Next Webinar is…

Tuesday, December 8th, 2009 at 7pm Central Time

Register Below

College Finances 101 has now come to the web. Attendees have been praising this ground breaking presentation for years; now you can participate in the comfort of your own home or at work.

In 90 minutes, I will cover the most important aspects of minimizing your students’ costs for college. You will learn…

• How parents can often send their children to expensive private colleges for less money than a state school.
• How to fix lost money caused by popular college savings plans.
• How to identify schools that give you more free money.
• The great myths and misconceptions about college funding that can cost you thousands of dollars.
• What assets are penalized 4 times higher than others when applying for help.
• Why waiting one year can cost you as much as $5,000.

“The information Mr. Anderson shared was
incredibly eye opening.” — Tricia Christiansen, Guidance Counselor,
Hampton-Dumont HS, Hampton, Iowa

“What an eye opener! We wish we had
attended this seminar sooner. This seminar has given us ideas and
information but also hope…” — Dave & Maria Sullivan, Rock
Island, Illinois

“He has provided our families with
invaluable information. Scott does an excellent job…” — Linda
Cutler, Guidance Counselor, Rockridge High School, Taylor Ridge,
Illinois

“Listening to all the options available
to pay for college encouraged us that we don’t have to sacrifice a
quality education because of a lack of money.” Pastor Scott & Tonya
Culley, Silvis, Illinois

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In July of this year, I published an article titled The Mythical Ivy Impact.  I discussed the evidence which suggests striving to get into prestigous colleges like Harvard, Stanford, or Yale may not be worth it if you have to take on substantial debt to do so.  Now it’s the fall, and discussions about college selection are flying all over forums on the Internet.  And I am still surprised how quickly the knives come out when you suggest it may be better to take the money and go to a so called “second tier” school, as opposed to mortgaging your future to pay for an Ivy or near-Ivy college.

I invite you to read my full article at the link above.  Also, here are the links to the supporting articles from USA Today and the Brookings Institute:

USA Today: Wanted: CEO, No Ivy Required PDF

Brookings Institute: Who Needs Harvard PDF

In a nutshell, don’t get hung up chasing prestigious named schools.  If you get in and it’s reasonably affordable, great!  But there is no reason to put yourself under a mountain of debt.

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I’ve often said it’s important for students to stay in contact with the decision makers at college.  In the fall, that would be the admissions office.  But there is a balancing act you need to walk when asking for the time of college reps.  You want them to know you are serious about their school, but you do not want to be… well… a pest.

Chapman University’s admission office helps provide a little perspective on this…

Thanks to Mark Montgomery at GreatCollegeAdvice.com for pointing this video out.

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I just finished reading Financing Your Future by Linda Abraham and Rebecca Blustein.  I’ve been following Linda Abraham (founder of Accepted.com) for some time now.  Her specialty is in helping students get admitted into graduate level college programs, but this is the first of her books that I have read.  For obvious reasons, college financing will always rise immediately to the top of my interest list.

There are some significant differences between funding for undergraduate college and graduate level college.  The Secrets to Real College Savings will not cover all the intricacies of graduate level finances.  Linda and Rebecca do a good job of providing an overview of graduate level college funding in their book.  I appreciate their writing style which is not populated with a lot of fluff to fill pages.  Thankfully, they apparently do not believe that the value of a college financial guide is determined by its thickness.  Their guide is also populated with dozens of hyper-links to more online resources helpful to grad students.

If you are an aspiring graduate student, I recommend you check out Financing Your Future.

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Coldwell Banker Real Estate recently published their annual study of college town real estate markets.  This study was predicated on similar four bedroom, 2.5 bath homes in each evaluated market.  Considering that housing costs are the single largest indicator of cost of living for an area, this study provides the ability to indentify those college towns which have the most affordable cost living.  This is very useful information if the University of Michigan and UCLA both provide the course of study you are looking for.  Michigan is in one of the top 10 most affordable areas, while UCLA is in the top 10 least affordable areas.  The bottom line costs of living in these areas will be dramatic.

Check out the most affordable and least affordable top 10’s below.

Top 10 Most Affordable College Towns

Top 10 Least Affordable College Towns

For a complete list of the Coldwell Banker study, click here.

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Bank of America announced within the last week that they are suspending all federal student loan originations.  This really isn’t anything new.  Throughout 2009, banks and other lenders have been abandoning the federal loan programs administered through the Federal Family Education Loan Program (FFELP) en mass.

The reason for this wholesale action is The Student Aid and Fiscal Responsibility Act of 2009.  The Act has cleared the House of Representatives, and will in all likelihood be through the Senate by the end of the year.  The major effect of this new law is to remove all private lenders from participation in the federal student loan programs.  Previously, federal student loans were divided in two programs, the FFELP and the Direct Loans.  This new act eliminates the FFELP.

What is the real impact to you the student or family wanting to borrow money for a college education?  Well… the only real difference is that from now on, your federal loan will be serviced by a government beauraucrat, rather than a bank representative.  Previous loans will still be administered by the company you borrowed from, or the company they sold the paper to.  Student loans will not be any harder to obtain because of this change.  There is still plenty of money available to help pay for college.

These new changes apply only to Stafford and PLUS loans.  This does not have any impact on Perkins or private education loans.

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Income Based Repayment (IBR) for Federal Stafford, Grad PLUS, and Consolidation Loans is a new option this year for college borrowers.  This tool has been talked about for years, but it finally came into being in 2009.  In essence, IBR is a system designed to make payments on federal college loans more manageable, particularly for those students who have just graduated and have limited income and resources.  It’s design is not limited to new graduates however, it can also help those with federal college loans no matter how long ago they were taken out if they meet the income and family criteria of the program.

The formula for determining IBR payments is not terribly complex, but it’s far easier just to show you the table developed by the federal government.  Keep in mind that this table will be adjusted every year as it is based in part on the annual poverty line.

There are four primary benefits to borrowers of the IBR program:

1. Payments are lower than the standard 10 year payment program, and likely lower than other available payment programs as well.
2. The government will pay for up to three years of interest on subsidized Stafford loans if your IBR payment does not cover your total interest payment.
3. If you qualify for IBR payments for 25 years and meet certain other requirements, any remaining balance on your federal loans can be canceled after the 25 years of payments.
4. If you work in public service for 10 years and qualify for IBR payments, you may be eligible for forgiveness of your remaining loan balance.  For information on public service loan forgiveness, please read the Loan Forgiveness for Public Service Employees Fact Sheet.

There are also disadvantatges to the IBR program:

1. You will likely pay more interest while paying off your loans under IBR as compared to standard payment programs.  In other words, it will cost you more in the long run.
2. You must submit annual documentation verifying your income and family eligibility for the IBR program.  If the documentation is not provided, your payments will revert to the standard 10-year payment plan.

For more information on the IBR program, check out the Income Based Repayment Fact Sheet.

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Are painful changes just around the corner for 529 prepaid college tuition programs?  If you live in Texas, they are not around the corner; they are staring you in the face and kicking you in the gut!

In a very surprising move last month, Texas Tomorrow Fund officials announced that their prepaid 529 fund would no longer return the accumulated interest on withdrawals if the money was not spent in Texas.  Some 100,000 families are now stuck with nothing more than a zero interest loan to the state if their students decide they would rather not go to college in Texas.

Why is this happening?  Simply put… legislative mismanagement.  The Texas Tomorrow Fund is bleeding at critical levels and will be over 1.7 billion dollars in the hole by 2030.  This is an excellent example of how what legislators thought was  a good idea is now blowing up in their faces.

Families have until November 30th to withdrawal the balances in their funds.  After that point, they will only get back the principal they paid in, minus administrative fees.  What a bargain.

Of course if you pull the money out by the end of this month and do not have allowable college expenses to spend it on, you will get penalized as well.  A real case of the state getting you coming and going.

Be very careful of relying upon any college savings plan that is beholden to government officials.  As we see in the example of Texas, their mismanagement or whim of change can cost you money.  Education Savings Accounts (Education IRA’s) are probably safer, but a sound savings plan will include several instruments.

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