Student loans have been all over the news lately, and most of the news has been pretty frightening. The Boston Globe recently reported that outstanding student loan debt now totals $870 billion, surpassing both credit card and auto loan debt as a fraction of the economy, with over 14% of borrowers currently delinquent on payments. And the Washington Post detailed how Americans over age 60 still owe approximately $60 billion in student loans, borrowed either for themselves or to help put children or grandchildren through school, putting the retirement of older borrowers at risk.
While student loan statistics are scary, your family does not have to be a statistic. The key to using student loans successfully is to consider them a part of your college financing strategy, not the whole. Want to use them the right way? Take the following advice from our college financial planning experts:
My oldest child is in the 4th grade, and it is amazing how many parents at his K-8 school want to have coffee with me to discuss college admissions, even for children who have not yet hit middle school. But if I’m being honest with myself, even I think about how my son’s decisions today impact who he will be when he applies to college. But then one of my wise colleagues will set me straight and help me to remember that he’s still too young to be planning for college.
On the flip side, I’ve met plenty of parents of 12th graders who are still kicking the can down the road, sort of waiting for the process to happen to them. So when is the right time to “start?”
Can students be blamed for thinking they have to apply to 100 colleges just to get admitted somewhere? Think about it. The population of high school graduates was supposed to have peaked in 2008, but colleges and universities are still finding creative ways to round up new applicants. As a result, admit rates are being driven down to staggering levels. A few examples:
A financial aid award letter can come with a lot of conflicting emotions: excitement, disappointment, and, more often than not, confusion. There is little uniformity among award letters, so comparing offers between schools often feels like comparing apples and oranges. If you want to be a discerning consumer, you need to understand the differences between three main types of aid — grants & scholarships, loans, and work study — and understand which questions to ask about each. It’s important to compare apples with apples and ascertain which college will provide your family the best value:
Recently, my colleague, Marj Southworth, and I met with 25 residents of the Light House, a maternity home in Kansas City providing comprehensive care for young women facing unplanned pregnancies. Ranging in age from 14 to 30, the women we met were all in different stages of their educational careers.
Our goals for the trip, outside of providing individualized educational counseling sessions for program residents, were to discuss educational goals, present ways to make them work financially, and to talk about avenues for success in college.
We received many inspiring updates from several young women whom we had counseled in past visits. One past resident, we’ll call her “Joan,” received a full scholarship to a private college for nursing.
While most scholarship applications are filed in the senior year, is there a way students can get ready for them any earlier? Similarly to how an early PSAT can help prep students for the SAT, the scholarship search process also has a route for preparing for those scholarship applications early on.
I always recommend students begin the scholarship search process sophomore and junior years before applying to colleges— there’s no need to wait until the senior year to learn something one might have been better off knowing earlier. Many scholarships have eligibility requirements that need lead time (50 hours of community service, a portfolio, or experience at sea, for example). Becoming familiar with those scholarship requirements early can maximize one’s options later. So act early, and give yourself the gift of time:
It’s not uncommon at this time of year as a parent of a high school junior to think “What is going on? Is this year ever going to get any easier?” It sometimes feels endless: the number of tests students need to take on top of their most intense academic demands thus far in high school, trying to research and visit colleges, juggling what are probably multiple after-school activities, and of course, Driver’s Education! Phew! Well, maybe it helps to know you are not alone. When parents who have survived junior year commiserate with you, most of them will very likely let you know that, though the college application process isn’t a walk-in-the-park and the stress of waiting for decisions can be a nail-biter, somehow, senior year is actually easier.
So, how do you deal now? Beyond running away to a different country or pulling the covers over your head, we recommend trying to infuse as much down time and balance into your family’s life as possible. Here are a few quick suggestions.
Over the last week I enjoyed four conversations with four different college bound students about their summer plans:
If you’re the parent of a high school senior, you’ve likely completed the FAFSA by now. And if your child applied to any private colleges, you may have also completed a CSS/Profile. So congratulations! The most difficult part of the financial aid application process is over. You can now sit back, relax, and let the money roll in, right?
Wrong! Did you know you can ask for more financial aid?
While most families take a passive approach to the financial aid process, accepting whatever aid colleges offer (or don’t offer), they may very well be leaving thousands of dollars on the table. I encourage every College Coach family with whom I work to remember the final step in the financial aid application process: Going back to colleges and asking for more money.
“What? I can do that?”