You are not alone if you were hoping that your child's education would be paid for by scholarships and it didn't turn out that way. Merit-based aid is exceedingly difficult to get these days and the standards for awarding this aid are growing more competitive. Unless your child is attending a school whose students typically have academic credentials below your child's credentials, then you probably don't qualify for campus-based merit aid.
Luckily, financial aid - such as grants and need-based scholarships - may have reduced your total costs. But if you are like most families, you will probably still have to shell out a significant amount of money in order to pay for tuition and fund other costs such as living expenses and books.
Your primary goal should be to limit the amount you borrow. Every dollar you borrow needs to be paid back with interest. It's easy to say, "what's the difference if I borrower $11,000 or $12,000?" Sometimes thinking about a large sum of money like that - especially one that doesn't have to be paid back right away - makes it feel less than real. But think about all of the things you can pay for with $1,000. Think about if you had that $1,000 stuffed in your wallet. It's getting more real, right?
This is where local scholarships come in. They can really help reduce the amount you borrow and they are often not as competitive as national scholarship programs or campus-based merit or athletic scholarships.
The amounts may be small: $200, $500, maybe $1,000. But some of these scholarships are not even awarded each year because no one applies. Just by conducting a thorough search, you could get enough local scholarships to pay for a year's worth of books and fund some of your living expenses.
A great place to start your search for local scholarships is RIScholarships.org. This database of local scholarships contains hundreds of scholarships that often don't have academic criteria. Some of these scholarships are awarded to students based on financial need. For example, the College Planning Center's Paul Sherlock Scholarship is awarded randomly to students who apply that have an Expected Family Contribution (EFC) of $7,500 or lower. All you have to do to apply is submit a short application by May 15 to potentially be one of 25 recipients to receive a $2,000 scholarship.
Other local scholarships may be awarded to students who have an interest in a particular hobby such as fishing, bowling or knitting. Scholarships may be awarded to children of employees of particular companies, or be awarded to students for having a specific quality such as social leadership.You will never know what you might qualify for if you don't search.
Other places to search for scholarships:
- Your school guidance office. They likely have a binder of scholarships available to students at your school. These will mostly be local scholarships with less competition.
- The library. Talk to the librarian and check the bulletin boards for local opportunities.
- Your local newspaper. Some local scholarships are advertised to get applicants.
- Family friends, neighbors, the mail man. Ask everyone you know if they are aware of any scholarships you could apply for.
Remember, a scholarship search isn't something you can just conduct in one night. Students should dedicate a few hours a week to searching. It can pay off so get started before it is too late.
College loans are unfortunately an inevitable consequence of going to college for most students these days. The average student graduates with more than $20,000 in debt - some over $100,000 - and college costs are not declining. You may have heard your friends or siblings complaining about student loans. Many students don't realize how much they borrowed before they graduate and don't really understand the impact the debt will have on their future decisions.That is why it is so important to do your research before you borrow and to limit the amount you borrow as much as possible.
Before you borrow for college, you should always explore any free financial aid options before throwing in the towel and taking on a student loan. Grants, scholarships, and student employment can all decrease the amount you need to borrow. Every dollar you can shave off your borrowing amount is one dollar - plus interest - that you don't have to pay back.
Keep in mind these 5 things about student loan before you sign the promissory note.
1. Student debt is typically not dischargeable in bankruptcy. Some folks in congress are trying to change this but as of now, you most likely can't get your education debt discharged by filing bankruptcy.
2. Rates come in two forms: fixed and variable. Remember the big financial crisis of 2008? Home foreclosures rose rapidly and one of the reasons why was that homeowners had begun taking on adjustable rate mortgages. With this type of loan - that is a variable rate loan - your payment changes as interest rates are adjusted. Sometimes those payments change so drastically, that you can no longer afford them. Right now, variable rates are at historic lows. Prime has been at 3.25% for over 4 years now, but this is atypical. Back in the 80s, rates were at 20%! See for yourself by checking out the history of prime rate. Before you borrow, check in with your appetite for risk. If rates are to jump, will you be able to afford your new monthly payment?
3. The lowest advertised rates aren't always what you receive. Only the most credit-worthy borrowers qualify for the lowest advertised rates. When you apply for a non-federal education loan, make sure to pay attention to the application & solicitation disclosures. Your lender is required by law to show you these at the time of loan applicatioan. These disclosures can give you a better idea of the rate range that you could potentially receive. Approval disclosures, always required by law on non-federal education loans, will tell you the actual rate you qualified for. Once again, by law, you have the right to cancel your application if you don't like the rate you receive after your loan is approved.
4. Most experts agree to check out your federal student loan options first. The federal Perkins loan and federal Stafford loan programs offer some great low fixed rates and a ton of repayment flexibility. Most experts agree that before taking on any non-federal education loan debt, you should explore your eligibility for federal student loans. The Perkins loans is not available to all students - only those who attend a school who have Perkins loans funds to award. And at those schools, only the financially neediest students qualify for these loans. They have a low 5% fixed interest rate. The larger student loan program, the federal Stafford loan, is awarded in two options. The subsidized version has a low fixed rate of 3.4% and the unsubsidized version has a rate of 6.8%. You must file the FAFSA to learn which version you qualify for. Stafford loans are awarded to you through the financial aid office at your school. Contact them for details.
5. Most non-federal loans require a cosigner. Those programs that don't require a cosigner often have a higher rate or much stricter credit criteria. Have a credit-worthy cosigner lined up if you plan to borrow a state-based or private education loan. This will give you the best shot possible at getting approved and earning a good rate.
Like most college students, I was convinced I was going to be making the big bucks after graduation. I wanted to work in advertising and to be frank, I never looked up earnings for people in that career. I pictured Hollywood's portrayal of a cool, collected and well-paid advertising executive, and I thought that would be me. I reasoned that I was attending a great school (an Ivy League school, even) and that if my starting annual salary wasn't at least as much as one year's worth of tuition, then what was the point?
As generous as my financial aid package was, it required me - and my parents - to borrow in order to afford our Expected Family Contribution. I maxed out my Stafford Loans, and for my first three years my parents met the rest of the burden by taking on PLUS loans. My fourth year, my parents and I joined up to get a state-based college loan, so I had some more investment in my education. The deal was they would make the payments on the loan until I could afford it on my own.
My last year of college, I spent a good deal of time in the Career Services office. During one particular appointment, my career advisor told me that my expectations for a starting salary in the field of advertising were grossly unrealistic. I didn't believe her. I left my appointment feeling angry, thinking I was going to proove the advisor wrong.
Sure enough, my first job out of college paid me more-or-less the average starting salary for an entry level job in the advertising field, and more than $20,000 less than what I unrealistically was hoping for/expecting.
Fortunately for me, I was living in a low cost city and with a few roommates, so my rent was reasonable. I graduated when student loans were still on a variable rate schedule and was able to consolidate them at the historic low rate. I chose a graduated repayment plan, that in the end would cost me much more in financing charges (and of course now I regret), but afforded me a much lower payment at the time. My parents were kind enough to continue paying on my state-based student loan until - years later - I was able to earn enough to take over the payments.
I got by but it was tough. I didn't save anything. I used my credit card when I shouldn't have, accruing even more debt. It took me years to pay off those credit cards and get back on track. It wasn't until 5 years after I consolidated my federal student loans that I even made a payment towards the principal balance, which meant every penny I paid for 60 months was just going towards interest!
I share this story as a warning that researching your career before you borrow is absolutely essential. Before you ever borrow a student loan, you should have a good handle on what you are interested in, what you can do with your skills, and how much money you will make in an entry level job in that field. This will allow you to develop a realistic picture of what your life will be like after you graduate with the debt load you plan to take on.
To research careers and salaries, you can use the tools available on the RI Department of Labor and Training site and the federal Bureau of Labor Statistics.
When it comes to paying for college, remember to always think of ways you can limit your borrowing, including getting a part time job, making your own coffee, and eating in the dining hall instead of ordering out. Remember to live like a college student now, so you don't have to live like one after you graduate.
After filing the FAFSA, you will receive a Student Aid Report outlining your Expected Family Contribution (EFC). The schools you choose on your FAFSA to receive your information will also receive your EFC. The difference between the total cost of education at each school and your EFC is called your "financial need." You may feel that your actual need is more than this number - many families do - but this is the figure the school uses to award all federal financial aid. Most schools also use this number for awarding their institutional funds as well.
The formula to calculate your EFC is complicated and based on a number of factors, including the numbers of members in your family, student income, parent income, student assets, parent assets, the age of the oldest parent and more. Your school may have also required you to submit a CSS PROFILE or other financial aid form. The school may come up with a different "EFC" using these forms. While they can't use this figure to award federal financial aid, they can use it to award their own institutional funds.
A school financial aid office aims to meet as much of your financial need as possible, whether they are using the federal methodology or an institutional methodoloigy. The unfortunate truth is that few schools have the funds to meet the total financial need for all students. While some of the top ranked colleges in the US have formed programs to limit borrowing and to meet 100% of a family's financial need, most colleges simply don't have the resources to do this. This may mean there is a difference between your financial need and your financial aid award. This difference is referred to as "gap". It is your job to figure out how you will meet that gap.
When you receive a financial aid award from a school, there are a few key steps you should take to make sure you understand your true costs. The first is to add up your direct costs and indirect costs at the college. Direct costs are those that are billed to you. Tuition and fees, housing, mean plans, student health insurance and other fees are direct costs. Indirect costs are variable and are estimated. They include travel expenses, living expenses (outside of room and board), and books.
Next, add up your "gift aid." Any grant or scholarship you receive is considered a gift and doesn't need to be repaid. You want as much gift aid as possible. Subtract your gift aid from your direct costs. How much is left over? Examine this figure between schools if you are reviewing multiple offers.
Next, add up your "self-help aid". This aid is comprised of work-study and loans. Keep in mind work study funds aren't just provided to you up front, so they aren't readily available to pay tuition, fees and other direct costs. Work-study earnings are paid to students just as the student would be paid for other jobs - as they work, they earn and are issued a paycheck. The source of the work earnings is coming from the federal government rather than from the organization that the student works for. Work study funds may be best set aside for indirect costs such as living expenses and books, as the funds are earned.
Also, make sure to add up how much you will need to borrow. Student loans such as unsubsidized Stafford Loans (which have an interest rate of 6.8%), subsidized Stafford loans (which have an interest rate of 3.4%), and Perkins loans (which have a rate of 5%) might be included in your financial aid package. What you receive will depend on your eligibility. Not all schools have Perkins loans funds to award. How much in federal student loans will you need to borrow at each school? Compare.
There may also be a parent loan, called a Federal PLUS loan, included in your financial aid package. This loan has a rate of 7.9% and a 4% fee. If this loan is included in your award package, know that the parent only is on the hook for this loan. The student is not a signor on this note. Just because the PLUS loan is in your award package doesn't mean that you have to take it out. And if it isn't listed, you still may be eligible to borrow it.
Other loan options, such as state-based loans and private education loans can help you meet gap.Add up all other loans you will need to borrow at each school and compare.
In the end, ask yourself: which school provided me with the most gift aid? Which school will require me to borrow the most? Answers to these questions can help you make your final enrollment decision.
Need help comparing your award letters? Book a free appointment with the College Planning Center of Rhode Island.
Local scholarships can often be dismissed by students because of their comparitively low values to national scholarships. While a local scholarship from the local Elk's club may be for $500, a national sweepstakes may offer a full ride. But it is very important to consider the number of applicants when applying to scholarships. With fewer applicants, as is the case with local scholarships, you have a much higher probability of winning the award. A few local scholarships could cover the costs of book and living expenses, reducing the amount you need to borrow and easing the burden of funding education costs.
Local scholarships aren't only for high performing athletes and straight-A students, mind you. They come in all shapes and all sizes. Let's say you are interested in fishing, bowling, painting, or playing the clarinet. There may be a local scholarship out there for you. Some scholarships are only awarded to students who can prove financial need, or have a FAFSA Expected Family Contribyution (EFC) below a certain threshold. For example, Rhode Island residents may consider RISLA's Paul Sherlock Scholarship. This is a scholarship awarded based on need. If you meet the need threshold, your chances of receiving the award are just as good as the other applicants. No high GPAs or SAT scores are necessary.
With that being said, it is important that you dedicate a considerable amount of time to your local scholarship search. You can start your search at RIscholarships.org if you are a Rhode Island resident. This College Planning Center tool will match you to scholarships that fit your interests and profiles and provide you with the information you need to apply.
Another great resource is your guidance counselor's office. Many schools keep a large binder of scholarships that are available to local students or even just to students from that school.
If you are going to be successful with your local scholarship search, it is best not to try to complete your entire search in just a single day. Dedicate a few hours a week over the course of a few months searching and applying for this free money.
Don't be shy about asking your neighbors, family members, and others about whether they are aware of any local scholarships you could apply for. The company they work for may have a special fund for children of employees or other relatives.They may have read something in the local paper that they could tell you about.
Most importantly, once you start your local scholarship search, be diligent about meeting deadlines. Free money could go right out the window if you aren't careful to send in your application by the specified date.Good luck!
Before you borrow for college, you should do very thorough research on salaries in your field or fields of choice. While not every student will know exactly what he or she wants to study before enrolling in school, it is a good idea to at least have an idea about some careers that interest you - and what you are likely to make after graduation. College isn't cheap these days and most students need to borrow to meet college costs. If you are borrowing without any idea of what your means will be to pay your loans back, you could get yourself in trouble.
For example, you may be interested in becoming an electrical engineer. According to the RI Department of Labor and Training (DLT), the average entry level salary for someone in that field is $34.84 per hour. An experiened electrical engineer averages $53.89/hr. Or say you would like to become a chef. The average entry level salary of chef or head cook is $17.10 per hour while an experienced chef will make around $28.71/hr.
Someone who is planning to make $34.84/hr after graduation may have the means of borrowing a little bit more than someone who is expecting to make $17.10/hr.
In addition to salary, you should also pay attention to job growth and unemployment rates. While it is important to pursue something that interests you, you should not ignore how practical a job might be in that field. Will it allow you to reach your goals outside of your career? Will it allow you to live on your own, or will you have to live with your parents? Ask yourself these questions and be honest with yourself about the answers and what you are and are not willing to do after college in order to meet your obligations.
The Rhode Island Department of Labor and Training offers information that can help you with your research. For example, on their website, you can search mass layoff information, labor market information, and other employment information.
For example, according to the DLT, the industries expected to add the most jobs between 2008 and 2018 are listed below:
Industries Adding the Most Jobs
|Professional, Scientific, & Technical Services
|Ambulatory Health Care Services
|Food Services and Drinking Places
|Nursing & Residential Care Facilities
|Administrative & Support Services
|Specialty Trade Contractors
|Management of Companies & Enterprises
|Internet Service Providers, Web Search Portals, & Data Processing Services
|Credit Intermediation & Related Activities
|Wholesale Electronic Markets & Agents & Brokers
|Religious, Grantmaking, Civic, Professional & Similar Organizations
|General Merchandise Stores
Manufacturing and telecommunications are among those industries considered to be declining.
- Start a 529 Plan. The earlier you open this type of account, the better. Put any cash gifts your child receives directly into this account. Make a habit of deposting small amounts regularly throughout the year and if you get an unexpected amount of cash (great tax return, inheretance) consider putting it straight towards your savings instead of spending it. When you invest your money, it grows.
- Get a summer job. If your child is of working age, encourage them to get a summer job and a part-time job during the school year, if he or she can manage it. Talk to your child about the importance of saving this money for college. Student savings can help cover the cost of books, fees, living expenses, and even tuition. Just keep in mind that when completing the FAFSA, students are expected to contribute a higher percentage of their savings to college costs than parents are, so you may want to consider putting your child's earnings in a savings account under your name.
- Search for Local Scholarships. Local scholarships are much less competitive than their national counterparts. The truth is, sometimes even local scholarships go un-used because there are no applicants. Yes, the total awards of these scholarships are certainly lower - $200, $500 or $1000, for example - but they are much more accessible. Any amount you can get that will reduce the amount you need to borrow is a good thing.
- Search for good value schools. Part of reducing your borrowing costs is choosing a school that offers good value for the particular program the student chooses to study. For example, Rhode Island College offers a tremedous teaching program. Regardless of where you graduate from, you are likely to earn the same amount as students who graduated from other schools, if you teach in the public school system. Rhode Island College is much less expensive than other schools and since the teaching program is so good, it would be considered a "good value."
- Complete the FAFSA, no matter what. Some families incorrectly assume they won't qualify for aid, or they believe the financial aid forms are too difficult to complete. No matter what, you should fill our the FAFSA, to ensure you are getting all of the aid you qualify for. If you need assistance, free help is available in Rhode Island:
- Don't miss deadlines. Missing a deadline may mean you don't get aid you would otherwise qualify for. This could mean that you need to borrow more than necessary to make up costs. Each school has a financial aid deadline that you should pay very close attention to. March 1 is the deadline for filing the FAFSA in order to be considered for a Rhode Island state grant. You will automatically be considered if you are a Rhode Island resident and you file before this date.
- Consider investing in mutual funds, bonds or stocks. Any of these methods can help you build your money better than if you were just to put your money into a traditional savings account. Talk to your financial advisor about what is best for your family.
- Find schools that meet 100% of need. Not all schools meet 100% of your financial need, according to the school's or Department of Education's methodology for eligibility. If you can find a school that has a policy of meeting 100% of need and your child can get in, it might be worth looking into.
- Apply to schools where your academic profile is above average. If a student's SAT scores and GPA are higher than the average student's scores at a particular college, that student may be eligible for merit based aid. Talk to schools before you apply to find out who qualifies for merit based aid, what the deadlines are for being considered, and consider applying to those schools to potentially reduce your borrowing requirements.
- Investigate salaries. Your borrowing should be in line with what you will be able to afford to pay back after college. Search online to find starting salaries in different fields. Don't choose to go to a school that will require you to borrow more than you will be able to afford to pay back after school.
If you will need some help paying for college, you are not alone. Most famililes these days need some sort of financial assistance in order to meet college education costs.
The number one way to make sure you get aid you qualify for is to file the FAFSA by your school's deadline. Missing financial aid deadlines could cost you thousands of dollars in grants, scholarships and loan subsidies, so you don't want to make that mistake.
If you are one of the many people who aren't sure how to approach these daunting forms, know that free help is available. For example, Rhode Island residents can make an appointment with RISLA's College Planning Center of Rhode Island to get free assistance completing their FAFSA or CSS Profile form. The FAFSA is used by all schools to award federal finanial aid. If you don't submit it, you will not be able to receive Pell Grants, subsidized Stafford loans, or federal work-study funds - even if your financial circumstances would otherwise qualify you.
The good news is that the FAFSA has become easier to complete over the past few years, due to some changes made by the Department of Education. For example, you can now use the IRS data retrieval tool to help fill in some of the blanks. The new online form also incorporates skip logic - logic that allows you to skip questions not relevant to you or your family based on answers to previous questions.
When completing the FAFSA, whether with assistance or not - keep these tips in mind:
- Don’t miss deadlines. This is a common mistake. In addition to your
school deadlines, most states require you to file by a specific deadline in order to qualify for the state grant.You must submit your FAFSA by
March 1 in order to qualify for a Rhode Island State Grant.
- Don’t include your retirement savings in your assets. The federal government does not expect your family to cash out its 401(k), 403(b) or other qualified retirement savings accounts to pay for your child’s education. However, while you will exclude these numbers from your assets, you will need to report the amount you contribute to your retirement annually as untaxable income on the FAFSA.
- In cases of divorce... The FAFSA requires that the parent who has
taken care of the child for more than half the year file the FAFSA. If one parent earns less than the other or has substantially less assets, it may be advantageous for the student to live with that parent for the majority of the year. However, keep in mind if you are re-married, your spouses income will also be considered on the FAFSA.
Remember, the FAFSA is the FREE Application for Federal Student Aid and you should not have to pay money to apply for federal financial aid.
The College Planning Center of Rhode Island has joined up once again with the Pawtucket Red Sox to host the 3rd annual college fair at McCoy Stadium. As in past years, over 100 college representatives will be there to answer your questions about college programs, campus culture, and financial aid.
Students and parents who attend will have a chance to win a scholarship and will have access to areas of the stadium normally off-limits to the public.
College planning experts from the College Planning Center of Rhode Island will also be available to answer questions and direct you to the colleges you are most interest in.
Plenty of free parking will be available so mark your calendars!
What: 3rd Annual College Fair
Where: McCoy Stadium, Pawtucket, RI
When: September 19, 2012 from 6pm - 8pm
Wondering if an education loan is the right choice for you or your family? There are many considerations you should take into account before borrowing. Many people will be quick to tell you that student loans are "good debt." But the fact is, no debt is good debt if you aren't borrowing responsibly! Before you borrow, even for college, make sure:
1. You can afford to pay back what you borrow. Certain types of education loans, mainly federal student loans, have loan limits. Typically, even if you borrow the maximum Stafford Loan amount for each academic year, your student loan payment after graduation will be fairly manageable (but that shouldn't stop you from looking into how much it will be!). However, if you borrow beyond these amount, let's say by also borrowing a state-based loan or private student loan, be careful you understand how much your monthly student loan payments will be after graduation. Even when borrowing federal Stafford or Perkins loan, you should know how much you will have to pay back each month after graduation and how much you are likely to earn in the career you are planning to pursue.
2. You understand the options available to you. You should never put your tuition bill on your credit card! Many credit cards have interest rates 15% - 20% or even higher! A subsidized federal Stafford loan has a rate of 3.4%. That means, if you put $5,000 on your credit card at a rate of 20%, you would accrue $1,000 in just one year if you don't pay it
| Depending on the repayment option you choose on your federal Stafford loan, you can a very different amount in interest. Keep in mind the standard repayment option, which has a maximum 10 year term, will usually lead to the lowest total finance charges. If you want to pay more, you can do so any time without penalty.
back (but keep in mind minimum payments do apply on your credit card from the time it is used). A subsidized Stafford loan wouldn't require you to make payments until after you graduate, the interest accrued would be paid by the government until you graduate, and in one year that same $5,000 would only accrue $170 in interest! If you need to borrow beyond the Stafford loan, you can consider a state-based education loan, a federal PLUS loan (in your parent's name), or a private education loan.
3. You give a lot of thought before signing the note. Don't just "sign now, deal later." Really take the time to understand your obligation and you will be in a better place than most of your peers after graduation. Read up on loans, smart borrowing, and financial literacy.
4. You understand what your parents will need to borrow to help pay for your education, and if they expect you to help them pay it back after graduation. Some options are available to your parents that aren't available to you, such as the federal parent PLUS loan. This loan carries and interest rate of 7.9% and has a 4% fee. The loan is exclusively in your parent's name, but some parents make an agreement with their child to borrow this loan only if they will receive assistance from you in paying it back. If this is the deal with your parents, make sure you know how much you will need to pay back each month and add this into your big post-graduation financial picture. Another option is to look into state-based loan in your area, which typically are signed by both the student and parent.
What to know more about paying for college and borrowing? Make an appointment with the College Planning Center.