02.14.14 | Do Colleges Provide Adequate Disclosures to Student Consumers?

Posted in College Life, News, Parent Advice, Student Credit by David Levy

Do Colleges Provide Adequate Disclosures to Student Consumers?The U.S. Government Accountability Office (GAO) has released a study that describes the growing number of colleges and universities who have entered into arrangements with financial institutions to market bank accounts, prepaid cards, debit cards and other financial services (including disbursing financial aid) to students. While the Consumer Financial Protection Bureau (CFPB) has encouraged financial institutions to voluntarily fully disclose these agreements on their websites, the CFPB found that nearly a third of public colleges and universities fail to do so.

Schools argue that these college-lender agreements offer convenience for students and, potentially, help lenders to establish long-term financial relationships with students. However, the GAO remains concerned about how some of the financial agreements impact students, their families and colleges.

For example, the GAO found that many schools encouraged students to choose the college-lender product rather than providing unbiased, neutral information to help student consumers select the financial product that best meets their needs. The GAO speculates that these endorsements on the part of colleges and lenders may be influenced by incentives the schools receive as part of the school-lender agreements. These incentives may not be adequately disclosed to students.

The GAO cites an instance in which a lender provided $25 million to a school for the use of the college’s logo on affinity credit cards. Such a practice is currently banned for student loans but not for credit cards. In another example, a college is paid an up-front fee for endorsing the lender’s financial services on campus. (Additionally, the college can receive a bonus payment for each new student who signs up for the services.) The GAO report also cited instances in which college card fees for purchases using a personal identification number were higher than for similar debit card products provided by banks.

The CFPB notes that while “many financial institutions offer good products at competitive prices,” colleges, universities and lenders who have financial arrangements should disclose these relationships and provide unbiased information to students. Without more transparency about these types of relationships, student consumers are prevented from making informed decisions about what is in their best financial interest.

The U.S. Public Interest Research Group (U.S. PIRG) published a report, The Campus Debt Card Trap, which identified high fees and inconvenient free ATMs as key issues.

Both the U.S. General Accountability Office and the Consumer Financial Protection Bureau have indicated that they will be addressing these issues as they develop new rules. The U.S. Department of Education will also be revising the regulations concerning disbursement of federal student aid funds through debit cards.

In the meantime, students and their families are encouraged to review the Consumer Financial Protection Bureau’s Managing Your College Money and consumer advisory for information on accessing student loans and scholarships. Students and parents who wish to complain about a student loan, checking account, or credit card, may submit a complaint online or call 1.855.411.2372.

09.17.13 | Take a Deep Breath and Beware of the Annual U.S. News College Rankings

Posted in News by David Levy

Now that the college rankings season has resumed, it’s a good idea to take a deep breath and consider the timely advice offered by Dr. John Tierney in The Atlantic. Despite its title, “Your Annual Reminder to Ignore the U.S. News and World Report College Rankings,” the article provides both a summary of the criticism leveled each year at the U.S. News rankings as well as other resources students and families should consider when looking at prospective colleges or even one’s alma mater. Before experiencing increased anxiety about the college admission process and deciding to which colleges to apply, keep in mind Dr. Tierney’s assessment about college rankings: “(they are) about as good for you as eating potato chips and Gummy Bears for dinner. With maple syrup.”

David-Levy-EdvisorsDavid Levy is Associate Editor of the Edvisors Network. David brings 30 years of experience as Director of Financial Aid at some of the nation’s leading colleges, including the Scripps College, California Institute of Technology and Occidental College. He is respected by students, parents and financial aid professionals nationwide because of his extensive outreach and volunteer activities, his extensive knowledge of financial aid and his leadership in helping to simplify the aid application process.

09.11.13 | Converse College Slashes Tuition

Posted in News by David Levy
Converse College

Image source: Converse.edu

Converse College, a small independent women’s liberal arts college in Spartanburg, South Carolina, announced that it is cutting its tuition by 43% for the 2014–15 academic year. The one-time tuition reduction or “reset” from $29,124 in the 2013–14 academic to $16,500 in the coming academic year affects both continuing and incoming full-time undergraduate students.

While ten other colleges have made similar tuition reductions since 2012, most have done so to increase enrollments. Citing increased enrollments over the past three academic years (including a 30% increase from last year), Converse College President Elizabeth Fleming declared that the College was making this move from “a position of strength.”

The college reported hearing from families about the flattening of their incomes over the past decade, intensifying concerns about the issue of college affordability. By resetting tuition amounts to back to levels not seen in more than a decade, Converse says it is working to reassure students and their families of the value of a Converse education.

In its announcement, the college indicates that it hopes this new pricing strategy — which will not reduce existing student services or its commitment to need-based financial aid — will reduce the “sticker shock” many families encounter as they plan for the cost of a Converse education.

David-Levy-EdvisorsDavid Levy is Associate Editor of the Edvisors Network. David brings 30 years of experience as Director of Financial Aid at some of the nation’s leading colleges, including the Scripps College, California Institute of Technology and Occidental College. He is respected by students, parents and financial aid professionals nationwide because of his extensive outreach and volunteer activities, his extensive knowledge of financial aid and his leadership in helping to simplify the aid application process.

08.27.13 | Why More Parents Might be Planning to Pay for College: The Rest of the Story

Posted in News by David Levy

An annual survey commissioned by Discover Student Loans shows that the number of parents who plan to help their children pay for college is up from last year.

Parents increasingly feel that a college education is valuable and a worthwhile expense.

  • Eighty-seven percent of parents say college is “very important” to their children’s future, compared to 81 percent in 2012.
  • Eighty-one percent of parents plan to help pay for their children’s college education, an increase from 74 percent a year ago.

But, as many families are learning, there is a big difference between a parent’s willingness and their ability to pay for college expenses.
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08.21.13 | Federal Government Reports More Students Receiving Financial Aid

Posted in Financial Aid, News by David Levy

The U.S. Department of Education’s National Center for Education Statistics (NCES) released new data showing that more than seventy percent of undergraduates received some type of student aid (including student loans) during the 2011-12 academic year. Overall, nearly 8 percent more students received grants and 3 percent more students received loans in 2011-12 than in 2007-08. The report, a preview of the 2011-12 National Postsecondary Student Aid Study (NPSAS) to be released later this fall, is the most comprehensive source of data about how students and their families pay for college. The survey is currently conducted every four years.
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08.14.13 | On vs. Off-Campus Housing

Posted in College Life by samantha b

Girl Pondering College Housing Options

With the fall semester of college starting up in a few weeks, college students are working towards finalizing their housing situation for the upcoming year. Unfortunately, you’re running out of time to answer the looming question: “Do I want to live on campus or off campus?” To help you to answer this question, we’ve weighed some of the crucial factors to consider while making this decision.

RAs, Rules, and Security

One of the first things that comes to mind about off-campus housing is the absence of resident assistants (RAs) and other members of residential life, and thus, the absence of rules. However, there is more to the story. While RAs serve as a form of law enforcement, they can also be a friend, mentor, and organizer of community events. In addition, the absence of RAs and desk assistants can result in lower levels of security. While many colleges are located in safe areas, this could be a relevant factor if your school isn’t located in the best area. On the other hand, living in an off-campus apartment will give you your first full experience of freedom, and with that, a strong sense of responsibility. Also, the absence of RAs means that your apartment could easily become the choice hangout spot for you and your friends.

Cooking and Cleaning

Living in a college dorm is kind of like living with really bad maid service. The communal bathrooms and hallways will probably be cleaned a few times a week, and you can call a custodian if, let’s say, your toilet explodes – and yes, this did actually happen to a friend of mine, but that’s a story for another day. In addition, you will probably choose to sign up for a meal plan, thus choosing to avoid cooking at the expense of sub-par food. On the flipside, living off campus will mean doing most of your own cooking and cleaning, but chances are that your cooking will be much better than the food in your cafeteria. (more…)

07.24.13 | 5 Ways to Cover College Costs

Paying for CollegeWhether you’re a soon-to-be freshman or second semester senior, it is never easy to figure out how to cover the costs of college. With tuition and hidden fees of private colleges averaging out to about $40,000 per year, many of you are still wondering how your family is expected to pay for $35,000 of your education, even after having received your Student Aid Report (SAR) three months ago. To help you out in your pursuit of a college degree, here are 5 ideas for paying for college when Federal aid comes up short.

Befriend the Financial Aid Office

If you are disappointed by the amount of financial aid that you receive, try talking to your financial aid office. Many colleges have an appeal process for financial aid, so get on a first-name basis with someone in the financial aid office and see what else can be done.

Search for Scholarships

There are millions of dollars in scholarships that go unclaimed every year, so why not spend a few days this summer searching and applying for as many scholarships as you can find? On average, you will win 1 out of every 10 scholarships that you apply for, so don’t get discouraged. For starters, try visiting our recommended scholarship search website, or try winning scholarships through the ScholarshipPoints program. (more…)

06.26.13 | Will Student Loan Interest Rates Double on July 1?

Posted in Financial Aid, News, Stafford Loan by Mark Kantrowitz

If Congress does not act, interest rates on new subsidized Stafford loans will double from 3.4% to 6.8% on July 1, 2013. Previously originated subsidized Stafford loans and all other education loans will not be affected.

Doubling of the interest rates certainly sounds dramatic, but the actual impact on students will be more muted.

Each year, less than a third of undergraduate students receive federal subsidized Stafford loans. The average subsidized Stafford loan is $3,357, based on data from the 2007-08 National Postsecondary Student Aid Study (NPSAS), with average subsidized Stafford loan debt at graduation of $9,008 ($11,329 for Bachelor’s degree recipients). Only 3% of subsidized Stafford loan borrowers graduate with debt equal to the aggregate limit of $23,000.

Assuming a 10-year repayment term, doubling of the interest rate on $3,357 in debt increases the monthly loan payment by less than $7. On $9,008 in debt, the increase is less than $18; on $11,329 the increase is less than $24; and on $23,000 the increase is less than $48.

Doubling the interest rate does not double the monthly payment. Most of the monthly payment goes to principal, not interest. For example, on a 10-year term, increasing the interest rate from 3.4% to 6.8% increases the monthly payment by about one sixth (16.9%).

So while the interest rate increase will increase borrowing costs, it is not a major disaster.

Focusing on the interest rates, on the other hand, is a distraction from the real problem (more…)

06.11.13 | Impacts of the Potential Stafford Loan Rate Increase

Posted in Financial Aid, News, Stafford Loan, Student Loans by Student Loan Network Staff

Student Loans in the MediaWith the recent legislation involving the subsidized student loan interest rate, many have begun to express concern towards the fact that if Congress is not able to reach an agreement by July 1, subsidized Stafford loan interest rates will automatically increase from 3.4% to 6.8%.  In the process, many news sources have erroneously been reporting that this increased interest rate would yield an additional $1,000 in annual debt for the average borrower. However, this figure is much lower in reality.

Using the loan repayment calculator from Finaid.org, we can begin to calculate more-accurate rates (though still estimates). Assuming a student borrows $23,000 over the course of four years—the maximum amount that can be taken out for undergraduate studies—the annual increase will be less than half of what has been reported.
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05.29.13 | Happy 529 Plan Day!

Posted in Financial Aid, financial aid tips, News by Student Loan Network Staff

Welcome back readers!  In honor of 529 Plan day (5/29/13), I’m here to help you learn about 529 plans and hopefully help you win some money for college.

What is a 529 Plan?

To start off, what is a 529 plan?  In short, a 529 plan is a savings plan with tax advantages that helps students pay for college.  529 plans can be further broken down into 2 types of college savings plans: prepaid tuition plans and college savings plans.

Prepaid Tuition Plan:

You know how your grandparents always talk about how they could buy a candy bar for 5 cents when they were kids?  Today, that same candy bar costs $1.00.  Over time, prices rise, and prepaid tuition plans enable you to pay the price of college at the time that you start your plan.  Prepaid tuition plans allow you to lock in the current tuition rate for your future educational expenses, and are not subject to federal, and sometimes state, taxes.  However, prepaid tuition plans require the student to attend one of the eligible public colleges or universities from the state of the tuition plan, and place a very tight restriction on how you can spend the money from the plan.  In addition, prepaid tuition plans are counted as a parental asset on your FAFSA application when determining your Expected Family Contribution, thus potentially lowering the amount of federal aid for which you may qualify.
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