And there is even more good news. The loan rates on Subsidized Stafford federal loans are dropping for the coming school year.

Taking a Dip

Families that qualify for need-based aid are the ones who qualify for the

Subsidized Stafford loan–a federal loan whose interest rate is subsidized by the government.  The loan interest is paid by the government while the student is in school.

The College Cost Reduction and Access Act of 2007 began to take effect this year, dropping the fixed rate of these subsidized loans from 6.8% to 5.6%.  The interest rate will drop further to 4.5% for the 2010-2011 school year and then in 2011-2012, students will only be charged 3.4% interest on these loans.

The Unsubsidized Stafford loan does not get an interest rate adjustment down.  These loans will remain fixed at their current 6.8% interest rate.

Look Before You Leap

Though the lower interest rates are wonderful, I always feel it my duty to caution families that are considering education loans. Though they can be a helpful piece of a college funding plan, you should try to make sure they do not become the major component of your family’s plan.  Try instead to utilize savings, current income, applying for scholarships and other cost-cutting strategies to cover the bulk of college costs.

So even as loan rates drop, carefully consider how a student loan might fit into your family’s college funding plan.  If you do decide to use the Stafford loan, have a frank discussion with your student on the responsibilities of carrying debt and how he or she will need to plan ahead to be able to cover the payments once graduation day has passed.  And if you do decide to borrow, be sure you get a federal loan rather than a private student loan from the bank.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

photo: kedy

Learning to Network

Networking can be an invaluable skill in preparing for the post-college years, and your child can start with simple steps right now. Having a team of experienced, respected people behind him or her can help open doors to graduate schools and career opportunities, as well as provide a handful of people who may be willing to write letters of recommendation, submit character references, and otherwise pull strings to help your student achieve his or her dreams.

Here are a few ways to get started:

• Office Hours. Many students tend to overlook these few dedicated hours each week in which their professors are available in a one-on-one or small-group setting. Even if your child is not struggling in a class, the face-time of these can be hugely helpful. Students should try to make a habit of visiting office hours with professors they like and respect.
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• Internships. College career centers are a great place to look into opportunities interning in a field of interest, and students should consider this for two important reasons. First, interning will give your child a taste of their potential career so they can see how they might feel about it as a 40-hour-per-week job. Second, it can help them begin making connections in their field that could lead to job opportunities after college.
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• Academic Counseling. Too few students take advantage of the academic counseling provided by their colleges. Sessions with a counselor can help a struggling student improve, and a strong student move forward more quickly–perhaps choosing a double major or graduating early. Counselors not only have a strong sense of how their college’s system works, but they can also provide students help and direction in preparing for graduate or medical school applications, or in finding opportunities to have real world experiences, such as study-abroad schooling.
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• Personal Connections. School is a great place to start, but students shouldn’t stop there in their networking endeavors. If your child has a specific field of study in mind, encourage him or her to search out connections through non-academic sources such as service clubs, church groups, or even family friends.

Remembering Etiquette

Once your student has chosen some ways to build his or her network, help him or her build a good reputation with his or her new friends and connections. Here are a few helpful tips to get you started:

• Respect Schedules. When setting up an appointment or asking for a favor (like a letter of recommendation) allow plenty of time in advance to allow for busy schedules. Asking someone to write a character reference in only a day’s time will not only look irresponsible but also most likely be answered with a “No.”
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• Please and Thank You. Emily Post didn’t get her good reputation for no reason–people respond to politeness and etiquette. That means a healthy display of gratitude can get your student far. Remind him or her to always send a thank you note (on paper, not just an email) to people who have helped them along their way, either by introducing them to someone, helping them find a job, or even simply writing them a letter of reference.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

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Just because your student is in college doesn’t mean he or she can’t generate some earnings to make a contribution towards the college bills. A part time job is a great start and here are a handful of ideas for your student to generate income to help fund the college years.

• Cater to Someone. Catering companies are a great option for students, as they mostly kick into high gear on weekends (not school nights!). MSN’s Liz Pulliam Weston recommends talking to local catering companies as well as local party and wedding planners about opportunities for this type of work.
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• Go to Auction. Online auction sites like eBay can be a great way to make a little extra income by selling some no-longer-needed things on hand. An item that has been sitting in the back of a closet unused for a long time can be put up for sale and snapped up by someone that feels they have to have it! You can sell anything from used DVDs or video games to vintage clothes or gadgets to increase your monthly income.
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• Help Your Peers. Many students find they can turn their talents into some part-time income. If your student is a math whiz, he or she could offer services as a tutor to peers. If your child recreated the definition of grammar itself, he or she could charge to help edit essays for classes or grad school applications.
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• Adult Education Classes. Community centers and community colleges often pay around $100 to an expert on a subject matter to offer a one-session class. If your child is well versed in any one subject matter he or she could contact local community centers and colleges to propose a class idea. Maybe your child is great at designing websites, has a real talent in arts or crafts or could teach techno-phobes how to blog. (This activity, by the way, looks great on a resume, too!)
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• E-Work. The internet offers a plethora of work opportunities, if you know what you’re doing. Students with web experience could charge a nominal fee to build or maintain a website. Elance.com has opportunities ranging from administrative assistance to writing to foreign language translations. The best part is the flexible time frame–you can work online any time of day (or night).
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• Stock Up. Stock photography is becoming more accessible as the internet expands, and students with a good eye and a digital camera can easily get into the field. Websites like StockExpert and iStockPhoto allow you to submit your best work and receive small royalties when people purchase it for use.
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• Babysit/Nanny. It may be an old standby, but babysitting is still a great way to help boost income. Many students are also turning to part-time nannying positions, which can often be found on the school career center website’s job postings. (These jobs may also offer your child the opportunity to study “on the clock” after they put the kiddos to bed.) Tip: Babysitters who are well-experienced or CPR certified can often charge a little more.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

Down, Set, Take a Hike

In an effort to reallocate smaller budgets, many colleges have trimmed their student athletic programs; but none have received quite as much attention as Northeastern University, which recently announced that it was eliminating it’s entire football program.

Though the team has reportedly been playing for nearly 75 years, school officials felt the money would be better spent focusing on building leadership in the student body.

Shaky Ground for Athletic Scholarships?

While Northeastern has promised to honor the athletic scholarships awarded to their current football team, their move to cut such a prominent sport suggests that students should not count on athletic scholarships alone to cover college costs.

With purse strings tightening on scholarship and grant funding at many private schools, administrators may be more likely to decrease these athletic offerings and focus more on academic-based scholarships (which may translate into a better payback in the form of alumni donations from these students in the futue.)

The brass ring of the full-ride athletic scholarship may be harder than ever to reach.

Keep Your Options Open

If your student is hoping to win an athletic scholarship, you’ll find that now more than ever students will need to get themselves noticed. And this means not just by playing well, but by building a relationship with coaches at not only their top-choice colleges, but at dozens (yes dozens!) more. Coaches will be looking for strong academics first and athletic abilities second. The student-athletes that are accomplished in both areas are most desirable. Athletic skills will be judged according to the level of play at a particular school.

Unless your child is a blue-chip athlete, if you and your child are hoping for a significant athletic scholarship you must understand that THE COLLEGE WILL CHOOSE YOUR CHILD, not the other way around. Your child must contact 50 to 100 colleges to find a few that will make an offer.
As your child strives for an athletic scholarship, however, I would encourage you not to put all your eggs in one basket. Now is the time to focus on alternate ways to cover college costs. This may be as simple as working on finding private scholarships your child is more likely to win, or learning how to get a tuition discount.

I also encourage my client families to take a close look at their cash flow. I’ve shared some great ideas about how to increase your family’s cash flow to pay for college in the posts Finding Money for College in Unexpected Places and 5 More Easy & Unexpected Ways to Find Money for College.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

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Today I wanted to share some thoughts with those of you whose children might consider graduate school so you can start the conversation–and preparation–early. You may find that getting a head start now will save you both time and money in the long run.

Getting a Head Start

College itself is a daunting task for most teens to take on, so it shouldn’t be surprising if your child hasn’t yet begun to prepare for graduate school. However, to get the best possible chance of moving right from undergraduate studies into a post-grad program, it is important that your student start working toward that goal during his or her college years. Here are a few ways to get started.

• Visit the Career Center. The career center at your student’s college will likely be an excellent resource in helping him or her start up a to-do list for graduate studies. Many schools also offer practice interviews, essay assistance, and other help with the grad school application process.
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• Accelerated Programs. Some colleges offer accelerated programs where your student can earn both a bachelors and masters degree in only five years.  What a great college funding strategy!  My son, who is now a sophomore in college, plans on participating in this type of program at his university.  Pre-planning is crucial here.  The curriculum for the graduate degree usually begins in the junior year of undergraduate studies.
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• Prepare for the Entrance Exams. Just as most undergraduate colleges want standardized test scores as part of the admissions package, so too do grad schools. Instead of an ACT or SAT, however, your student should find out what test his or her intended field of study will require. For most students, this will mean the GRE for grad school, or the MCAT for medical school. You and your student should work out a study plan to help him or her prepare for this test, and also discuss who will cover the cost of tutoring and test fees.
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• Get Experience. Graduate schools like to see that a student is taking his or her field seriously, so volunteering, interning or working in the field can strengthen a grad school application. Not only will it enhance your child’s CV, it will also allow him or her the opportunity to see how he or she feels about working in this career field on a daily basis.
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• Network. Not only does networking give your student a pool of people to write letters of recommedation, it may also lead to connections at a graduate school or in the job market later on.
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• Discuss Finances. Now is also the time to talk to your student about how to finance his or her graduate studies. Decide whether you feel your student should take on the full responsibility of paying for school on his or her own, and if you reach that decision, help him or her come up with ideas about how to do so. Discuss options such as working, taking night classes, saving, applying for scholarships and grants and using student loans. Offer to assist with budgeting advice.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

photo: harrykeely

Did You Know?

Colleges make it extremely easy for students to take out a student loan in this day in age. Once a student’s FAFSA proves them to be qualified, most colleges process the information for your loans through their financial aid office, so that all a student has to do is perhaps choose a lender and then click “Accept” on the school aid website.

While this ease of borrowing may be comforting, it has also lead to less rigorous studying of loan terms. Does your child usually read the full terms before signing away his or her acceptance of them? Does he or she understand the full levity of signing on for a student loan?

Many students are completely unaware that they are solely responsible for repaying their student loans, and that if they do not pay them back it will harm their credit. Some may even think their parents are responsible for the loans, but even if a parent or grandparent agrees to pay them back, the student is the only one truly held responsible for repayment.

Bankruptcy & the Supreme Court

Another little-known fact about student loans is that they are extremely difficult to escape from, even if a student goes bankrupt. Currently in order to be released from a student loan debt, a student must prove that repaying the loan would be an “undue hardship,” which the Chronicle of Higher Education reports is a term that has no fixed meaning (making each case subjective).

However, the Supreme Court is preparing to review a case involving bankruptcy and student loans. The case, United Student Aid Funds Inc. v. Espinosa, is expected not to change the difficulty of excusing student loans at bankruptcy, but it may change the standards by which “undue hardship” is judged.

Being Prepared

Though many students feel the pinch of having to repay their loans as they are just starting out in their career, bankruptcy is not a very common result of these loans. However, it is important that your student fully understands that borrowing even a consumer-friendly Stafford student loan places a new responsibility on his or her shoulders.

For more information your child may not know, read the article I wrote about what your student needs to know before borrowing student loans.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

photo: svilen100

First some good news:  This year the FAFSA has been simplified!  The form is shorter than last year and more intuitive.  The online application will automatically include or exclude certain questions depending on how you answer various core questions.  Next are four tips for you:

1. Get Your PIN

Filing the FAFSA online requires both you (the parent) and your student to use a PIN as an electronic signature. This number is specific to you or your student, and will be used every time you file the FAFSA on the web.

Go to PIN.ed.gov to apply (make sure your student applies for one as well). It will only take you a few minutes, and you’ll be one step closer to having the FAFSA done.

2. Look over the FAFSA on the Web Worksheet

If you’ve never filed the FAFSA before, you might wish to take a look at the FAFSA on the Web Worksheet offered on the FAFSA website. This will give show you the type of information you will need to have prepared before you tackle the form online.

3. Prepare Income Estimates

Once you’ve looked over the worksheet, try to prepare an accurate estimate of both your student and parental income for the 2009. If your income is complicated, you may wish to discuss estimated numbers with your accountant or financial advisor.

Remember, the point of this estimate is to allow you to fill out the FAFSA as soon as possible. You should then go back once your 2009 tax return is complete and submit your final numbers.

4. Gather Your Information Beforehand

In addition to your and your student’s PINs, you’ll want to have the following information on hand when you sit down to file the FAFSA:

• Drivers licenses and Social Security numbers of both parents & your student
• Information about parental 2009 earnings from work and other income (interest, dividends, child support, etc.)
• Information about your student’s 2009 earnings from work and other income
• Account balances of savings, checking, investment accounts (non-retirement*), investment real estate equity (not personal residence) for both parents and students

*NOTE: You do not need to report the balances of any retirement accounts such as IRAs, 401(k)s or 403(b)s.

Get these 4 steps done in advance, and you’ll find filing the FAFSA will go a lot faster!

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

What is the FAFSA?

The FAFSA is just what it’s name implies: an application to receive financial aid for college from the federal government. Put out by the Department of Education, by calculating a family’s Expected Family Contribution (EFC), it determines which students are eligible to be awarded different types of financial aid such as grants, loans or work-study.

Who Should File?

Every family with a student currently in college, or with a high school senior planning to enter college next fall, should apply. Your family should fill out the FAFSA regardless of whether or not you expect to be eligible for “need-based” financial aid.

Why Should I File?

You should file because families of all income levels can benefit from filing the FAFSA.

Students of families whose income level qualifies them for need-based financial aid will have the opportunity to be awarded grants, scholarships, and low-interest loans.

Families that will not qualify for need-based aid should still file the FAFSA, because it is also the only way to get access to federal student loans–the most consumer-friendly type of student loan (as opposed to private student loans, which are offered by private lenders like banks, and typically have higher interest rates and less attractive terms.)

Even if your family does not currently need a loan, filing the FAFSA will make your child eligible to take out a federal student loan at any time during the school year, should the need arise. It also gives you access to the parent PLUS loan.  During these tumultuous times, it may be a helpful safety net to have in place.

Where Do I File?

While a paper application is available on request, I recommend that you fill it out and submit it online at www.FAFSA.ed.gov.  The online application is processed much more quickly than the paper version.

Make sure you only go to the address above to file your FAFSA, and not to the site, FAFSA.com which is actually a commercial site that will charge you to file your FAFSA.  (The FAFSA is a free form to file if you use the government site.)

When Should I File?

The FAFSA for the 2010-2011 school year (for students who will be attending college this coming fall) became available on January 1st, 2010. Some colleges award aid on a first-come first-served basis, so you should apply as soon after the 1st of the year as possible to guarantee your student the best chance of receiving the most attractive financial aid package possible.  (Plus it will feel great to have this task checked off as “complete” on your “To Do” list!)

You won’t likely have your 2009 tax return completed when you fill out the FAFSA, so you will need to estimate your 2009 income figures.  If your income for 2009 was similar to 2008, you can simply use the numbers off of your 2008 tax return.  You can update the figures on your FAFSA once your 2009 tax return is complete.

Next post I’ll give you some handy tips about how to get a head start on the FAFSA process, so stay tuned.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

Cost Up, Aid Down

I’ll break the bad news first (don’t we always want to get that out of the way?), but don’t worry–there is good news to follow.

First of all, it seems that both public and private college costs are continuing the steep upward trend we’ve been seeing for far too long. According to the College Board’s yearly survey of college costs, public 4-year schools tuition has increased by about 6% to an average $7,020, while private 4-year college tuition has gone up approximately 4% to $26,273.

Of course, the rising prices aren’t the only problem–CNN reports that families are also struggling with decreasing amounts of aid. As families grapple with the financial struggles of the current economy, college grant funds have failed to increase equally to tuition increases–which translates to families having a larger out-of-pocket cost than ever.

Two to One

One piece of good news–at least for some students–is that reportedly two-thirds of students attending college this year received aid in the form of grants or scholarships that do not have to be repaid. CNN estimates that these students are paying only about $11,900 out of pocket for private college tuition and $1,600 out of pocket for tuition at a 4-year public. Of course, that leaves an entire one-third who are paying full price, either out of their own pockets or borrowing funds.

Unfortunately, the numbers above only reflect tuition costs. Students also have to find ways to pay for room and board, transportation, books and supplies and other day to day expenses.

What You Can Do

With costs up and aid down, more and more students are turning to borrowing as their first solution to the problem, but student loans should be the last choice. After all, starting off out on your own is hard enough without the stress of loan payments hanging over you!

Now is the time to step forward and really search for ways to cut your college costs. I work with my client families every day to help discover creative ways to reduce the out-of-pocket costs for college.

Here’s where you should start:

• Learn how to get a tuition discount, and do everything you can to make that happen.
• Spend time doing scholarship searches (see my tips here) and encourage your child to spend time applying for scholarships. The rewards can be great!
• Look for ways to find money for college in your day-to-day spending.
• Learn about college tax credits and use them!
• Fill out the FAFSA yearly to give your child the opportunity to potentially win grant money from the government and/or college and to make federal loans available to your family.
• Get assistance from a professional college planner that can help you identify dozens of additional strategies that apply to your particular family and may reduce your costs by thousands of additional dollars.

Even in the toughest of times, a little ingenuity can take you far. Good luck–I know you can do it.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

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Senate Stall

Though the bill was being discussed in the House of Representatives months ago, and finally approved their version in September, it seems that the Senate is in no rush to get to it. Instead, their attention is (and will reportedly remain) on the controversial new health-care program that has been the center of so much media.

The Senate does not expect to address the student loan bill at all until the health care issue has been resolved, and many don’t expect that to happen until at least December.

Slowing the Tide of Change?

While the bill waits for Senate consideration, many in the higher education industry continue to question–or refute–the wisdom of changing the current student loan status quo.

Private lenders, who have enjoyed the opportunity to offer federal loans as well as their own private loans, are lobbying senators to reconsider the entire plan. Should the bill pass, private banks would no longer be able to offer federal student loans like the Stafford, as they would all come directly from the government.

Higher education leaders worry that Congress will not offer the money on optimal terms for student borrowing.

What Might Be

In the past, the bank-based system has allowed a certain amount of competition to form between banks, which has often lead to a happy outcome for students. In competing for student borrowing, banks have been known to go so far as to lower interest rates on the already-low federal loans rates–quite a boon for students.

Should the Senate pass this new bill, all lending would move to the “Direct Lending” program, under which students would only be able to borrow federal loans directly from the government itself. As the government would then monopolize all federal loan offerings, this would eliminate the competition that offered such helpful perks for students in the past.

While private banks would still be able to offer their own private student loans, let me reiterate that these loans should be a very last resort for student borrowers. Private student loans–which are any loans unaffiliated with the federal government–have fewer consumer protections and much higher rates, making them a risky and unfavorable first choice.

Stay tuned for more information as the bill moves forward–and thoughts about how your family may wish to proceed if it passes.

All the best,
Deborah Fox

Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.

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