Student Loan Help

This article originally appeared on the Financial Aid Podcast.

Is there such a thing as negotiating your financial aid award package? Yes and no. No in the sense that your school’s financial aid office is not like a car dealership with a dean of admissions in the back room who will give you the manager’s Wednesday special. Yes in that if you can prove beyond question that your financial need and circumstances are greater than what’s provided via the usual financial aid paperwork like the FAFSA, schools can be flexible.

Before we get started, I recommend strongly reading this article on StudentLoanNetwork.com about how to read a financial aid award letter.

Get Your Budget In Order

If you don’t use any kind of personal finance software, be it a desktop application like Quicken or a web-based application like Wesabe, Mint, or Geezeo, I strongly recommend starting with one. The web-based applications are free, so if you’re trying to save money from every angle, start with one of those.

Start by importing any electronic records of your finances and your family’s finances for at least 90 days. You’ll want to take the time to categorize your expenses in terms of mandatory and discretionary, followed by breaking them out into individual categories, like mortgage or rent, utilities, etc.

Once you’ve got your budget broken out, you’ll want to compare it against your award letter, especially looking at what kind of discretionary income you have compared to the expected family contribution, or out of pocket expenses. If your EFC from your award letter divided by 12 (for what’s essentially a monthly EFC) is greater than your discretionary expenses budget (dining out, entertainment, etc.) then you’ve got a good starting point for a conversation about what you can and cannot afford.

Get All Your Paperwork Together

If you’re going to be asking for more financial aid based on changed economic circumstances, have ample paperwork available to back up your claims and requests. Did someone lose a job in the family? Have termination notices, unemployment insurance, or other papers ready. Did your income change? Use any of the budgeting software described above to graphically illustrate your monthly cash flow, along with things like pay stubs, tax returns, etc.

Know What To Ask For

It’s not enough to ask for more money. That’s way too generic. Ask for specific amounts, ask for specific assistance, and try to know some of the different types of things financial aid administrators are permitted to do. Financial aid administrators are permitted to make professional judgement overrides on:

- dependency. If you can prove that you are an independent student due to the involuntary dissolution of your family (i.e. parents in jail, social services removed you from the home due to abuse, etc.) a financial aid administrator can override the dependency requirements for undergraduate students, letting you complete the FAFSA and other financial aid paperwork without parental income information.

- future earnings and income. If you can prove that you or your family has had a significant change in income that impacts your ability to pay for college, a financial aid administrator can grant you more assistance. Be prepared with termination notices, tax returns, and every scrap of paper you can find to make your case.

Updated April 2, 2009: The Department of Education has offered additional guidance for this scenario. See this post at FinancialAidNews.com about the changes.

- cost of attendance. If you can prove that expenses in your student budget (transportation, medical, disability, dependents, and a few other select cases) do not reflect your situation, a financial aid administrator can alter your student budget, allowing for additional aid. If you pursue this override, again, be prepared to document every step of the way to show why, for example, traveling to and from your school requires a transportation budget greater than allotted.

- special circumstances. In some cases, parents divorce during the financial aid award year, but the FAFSA cannot be changed to reflect the divorce. With appropriate court documentation noting the dissolution of the marriage, a student can ask for a special circumstances override that will let them use the income of the custodial parent.

There are other, more narrow circumstances that apply as well. If you don’t know what to ask for, haul as much documentation to your financial aid administrator as possible so that they have as complete a picture of your finances as possible.

Be Polite

The single thing that will do the most good or harm in getting additional aid is how you approach the financial aid office. The best time to approach them is before you need their help, as is the case with virtually all professional networking. Stop by from time to time casually, and say hello. Ask if there are any new scholarships that have been posted. Check in. If you find a scholarship that you’re not eligible for but other students at your school might be, let someone in the office know about it so it can be posted in the office. If you want a real education in financial aid, apply for a work study job in the financial aid office.

If you know your parents are, shall we say, less than diplomatic, then try to mediate any discussions with the financial aid office so that overly aggressive or insistent requests don’t harm your chances of getting help.

Deion Sanders was known as “prime time” back in the day; a name the self-absorbed NFL star actually gave himself. But when people speak of prime time these days they are usually referring to the widely used benchmark which determines the interest rate on a number of loans. Strike now while the kettle is hot is my advice.

I’ve been beating the private student loan drum for the past few weeks, and with good reason. It is a great time to take out a private student loan for school. With the prime rate at 3.25% and Stafford loan rates ranging between 6% and 6.8% it’s just good business acumen.

Whether you are looking to cover a portion of your student loans or fund your entire education with private loans one thing is certain, the rates have never been better. Apply today.

It’s not the gun, but the person pulling the trigger that’s ultimately guilty of the crime. The same principle applies to credit cards and debt. Who’s really at fault when credit card debt gets out of control? Is it the person swiping the card or the bank that handed it to them? Or perhaps it’s neither. Maybe it all starts at home.

I receive calls and emails from angry parents asking, “Why are you offering credit cards to students? I don’t think that’s very responsible of you.” I must admit, I scratch my head when I hear this, although I do understand that parents want to safeguard their children from life’s many dangers. Being a father myself I certainly want to protect my son from any potential pitfalls, but credit cards are not one of them.

I’ll sit down with Barrett, when he is a little older, and set in motion a plan to ensure he is financially viable, and yes, having a credit card in his name is one way I plan on doing it.

I’ll serve as the co-signer on his credit card so I can monitor the purchases and view the statement activity. I will also have the credit line capped at $500-$1,000 as a precautionary measure. I want him to first learn to be responsible with a small balance before graduating into the world of auto loans or even a mortgage. Your child can gain valuable credit history at an early age and be well on their way to financial freedom with your guidance and watchful eye.

I take my responsibility as a parent seriously. I want the very best for my son as any parent does, which is why when I receive emails claming we are irresponsible for offering credit cards to students I’m bewildered. My Dad took time to explain things to me and ensure I would not get myself into financial trouble. “Pay yourself first” and “spend beneath your means,” were two common threads of wisdom he showered on me. He also eased me along in the world of credit and showed me how to make it work to my advantage.

We send our children to school so they’ll be educated and capable of making intelligent decisions in their lives, but that education begins at home. They look to us for sound advice and guidance. They put their trust in us. I am educated to the facts, and not the negative propaganda surrounding credit cards, which is why my son will be a step ahead of the rest. But it can be lonely being the lead dog. Anyone want to join our team?

Related Topics

Why Smart Students Have Credit Cards

Now that summer is over, it is time to start thinking about getting organized for the rest of the year, and yes - the holiday season…  One consideration might be private student loan consolidation.  Refinancing  your private student loan payments is a great way to lower your monthly payments and combines all your private student loans into a single manageable loan.  Consolidation is not always the best option for everyone - but it will help make life easier for many of you.  Learn more at:

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It has been reported that many Universities throughout the country are freezing 2008-2009 tuitions at last year’s levels in an effort to help make college more affordable for the nation’s middle class. Thanks guys, but you’re about a decade too late. This initiative reminds me of the movie Jurassic Park when they were discussing how much they would charge people for the amazing Dino Amusement Park attraction (before things went terribly astray). They could charge anything they wanted and they knew people would pay it. When someone asked what about the common man the lawyer replied, “We’ll have a coupon day or something.” Well, this coupon has come much too late.

Freezing tuition rates sounds good for the papers but there are a number of ways schools can still hike up the cost on you. Perhaps room-and-board costs will be increased, like was the case at Ohio State University who bumped up cost by 5.8%. Maybe out of state tuition will be increased. How much is your parking decal this year? You probably won’t even notice the few extra dollars attached to your text books. One way or another they can and will get you.

Don’t be disillusioned by newspaper headlines. Do your research. Look at the tuition, room-and-board, books, parking, meal plans, and other transportation costs (such as gas) when making your decision. These costs add up quickly and end up taking years to pay off for many.

One thing I don’t want to see is you driving frantically in a jeep with a T-Rex chasing you down looking for money. Who needs that stress? I’d rather dine on Dino burgers.

Time to start a new year! To do our part to help, we wanted to let you know about a couple of new resources for those of you returning to college this month. The first is a free downloadable ebook: How To Find Cheap College Textbooks, available online at http://www.campusx.com/college-textbooks/. The second is a new student credit card offer we have secured exclusively through CitiBank: The Citi® Dividend Platinum Select® Card for College Students and available only at www.StudentPlatinum.com.  This offer includes: “Promotional 10% cash back reward program; no annual fee; and a 0% introductory rate for all transactions”!

For up to date on new and improved resources for students looking for ways to pay for college, visit: http://www.studentloannetwork.com/student-resources/

Do you have ideas for new products, services or ebooks? Send us your ideas in the comments below.

Use the Library: The library is a great place to save money. Most libraries nowadays have internet access (although you have a time limit), periodicals, music catalogs, and obviously books. Library cards are also very inexpensive, if they even charge at all. Libraries are literary treasures and are underused. I go there to look up consumer report information on appliances while my colleague loves taking out books from Oprah’s book club list. My brother Dan loves music and takes out CD’s to listen to.

Hit grocery sales twice. The standard sales at a grocery store last 7 days (they generally run Friday – Thursday in my region). Wouldn’t it make sense for me to make a return trip back on Thursday night and hit that sale one last time? Most people couldn’t be bothered but over the course of the year you could save hundreds of dollars this way. This is like a giant coupon in and of itself, and you don’t need to clip it out of a paper.

Pay cash for gasoline. Did you know a lot of gas stations apply a surcharge when you pay for your gas by credit card? In some places they actually charge as much as 10 cents more per gallon! That is just crazy. It is the classic bait and switch tactic. Some gas stations have now been forced to post two prices at the pumps, but not every station is required to do so.

Get the right phone plan. If you don’t get the right plan it can cost you dearly! I had a 1400 minute plan with Verizon and discovered I only averaged 650 minutes each month (I have become a textaholic). They had a 700 minute plan that I moved to and saved myself about $20 per month. Do the math, that’s $240 more bucks in my pocket at the end of the year. Shame on me for not doing it sooner!

Pre-owned better than new Automobiles. Buying a quality pre-owned vehicle may save you thousands over a new one. Sales tax and excise tax will be considerably less, and of course the sticker price will be greatly reduced as well. Autos are a liability and a depreciating asset already; you might as well minimize the damage if you can.

As the hands of time march on, each of us become wiser; at least that’s the hope. We try our best to learn from past mistakes and accept valuable advice from family and friends who have traveled down that dirt road before us. Still, some lessons we just need to learn the hard way. I have had once such lesson I would like to share with you in hopes that you will not suffer the same fate.

I entered into a business venture with my father-in-law in 2006 and got burned badly. In this instance I am the one who traveled down that dirt road and got covered in mud when the dust cleared.

He and I bought a condo together in Naples, FL in 2006. As he was located right in Naples he took care of drafting the tenant lease (we had a tenant already in there), taking care of condo maintenance, and paying the mortgage. I basically served as the silent financial partner from Boston during this time. Everything was going well, or so I thought.

Now it’s important to note that the tenants rent was covering both the mortgage and condo fees so I was not required to send down any money. It seemed to be a perfect scenario, that is, until my place of employment was called for employment verification. What I didn’t know is that my father-in-law had experience financial hardship and was paying other bills with the tenant’s money while letting our property fall deeper and deeper into debt. In November of 2006 I discovered no payments had been made since June!

This episode damaged my credit by 75 points. Also, to compound the problem, I had to pay $6,200 to get the property out of foreclosure status. Half the money went to past due mortgage payments while the other half went to attorney fees. This was a hard life lesson learned for me. I thought I could trust my wife’s father. The man even contributed $10,000 toward our wedding. He would never do anything to harm his little girl or her husband, right? WRONG!

Here is my advice to you. If you ever enter a business venture with anyone open an online account to keep tabs on things or call customer service once per month to confirm your account is in good standing. Of course, you could also be the one who pays the bills (which I am currently doing) to make sure it gets done in a timely manner. Finally, you may consider a credit service like one of my friends to give you monthly credit alerts should anything negative hit (a monthly fee is involved). That way you will have the information in hand immediately.

Learn from me my friends. Here we are two years later and I’m still trying to get the mud off my jeans. I’ve already tried Tide, Wisk, ERA, Extra, Arm & Hammer, and Shout to no avail. Perhaps with time it will fade, but it will always be there.

StudentPlatinum.com has created a useful resource for students and parents who are wondering what they can do to improve their credit.  The primary benefit of improving your credit is that you can secure lower rates and more favorable terms on loan and credit cards.  Get more information on how to Improve Your Credit Score at:

http://www.studentplatinum.com/improve-credit-score/

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