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Wednesday, March 30, 2011

223.Unstack the Odds--Cost, Part 5


Unstack the Odds: Help All Kids Access College—and Graduate!

by

Joe Rottenborn

Executive Director, Mahoning Valley College Access Program (MVCAP)

11. Cost, Part 5


“Self help” refers to the kind of financial aid people love to hate--because a student or parent often has to pay it back! We may not like it, but colleges expect both students and parents to "help themselves" pay for their higher education--hence, the term "self-help." The most common variety consists of a loan—for many, the four-letter word in college financial aid! Loans, of course, must be repaid (with interest), which results in students' loan-debt.


Today, many students--and their parents--will likely consider loans to pay for higher education. To learn more about borrowing for college, Lynn O'Shaughnessy has compiled several of her blog-posts on loans, "Best College Loan Advice: 9 Tips for Borrowing for College," at this link: http://moneywatch.bnet.com/saving-money/blog/college-solution/best-college-loan-advice-9-tips-for-borrowing-for-college/1864/?tag=col1;blog-river


Before a student takes out loans to pay for college, he or she and their family should investigate available options (i.e., “shop” for student loans.) Specifically, they need to consider the kinds of loans offered as well as interest rates and repayment obligations. To become aware of these possibilities, read the blog-post by Lynn O'Shaughnessy, entitled "Find the Right Student Loan," at this link: http://moneywatch.bnet.com/saving-money/blog/college-solution/find-the-right-student-loan/371/?tag=col1;blog-river


Students and their parents who need to borrow to pay for college who research their options for loans often wonder whether they are better off taking out federal student loans or private loans. More than simply interest rates and terms of repayment are involved in this consideration. To see some comparisons between government and private loans, read the post by Sandra Block on May 4, 2010, in USA Today at this link: http://www.usatoday.com/money/perfi/columnist/block/2010-05-04-yourmoney04_ST_N.htm?loc=interstitialskip


Both students--and their parents--often have to borrow money to pay for college. Despite taking out all federal student loans for which they qualify, some still consider private student loans. To get the best (lowest) rates of interest on these loans, shop around! In her blog-post from May 14, 2010, Lynn O'Shaughnessy states: "The interest rates that lenders offer on private student loans are wildly different even for borrowers with the same credit scores." To read her entire post, click this link: http://moneywatch.bnet.com/saving-money/blog/college-solution/private-student-loans-the-good-bad-and-ugly/2078/?tag=col1;blog-river


An important question students need to ask in regard to college loans is "How much should I borrow?" With the hazards of loan-debt so well-publicized today, this is an important question to ponder. Lynn O'Shaughnessy addresses this issue in her blog-post "College Debt: Don’t Borrow More Than $27,000" at this link: http://moneywatch.bnet.com/saving-money/blog/college-solution/college-debt-dont-borrow-more-than-27000/1521/?tag=col1;blog-river


Even after considering all elements a student may receive in his/her financial-aid package, they may still need more money to pay for a particular college or university. In that case, parents often consider taking out loans to assist their child. However, how much parents should borrow is often not addressed. Lynn O'Shaughnessy confronts this issue in her blog-post "College Loans: How Much Should Parents Borrow?" at this link: http://moneywatch.bnet.com/saving-money/blog/college-solution/college-loans-how-much-should-parents-borrow/1510/?tag=col1;blog-river


Borrowing to pay college expenses is becoming a necessity for more students. The percentage of students who have college loans is growing, as Lynn O'Shaughnessy discusses in her blog-post "The Soaring Popularity of College Student Loans" at this link: http://moneywatch.bnet.com/saving-money/blog/college-solution/the-soaring-popularity-of-college-student-loans/545/?tag=col1;blog-river


Borrowing for college is an important issue today, as student loan-debt increases--sometimes to scary levels. To read a report by Sandy Baum and Patricia Steele for The College Board entitled "Who Borrows Most? Bachelor's Degree Recipients with High Levels of Student Debt," click this link:http://advocacy.collegeboard.org/sites/default/files/Trends-Who-Borrows-Most-Brief.pdf




Despite all the information available, mounting loan debt of college students is a financial crisis affecting many college students today. Indeed, according to a post in The New York Times, average student debt for college graduates is over $23,000—and rising. According to that article by Jacques Steinberg, “Students who graduated from college in 2008 with loans carried an average debt of $23,200 — an increase of nearly 25 percent, or $4,550, when compared with those who graduated just four years earlier. These figures appear in the latest study by the Project on Student Debt, an initiative of the Institute for College Access and Success, a nonprofit organization.” (Jacques Steinberg, "Average Debt for Graduating College Seniors Rises to $23,200," The New York Times--The Choice: Demystifying College Admissions and Aid, December 2, 2009.) http://thechoice.blogs.nytimes.com/2009/12/02/debt/?src=twt&twt=NYTimesCollege


To read first-hand, student accounts of being in debt from college expenses, click on this series from HuffPost College: http://www.huffingtonpost.com/2010/02/22/college-debt_n_471023.html?slidenumber=1mvKlgmw4aI%3D&&&slideshow#slide_image


To read additional articles about the hazards of taking on too much loan-debt for college, click on the following links:


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