letter from Selective Service regarding whether his failure to register was “knowing and willful.” Then he needs to present that letter to the school. The school’s decision regarding his eligibility is final and can’t be appealed to Selective Service, U.S. Department of Education, or anyone else. – D

I have come across this from time to time. I ask the student to request a Status Information Letter from the Selective Service (www.sss.gov) and when they receive it back from the Selective Service it typically will show they are not registered. The student must then submit a written statement explaining in detail why they failed to register to our office along with the Status Information Letter for review. It is really up to the discretion of the FAA to determine if the explanation was “not knowing and willful” or not… – Y

Ultimatly, it is the schools that make the final decision. Some will probably play it pretty close to the vest and require pretty definite proof that it was not willful nor knowing. Others may be somewhat more liberal and allow the student’s written letter and no obvious information from SSS to the contrary. – P

I always ask for the “Status Information” letter from Selective Service and use the code they list at the bottom of the letter as a determining factor in my final assessment. – A

It is difficult to believe that someone could have been in a bubble that long and not have registered for SS. Secondly, the potential student would have to provide some documentation that beyond 18 he never was in a post office, talked with someone that had registered, or was in a foreign country where the issue didn’t arise. He might have more luck if he were up front and stated that he saw no reason to register since it didn’t affect his daily living and only now has realized that he omitted a responsible action that is denying him a benefit. – R

I extend my thanks to the many financial aid professionals who responded to my query about Selective Service. If you’re male between the ages of 18 and 26, you MUST register for the Selective Service (even though we no longer operate a military draft at present) in order to qualify for financial aid.

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On the question of:

What are some ways that college students can go green without spending a ton of money?

A bunch of people posted some really terrific responses. Since today’s technically a holiday in Massachusetts, where the Student Loan Network is headquartered, I thought I’d post this Earth Day idea list up today so that you can get a head start on Wednesday’s celebrations.

I’ve bartered for many things myself and have seen everything from cars and electronics to vacations and college text books, even many different services advertised on my site. I always thought what a great way to not only save money, but to truly stay “green” in these times of a growing awareness for the planet and I’ve been happy to be able to help. – Joseph Denton

Clean a river. We have many local groups that need dozens of bodies to walk in the river and pick up garbage. – Trey Burley

Another great thing is re-purposing stuff. I love to scour thrift stores and estate sales for quirky t-shirts that I can make into bags, skirts, stylish shirts, pillows, etc. It’s incredibly cheap, it’s good for the environment, and you get new stuff! You can sew by hand (cheaper to get into if you’re new to sewing) or find a sewing machine. Many college art and theater departments have sewing machines that you may be able to use during off-hours, or find a community center that offers sewing classes. I have occasionally seen sewing machines at thrift stores, as well. – Andi Enns

Many places throughout the Country are ideal for composting and planting a small garden for some or all of the year. This tip definitely applies more for off-campus living, though some colleges may allow dorm-dwellers to plant a garden near their building. Both gardening and composting are easy things students can do that won’t take too much of their time on a daily or weekly basis.

For the most part, food waste, when it gets sent to a landfill for disposal goes through a breakdown process known as anaerobic digestion. This process, which excludes oxygen in it’s chemical reactions, is the main reason why landfills are one of the leading sources of greenhouse gases, such as methane. Composting food waste does not produce these same greenhouse gases and creates a nice soil amendment that will (1) reduce water consumption where it is introduced to the soil and (2) provide more, slow-released nutrients to plants then chemical fertilizers can reducing the need to add chemicals to the garden.

Students that establish a garden and use compost in it will (1) produce less waste, (2) help reduce water consumption in their outdoor landscaping, (3) reduce stormwater run-off pollution by eliminating pesticides/fertilizers, (4) grow their own healthy food and (5) become more conscious about how our waste (or eliminating it) can have a whole host of positive benefits.

Additionally, in markets such as New York City & Atlanta, the food banks are encouraging folks to “plant a row” for them. Any excess produce can be brought directly to the food banks for redistribution to their member organizations. With the ongoing economic crisis facing many Americans, Food Banks are becoming increasingly relied upon and need products. Fresh produce is one great way to give back to the community and local Food Banks. – Adam Schlachter

Barry University:

- Trayless for the day

- Encouraging Students to avoid using take out containers

- Running Plant- Based Menu Specials all week with the goal of reducing carbon footprint

Palm Beach Atlantic:

- Dim the Lights

- Peanut Butter & Jelly Campaign

- Local & Sustainable Crudite & Dip Display

Jacksonville University

- Battery Collection—Turn in your used batteries for proper recycling—Kinne Center (Crossroad Café) will have a drop bucket.

- Clothing Exchange – Tired of your clothes? Bring good used clothing & accessories to Kinne Center swap for something you like. Talk about recycling!

Northwood University (FL)

- Offering Sodexo reusable bags.

- Fair Trade Coffee & Grounds for Growth program.

- Recycle mug promotion.

- Diming lights.

Rollins College

- Offering Sodexo reusable bags.

- Fair Trade Coffee & Grounds for Growth program.

- Recycle mug promotion.

- Diming lights.

GEORGIA

Georgia Tech

- GT Dining is serving organic boxed lunches; we are hosting a farmers market, and we will be providing a veggie burger grill station (to minimize personal carbon footprints).

Savannah College of Art & Design:

- Special Menus to reduce carbon footprint by using less energy

- No Styrofoam will be used all week: Only Eco-Friendly products will be used: Including Utensils, cups, to-go boxes & brown express napkins, this will result in a 30% to 40% increase in our cost

- Lights will be turned off in different sections of the dining halls all day for entire week

- Our Weigh the Waste program will run for the preceding two weeks and will culminate on Earth Day

- We currently use bulk condiments and tray less dining

- We will continue with our identifiers: posters, Power Point on plasmas and napkin inserts

Georgia College & State University:

- Outdoor picnic to celebrate the outdoors of the earth on Earth Day. All paper items used will be recycled and anything else that can be recycled will be.

- Featuring an area where they can add up their carbon footprint, find out more information about how to go green, and register to win a reusable gift bag with a Sodexo water bottle, organic food items, energy saving light bulbs, reusable shopping bag, a tree planted in a rain forest, and other sustainable items.

- We will have local artists playing and the recycling bins. We will also provide activities such as Frisbees and footballs.

NORTH CAROLINA

Methodist College

- Will be featuring organic items at each station all week and will have the punch cards for the students. At the end of the week they will give out reusable bags to all the students who have their card punched completely.

UNC Pembroke

- Will feature organic products at their stations all week, they are also working with SGA to plant a tree on campus.

North Carolina A&T

- Will feature organic products all week at every station. All stations will feature signage about reducing our carbon footprint.

North Carolina Central University

- Will have a sampling of organic fruit and vegetables. Featuring one sustainable items at each station.

- Will have a Clean tech truck from Piedmont Biofuels on campus demonstrating how they recycle our grease from the kitchen into biodiesel fuel. We will also pass out recycle mugs and bags.

SOUTH CAROLINA

South Carolina State University

- Will have a sampling of Organic fruits and vegetables on Earth Day.

Presbyterian College

- Running – Earth friendly/low carbon foot-print type foods.

Spartanburg Methodist College

- Low carbon footprint meal and going trayless for the day.

USC Upstate

- We are running the vegetarian/low carbon footprint items each day at lunch.

Converse College

- Converse is running the low carbon footprint specials at the JIT station and using provided POS in dining hall.

TENNESSEE

Belmont Univeristy

- They are running the PBJ day

- Last week ran one event where the entire school turned off ALL the electricity for one hour on campus. They served a meal on top of one of the buildings that did not require any cooking. It included pick up sandwiches, chips, cookies and water. Biodegradable products were used. They were trying to decrease the amount of energy they used for one hour to see how much was saved during that time period.

Cumberland University

- Doing a cookout and using all of the biodegradable products.

Lipscomb University

- Erase the Waste campaign: they are measuring how much waste they have left during a day. Managers are displaying the amount in lbs. and dollars to the students so they can see it. They are trying to make students aware of the waste left on their plates.

- Massive list submitted by Monica Zimmer of Sodexo

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Listen now:

Weekly Financial Aid Roundup

• The show turned 4 years old this week!
• Sallie Mae’s student loan proposal – a review.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
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Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

News You Can Use

• Why you should never use student credit cards for tuition and interest computation.

Mail Bag

• How much is that degree really worth?

Scholarship Update

• Google Lime Scholarship – $10,000
• Student Platinum – $2,500
• Scholarship Points – $1,000

Free Stuff Friday

• 60 day pass to BJs wholesale club
• Home Depot CFL bulb on April 19
• Amazon Free MP3s
• Kotex Samples
• Better than Ears Dog Treats
• Fine art postcard
• Discover Education tote bag
• On Earth Day, bring 3 plastic bottles to any Disney store for a free gift plus bag
• Recycled roll of aluminum foil
• Mana Potion Inscription Kit

Giveaway

The 17th Scholarship Points member who claims the code from today’s show will get a free copy of Scholarships 101, a book by Kim Stezala on finding scholarships. Great companion to our free Scholarship Search Secrets book.

Free Song of the Week

• Lee Coulter, Booty Voodoo
  

Road Trips

• Podcasters Across Borders
• NEDMA
• National CGS
• MarketingProfs

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Student Financial Aid News

From InsideHigherEd:

Sallie Mae (ticker: SLM), which as the country’s largest student loan provider has a lot to lose from the Obama administration’s proposal to eliminate the Family Federal Education Loan Program, is floating an alternative that would save the program but cut its costs significantly. In a letter to sent to its college customers, the lender outlined a plan that would entail permanently extending the emergency programs that Congress put in place in 2007 to ensure the continued availability of student loans given the distress in the financial markets but, like the Obama plan, contract out to companies through auction the right to service all federal student loans. Competing analyses of the Sallie Mae plan by Mark Kantrowitz, publisher of Finaid.com, and the New America Foundation put the savings from the plan at between 80 and 90 percent of that promised by the administration’s proposal to move to 100 percent direct lending.

Commentary

In reading the Sallie Mae proposal, there are a couple of loopholes. First, there’s a Master Loan Purchase in the legislation which effectively requires the Department of Education to purchase any federal student loan issued by a student loan company. While this doesn’t impact federal Stafford loans, it does include the credit-based parent PLUS loan and graduate PLUS loan, which creates an incentive to lend without risk to the lender. Currently, the credit restrictions on PLUS loans are looser than on private student loans, so the Department of Education would end up buying loans issued to borrowers who probably shouldn’t be issued loans.

While there is language for servicers sharing the risk of default, their participation in default prevention is limited in scope to 4 years after a loan enters repayment. If you look at historical data for loan defaults, a lot of borrowers run into trouble around year… seven. Within 4 years of repayment, you have effectively 3 years of deferment plus a year of forbearance which means that the lender can theoretically encourage a borrower to keep putting off payment until after their responsibility for the loan ends.

Finally, there’s no language in the proposal about origination and guarantee fees for borrowers, only eliminating fees for lenders.

Will this proposal be in the best interests of students? Honestly, I don’t think so, any more than President Obama’s plan to eliminate the FFEL federal student loan program. While the President’s plan effectively puts any form of customer service or incentive to prevent default through competing lenders in the tank (bad for students), creating any kind of program where originating loans without risk to the lender is also bad for students.

The best solution in my mind would be something along the lines of the current securitization model, which allows the Department of Education to buy loans, combined with eliminating the distinction of Direct vs. FFEL lending (allowing students and schools 100% choice of any lender they want, ensuring that no student or school is ever without a lender in bad times but allowing lenders to compete in good times), and a clause in the buyback mechanism that says if a student loan sold to the government enters default, the lender has to buy it back from the government at cost. That would ensure a strong financial incentive for lenders to aggressively prevent defaulted student loans.

Scholarship Update

Access to knowledge is our thing. When it comes to higher education for promising scholars, we don’t want anything to stand in the way. That’s why we’re proud to partner with Lime. Google is committed to helping the innovators of the future make the most of their talents by providing scholarships and networking retreats for computer science students with disabilities. Recipients of the Google Lime Scholarship will receive a scholarship for the 2009–2010 academic year. Selected students will also be invited to attend the all-expenses-paid retreat at the Googleplex in Mountain View, CA, in 2010. Scholarships will be awarded based on the strength of candidates’ academic background and demonstrated passion – $10,000USD for those studying in the US and $5,000CAD for those studying in Canada (based on average tuition costs).

Details at our free college scholarship search site.

Mail Bag

Myesha writes:

Hi, I don’t know if this is the place to ask this, but I’m looking for as much help as I can get. I was accepted to the University of Miami last year as a transfer student. I deferred my enrollment for a year for financial reasons. It’s almost time to re-enroll but I’m still in the same predicament. According to UM’s website a year of school would cost about $55,000. My EFC is about $51,000. So on paper, it looks like I don’t really have a problem. My parents tell a different story. They say they can only afford to give me about $20,000 a year. So I have to come up with $35,000 and fast. I don’t know how I’m going to do this. I’ve been actively searching and applying for scholarships, but there’s no guarantee I will actually win any. So the next logical thing to do would be apply for loans, right? Well I don’t know if that will work for three reasons. 1) I’m not too excited about graduating from college with almost $70,000 in student loan debt. 2) Even if I wanted to, I’m not sure I could even get a loan and my parents do not want to co-sign one for me. 3) I don’t know if that’s the best thing to do in the current economy. So do I even have any options left? I’ve spent two years at a less expensive state school, so I only have two years of college left. I thought about looking into other schools, but my major isn’t one that you can get at just any school. Do I even have any options at this point? Should I just give up on UM, change my major and go to state school even though I would really prefer not to? I really don’t want to give up on UM but it kind of looks like I’m out of options.

To be perfectly honest, I can’t think of many careers that would start you off with a salary of $70,000 per year, which is what you’d need to make out of the gate just to make that size of student loan affordable after college. Your scholarship search is exactly the right way to go, and your instincts about borrowing that much money are also spot on.

There aren’t many programs I can think of at the undergraduate level that merit graduating with that much debt. Bachelor’s degrees are a dime a dozen in terms of common availability, and a degree from one institution, at least from my perspective as a hiring manager, doesn’t carry any more weight than another institution. Your Harvard undergraduate degree is worth about the same as a UMass undergraduate degree to me.

Talk to UM’s financial aid office and see how creative they can get with institutional funding, but I would avoid borrowing that much if at all possible, and save up to take a graduate degree in the field you want to pursue, as graduate degrees are less common and therefore more valuable and worth borrowing a little bit more for.

Given the current economy, if you can do so, avoid borrowing at all. Despite claims to the contrary by politicians and retailers desperate to sell, I don’t see a huge economic recovery in the jobs market by the time you graduate, so you’ll be graduating into a period of time when things will be picking up but not rich with opportunities. Minimizing your future debt is the smart thing to do, so that if you have to live on a shoestring budget for a while after graduation, what cash you have will not be going towards debt payments.

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Student Financial Aid News

From the Chronicle:

Georgia’s public colleges can no longer afford to let entering freshmen lock in a tuition rate for four years, the state Board of Regents decided today. The regents voted unanimously to suspend the policy indefinitely, as of this fall, The Atlanta Journal-Constitution reported. The regents, meeting in Atlanta to set the higher-education system’s budget for the fiscal year that begins in July, also approved a new formula that will allow full-time tuition to rise by 25 percent this fall.

Commentary

I’m not sure which is more newsworthy, the cancellation of the fixed rate plan or the new tuition increase, which just blows me away. A 25% increase is a giant increase that I suspect many Georgia families will struggle to accommodate.

If you’re a student in Georgia, it might be a good time to start re-evaluating your financial aid options. Be hunting for scholarships aggressively, and weigh all the options for paying for college, including student loans.

From NASFAA:

Student Lending Analytics posted the following analysis of data released yesterday by the Department of Education that summarizes the number of FAFSAs filed in the first quarter of 2009. More than a million more aid applications were filed during the first quarter of 2009 compared to the first quarter of 2008 – a 20.8 percent increase. Student Lending Analytics notes that the sharp increase in the number of original FAFSAs by independent students, 31.0% vs. 14.0% for dependent students, may reflect more adults returning to school to hone or enhance their job skills.

Commentary

I think SLA overlooked that there are now more exemptions and categorizations for independent students than there were previously on the FAFSA – we added emancipated students, homeless or at risk of homelessness, and a few other changes to the definition of an independent student. That said, the overall volume increase doesn’t surprise me – if anything, it feels a little low given the state of the economy.

If you haven’t yet filed your FAFSA, it’s not too late to do so. Check out our free FAFSA guide for more details on how to get the most out of your financial aid application.

Scholarship Update

“Fostering leadership, learning and empathy between cultures was and remains the purpose of the international scholarship program.” Senator J. William Fulbright THE FULBRIGHT PROGRAM: * Is sponsored by the U.S. Department of State. * Is the largest U.S. international exchange program offering opportunities for students, scholars, and professionals to undertake international graduate study, advanced research, university teaching, and teaching in elementary and secondary schools worldwide. * Was established in 1946 by the U.S. Congress to “enable the government of the United States to increase mutual understanding between the people of the United States and the people of other countries.” * Awarded approximately six thousand grants in 2004, at a cost of more than $262 million, to U.S. students, teachers, professionals, and scholars to study, teach, lecture, and conduct research in more than 150 countries, and to their foreign counterparts to engage in similar activities in the United States. * Receives its primary source of funding through an annual appropriation from Congress to the Department of State. Participating governments and host institutions in foreign countries, and in the United States, also contribute financially through cost-sharing and indirect support, e.g., through salary supplements, tuition waivers, and university housing. This year’s deadline is May 18th, 2009.

Details and application at our free college scholarship search site.

Jobcast

Having something to say is probably one of the most difficult and awkward parts of networking. I’ve been there many a time, whether at a trade show, conference, or job fair. Wondering how to approach someone, what to say, how to say it – reminiscent, in many ways, of dating. So here’s two ideas you can use as icebreakers or conversation starters.

1. If you know which industry you’re targeting, head over to TradePub.com as soon as you can and sign up for as many free publications as possible. Read them voraciously so that you know the lay of the land – and pay attention to the advertisers as well. See who the big names are in the field and keep current on what’s happening, what trends there are. When you attend any networking event or opportunity, you’ll have plenty to say and you can jump into conversations readily, as opposed to just hoping the topic jobs comes up. Prove that you’re knowledgeable about the industry you want to work in to professionals who have the potential to hire you, and making connections will be much easier.

2. If you don’t know what you want to do, go volunteer at a non-profit. Why? Non-profits are often causes, and that gives you something to talk about that isn’t necessarily a commercial sell (”get a student loan from the Student Loan Network” is a terrible networking opener) or blatantly self promotional. A cause is something that you’re expected to be passionate and vocal about – whether it’s affordable access to college, homelessness, donations for food pantries, or saving the critter of your choice from extinction. Have that passionate focus and carry it with you to events and random networking opportunities, so that when someone asks the typical, “So, what do you do?” or “So, what are you interested in?” you can have a lengthy conversation with them that demonstrates both passion and expertise in something.

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Student Financial Aid News

From the Chronicle:

College students are using credit cards more than ever before, according to a survey of private-student-loan applicants released today by Sallie Mae, the giant student-loan company. Students with credit cards have an average of 4.6 of them, the report says, and half have four or more cards. The median credit-card debt is $1,645.

Ninety-two percent of respondents with credit cards said they had used them to pay for some kind of college expense. Thirty percent said they had used credit cards to pay part of tuition. Only 17 percent of respondents said they paid all of their card balances every month.

Commentary

Student credit cards and credit card balances going up should be no surprise to anyone, as many people use credit cards like a last resort line of credit. This, by the way, is far worse than any private student loan, and here’s why. Unlike student loans, credit card interest computation is done by a calculation called average daily balance, as opposed to simple amortization.

Simple amortization interest is computed based on the interest rate and balance. Your payment stays consistent, and the amount of interest you accrue scales with the amount you owe. If you pay more than the minimum payment, you pay less interest.

Average daily balance is computed based on how much your balance is every day and then interest is assessed on that average.

How do the two differ? Let’s say you have a $1,000 balance for both a private student loan and a student credit card at 12%. Let’s say for sake of example that you pay a $100 payment just 5 days before the bill comes due. You owe $900 on the loan now.

Under simple amortization, the amount of interest you would accrue for your next payment is $900 x 1% (12% / 12 months in a year), or $9.

Under average daily balance, you had a balance of $1,000 for 25 days of the month and a $900 balance for 5 days of the month. Your average daily balance would be $983.33. The amount of interest you would accrue for your next payment is $983 x 1% or $9.83.

Now, that 83 cents may not seem like a big deal, but it’s fundamentally getting you to pay more for the same amount of borrowed money, all other things being equal.

If you need funding for education, look to federal student loans first, then private student loans, and only turn to credit cards for the very, very last resort.

Scholarship Update

Recession photo scholarship. We are living in an interesting time of adjustment and change. Whether it’s stores closing, your own job search or the effects on your community, submit your photo depicting what you see happening where you live and be part of creating this historic snapshot of our lives.

Details at our free college scholarship search site.

Mail Bag

Thomas writes:

Hi, I was wondering what is the maximum amount of financial aid one could receive. Like if someone wanted to go to an out of state school would they be able to receive enough money. For example, someone wanting to go to an out of state school who’s total family income is around $25,000 a year with 3 daughters and one mom and the estimated cost of the school is around $32,000?

The maximum amount of financial aid you can receive is limited only by your FAFSA results and how diligent you are at finding scholarships. There’s no blanket estimate available based solely on family income – there are a lot of factors to take into account.

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Photo credit: Amanda Downing

A Brief History of the Financial Aid Podcast

On April 11, 2005, I got a new PowerBook G4 and an iPod mini. With a desire to put legal stuff on my new iPod, I started poking around the Interwebs and found podcasting as a nascent new medium, and I tuned in. I quickly discovered that podcasting was relatively easy to do, as evidenced by the number of people podcasting while under the influence of various substances that still had large audiences.

At the same time, we had an employee at the Student Loan Network who, to be charitable, needed to hear things more than once. Rather than repeat the same information over and over, I recorded a lot of our web site contents for them and stuck the recordings on their iPod. It didn’t help the employee improve, but the information was useful and sounded good enough to share with the public.

Thus, the Financial Aid Podcast was born.

On June 27, 2005, the world changed for podcasting. What was a niche medium that required a decent amount of technical savvy to even get started with became immediately accessible to anyone with an iPod when Apple created podcasting support in iTunes 4.9. Suddenly anyone with an iPod could easily tune in.

Four years later, the Financial Aid Podcast is still going strong, with tens of thousands of listeners and downloads a month, scholarship information, eBooks, and so much more.

To everyone who has subscribed for free and listened to the show, thank you. Thank you for your support, for tuning in, for giving up a few minutes a week of your valuable time. To everyone who has commented, contributed, and shared what they’ve experienced over the years in paying for college, thank you for generously spreading your knowledge to help your peers afford school.

What’s next for the Financial Aid Podcast? You tell me. :-)

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Weekly Financial Aid Roundup

Breaking – the Department of Education has canceled PLUS loan auctions.

Through a notice in the Federal Register of March 3, 2009, the Department established an April 1, 2009 deadline for the submission of pre-qualification requests under the Competitive Loan Auction Pilot Program for Parent PLUS Loans, relating to loans to be made for loan periods beginning on or after July 1, 2009 and ending on or before June 30, 2011. In order for the auction to have been considered successful for any State, at least two lenders must have submitted pre-qualification requests for that State. However, the Department failed to receive two requests for pre-qualification for any State, and for the vast majority of States the Department received no requests at all. For this reason, the Department considers the purpose of the Competitive Loan Auction Pilot Program to have been frustrated, and it is canceling the auction that was scheduled to occur on April 15, 2009.

During the 2009-10 and 2010-11 award years, Parent PLUS loans under the Federal Family Education Loan program may be made by any eligible lender to parents of students attending eligible educational institutions in any State.

What does this mean for you? What was not a great idea has been canned. The reasons for a lack of bidding by lenders are pretty simple and boil down to an economy that makes lending tough under any circumstances, much less a lowest-bid war. To think that lenders would voluntarily try to reduce what little profit was left in the worst economic crisis in 75 years was the height of silliness.

Increased education tax refund and how to take advantage of it.

Student debt balloons up.

FICO scores and student loans.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Scholarship Update

Jonathan Olson – University of Iowa did indeed win the Student Loan Network $10,000 scholarship. He said:

I have just returned to school to complete an undergraduate degree in Actuarial Science that I began long ago. I left my full-time job last August to pursue my education full time. With student loans racking up, this scholarship couldn’t have come at a more useful time.

Congratulations, Jonathan!

We’ve got $3,500 to give away this month. Enter to win at ScholarshipPoints.com.

News You Can Use

Managing your reputation online.

Free Stuff Friday

Big crop!

Ben & Jerry’s and Bare Naked Ladies give away 3 free songs.

Free Quaker Rice Snacks.

Huggies has some diapers.

Free toothpaste from Walmart.

Some free shampoo from Mizani.

Free eco-friendly grocery bag from Kroger.

Free bottle of ketchup.

Free Gillette body wash.

Free sunglasses case.

Free pile of my eBooks.

Ben & Jerry’s again – free cone day is April 21 from noon to 8 PM.

Free Song of the Week

Black Lab, See The Sun

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Student Financial Aid News

From NASFAA and the Seattle PI:

“In the wake of the governor’s proposal to raise college tuition by 30 percent over two years, University of Washington students and administrators are trying to find ways to blunt the financial impact on families,” Seattle Post-Intelligencer reports. “One possible solution is federal money. The economic stimulus plan President Obama signed in February expanded tax credits to low- and middle-class families who are paying for higher education. ‘That’s the magical one,’ UW spokesman Norman Arkans said. ‘Whoever decided to improve that is a genius.’ For families with an annual income of less than $160,000, the federal government now offers a tax credit of $700 to $2,500 for four years. That’s up from the Hope Credit’s maximum $1,800 and an eligibility period of two years. Plus, the income ceiling increased from $116,000. ‘It’s the middle-income families that everyone’s worried about,’ Arkans said. ‘And the tax credit’s going to help them.’”

Commentary

Very good news indeed. Make sure that when you prepare your taxes, if you haven’t already done so, you take advantage of the new tax credit. If you filed early, consult a tax preparation advisor or CPA about filing a corrected/amended IRS 1040 to qualify for additional refunds. Your financial advisor should be able to counsel you on how to correctly amend your tax return for tax year 2008.

Disclaimer: I am not a tax professional. As with any advice regarding taxes and other personal finance issues, please consult a qualified professional before making any extensive changes to your finances, and don’t believe everything you read on the Internet.

The Financial Aid Podcast recommends TurboTax as a paid affiliate.

Scholarship Update

Pfizer Animal Health Scholarship. The AABP Foundation announces the availability of scholarships for 2009. These scholarships will be administered by the AABP Foundation with the assistance of the Amstutz Scholarship Committee. Announcement of the scholarship recipients will be made prior to the AABP Conference. Scholarship recipients will be encouraged (and funded) to attend the AABP Annual Conference in Omaha this September to receive their awards in person but attendance is not required to receive the scholarship.

Details at our free college scholarship search site.

Mail Bag

Ed asks via Twitter:

My oldest is a hs junior. I’m coming to you later (and likely going to affiliate). Spread thin as a disabled single dad of 3. When do I have to get deeply serious re; financial aid, etc? Thank you Chris

Now, right now. Your oldest should be hunting down scholarships right now, today, and throughout the next two years. Keep the grades up, get involved in activities and things that he or she is passionate about, and be hunting for scholarships. Make it a rule in your house to locate and apply for a scholarship every Sunday from now until high school graduation. Offer an incentive, like we mention in our Scholarship Search Secrets eBook, of a percentage of each scholarship earned as spending money.

You’ll want to talk to a financial planner as well about how to start structuring your finances today so that you have one full tax year for changes to take effect.

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Student Financial Aid News

From the Chronicle:

Increased federal student aid, especially to middle-class families, is contributing to the rising cost of higher education, a report by the Center for College Affordability and Productivity says.

The report concludes that federally backed loans should be offered to only low-income families, not expanded to help more middle-class families, and that “the expanded tuition tax credits in the 2009 stimulus bill are probably a step backward.”

Commentary

Economics 101 – the more a customer has to spend, the higher you can raise your prices. Conversely, the less a customer has to spend, the lower you must take your prices in order to sell anything.

Now, where this report goes astray is that it lumps all federal student loans together instead of breaking out subsidized Stafford loans from other forms of federal student loans like PLUS loans.

Again, the way out of spiraling tuition is likely going to be things like online degrees which can rapidly increase supply, because decreasing demand for higher education seems unlikely in the near future.

From NASFAA and the Monitor:

“Student debt in the United States has surged in recent decades, with outstanding federal student debt now topping $500 billion. The share of young adults carrying some educational debt has almost tripled since 1983, according to economist Ngina Chiteji,” The Christian Science Monitor reports. “At the same time, defaults are on the rise. Between 2006 and 2007, the proportion of borrowers who were supposed to enter repayment for the first time and who instead defaulted went up – from 5.2 percent to 6.9 percent, according to a Department of Education report last month. That percentage is the highest in more than a decade. And the 2008 and 2009 default rates are likely to be much higher.”

Commentary

Pretty astonishing, isn’t it, the amount of total student debt? This is why we continue to urge you to borrow responsibly according to the 10% rule – borrow no more than you can afford to pay, 10% of your income once you graduate. That works out, at least for federal student loans and loans with 10 year terms, to be no more than your first year’s estimated salary after graduation. Never borrow more than that total to avoid saddling yourself with unmanageable amounts of debt.

Check out any of the salary finder tools online to research what your likely salary will be based on profession and geography.

Scholarship Update

HACU applauds your initiative in searching for a scholarship! We hope that we will be able to assist you in defraying some of your college expenditures. Each scholarship has specific criteria, so please review each one carefully.

However, all scholarship recipients MUST meet all the following criteria:

1. Demonstrate financial need.
2. Meet the specified criteria for the scholarship to which they are applying to.
3. Be attending a HACU-member institution (excluding international members) both when applications are completed and when scholarship awards are made.

Details at our free college scholarship search site.

Did you know that I get a good deal of my new scholarship info every day from Twitter? Read this blog post on how to locate scholarships with Twitter, and follow @winscholarships for our Scholarship Points extra codes!

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Student Financial Aid News

From the Chronicle:

The Alfred P. Sloan Foundation is closing its online-education grant program, a foundation official has told The Chronicle. Some college officials are concerned that the decision will leave a fast-growing sector of American higher education without a major source of support. The New York City-based foundation has funneled roughly $80-million into online-education ventures around the country since the early 1990s.

Commentary

Online degrees are indeed taking a hit from this closure, which is unfortunate but understandable in these times. However, it’s worth reminding and pointing out that if you take an online degree from any Title IV accredited school, you can apply for and possibly receive all the regular forms of financial aid such as Pell Grants, Stafford loans, etc. as long as you meet eligibility requirements. Of course, there are plenty of online degree scholarships as well besides the Sloan grants.

Scholarship Update

Play City, a campaign created by YouthNoise in partnership with Nike, is giving a whole new meaning to the phrase “Be a good sport.” We believe sports have the power to energize individuals, revitalize communities and catalyze change in the world. The question we want you to answer is: “What Do You Play For?” We want to know how you are using sports to make a difference in your life, your community or the world as a whole. Submit a photo that clearly demonstrates how you are using sports to make an impact, and tell us in detail what cause or purpose you play for. Whether you play basketball to stay happy and healthy, run marathons to benefit local charities or coach soccer to empower young women, we want to hear your story. You could win the grand prize of $500 cash or scholarship!

Details at our free college scholarship search site.

Jobcast/News You Can Use

Let’s talk about online reputation real quick.

We’ve all had those college experiences that were fun and funny at the time but kind of embarrassing later on. The stories I could tell you about my undergraduate days would fill a small book and you’d leave shaking your head. Sound familiar? The difference between previous generations of students and today’s students is this, in one word:

Google.

Google doesn’t forget. Once it indexes something, it never forgets. Even if you take down a web page or change a photo, Google or one of the other major search services is constantly copying, archiving, and recording everything, all the time.

This photo is a good example. At the time, it was probably funny.

A couple of years down the road, if this person (who I don’t know) applies for a job and their name was attached to this photo, they might have some explaining to do in an interview, or worse yet, never get the interview and would never know WHY they were denied the opportunity.

So what do you do to still have a life and some adventures to retell down the road, but not sabotage your future? Here’s a 3 step recipe.

1. Don’t put up things online you don’t want to be found. At the very least, check out and restrict your privacy settings on social network and media sites like Facebook, MySpace, Flickr, Twitpic, etc. so that the world can’t see everything, or even the majority of things. Ideally, avoid placing anything embarrassing online at all, since even the best privacy settings get messed up over time.

2. Take down anything you don’t want to be found. This is especially important to ask of friends who post photos and videos from parties, etc. Obviously, if at all possible, avoid putting yourself in those situations to begin with, but at the very least, ask friends to take down anything you don’t want to have seen.

3. Flood the Internet with content you do want to be found. This is where having lots of obvious bait is important. Considering working in healthcare? Start a healthcare blog and make sure your name is prominent in it so that anyone Googling for you in a few months or years finds what you want them to find. Take appropriate photos and post them up with your name and personal URL.

Here, for example, is a picture of my barbecue. Boring, right?

If you look in the description on Flickr, you’ll find links to the Financial Aid Podcast and other attributes that I want you to find. I want you to know that I own a digital camera and use it frequently, that I blog about financial aid, paying for college, online degrees, student credit cards, marketing, podcasting, and much more.

I want you to find all that stuff, because in this day and age, having a complete vacuum associated with your name is almost as bad as having drunk party photos out there. Searching Google for your name and coming up with nothing makes me wonder what you’re hiding, and speaking as a hiring manager at an Internet-savvy company, a Google result of zero means you don’t know the marketplace we want to serve, and thus you’re a less desirable hire.

Google yourself. Check yourself out on MySpace, Facebook, or wherever you have a profile, and honestly ask yourself what kind of impression you create. If it’s not what you want, then take some time to reshape your digital life so that you create exactly the perception you want to create.

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I recently asked on Twitter:

“How would YOU reduce the cost of college?”

Here’s a selection of thoughts.

Financial Aid

KinZ6: Cut all types of education loan rates in half.

KinZ6: Another idea – Pell eligible includes EFCs up to 15K.

davidgallant: With the effects of today’s society, colleges are providing poorer services at greater costs. The government should subsidize .edu

carlalynnehall: I’d have universities remove the unnecessary BS classes that they use to pad their graduation requirements, and make more money.

carlalynnehall: And when I suggest removing BS college classes, I’m referring to the bull**** “required” intro/elective classes. Fluff classes=waste

carlalynnehall: I think colleges need to rethink the whole four year concept of college. Two well-planned years would have done it for me.

carlalynnehall: Even in liberal arts, students usually have subjects they want to take, but tons more that the school requires them to take.

carlalynnehall: In my opinion, electives are padding for the university’s benefit, and often a waste of time for the student.

carlalynnehall: To be fair, I’m clear on what I want to learn, and not all liberal arts students are. I hate being forced to take unwanted classes.

carlalynnehall: In my opinion, the biggest lesson of those 4 years of college happen outside of classes. It’s about becoming self-sufficient.

carlalynnehall: I never had the opportunity to test out of a class when I was an undergrad. I would have jumped at it.

Price Controls/Tuition and Fees

jack_daniel: wouldn’t make more afforable, but: being more open about real costs. Tuition is only a part of cost, the fees are out of control.

Steve_Sanderson: I believe that college ed. Should be available to all, I think mandatory min aid should be born by both fed state & county to mi …

jruckman: stop charging for it

jruckman: while much of college is effective, a TON is wasteful, the model is unsustainable; also money is dying

davidgallant: I would start with restructuring university spending limits. I saw some budget concepts at my uni that made no sense…

Textbooks

_cc: make most of the resources virtual, and reference’s to open-source knowledge sources, e.g: wikipedia.

barbaranixon: The price students have to pay for textbooks is outrageous. As a professor, I work hard to find the best reasonably priced books.

barbaranixon: I could use online (peer-reviewed journals, etc.) with some significant legwork on my end. Working toward that. Hard.

caffination: push for ebook versions of textbooks that cost less and can be updated without a whole new version

AllenHarkleroad: Get rid of the overrpiced textbooks and ban the publishers that market them.

andymci: As a college student, I say start cutting costs by reducing textbooks and moving learning material to online/digital format.

Meezyy: decrease the cost of text books and/or stop making unnecessary new editions

davidgallant: and I would require uni’s to use opensource materials instead of expensive books, and to publish class video on the web

Other Ideas

josiahsprague: Working on campus. Practical and convenient way to pay for school.

SurveySpot: Pop ups and talking flash ads on every campus PC :P srsly- allow businesses to hire a class to fill a biz need. $ + RL exp. FTW

RickWolff: Some economists say tuitions are high as a result of so much aid. Want to raise something’s price? Subsidize it.

268Sharon: Colleges & Universities could get rid of extra things to save costs, like computerlabs since everyone already comes with a computer

268Sharon: Yes, even low- income students. But the money from the labs can buy laptops for those who don’t have & the colleges would still save

268Sharon: I heard about univ. of Virginia closing computer labs on the this week in tech podcast.

268Sharon: Also, I was charged 3-4 different fees each semester often for services I never used- cutting those fees would save a lot.

chelpixie: Cut the requirements for a 4 year degree down, lower tuition and promote the use of online classes more. Not a replacement but…

chuckgose: To make college more affordable, I think every dollar spent on tuition should be tax deductible.

MidwivesGallery: college affodability:divert corn prod. subsidies 2 edu. subsidies. 2 birds,1 stone:healthier food (no corn syrup), smarter people.

Commentary

I think there’s something to Rick Wolff’s commentary that goes along with the ideas of increasing aid or reducing interest rates on loans – the idea that when something is subsidized, there’s less incentive for the producer to control costs. When the government changed the unsubsidized Stafford loan limits a year or two ago to increase them, there was a free market response to increase tuition by the same amount since students had that much more money theoretically available to them.

The way to control the cost of college isn’t by offering more financial aid, as that offers no incentive for colleges to control costs at all. If you ran a business that sold widgets and knew that the government was giving every citizen a $10 widget loan, why would you ever offer to sell a widget for less than $10?

What was also surprising in this very informal, completely unscientific survey was the emphasis on controlling the costs of textbooks. There has to be a measured response here as well, focusing on free markets. Professor Barbara Nixon does a good job finding reasonably priced books, but increasing the scope of books to non-textbooks would probably do even more to control costs, as well as using open source, publicly available texts in electronic format.

What will help here is the mindset shift for colleges to be filters, certifiers of information, rather than dispensers of it. The education system we currently use predates the Internet by decades, in terms of structure. The education system still functions as though citizens do not have ready access to the bulk of humanity’s public knowledge through online sources. Rather than attempt to be the gatekeepers of knowledge, educational institutions need to refocus on being the certifiers of knowledge, the verifiers, the ones who help teach students how to gather information and assess its validity.

Ultimately, the solution to reducing student debt is to lower tuition. The solution to lower tuition we discussed last week and follows basic market principles of supply and demand.

I want to thank all the folks on Twitter who responded to the question, and encourage you to check them out and see what else they have to offer.

Scholarship Update

The April 2009 StudentPlatinum.com scholarship is now open – enter via Scholarship Points to win $2,500.

Details here.

Mail Bag

Shawn asked:

Should I withdraw from my 401k to pay off a credit card in full? Is it worth the penalty? I’m paying 12.99 % APR on the CC.

Absolutely not in this case. You’re going to lose the time value of the investment as already held. If you’re not anywhere close to retirement, your best bet is to balance your 401k’s investments and hold tight for the 20-40 years ahead of you. Continue to make your payments on your credit card, but don’t lose that nest egg and the time invested in it so far. Do make sure it’s diversified and balanced.

Disclosure: I am not a certified financial planner or investment advisor. I do recommend you consult with someone who is certified for more in depth information about how to save for the future.

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Weekly Financial Aid Roundup

Breaking: updated rules for appealing for financial aid.

Scholarship Update

We gave away $10,000 this week. Jonathan J. Olson – University of Iowa was drawn. Here’s the catch: Members of Scholarship Points have to confirm that they’ve won. If you don’t respond in 3 days, we move to the next runner up.

Also this week, a Hispanic MBA scholarship.

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

If you have Google Reader:
http://www.financialaidpodcast.com/googlereader

If you subscribe by email:
http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

Mail Bag

A question about year round Pell Grants.

Free Stuff Friday

Spin magazine in exchange for a vodka recipe.

Free Axe body spray sample.

Free antivirus software from AVG for Windows.

Free dog food from Wal-Mart.

Free bowling for kids all summer. Great if you volunteer with kids.

Free Snuggle fabric softener.

Another spatula, this time from Sears.

Busch Gardens, Sesame Place, and SeaWorld all have free admission for military personnel. You must be on active duty.

If you are unemployed and/or uninsured, Walgreens is giving away free visits to their walk in clinics for the rest of the year.

Free Song of the Week

Matthew Ebel, Night Train

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Opinion

The battle of words between supporters of the Family Federal Education Loan Program for federal student loans and the Direct Lending Program continues to heat up, with exchanges on forums, bulletin boards, and mailing lists. Lots of the same arguments are being rehashed, and each side has its “fact” sheet with talking points that are so beaten to death, they’re practically salsa.

I’d suggest that rather than petition for an either/or, we also devote some time, energy, and thought to the root cause of the debate. It’s not about FFEL vs. Direct, which program costs taxpayers more money, which program is better, which program is less susceptible to corruption or inefficiency…

… the root cause is that higher education is generally too expensive for the average consumer to afford out of pocket (with exceptions).

Demand for education has never been greater. Supply hasn’t kept up. Prices go up. Econ 101, right? Either we reduce demand by devaluing education, or we increase supply so that education becomes available as a commodity.

If you haven’t checked out iTunesU yet, you should. You can take courses up to a Ph.D. in physics from some of the best institutions in America like MIT, for example, and not leave your desk – for FREE. All that remains is testing and accreditation, and the available supply of education goes up without substantially increasing the cost of its production.

Think about that for a second. The role of higher education can shift from being a provider of information – which the Internet is equally, if not better, suited for – to a certifier of knowledge and skill, and for institutions with research specialties, a creator of new knowledge. If a student can solve Fermat’s last theorem from skills gleaned via their iPod just as well as sitting in MIT 10-250 for 8 years, does it matter where they learned it as long as they can produce results?

If you want to take the debate of FFEL vs. DL to a higher level, please encourage your colleagues to push for more online education and online degree initiatives at your institution, and to look down the road to the future, where the university creates and certifies knowledge, rather than tries to redistribute it in bulk as a commodity. That’s our way out of this, our way out of students defaulting on $100,000 loan balances and swimming in debt for 30 years, no matter which loan program they got it from.

Scholarship Update

Brickfish is looking for your cute, funny and adorable photos or videos of people, babies or animals dozing off or catching some Zs. From puppies trying not to fall asleep, babies passed out in their car seat to snoring spouses, we want to see it! Submit an entry that doesn’t make us yawn and you could win a $500 scholarship or cash.

Details at our free college scholarship search site.

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Start with our Personal Finance First Aid Kit, a short eBook that guides you through the process of setting up a budget – it’s fast and easy – and lists tips for saving money.

Then go check out these past blog posts for additional money saving and money earning tips:

• The one page budget
• Revisiting the one page budget
• Tracking your expenses with your phone
• 5 more money saving tips for college students

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Student Financial Aid News

Nothing clever here for April Fool’s Day. However, if you don’t already have free antivirus software for Windows, you may want to check out AVG Free Antivirus.

Oddly, not a lot of real news either! Perhaps everyone’s taking the day off from news reporting and the serious stories are being held until tomorrow. Well, there’s always Google’s April Fool’s joke.

Scholarship Update

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Mail Bag

Lisa writes:

In August’s Higher Education Opportunity Reauthorization Act, I noticed students are suppose to be able to get Pell grants year round (ie one Pell for Fall/ Winter and one to go to College Spring and Summer.) When I have asked Colleges my daughter is considering about this, the Financial Aid Offices claim to not know anything about it. This will make a big difference though for her, and will help her decide between taking 12 credits per semester or possible as many as 16 per semester.

There’s a lot of debate in the financial aid community about how schools will implement the year round Pell eligibility rule. Most school systems are configured for an academic year – September through May or June. Schools are beginning to implement year round Pell grants by extending the school year through the summer, so there will be cases at those schools where a student will use up their financial aid for the year before the summer arrives if they take the full grant award during the school year.

Your best bet when talking to schools is to ask:

1. Are you doing year round Pell Grants?
2. Are you using the summer session as a trailer, with the award year ending at the end of the summer session?
3. Are you using the summer session as a header, with the award year beginning at the beginning of the summer session?

You’ll also want to make sure you’re talking to the Director or assistant Director of financial aid – most of their staff have not been trained yet on year round Pell because the systems themselves have not been updated, and in some cases the school may not be sure how they’ll implement it.

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Scholarship Update

Today is our drawing for a $10,000 scholarship. Even if you miss today’s, we’re doing another at the end of July. Apply now. It’s free.

Ranting and Raving

A little QQ, or complaining vocally, about a student loan servicing company, ACS, from me.

Dear ACS:

STOP LOSING MY PAYMENTS.

For the last 3 months, you’ve lost every payment I’ve sent to you, and what’s more, your customer service team’s ability to deal with it in a courteous, polite manner has been inexcusable. They’re not even paper checks – they’re EFTs from my credit union. Would you [a] please fix the problem and [b] improve your customer service rep’s politeness? Thanks.

–

A little bit of background: when I joined the Student Loan Network back in 2003, I had about $25,000 in graduate Stafford loans thanks to Boston University’s MS/MIS program, which I graduated from in 1999. After learning about the wonders of student loan consolidation by working here, I consolidated my student loans in 2004. After multiple changes of guarantors, servicers, and other entities, my consolidated student loan ended up with ACS for servicing, which means that all the paperwork – bill payments, billing, notices, etc. – is handled through them.

Things were mostly fine up until about 3 months ago, when we noticed that things were getting wonky. I started getting late payment notices from them on monthly payments that were made on time or early, and each time contested the late payment with the appropriate information. This is now month #4 of their mishandling my account.

What’s behind this, you wonder? Simple: direct lending, or federal student loans through the US Department of Education, is managed through ACS. The Department of Education doesn’t have the capacity to manage all of the direct loan program internally, so servicing is contracted out to ACS.

I suspect that the 20% increase in direct lending schools – colleges that choose the direct lending program as opposed to the FFEL program (of which the Student Loan Network is a participant) – due to the economy and financial crisis has stretched ACS’ processing capacity beyond its service limits. That many new schools and new customers are probably bogging down their systems. I can understand that – during the peak of consolidation in 2005, there were days when I didn’t finish up work until nearly midnight, only to wake up at 5 AM and start all over again.

What does this mean for you? If you already have ACS as a servicer on any of your current student loan bills, make sure you aren’t getting shortchanged. I’d also ask you to contact your elected representatives and urge them NOT to vote for the elimination of the FFEL student loan program since a 20% increase in business is already enough to screw up service at the Department of Education’s contractor – I can only imagine what service will be like with a 400% increase.

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Student Financial Aid News

From Inside Higher Ed:

As Congress prepares to take up their 2010 budget blueprints, supporters and critics of President Obama’s proposal to eliminate the Family Federal Education Loan program are ramping up their arguments for and against the plan. The Consumer Bankers Association has attracted more than 4,000 college financial aid administrators, parents and loan industry officials as signers of a petition asking lawmakers to sustain the competition between the lender-based guaranteed loan and the competing direct loan programs. The heads of more than a dozen state associations of financial aid administrators also have written letters opposing the plan. The National Direct Student Loan Coalition, meanwhile, sent their own letter to members of Congress arguing why the president’s plan deserves their support, focusing on the fact that it will allow lawmakers to use $94 billion in projected savings from the changes to help increase grant and other funds for students.

Commentary

Not much more needed. I stand firmly on the belief that both programs should be merged to function as one, making the Department of Education a lender like everyone else. As long as companies have to compete with the government and vice versa, efficiency will improve or students will simply get a loan elsewhere. Free market rules.

From NASFAA:

“The most important fact about the preliminary data the U.S. Education Department released Thursday about student loan default rates is that the rate at which borrowers whose loans went into repayment in 2007 defaulted rose sharply, to 6.9 percent from 2006’s 5.2 percent,” Inside Higher Ed reports. “That would seem to be a clear sign that the economic downturn is increasingly taking its toll, a worrisome trend from a public policy standpoint. However, in the highly politicized environment of our nation’s capital, the department’s release of the numbers drew attention for other reasons, most notably because the agency — for the first time ever — broke the data down to highlight the differences between how borrowers fared in the government’s two competing loan programs, showing that borrowers were likelier to default in the lender-based guaranteed loan program, 7.3 percent to 5.3 percent.”

Commentary

There’s a secret here no one is talking about. Up through 2006, student loan consolidation was a hot industry, with hundreds of companies competing to consolidate student loans. Once times changed and the ability to sell loans on the market disappeared, originating lenders held onto far more of their student loans than in previous years.

When a student consolidates their student loans, the original lender has the loan marked as fully paid on its books, and the new lender takes on a consolidation loan, which doesn’t count towards the default rate of either a school or the original lender. When consolidation was a hot business, the majority of students would consolidate their loans, making default rates artificially low. Once consolidation as a business virtually disappeared, default rates spiked upwards.

Scholarship Update

The National Society of Hispanic MBAs, which exists “to foster Hispanic leadership through graduate management education and professional development,” has established a scholarship program to assist qualified Hispanics to pursue MBAs. Scholarships are offered each year for full- and part-time study at an accredited (AACSB) institution of the student’s choice.

Details at our free college scholarship search site.

Mail Bag

No questions, but lots of comments on the affiliate marketing with Amazon.com post recently. Keep the comments coming!

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Weekly Financial Aid Roundup

The consequences of eliminating FFEL – some predictions.

Eliminating FFEL – more commentary.

Scholarship Update

Our $10,000 scholarship… next week!

Scholarship Points Instructions

Are you a Scholarship Points member? In today’s show, get a Points code for 20 Scholarship Points by subscribing to the podcast and listening to the episode. Subscribing is fast, easy, and free.

If you have iTunes:
http://www.financialaidpodcast.com/itunes

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http://www.financialaidpodcast.com/googlereader

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http://www.financialaidpodcast.com/email

Remember, the points code is in the show itself, so you have to tune in and listen to it. I promise it’ll be worth your time.

News You Can Use

Affiliate marketing with Amazon.com

Mail Bag

Should students have credit cards?

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Student Financial Aid News

From NASFAA:

“Student-loan companies, faced with the threat of extinction, are finding a glimmer of hope in the Senate’s budget blueprint for the 2010 fiscal year,” The Chronicle of Higher Education reports. “The spending plan, which will be unveiled later today or tomorrow, will not instruct the education committees in Congress to undertake the deficit-cutting process known as budget reconciliation. The omission could make it harder for Democrats to push through President Obama’s plan to abolish the guaranteed-loan program. That’s because budget-reconciliation bills, unlike regular bills, are filibuster-proof and require only a simple majority to pass. If the Senate took up the president’s plan through the reconciliation process, it could pass with only 51 votes.”

Commentary

We’ll see how the political process goes, but if you’re so inclined and believe that student loan companies (or at least some of them) do provide a competitive benefit to the Department of Education solely as lender, I encourage you to sign this Consumer Banker’s Association petition.

Unquestionably, there have been student loan companies that have behaved badly, gaming the system in any way they could. Unquestionably, there have been and continue to be student loan companies that provide terrible service and terms on their loans – especially private student loans – that border on usurious thanks to Congress’ creation and approval of tough bankruptcy law changes in 2005.

That said, the majority of people I have worked with in the financial aid industry, the majority of the professionals in other student loan companies, are people who do actually believe in what they do – provide access to college through lending to people who otherwise would not be able to afford to go to college.

Eliminating the FFEL program does nothing to solve the cost of a college education. If the President and Congress eliminate FFEL, it will still cost as much or more to attend (insert name of school here) next year as it does this year. It will still require borrowing, and it will still require scholarship hunting.

More important, consider that the Department of Education doesn’t create nearly the resources that student loan companies do – like default prevention, scholarship guides, etc. Do we publish Scholarship Search Secrets, our free eBook on finding scholarships, as a means of building brand awareness? Absolutely. Does Scholarship Search Secrets still provide benefit to students? Absolutely – ask students who have used it to land tens of thousands of dollars in scholarships if it’s of value, like Nolan Hergert.

Let me throw out for comparison two scholarship guides to show what the private sector creates versus what a government program creates:

Scholarship Search Secrets, 5th edition from the Student Loan Network

How to find scholarships, from the US Department of Education

If you’re a student, which would you rather have? If you’re looking for money for college, which guide will be more useful? This is the role of the private sector in student lending – to do better than the government and simultaneously to compete with other companies in the private sector to provide the best, most useful financial aid resources available.

Eliminating the private sector from student lending makes all that go away. Is reform needed? Absolutely. Abolishment? I question that.

Disclosure: If it’s not already blatantly obvious, I work for the Student Loan Network, a private sector student loan company that would be impacted negatively by Congress’ proposal to eliminate student loan companies.

Scholarship Update

From the Chronicle:

Google is handing out $4,500 stipends to a select group of college students who will spend this summer contributing to open-source projects, including ones that compete with Google’s own software.

Google is offering fewer stipends this year than last year — 1,000 this year compared with 1,175 last year. But Ms. Hawthorn said that the company is committing the same amount of money to the project as last year — $5-million — and focusing more energy on mentoring and support for the participating students.

Details and application at our free college scholarship search site.

Mail Bag

Kathy writes:

My 19 yr old college soph. has NO interest in owning/using a credit card but I believe he should have one in order to establish credit so that when he graduates he will have an easier time of renting an apt./purchasing a car/setting up utilities. Currently his only debt is subsidized Stafford loan. Am I correct or should he remain without a credit card? Thanks.

A very good question. To establish a basic record of credit, a student loan is a good start, but to get the maximum benefit for building a high credit score, the FICO algorithm tends to like to see about 2 trade lines. Here’s a quick glance at a FICO formula scorecard presented by Fair Isaac to the Federal Trade Commission. It’s not the exact formula, but it gives you a good idea of what credit scores look for:

Take a look especially at strongly positive and negative numbers in the chart. Owning your home is a great score booster – logically, of course, it’s because there’s something for a creditor to seize if you default on a loan. In occupation, the higher your likely pay scale, the more impact. The longer you’re employed, the better.

Number of inquiries is attention-getting – once you get turned down more than twice, at least according to this scoring model, it rapidly begins to negatively affect your credit score. Once you exceed 30% of your credit line utilization – for example, you owe more than $300 on a credit card with a maximum limit of $1,000 – your score declines quickly.

Does this answer whether your son should get a credit card? The answer is tentatively yes if he only has the Stafford loan – look at the line titled # Rev trades outstanding – this is number of trade lines. Having 1 or 2 trade lines is a good thing. Having a credit card grants 16 points to the score on the line titled Dept St/Major CC.

I’d recommend the following based on this credit guide – which admittedly isn’t the exact formula of today’s credit score, but is close:

1. If your son can rent off campus with you as a cosigner or guarantor, that might not be a bad idea.

2. If he can work, even a little, that’s a good thing.

3. If he does get a credit card, take a look at our StudentPlatinum.com credit card guides for student credit cards to find a card that fits his needs. You might be asked to co-sign on it or provide some debt guarantee, and that’s not a bad thing.

4. If he does get a credit card, make sure he keeps credit line utilization under 15% of the maximum limit – no more than $150 balance on a $1,000 card, for example.

5. He absolutely should have a checking account and a savings account set up at a bank or credit union.

6. Don’t apply for more than a couple of credit cards – multiple inquiries can significantly damage a credit score.

7. Above all else, if he does get a credit cards, never, ever be late with payments. Ever. Be early or on time, always make at least the minimum payment, and strive to not carry any balance at all.

Getting started with a student credit card as a sophomore is also not a bad idea as long as he maintains a solid payment history, as the bonus for years on file goes up significantly around year 3 – once he graduates, having that trade line active and in good standing will be very helpful to him.

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carterharkins: Know anyone at Sallie Mae who can straighten out UCLA’s mistaken loan cancellation?

cspenn: eh, no – what’d they do?

carterharkins: UCLA even acknowledges the mistake, but still say it’ll be 3 weeks to get it corrected, and until then she must pay to stay.

cspenn: is that from the bursar’s office or financial aid? sometimes the two never talk…

carterharkins: not sure, & that’s what I told her, too. Earlier today she wasn’t getting any answers, but no update in past 2 hours. It’ll work out

cspenn: make sure that the dir. of financial aid is talking to the bursar’s office – easiest way to get things negotiated.

carterharkins: Thanks, Chris, you are a great help!

carterharkins: Thanks 4 advice yesterday. My sister-in-law was able 2 get bursar’s office talking w/financial aid people and resolved issue. Urock!

cspenn: awesome! solving financial aid problems by twitter FTW :)

For financial aid officers, think about the possibilities of providing yet another contact point for students to interact with your department, yet another way for you to provide your expertise to them and help them get things done.

For students, think about how to reach out beyond traditional means of communication to get financial aid help.

For anyone working at Sallie Mae, you owe me a small beer for handling your customer service issue.

For everyone, especially Carter, next time take out a student loan from the Student Loan Network instead :)

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