Image: Digital Vision

College tuition is chomping its way through students’ finances. But with an increase in payments granted to students based on honorable academics and low income, paying for college may not be as bad as it seems, Quartz reports.

Colleges and universities are awarding scholarships and financial aid at the highest rate ever recorded. At this point, the average cost of tuition is 50 percent less than the advertised sky-high price tag.

This is not to say that the absurdly overpriced cost of schools should be disregarded. Between 1982 and 2007, expenses for colleges rose 439 percent. This did not work in favor of middle-income families whose earnings increased only 147 percent. But to ameliorate the agonizing price of college, schools are offering more scholarships and grants.

Sadly, financial aid is not going to the students who truly need it. Instead of being awarded to the lowest-income students, they are given to those who simply need some extra cash to supplement their payments. For colleges, this is more cost-effective; they can distribute smaller amounts of need-based aid to more students.

But why are colleges choosing to award more grants instead of just lowering the tuition prices and other fees? American labor economist, Ronald Ehrenberg, explains that the answer lies in the schools’ reluctance to cut costs: they are choosing to spend more to satisfy the influx of “high quality” applicants. “Alumni also tend to discourage institutions from cutting almost anything by threatening to withhold contributions,” he said, as reported by Quartz. It’s just a lot easier to issue more scholarships to students rather than reallocating funds and reconstructing the budget to reduce tuition costs.

Do you think the higher distribution of financial aid and scholarships is making a positive difference?

Mama told me I would need my credit score one day, and that day arrived last week.  There I was, sitting at a red light in rush hour traffic jamming to my Babyface and Karyn White mix CD (don’t judge me) when all of a sudden all of the lights lit up on my dashboard and a familiar panic flooded through me as I realized my car had just stalled out.

I actually wasn’t all that surprised.  Over the past few years my car had experienced its share of fuel distribution problems that left me broke, frustrated and embarrassed.  But I must say one thing my 2001 Korean car had never done is leave me stranded; it always got me home.  But after excusing three windows that slowly stopped working one by one, a headlight plagued by a bad case of condensation, a clock that always flashed 3:37 and a sensor that I would now be replacing for the sixth time, I knew it was time to put ole’ girl to rest.

I had been contemplating the move for quite a while, but I was hoping my car would hang in there for a little longer while I cleaned my credit up and put some money away.  I also knew that as much as I looked forward to car shopping I would also have to work up the courage to do something I had avoided since graduating college: Check my credit score.  It’s not that I thought my credit score was bad, but I knew it wasn’t stellar.  A part of me prayed that if I took some years to open a few lines of credit and not max any of them out, and pay my bills in full and on time, by the time my credit score would be of some use I would check it only to be pleasantly surprised, but credit doesn’t quite work like that.

The good news is that my credit was good enough to allow me to get a new car fairly easily, but by all means it wasn’t perfect.  The biggest lesson I’ve learned in the past two weeks is that credit is like a GPA: Easy to break down but difficult to build back up.  Looking over my credit report definitely did not make me a financial expert, but it did teach me a few lessons about being more careful with my credit and making better financial decisions:

allposters.co.uk

1. Ignoring it doesn’t make it go away.

A big part about maintaining good credit is communication.  The next time you’re dodging the bill collector’s call or crumpling up a bill you have no intentions of paying, remember that it’s a recession and many debt collectors realize that. While some are cold-hearted, others are willing to work with you because they understand on their end a little bit of something is better than all of nothing.  Responsible people don’t necessarily pinch every penny to get the bills paid, but they do make an effort with debt collectors to explain their situation and make arrangements.

Everyone won’t be willing to work with you, but that’s not to say explaining that you’re on hard times isn’t worth it.  Collectors who want to be paid eventually may bring to your attention payment plans that you weren’t even aware of.  When my paycheck wasn’t matching my student loan debt, by calling and explaining my situation and what I was able to pay, I eventually was placed in a plan that was sensitive to my income.  Ignoring your debt doesn’t make it go away, it just sends a message that you’re irresponsible, don’t care and just makes things worse in the long run.

Image: Digital Vision

Jobs are scarce and student loan debt is putting many college grads in a financial bind. As a result, many people are questioning whether a college education is worth the time and expense that so many people are investing in it.

Earlier this week, we offered some basic advice for how to get the most out of the financial aid offered by the federal government. In that story, we included this important comment from BusinessWeek: “Many students are incurring heavy debts for an education (ethnomusicology, theater arts) that just isn’t worth it from a strictly financial viewpoint.”

This topic is tackled further in this week’s issue of Newsweek. To be clear, the article says that a college education is very much a valuable investment.

“College graduates now make 80 percent more than people who have only a high-school diploma, and though there are no precise estimates, the wage premium for an elite school seems to be even higher,” the article reads. Like the BusinessWeek story, the Newsweek article makes distinctions between majors and how exactly students spend their four years in school. (The article frowns upon beer pong.)

But more than that, the article takes a look at the rising cost of school and how that is impacting the ability to pay back those student loans. Schools are now investing in nicer dorms, more faculty and administrators, and other perks and features that are meant to attract students. But those bells and whistles drive up the cost of operating a school. That cost is passed down, of course, to the student. If the price of school goes up, the amount one has to borrow goes up, which means you’re on the hook for more after graduation.

“Just as homeowners took out equity loans to buy themselves spa bathrooms and chef’s kitchens and told themselves that they were really building value with every borrowed dollar, today’s college students can buy themselves a four-year vacation in an increasingly well-upholstered resort, and everyone congratulates them for investing in themselves,” the article says.

More than that, many students are going to a particular school because of how it looks on their resume.

“That debate matters a lot, because while the value of an education can be very high, the value of a credential is strictly limited,” the story continues.

In other words, give some deep thought to what you’re going to school for. Ultimately, it should be for the education you’re going to get. And that education comes not just from the institution, but from the effort that the student puts into the work.

Start saving your money early, and take steps to keep college costs at a manageable level. That could mean going to a two-year college then transferring to a four-year institution. Or going to a state school instead of a private one. Or one closer to home to save on housing expenses.

The point is, know what you want to get from your education and take steps toward that goal. You’ll be rewarded with a salary that will allow you to pay any debts you might have incurred.

Image: Goodshoot

Colleges are getting very tight with their financial aid rewards. So, The Wall Street Journal warns, students and their families should be careful to press the right buttons to get all the financial aid they’re entitled to. The Journal has got plenty of advice about how much to keep in a student’s 529 account (not too much) and how to adjust your income to maximize your reward. And one of the basics is to fill out the FAFSA, something that everyone at all income levels should do. Megan McClean, the director of policy and federal relations at the National Association of Student Financial Aid Administrators, echoes that suggestion.

“This is the first step and has to occur if a student wants any aid from the government,” she told us in a phone interview.

College has become a very pricey but necessary expense, and it’s only getting more costly as the economic recession grinds on. With that in mind, we wanted to get down to the financial aid basics, which means taking advantage of what the government can offer. Certainly, this doesn’t mean you shouldn’t explore all of the options — what your school can give, what sorts of scholarships and grants you qualify for through third-party organizations and other options. But the government’s tuition assistance programs are a fundamental benefit that can continue to reap rewards even after you’ve completed your studies.

Everything starts with the FAFSA, the Free Application for Federal Student Aid. Note the word “free.”

“If you come across something that’s charging, that’s not it,” warns McClean. The form is tweaked and re-released every year on January 1 and can be filled out online.

For the neediest, there are Pell grants, which offer up to $5,550 worth of aid that doesn’t have to be paid back. Work-study programs, also need-based, dole out their benefits via paycheck, and there are student loans.

As we’ve mentioned (and, surely, as you’ve noticed) the cost for a college education has increased over the years, making something like $5,000 seem like small potatoes.

“Pell grants used to cover a larger percentage of tuition and fees,” says McClean. “Now things are more expensive. Also, this goes to very low-income students. So there’s increased reliance on student loans, which we don’t necessarily think is a bad thing because there are protections.”

There has been a lot of talk about student loans lately and much of it has been bad. From horror stories of people saddled with so much student loan debt they work simply to pay it down, to threats of government legislation lapses that could drive interest rates up, it seems like student loans are a financial booby trap rather than a genuine resource to those in need. BusinessWeek recently called it “Debt for Life,” noting that U.S. student loan obligations had surpassed $1 trillion in March.

Summer’s over in less than a few weeks. The vacations are coming to a close and we’re putting away the bikinis and 50 Shades of Grey. And with the end of summer comes the back-to-school season for many. It’s time to pull out the syllabi and textbooks for another school year.

Whether you are going back to college or attending college for your freshman year, here are a few tips and reminders of how to get prepared.

Image: Digital Vision

Double-Check Your Financial Aid Packet 

Financial aid is the gift that keeps on giving. Log-in to your college Web portal and make sure your financial aid packet meets all of your needs like your tuition, housing and meal plan. If there are discrepancies, follow-up with your financial aid office quickly to ensure your grants and loans are situated.

A sample piece of the Shopping Sheet. Photo: CollegeCost.Ed.gov

Hoping to alleviate some of the confusion that comes with financial aid letters, the Obama Administration has introduced the “Shopping Sheet.”

“The Shopping Sheet will standardize award letters, making it easier to comparison shop and provide students with key information…,” reads the U.S. Department of Education blog. The info on the Sheet will include the cost of one year of school and the financial aid options available. We’ve got a sample section of the Shopping Sheet above.

Arne Duncan, the Secretary of Education, announced the Shopping Sheet today on Twitter, saying that it “helps unravel the mystery of college costs so students can make informed decisions.” He’s also published an open letter to college and university presidents asking them to use the Shopping Sheet, starting with the 2013 school year. Use of the sheet is voluntary.

The introduction comes amid increases in college tuition (“…the average cost of public education rose 15 percent between 2008 and 2010, with two thirds of students owing more than $26,000 in loans upon graduation,” reports ABC News). And Americans are saving less and less for education because of the recession. USA Today says, “48 percent of families with college-bound children are saving for their education, down from 56 percent in 1997.”

A college budget breakdown is a must-have for most everyone enrolling these days, so it will be interesting to see how many schools adopt the Sheet. For tips on how to pay for college, check this out.

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lifeafterwealth.net

As the class of 2012 graduates from high school, parents are excited to see their children grow up, but many are afraid of the mounting debt from a college bill looming in the distance. These days with the cost of college rising as well as everything else, if your child is intent on going to college, you’ve got to think strategically on how you both will manage the heavy price tag. The Daily Finance shares five top websites to assist parents and students in securing financial aid for college.

1. US Department of Education: The site will help you stay abreast of any changes to Student Aid programs as well as an early evaluation on financial aid eligibility.

2. National Association of Student Financial Aid Administrators: Take a look under the “Students, Parents & Counselors” section, you’ll find resources for state-by-state financial aid programs.

3. The College Board: Its scholarship search tool has a selection of over 2,200 programs with financial aid, scholarship and internship information.

4. Studentaid.com: Families with a household income over $40,000 will be charged for its services, but this site offers a variety of scholarships, grants and loans on a customized basis.

5. Savingforcollege.com: While this plan also offers financial aid and scholarship information, it concentrates more on creating a savings plan for your child’s college education.

From TheGrio.com

An estimated 1.5 million black students could see interest on their student loans increase unless Congress and President Obama reach an agreement to keep current rates in place.

Obama will give speeches at the University of North Carolina and the University of Colorado Tuesday, pushing his proposal to prevent a scheduled hike in rates for subsidized Stafford Loans. In 2007, Congress and President Bush agreed to gradually reduce the interest rates of these loans from 6.8 to 3.4 percent, but that provision expires in July, and new loans would be issued with the 6.8 percent rate if legislation is not passed.

The Department of Education estimates the increase would result in about $1,000 in additional loan costs for each student. African-Americans carry the highest levels of high student debt among demographic groups, as 16 percent of black graduates owe more than $40,000 in loans, according to a recent Philadelphia Inquirer report.

About eight million American students use subsidized Stafford loans each year, most of whom are in households with income below $50,000. These loans have particular appeal because the federal government pays the interest rates on them when students are in college, while students are responsible for the interest of unsubsidized federal Stafford Loans as soon as they start borrowing.

For the complete story, visit TheGrio.com.

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From BlackVoices.com

BERKELEY, Calif. — Fifteen years ago, California voters were asked: Should colleges consider a student’s race when they decide who gets in and who doesn’t?

With an emphatic “no,” they made California the first state to ban the use of race and ethnicity in public university admissions, as well as hiring and contracting.

Since then, California’s most selective public colleges and graduate schools have struggled to assemble student bodies that reflect the state’s demographic mix.

Universities around the country could soon face the same challenge. The U.S. Supreme Court is set to revisit the thorny issue of affirmative action less than a decade after it endorsed the use of race as a factor in college admissions.

The high court agreed in February to take up the case of a white woman who claims she was rejected by the University of Texas because of its race-conscious admissions policy. The justices are expected to hear arguments this fall.

College officials are worried today’s more conservative court could limit or even ban the consideration of race in admissions decisions. A broad ruling could affect both public and private universities that practice affirmative action, a powerful tool for increasing campus diversity.

For the complete story, visit BlackVoices.com.

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(ABC News) – President Obama will pitch a plan today to help ease the burden of loans on college students, as a new report shows that higher education is becoming more expensive for many young Americans.

Starting next year, borrowers’ student loan payments will be capped at 10 percent of their discretionary income, and they could be eligible for forgiveness on the balance of their debt in 20 years. Under the current plan, loan payments are limited to 15 percent of a borrower’s discretionary income, and their balance is forgiven after 25 years.

The plan will also help provide an opportunity for reduced interest payments. Students will be able to consolidate their loans under the same terms and conditions in a move that proponents say will simplify the payment process and help nearly 6 million borrowers. The Department of Education will send out a letter this year to borrowers who qualify, and those who consolidate their payments will receive a one-time, half percent reduction on their interest rate for some of their loans.

Read More…