College Planning, Financial Aid Guidance, and Career Awareness

College Planning Center to Hold 3rd College Fair 9/19

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!

The details

What: 3rd Annual College Fair

Where: McCoy Stadium, Pawtucket, RI

When: September 19, 2012 from 6pm - 8pm

Education Loan Basics

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.

How State-Based College Loans are Different.

College loans come in all shapes and sizes. Students should always explore their federal student loan options, including subsidized Stafford loans and Perkins loans, before turning elsewhere for borrowing for college. The subsidized Stafford loan offers the lowest rate (3.4%) and a low 1% default fee. The Perkins loan has a low rate of 5% and no fees. Awards for the Perkins loan, if available, are awarded by your school through your financial aid award letter.

Stafford loans also come in an unsubsidized option. The rate on these loans is 6.8% and borrowing limits do apply for all Stafford and Perkins loans.

So what happens if you are awarded the maximum amounts and you still need more money to pay your college bill? Searching for grants & scholarships to help fund your education, but they rarely will meet your entire need.

Your next option is a Federal PLUS loan, a private student loan or a state-based student loan. We will review how each of these options are different below.

The Federal PLUS Loan is a fixed rate loan in the parent's name (grad students can also pursue a PLUS loan). The student has no obligation on this loan, unless they make an individual agreement with their parents. The rate is 7.9% and there is a 4% fee for all borrowers. The biggest benefit of these loans is the flexible payment options. You can defer your payments while the student is in school (although this means you will end up paying a lot more in finance charges in the long run) and there are countless deferment and forbearance programs if you are in a sticky financial situation, for example, if there is a job loss or illness in the family.

State-based loans are provided through non-profit, state affiliated lenders. These loans are typically fixed rate loans and may or may not have fees. They have varying deferment and forbearance provisions, dependent upon the lender. Rhode Island Student Loan Authority, sponsor of the College Planning Center of Rhode Island, offers two repayment options. The immediate repayment option has a low fixed rate of 6.39% and zero origination fees. The deferred repayment option has a fixed rate of 7.39% and a 0-4% orignation fee. Any borrower can qualifty for the zero origination fee on the deferred loan by taking an online financial literacy test within the year the loan is borrowed. You may also qualify if your high school offered a mandatory (and approved by RISLA) financial literacy course.

Typically, state-based loans are available to residents of the state in which the agency serves, or to students from outside of that state who come to the state to enroll in a college there. For example, if you are from New Jersey and you go to college in Rhode Island, you may qualify for RISLA's state-based loans. Likewise, if you live in Providence, RI, whether you go to school in Rhode Island, Massachusetts, or Hawaii, you can apply for this loan.

Lastly, there are private student loans. These loans are offered by banks and nationwide student lenders such as Sallie Mae and Discover. Some of these businesses offer fixed rates but most of the offerings are variable rate. In either case, most programs offer tiered pricing. Tiered pricing means the rate that you receive, whether it is on a fixed rate or variable rate product, is based on your credit score. It may be the credit score of the student, the coborrower, or some combination. Every bank determines their own criteria. When applying for a private student loan, be very aware that the advertised low rate may not be what you qualify for, unless you have outstanding credit.Also, make sure to pay attention to disclosures, terms and conditions. Deferment and forbearance options may be very limited.

College Planning Essentials: The 5 Best Chairs to Pack

You may think that now that you've made your decision about where to go to school, you are done with college planning. But don't get too excited! You still need to determine what to bring with you, if you will be living away from home (in addition to how you are going to pay the tuition bill). These top 5 chair types can help bring some of the comforts of your home to your dorm room and surely will impress your friends.

The Comfort Bowl

Curl up with a down blanket and your school books in a soft bowl-shaped chair while you study. Just make sure not to fall asleep while you are doing your homework!This sherpa version by PB Teen is sure to be a hit.

The Inflatable Lounger

Want to be able to lounge around on a day-to-day basis but make room for a group of friends to come by for a game of cards? An inflatable chair might just be what you need.The below Hero chair, can be found at online shops.

The Hip Rocker

Sway back in forth on a modern wicker rocker when you are stressing about an upcoming exam.

The Posturing Ergonomic

College issued desk chairs might not always be the best for your back (or your posture). If you spend a lot of time at a desktop computer and need a little extra support, try an adjustable ergonomic desk chair. Just keep in mind, these chairs can be high priced so make sure you look for a good deal and try out the chair before you make your purchase to make sure it is the right one for you.

The "Feels Like Home" Chair

Stick with a more traditional upholstered chair  to bring a little bit of home with you to your dorm room. Accessorize with a funky throw pillow for some extra color and charm.

Want more advice on what you pack? Download our checklist and make sure to go to college prepared. And don't forget, if you need loans to pay for college, download our guide to college borrowing.

Parents: 10 Steps to Paying for College

Paying for college tuition is no piece of cake. Much goes into figuring our how you will foot the bill, and our online meeting college costs calculator can help you with the process.

Take these steps when determining how you will meet college costs and use the calculator to come up with how you will meet the difference:

1. Add up your direct costs. Direct costs are costs paid directly to the school such as tuition & fees, room & board and other fees. Books, travel costs, personal expenses and other miscellaneous costs, while they add to your total cost of attendance, are considered indirect costs.
2. Calculate your total gift aid. Gift aid is free to you and includes grants and scholarships. The first step to comparing award letters is to sum up your total gift aid. Subtract any gift aid from your total direct costs. Do not subtract work-study or loans from your total costs since these are considered self-help aid.
3. Consider what savings you have available to help meet tuition costs. Do you have a 529 college savings plan or a Coverdell savings account? Any other savings orgifts meant for college? Subtract any resources you will use from your direct costs.
4. Determine if you have any income available to help pay college costs. Most colleges offer a payment plan that allows you to spread out the cost of tuition over the course of a school year. Typically, a payment plan administrator charges a one-time enrollment fee. Be aware that making payments late can result in high fees. Contact the college Bursar’s office or Financial Aid Office to get information regarding payments plans. Some popular plan administrators are Tuition Management Systems (TMS), Academic Management Systems (AMS) and FACTS.
5. Add up federal student loans. If federal student loans, including the Direct Stafford and Perkins loans, are included in your financial aid award, decide if you would like to accept these awards. Remember, you will have to pay interest on loans so you want to borrow as little as
   possible. Make sure you understand the terms of these loans before accepting them. Subtract the amount of Perkins and Stafford loans you will accept from your direct costs.
6. Think about how you will meet the difference. The remaining balance may be higher than your Expected Family Contribution (EFC). Most schools are not able to meet 100% of your financial aid eligibility. Some schools may include the Federal PLUS Loan in your financial aid package. Keep in mind that you can apply for this loan regardless of whether or not it is listed on the financial aid award letter and you don’t have to accept it just because it is included. If you plan to borrow, whether it is a PLUS loan, state-based loan, or private education loan, remember to be a good consumer and explore rates (APR) and terms. Factor your borrowing into the whole picture when
   determining which aid package is best for your family.
7. Subtract any additional loans you plan to borrow from your direct costs. This includes PLUS loans, statebased loans and private education loans (remember to be careful to compare rates, terms and fees for any of these options before signing the note!). Make adjustments if you still have a balance due.
8. When comparing award letters, focus on the ratio of gift aid to total aid received. It is easy to get swept away by a big financial aid offer. But remember, it isn’t always the total award amount that is most
   important. Pay attention to how much of your financial need each college met and how they meet your need. The higher ratio of gift aid the better. Also, figure out if awards are renewable. Be wary of scholarships and grants that are only good for your first year.
9. You do not need to accept the financial aid package as is. Loans need to be paid back with interest, so try to limit the amount you borrow by reducing your award amounts or declining loans if you don’t need them. If you think you need more aid, you can always try to appeal the offer. Make sure you have documentation to support your request. Many schools will take a second look at the award package, if asked.
10. Send in award acceptance forms by the deadline. If you do not, the aid awarded to you may go to another student.

Need help with this process? Make a free appointment with the College Planning Center of Rhode Island.

Student Loans: Questions Parents Should Ask

Your child may be eager to sign whatever it takes to go to their dream college. As their parent, of course you want to make that happen. But too many students have a borrow now, deal later attitude about their student loans that leaves them full of regret - and debt - after college.

Borrowing for college isn't always a bad thing - it just needs to be done intelligently and responsibly. Your child may not think to ask these important questions before borrowing, but as their parent, you can help your student find the right college loan by asking these important questions. After all, you may be on the hook too if you are a cosigner.

First off, before you student looks into any state-based or private student loan, be sure they have exhausted their subsidized federal loan options. The Perkins loan is offered at a low fixed rate of 5% and if your family qualifies, it will be included in your financial aid award letter from the school. Next, the Stafford loan is always a good bet. This loan, currently set at a rate of 6.8% (although Congress is looking to reduce that for the subsidized option this upcoming year), offers many repayment options, flexible deferement and forbearance terms, and loan forgiveness programs for public service workers.

If your family need to borrow beyond the Stafford and Perkins loan, remember to ask these questions:

1. What is the interest rate?
2. Is the rate fixed or variable? - Variable rates are at all time lows so they may look very appealing. Just remember, variable rates change, and if rates go up - so do your monthly payments. Take a look at prime rate history to get an idea of how rates have changed over the years. Keep in mind that variable rates are often based off of prime or LIBOR PLUS a markup that is dependent on your credit score.
3. Is the interest rate based on my credit? Tiered programs offer different rates to different borrowers, based on the borrower or coborrower's credit score.
4. Does the rate ever change? Some programs offer a lower rate to students while they are in school and it is hiked up after graduation.
5. What are the fees? After you apply, student lenders are required to disclose all fees in the application & solication disclosures but you should ask up front before submitting your application. Fees may be called application fees, origination fees, default fees, repayment fees, or may be late fees, returned check fees, etc.
6. What is the loan term? Keep in mind a longer term often means you will pay more interest in the long run, but it might be able to offer you a lower and more manageble monthly payment.
7. What would my monthly payment be if I borrowed $X,XXX?
8. When would my first payment be due?
9. What deferment, forbearance and other repayment options would be available to me?
10. How are loan funds disbursed? They might go directly to the student or directly to the school.
11. How long does it take to process an application? Keep in mind, private and state-based lenders are required to send you certain disclosures and get loan approval and self-certification forms from the student. It is the student's reponsibility to get these forms back in a timely fashion or the loan process can be delayed.
12. What are the borrowing limits?
13. Who is eligible for this loan?
14. Is a cosigner required?
15. What steps do I need to take to apply?

If you have any further questions about borrowing for college, make a free appointment with the College Planning Center of Rhode Island.

College Planning Essentials for Rising Seniors

College Planning Essentials for Rising Seniors

As your junior year in high school comes to a close, you are probably getting excited (and nervous!) about your senior year. Spending time with close friends, senior prom, and graduating will have great payoff. But with all this excitement comes a lot of stress – the college application process. Remember, it is never too early to start planning for college and if you haven’t already, now is the time. Use this list of advice to help you stay on track this summer.

Prepare for the SAT

You may have already taken the SAT, but if you aren’t happy with your scores, you can take it again. How much time did you spend studying for the exam? Practicing for this test prepares you for what to expect and teaches you to use your time efficiently. There are many free tools online and at your local library to help you study. Start at sat.collegeboard.org/practice.  Just a few points could mean the difference between receiving a scholarship and not receiving one as SAT scores are a major factor many colleges consider when awarding merit based aid.

Think about your career interests

You may have heard that going to college is a time for you to explore your personal interests and to decide what you want to do. But with college costs on the rise, it may be best to get started on this step before you decide where to apply and enroll. Having an honest idea of what you are likely to make after graduation can help you make a wise decision about how much is okay to borrow for college and what your return on investment will be.

Furthermore, going into college with an idea of what you want to pursue can mean it takes you less time to graduate and can save you a lot of money. Get started exploring careers and learn about starting salaries in your fields of choice at the Rhode Island Department of Labor &Training’s website at www.dlt.ri.gov/lmi/jobseeker.htm.

Start investigating schools

Find out more about colleges that interest you. In addition to searching online and requesting information from colleges, go to the college campuses, meet with financial aid officers, and get in on a campus tour. If classes are in session, ask an admissions officer if you can sit in on a few. On your tour, stop a student or two and ask about their opinion of the college. What do they like most about the school? What do they like least? Not sure where to start? Visit the College Planning Center of Rhode Island’s website at www.collegeplanningcenter.org and view of list of factors to consider during your college search.

Discuss your college budget with mom & dad

Before you get your hopes set on the perfect school, have an earnest conversation with your parents about what is affordable for your family. Remember, the sticker price of a college isn’t necessarily what you will pay to go there. The Consumer Financial Protection Bureau offers a financial aid comparison tool at www.consumerfinance.gov/payingforcollege that will help you determine the net cost of going to a particular school. Colleges also provide a net price calculator to help you get an idea of the average financial aid offer. Use these tools during your conversation.

Get a summer job

And more importantly, don’t spend every penny you make! Putting away hundreds, or even thousands, of dollars from a summer job can significantly reduce the amount you need to borrow for college. Savings from a summer job can help you fund costs like books, personal expenses, or even tuition & fees. When looking at the high sticker price of a college education, it may be easy to think that a few hundred dollars won’t make a difference. But it will! Save, save, save!

Work on your college essay

Start to think about what you want to write about. View example college essay questions on line. The essay is your chance to let your personality shine and tell the college something they don’t know about you through your application. Remember to make your story unique and to use your personal voice. Proofread and edit, again and again. Don’t let another student get your spot because of a typo or spelling error on your essay.

For more college planning information or to make a free appointment with a college planning expert, visit www.collegeplanningcenter.org. At the College Planning Center of Rhode Island, you can receive free guidance on college selection, applications, essays, scholarships searches and financial aid. The College Planning Center of Rhode Island is a free service of Rhode Island Student Loan Authority, a non-profit state authority that has been providing higher education solutions to Rhode Island families since 1981.

How to minimize college loan debt - Part II

Part I of this series encouraged students to borrow only what they need and keep their borrowing in line with their career choice. Below are some additional techniques to help students minimize the amount they borrow for college. Some of these require a lot of foresight and need to be done prior to applying for college. As with the tips in Part I, these tips may require you to make some sacrifices - but these short term compromises will have a very long term payoff.

Earn college credit while in high school.

Does your high school allow you to enroll in courses at a local college while earning your high school degree? Some high schools offer these programs, which allow you to earn both college and high school credits at the same time. This could potentially mean it will take you less time to graduate from college. If this option isn't available to you, keep in mind many colleges also accept certain test scores on AP exams for college credit. Look into each individual college's policy. By earning credits before you enroll, it can potentially reduce the amount of time it will take to finish your degree and therefore the amount you may need to borrow.

Enroll at a community college for your first two years.

If you are planning on pursuing a bachelor's degree or higher, you may want to consider enrolling at a community college for your first two years, especially if you are unsure of what you want to study or what career you aim to pursue. Some students don't find this option as glamorous as perhaps, living in the big city, or attending the state flagship university, but community colleges provide great value. Community colleges are typically much less expensive than public or private four year schools. However, before you pursue this option, make sure you understand which credits can be transferred to other schools and which schools will accept them before you make your final decision.

Fill out the FAFSA by your school’s deadline.

In order to make sure you receive all of the financial aid you are eligible for, including federal and institutional grants (“free money”), make sure you complete your FAFSA and any other required financial aid forms by the school’s specified deadline. Missing a deadline could mean you miss out of opportunities to receive free money or cheaper loans.

Apply for scholarships.

Scholarships are not only available through your school. Private scholarships are available to just about every type of student. Local scholarships tend to be smaller but are a lot easier to get. A few scholarships can add up to pay for books and living expenses and can significantly  reduce your borrowing needs. Before you borrow, may sure you explore your free money options first. Start your search here.

Budget for a lower cost of living.

A good way to reduce the amount you need to borrow is to create a monthly budget. Be realistic. Remember to live like a college student now, so you don't have to after you graduate.

Spend responsibly.

A slice of pizza here, cup of coffee there? How can this really make an impact on your borrowing? Take a look at the chart below.

Item	Frequency	Cost Per Unit	Monthly Cost	Annual Cost
Coffee	5 x a week	$3	$60	$720
Takeout/Pizza	4 x a month	$15	$60	$720
Cigarettes	4 packs a week	$8	$128	$1,536
Vending machine snack	3 x a week	$1	$12	$144
		Total	$260	$3120

Get a part time or summer job.

Work part time during the school year and summer and use your earnings to pay for college costs, rather than spending them on clothes, gadgets or entertainment. Just remember, working part-time can be good for you, but working full time can sometimes be too much. If you aren't able to balance your studies and job, it could mean you are unable to finish school on time and need to pay for an extra year of tuition, and borrow more. Try not to work more than 10-25 hours a week if you are full time student.

Be wise with your credit cards.

Practicing responsibility and discipline with credit cards from the start is vital to establishing good credit and avoiding a heavy debt load post-graduation. Never use your credit card if you don't think you can pay off the balance quickly. Your credit card is not an additional source of income! This is one of the most important things to remember when you are in college. You may think putting spring break on your card is a good idea now, but when you ending paying back $4,000 instead of $2,000 after credit card interest, you may think again. Only use your credit card when necessary and pay your entire credit card balance off each month to avoid interest charges. Learn more about being smart with your credit card.

How to minimize college loan debt - Part I

It's no big secret that student loan debt is getting out of hand for some. The average student graduates with more than $25,000 in debt. But there are ways to minimize your debt, and limit the amount you borrow  for school. The smart borrowing techniques listed below can help you. Yes, these tips may require you to make some sacrifices - but these short term comprimises will have a very long term payoff.

What amount is the “right” amount to borrow for college?

This is a difficult question students & parents need to face before making an enrollment decision. While many students are eager to sign whatever it takes to go to their
dream school, they often don’t understand how much it will cost them after they graduate. Others decide if they need to borrow for college, they just won’t go. What is the
right choice?

The reality is borrowing for college isn’t always bad - as long as it is done responsibly. College graduates earn much more than high school graduates so college is a good investment. But families should be careful not to borrow outside their means. Think about your return on investment.

Only borrow what you absolutely need.

You don’t need to borrow the full amount listed on your financial aid award letter. It is tempting to borrow a little extra for something you want but don’t actually need (say a new computer, when you can use the campus computer lab). When you borrow money, you pay it back with interest, increasing your total costs. A good rule of thumb is to only borrow what you absolutely need and no more.

Don’t ignore interest.
When you borrow, you pay back your loan with interest. It is easy to underestimate how much interest you will pay over the course of your repayment period. Use our loan repayment calculator to estimate your monthly payments and to see how much you will pay in interest on your loans.

How much will you earn?
Before you borrow, do your research on entry level salaries in your field of choice (The Bureau of Labor Statistics web site is a great place to start: www.bls.gov). Will you be able to afford your monthly payments with the salary you will make? Remember to account for all four years
of your education when estimating your total borrowing needs. Too many students have a “borrow now, deal later” attitude that ends up getting them into trouble.

How will your education debt affect your future goals?
When deciding between two schools, you may find you want to go to one more, but it will mean you have to borrow a lot more. Think about how that will affect your ability to reach your future goals. Will you be able to afford to reach your goals with a higher student loan
payment?

Will College Loan Rates Increase?

If you turn on the news, you are likely to hear about the pending increase of subsidized Stafford loan rates if Congress doesn't act. Rates, currently set at 3.4%, are set to double on July 1 to 6.8% - and without intervention - it will happen.

Stafford loans are a student's first choice when choosing to borrow for college. Not all students qualify for the subsidized version, under which the federal government pays any interest that accrues while the student is in school. To see if you qualify, you must submit the FAFSA and apply for financial aid at your college. If you are eligible, the subsidized Stafford loan will be included in your financial aid award letter. 

Nothing will change for students who only qualify for the unsubsidized Stafford loans. Rates are currently set at 6.8% and that is where they are expected to stay.

However, many have raised the question about the fairness of rates doubling on Stafford loans for the neediest students. These families, in many cases, are already struggling to fund a college education. Repaying that education can cost the student about $5,000 more after graduation if he or she borrows the maximum subsidized Stafford limit of $23,000 under the 6.8% interest rate vs. the 3.4% interest rate. 

The good news is that no one actually wants to let these rate increases happen for students. The bad news - Congress can't seem to agree on how to fund this costly interest rate reduction. Until bipartisan support is reached, the clock is ticking and students are rightly nervous about how this change will affect them.

Of course, Stafford loans have annual limits, and many students still need other sources of funding to fully meet college costs. Learn more about your other college loan options, come up with a plan for meeting college costs, or if you are a Rhode Islander or considering going to school in Rhode Island, learn more a low cost state-based Rhode Island Family Education Loan with RI Student Loan Authority.

As always, for more help with college planning, or to get assistance understanding your financial aid award letter or federal college loan options, make an appointment with the College Planning Center of Rhode Island.