Archive for ‘paying for college’

October 13, 2014

Student debt doubled for high-income families

by Grace

Borrowing for college among high-income families increased from 24% to 50% over the last twenty years.  Similar increases occurred among middle-income families.

… A new Pew Research Center analysis of recently released government data finds that the increase in the rate of borrowing over the past two decades has been much greater among graduates from more affluent families than among those from low-income families. Fully half of the 2012 graduates from high-income families borrowed money for college, double the share that borrowed in 1992-93.1.

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These numbers show how college affordability is no longer just an issue for low-income families, but now affects families across the income spectrum.

What has changed over the course of roughly two decades then is the pervasiveness of student borrowing across income groups: In the early ’90s, only among graduates from low-income families did a majority of graduates finish college with student debt. Now, solid majorities of graduates from middle-income families (both lower-middle and upper-middle) finish with debt, and half of students from the most affluent quartile of families do the same.

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Richard Fry, “The Changing Profile of Student Borrowers”, Pew Research, October 7, 2014.

October 9, 2014

Colleges want students who ‘can pay full price’

by Grace

Here’s a sobering reminder for students working on their college applications now.  It’s number 8 on the list of “10 things the college admissions office won’t tell you”.

We’d rather admit someone who can pay full price

All other things being equal, a full pay student often has a better chance of admission than a student who needs financial aid.

According to the College Board, 10% of college freshmen in 2013 were foreign students. One reason colleges woo these international scholars: Many are wealthy enough to pay the full price of tuition.

At publicly funded state universities, higher tuition for out-of-state students often helps subsidize education for state residents. For example, for an undergraduate at the University of California at Berkeley, in-state tuition is about $13,000 a year; for an out-of-state or foreign student, tuition is about $36,000 a year.

Full pay can be an admissions boost for marginal students.

The interest in full-pay students is so strong that 10 percent of four-year colleges report that the full-pay students they are admitting have lower grades and test scores than do other admitted applicants.

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Daniel Goldstein, “10 things the college admissions office won’t tell you”, MarketWatch, Oct 4, 2014.

September 22, 2014

Getting a college degree doesn’t seem as important as it used to be

by Grace

Amid a national debate about the worth of a college education, a respected annual poll about the education views held by Americans has found that only 44 percent of Americans now believe that getting a college education is “very important” — down from 75 percent four years ago.

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…. Similarly, in 2010, 77% of parents said it was somewhat or very likely that they would be able to pay for college for their oldest child. That percentage declined to 69% this year.


Interestingly, confidence in being able to pay for college dropped down to the same level seen in 1995 after rising in 2010.

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I will be on the lookout for an update to the 2011 Pew Research survey that found 80% of parents believed paying for their child’s education is an extremely important (35%) or very important (45%) goal.

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Valerie Strauss, “Poll: Most Americans no longer think a college education is ‘very important’”, Washington Post, September 16, 2014.

September 17, 2014

GoFundMe can help pay your college tuition bills

by Grace

Education is the second-most-popular category on GoFundMe.

It’s easy to do.

… GoFundMe and other sites, like Crowdrise, let individuals pursue personal fund-raising. You create a profile, including a photo and an explanation of what you’re seeking the money for, and then spread the word on networks like Facebook and Twitter.

The rules are loose.

Unlike Kickstarter, which requires its users to meet a goal to get the money, GoFundMe and Crowdrise allow individuals to keep the donations whether or not the goal is met.

Crowdrise’s chief executive, Robert Wolfe, said his site had recently added an option for individuals — rather than recognized charities — to raise funds and that the educational category is growing….

Neither GoFundMe nor Crowdrise independently verifies the claims made in profiles.

Since most donors are friends and family, low-income students often find it challenging to raise substantial funds.  Another barrier is that contributions to individuals are not eligible for tax deductions.

Other similar sites, like ScholarMatch, use more stringent criteria and do not allow donations to specific individuals.

A dramatic story helps raise more money.

Heart-rending stories tend to gain the most attention and donations from beyond a student’s circle of friends. A Vanderbilt University student whose profile told of her mother’s suicide shortly before her freshman year raised $50,000, double her goal. And GoFundMe says its most successful campaign raised more than a million dollars for a child with a rare genetic disease.

For students who are willing to share their stories, crowdfunding seems like a no-brainer.  Given that young people seem eager to share many details of their personal lives online, I can see how this idea will continue to grow.

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Ann Carrnssept, “That Selfie Is So Good, It Could Help You Pay for College”, New York Times, Sept. 11, 2014.

September 8, 2014

Freelancing may be ideal for college students

by Grace

Freelance jobs can be a good way for college students to earn money and enhance a resume.

… Getting a stable job is tough because classes and studying will take up an unpredictable amount of time. Thus, one of the best ways to survive college is to find freelance work….

Some ideas include IT support, graphic design, tutoring, and almost any other type of freelancing.  Baby-sitting and home improvement services are often in demand in college towns.  Check out the complete list of 15 freelance jobs for students to get more ideas.

August 27, 2014

Step-by-step planning for college is one way to reduce the stress

by Grace

Families are stressed out about getting into college.

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They’re also stressed out about paying for college.

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All this is not breaking news to most families with teenage children.  However, since these survey results are from readers of  Princeton Review’s “Best Colleges” guidebook and users of their website, they are not really representative of the general population.  These survey respondents are more likely to be overly obsessed with the college application process than the average person.

Most families believe providing a college education for their children is very important, but are probably not “extremely” stressed out about it.

It is important to plan for college, but it’s unhealthy to become obsessed with the process.  Here’s some advice from parents and children on dealing with the stress.

Don’t spend too much time comparing notes with others going through the process. Makes people crazy. …

Make sure to take the college process in steps and you won’t feel so overwhelmed….

Don’t freak out. College is not the end of your life. Everything will be OK….

Have fun with it! If you enjoy the process along the way, the outcome will hopefully be more beneficial….

Thoughtful planning is good, and deep breaths can also help.

August 25, 2014

Buying and selling college class notes is made easier by technology

by Grace

Selling class notes can be a way for college students to make extra money, but is it a good idea?

Every student could use a little extra spending money, and selling your class notes and study materials is one way to make some on the side for something you’re doing for free already. Flashnotes lets you sign up by school, post your notes for specific classes, and sell them to other students.

Sharing class notes and tests has been going on for years, but somehow using technology to escalate this practice to an efficient business transaction seems to go over the edge.

… Flashnotes says their average students pick up a couple hundred dollars on the site, and that their in-house team reviews and monitors materials uploaded to make sure the notes being sold are actually of decent quality before they’re posted. Plus, you can preview any notes before you buy them, to make sure you’re not shelling out for what amounts to be useless. They also offer a money-back guarantee if you’re displeased with your purchase. For their part, Flashnotes doesn’t add listing fees, but they take 30% of every sale, so price accordingly….

Some pushback in the comments to the original article included a discussion about the legality of profiting from someone else’s intellectual property, which apparently is not a problem since the students’ notes are considered “their own personal interpretations of what has been taught within the class”.

At least one commenter gave several reasons why buying and selling class notes is generally a bad idea.

Speaking as a college professor of 4 decades’ experience, please, please don’t do this. Buying classnotes is a lucrative business for the resellers, but leaving aside the issue of intellectual property, buying classnotes is no substitute for being present and taking notes yourself. Buying notes is to entirely misunderstand why we take notes: it’s not in order to capture a set of objects, but in order to process heard & seen data intellectually into our own words, which form unique mnemonics and significantly enhance recollection, synthesis, and critical thinking. With respect, Alan: please reconsider this recommendation—it is highly problematic, possibly unethical, and certainly unstrategic and counterproductive for learning. I respect Lifehacker enormously, but this is a very bad idea.

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Alan Henry, “Flashnotes Offers College Students a Place to Buy and Sell Class Notes”, Lifehacker, August 8, 2014.

August 19, 2014

Families are finding various way to cope with rising college costs

by Grace

Sallie Mae reports that American families are finding various ways to cut college costs.  They are relying more on out-of-pocket contributions and less on student loans.

Cost-Saving Measures

How America Pays for College 2014 finds that families are adopting multiple strategies to reduce the cost burden of paying for college, such as opting for in-state tuition (69%), living closer to home (61%) or at home/with relatives (54%), filing for education tax credits (42%), getting a roommate (41%)6, accelerating the pace of coursework (28%), or not deferring payments on student loans (23%). Not only was the choice of an in-state school the most frequently mentioned response, it is also most likely to be mentioned if only one cost-saving measure is adopted by the family. Most families, however, are likely to adopt a combination of cost-reduction approaches, such as opting to go to school in state and living at home or with relatives (43%).

Paying from current income and savings increased while borrowing decreased.

Out-of-Pocket Contributions

A significant source of college funding comes from the income and savings of families known generally as “out-of-pocket” contributions. In 2014, American families reported that out-of-pocket spending from parents and student combined was $8,850, accounting for 42% of the total amount paid for college. This breaks a three-year trend in decreasing out-of-pocket spending (46% in 2010, 41% in 2011, 40% in 2012, and 38% in 2013). Compared to 2013, American families increased their contributions from income and savings by $839 while decreasing the total spent on college by $295.

 

How the Typical Family Pays for College, Year-over-Year

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Borrowing

Families’ use of borrowed money used to pay for college in 2014—a combined parent and student amount of $4,610— dropped to the lowest it has been in five years. Borrowed funds paid for 22 percent of college costs in 2013-14, a decline from 27 percent the prior year. Student borrowing (15%) accounted for twice as much as parent borrowing (7%).

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How America Pays for College 2014, Sallie Mae & Ipsos Public Affairs, August 2014.

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June 4, 2014

Home equity loans regain popularity as college costs continue to rise

by Grace

A rebound in house prices and near-record-low interest rates are prompting homeowners to borrow against their properties, marking the return of a practice that was all the rage before the financial crisis.

College costs continue to rise, so home equity loans may rebound in popularity as a tuition-funding vehicle.

Ian Feldberg planned to open a $200,000 Heloc this week with Belmont Savings Bank to help pay his son’s college tuition. The medical-device scientist purchased his home in Sudbury, Mass. for a little over $1 million in 2004, and estimates that its value dipped as low as $800,000 during the financial crisis. However, after applying for the line of credit, he found that its value had completely recovered.

“I’m very pleased about that. My options for tuition fees were either that or to cash in on my pension prematurely,” he said.

A too-big-to-fail bank steps up home equity lending, and Tyler Durden of Zero Hedge expresses some concern.

The Wall Street Journal reported yesterday that home-equity lines of credit (Helocs) had increased at a 8% rate year-over-year in 1Q14. Some banks are more aggressive than others, and perhaps we shouldn’t be surprised to see TBTF government welfare baby Bank of America leading the charge, with $1.98 billion in Helocs in the first quarter, up 77% versus 1Q13.

What could possibly go wrong?

As HELOC delinquencies are off their highs (for now) but remain elevated… (we are sure this renewed ATM usage on the back of created wealth and stagnant wages won’t harm that downward trend at all…) – will we never learn?

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And then there’s this.

Think about that for a minute. A “medical-device scientist” can’t send his kid to college without either a Heloc or cashing in on his pension.

Life goes on.

Related:  “Federal Direct PLUS or home equity loan for college costs?” (Cost of College)

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Tyler Durden, “Home Equity Loans Spike As Americans Scramble For Cash”, Zero Hedge, 05/31/2014.

May 28, 2014

American teens are not interested in summer jobs

by Grace

Fewer teens are working.

… In 1978, nearly three in four teenagers (71.8%) ages 16 to 19 held a summer job, but as of last year, only about four in 10 teens did, according to data from the Bureau of Labor Statistics for the month of July analyzed by outplacement firm Challenger, Gray & Christmas . It’s been a steady decline, seen even during good times: During the dot-com boom in the late 1990s, when national unemployment was only about 4%, roughly six in 10 teens held summer jobs….

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And they are not very interested in getting jobs. Only 8.3% of teens who were not working last summer said they even wanted a job.

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This doesn’t mean that teens are simply tanning by the pool or binge-watching Bravo (though some certainly are). Challenger says that many teens are in summer school (rates of summer school attendance are at one of the highest levels ever, he says), volunteering, doing extracurricular activities to pad their college applications and trying out unpaid internships. And all of these are worthwhile endeavors (well, minus the tanning and Bravo), especially as it becomes more competitive to get into many elite colleges.

Lack of work experience can be a disadvantage.

That said, experts say that paid work has value for a number of reasons — and that teens (even those who plan to go to college) who don’t do it may be at a disadvantage. “It’s critical for teenagers to work, to begin to understand the working world, the value of a paycheck” says Gene Natali, co-author of “The Missing Semester” and a senior vice president at Pittsburgh investment firm C.S. McKee. “Choosing not to work a paid job has consequences.”

The good old days?

One of my older relatives had a job in high school delivering both the morning and afternoon newspapers.  He and a friend would rise early each day to roll up and deliver papers before their first class, and then repeat the routine after school.  He was also in the school band, played varsity tennis, and maintained good grades, clearly demonstrating he was able to manage his time effectively.  A generation or two later, it’s hard to imagine many kids successfully maintaining a similar schedule of activities. Many of them need reminders to take their Adderal in the morning, and think they are too busy for a part-time job.  Maybe my relative was a remarkable young man, but many of his peers also worked during high school.

Times have changed.  Expectations have changed.  Kids have changed.

Related:  “Teens are too busy preparing for college instead of working” (Cost of College)

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Catey Hill, “American teens don’t want to work”, MarketWatch, May 3, 2014.

‘Teen Summer Job Outlook Teen Employment Culd Remain Flat as More Say “Nah” to Summer Jobs’,  Challenger, Gray & Christmas, Inc., April 28, 2014.

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