Tagged: college debt

Intro to Finding Scholarships

Lets face it, by the time senior year rolls around you’re too busy starting the transition to college, writing essays and attending Home Coming to spend much time looking for scholarships.

Once you turn 13 you can earn scholarships that will be held until you need them. By that standard, if you’re 15 you’ve lost 2 years in the free money hunt. No time like the present to get started.

The first thing on your agenda is to have a serious and frank discussion with your parents about what they can afford to pay for you to attend college. Remember that over the 4-6 years that you will be a student the costs will only go up, at least slightly. Keep in mind that your siblings will need college money, too. The conversation may be uncomfortable but it is a necessary step.

The very worst thing you can do is “just get in and we’ll figure it out”. That is completely backwards. Here are a few facts about college costs.

1. When a college lists average student debt on their website they refer to loans in the student’s name without including debt in a parent’s name.  The number is almost always just above $30,000.

2. Most Loans your parents take to finance your education must be paid beginning immediately and be paid every month like a mortgage or car loan.

3. Your financial aid package will have loans built into it that don’t cover the Expected Family Contribution for which many families must also borrow.

Now that I’ve convinced you to be serious about what you can afford, here’s a story about one student who made earning scholarships a priority and a job. The story comes from Susan Smith in the Philadelphia Inquirer on 6/15/13.

Christopher Gray of Birmingham Alabama, wanted to attend a college in the Northeast. To finance his education he spent 3 months in the library researching scholarships. Ultimately, he applied for more than 70 scholarships, of which he received 34, for a total of $1.3million, enough to pay for his Bachelors, Masters and Ph.D, living expenses and some to invest.

$1.3 million, yes your read that correctly. He is not the only student who has scored big by investing time and effort in searching for financial resources.

How to start your own search. Step One : Get Organized

You will need a filing system. Put it on your computer and consider a box you where you can put material mailed to you by colleges. You will need tabs for:

1. your resume, transcripts, test scores, and other official documents; tax records

2. informal records that you keep of community service, honors/awards, employment hours and responsibilities, leadership accomplishments.

3. scholarship information and a separate page or file for those applied for

4. articles you want to keep and leads

5. correspondence related to scholarships including from your school

6. college marketing material

The files can be used jointly by parents and students.

Christopher Gray created an app for android and iphones called scholly that sells for $.99. When you’ve set up your organization tools and downloaded the app, read the next post to see where to begin looking for free college money.

Read the next post for what to do next.

Graduate From College Debt and Regret Free

How to Graduate From College Debt-Free (and Regret-Free)

Tips from an author who’s been there, done that.  Money  Magazine 9/6/16

Heeding the classic advice to write what you know, Kristina Ellis wrote her first book, 2013’s Confessions of a Scholarship Winner, about how she raked in a reported $500,000 in scholarships to put herself through Vanderbilt University and then graduate school. In a just-released sequel, How to Graduate Debt Free, she shares her advice on borrowing (or better yet, not borrowing) to pay for college. MONEY asked Ellis about how students and parents can make the right decisions now—and maybe avoid some big regrets down the road.

rolled-money1362244_640

MONEY: Do you think parents often aren’t open enough with kids about what they can afford to contribute toward college?

Ellis: Yes, I do believe that. Many parents think they are protecting their kids’ dreams by not divulging their financial standings. But one of the biggest favors parents can do for their children is sitting down and having real conversations about money sooner, rather than later. My mother sat me down on the first day of my freshman year in high school and explained that I would be on my own financially when I graduated. While it was hard to hear, knowing my situation early allowed me to make a plan so that I could stand out when it came time to apply for college and scholarships. Having a plan and strategy allowed me to secure more than $500,000 in scholarships and grants, graduate from Vanderbilt University and receive a master’s degree from Belmont University, all debt-free.

  1. What do you say to a student who has his or her heart set on a particular college that is simply unaffordable?
  2. Many students think they can’t afford their dream school because “there just isn’t a scholarship out there for me.” But there are literally billions of dollars in scholarships given away each year to help students with college expenses—for all sorts of reasons beyond just academic achievement and sports. There are a bunch of niche scholarships for having the best zombie apocalypse escape plan and having the best duct tape prom dress for being tall, for being short, for being right- or left-handed, for having a certain last name. All types of students from all sorts of backgrounds have been highly successful in winning scholarships. Somebody is going to get them. It might as well be you!

But if your dream school isn’t financially realistic, even with scholarships, there are so many great colleges across the country that could also be an excellent fit at a more affordable price. While it can be hard to give up a dream to attend a particular school, being saddled with thousands of dollars in unnecessary student loan debt can be way harder. I’ve spoken to many college grads who felt heartbroken going into college on a full ride at a public university versus attending the private school they dreamed of. However, in the long run, many have deemed it the best decision of their life. They still got a great education, had an awesome college experience, and ultimately got their dream job—with zero debt.

  1. What do you think of taking time off between high school and college to earn money for college?
  2. Taking a year off to volunteer, travel, or intern in a career field can be a good option as long as you stay motivated to return to school. However, if the purpose of the year is to earn money for college, students need to bear in mind how it will affect their financial aid package. When they do attend college, if they plan to rely on need-based grants and work-study, the money they made during that year could count against them in future financial aid applications. The Student Income Protection Allowance currently stands at $6,400, meaning students can make up to that amount before it counts against them. Beyond that, though, they can decrease their financial aid eligibility by 50% of every dollar they earn.

Therefore, be wise about your decision by seeking to understand its long-term impact. You may find that applying for more scholarships, working during college, or completing a co-op is a more effective way to earn money for your college education.

  1. Would you urge students to work during college even if they don’t need the money?
  2. Yes, I would encourage students to work during college. Studies consistently show that students who work a modest 10 to 15 hours per week are more likely to succeed in college than those who don’t work at all. Not only can it put egap year,xtra money in their pockets during school, but it can also foster qualities that are known to produce success, such as a greater sense of responsibility, a better ability to organize themselves, and a stronger work ethic. Plus, those additional years of work experience are a prime way to build up their résumé in ways that will appeal to employers.

computer-internship-245714_640

  1. In your book you mention taking a risk after you graduated—turning down a well-paying corporate job to take your chances as a writer. Do you think many young people today are too risk-averse because of financial fears?
  2. I think we’re seeing a strong mix of both, primarily hinging on whether or not they have student loan debt. Walking away from college knowing you are about to owe $500 a month to a loan company before any other basic expense is factored is daunting and can strap a student into a more “safe” journey.

On the other hand, we’re seeing more entrepreneurialism, millennial travelers, blog writers, and social activists. Many young people are taking risks in their twenties, before marriage, mortgage, and major career commitments.

One of my greatest goals is to help students graduate as debt-free as possible so that they have the financial freedom to choose. Even without student loan debt, they still may select a safer route, but they’ll have options. There’s a beauty to starting your life and career based on what you feel is truly best for you long-term, versus the safest way to pay your loan-debt obligations.

  1. Is there anything you’d do differently if you were back in college today, knowing what you know now?
  2. Yes, absolutely. First, I would be way more intentional about networking within my broader school community. It’s easy to get caught up in classes and peer events, overlooking the incredible opportunity to build strong, long-term relationships with professors and alumni. People typically love to help college students, and if I could do it again, I’d be bolder in reaching out and maintaining a larger campus-affiliated community.

bridge-Cambridge

And second, I would have studied abroad. When I was in college, I got very focused on working and networking within the Nashville community. I traveled on the weekends singing with a band while also building a marketing business. After several semesters of putting it off, I finally said, “I’ll live abroad someday, once I’ve built a successful career.” Looking back, I really wish I had seized the opportunity then. While I’ve since traveled to several countries, I haven’t fully immersed myself in international culture and learning the way I believe I would have been able to in college.

 

College grads with extensive debt can’t buy cars or homes, perhaps aren’t able to rent an apartment.  Debt has an impact on the economy.  I can help you find great colleges that won’t put you in the poor house or living in your parents basement.  Financial planning should be part of any college planning.  stephanie@accessguidance.com or 610-212-6679.

 

 

 

 

 

 

 

 

 

The Problem With Student Debt Is Paying It Off

It’s not the amount you owe, it’s not having a plan to pay it off that gets students into trouble.

keyboard-panicIf you’re waiting for your job to hand you a “get out of debt” card along with a salary and bonuses, you’re missing the opportunity to make your own way in the world.

The following story is about a 2013 graduate who paid off $23,000 in loans in 10 months.

The first thing Jordan did was get a job paying $36,000 a year in a field related to what he really wanted as a career; then he moved in with his parents; he got a second job and put all the income toward paying off his loans.

An austerity budget involves cutting up the credit cards so you aren’t tempted to charge purchases. Budgeters also encourage you to put aside an emergency fund like Jordan, to pay unexpected expenses.

To back up for a minute, lets look at where the plan started. Jordan graduated in 3 years instead of 4. That saved him tuition, expenses and borrowing additional funds. Most students can reduce the time to graduation by taking one extra course per semester, leaving summers free to work. Another way to do it is to take courses every summer, cutting off a semester or more.

The take away from this post is to create your plan before you graduate, ideally before you matriculate as a freshman. Know how you are going to pay back the loans before you sign for them.

 

time.com

This Millennial Paid Off $23,375 in Student Loans in Just 10 Months

Kara Brandeisky @karabrandeisky
MONEY Out of the Red
Jordan Arnold

Like many millennials, Jordan Arnold graduated from college five figures deep in student debt. Unlike most of his peers, he paid off all of his loans less than a year after graduation.

This is his story, as told to MONEY reporter Kara Brandeisky.

Jordan Arnold, 22
Bluffton, Ind.
Occupation: credit analyst
Initial debt: $23,150
Amount left: $0
When he started paying it down: May 2013
When he became debt-free: March 2014

How I started building debt

I always knew I was going to go to college, though I figured I’d go to community college for a year or two because it’s cheap. But my parents started talking to me about this private Christian school, Indiana Wesleyan in Marion, Ind. I took a visit, and I really liked it. It’s only like 3,000 students on campus, so it’s a tight-knit community.

Tuition and room and board was about $31,000 a year. And the first year I hadn’t applied for federal student aid, since I didn’t commit to the college until about 10 days before classes started. I got some scholarships and a grant from my church, though. So, ultimately, I owed approximately $9,000 that first year.

Getting to $23,000

I could only borrow up to $5,500 in subsidized loans from the government each year, so I worked to cover the rest so that I didn’t have to take out private loans. I also graduated in three years, which helped.

Still, altogether, I had to take out $15,150 in subsidized federal loans and $2,000 in unsubsidized federal loans. I borrowed another $6,000 from my parents.

My uh-oh moment

In the fall semester of my senior year, I remember being kind of nervous. I knew I had to start paying my debt within six months. It’s stressful, when you don’t have any money. And I heard all these stories about college students who get out of school, they have all this debt, and they can’t find jobs.

Getting my debts paid off was important to me. I didn’t want to get the point where I’d have to be paying student loans for another 10 years. Right now, I’m single. I don’t have any dependents that rely on my income. But I didn’t want to have these loans over my head when I’m trying to feed a family and put a roof over their heads. It’s not just about me, it’s about my future family.

My first step out of the hole

Luckily, I got a job right out of college at an insurance agency (I had majored in finance). I was on salary, and it was pretty good: $36,000 plus bonuses.

I didn’t have to pay my student loans for another four months, but over the summer I decided to go ahead and start making payments before interest began accruing.

I actually moved back in with my parents—which is hard when you have been out on your own. But I didn’t really have a reason to move out. And I was blessed that they actually preferred me to live there because I could help out around the farm they own, baling hay or feeding the horses. Living at my parents’ place for free was a lot better than having to pay $400 or $500 a month for rent.

Kicking it into gear

About four months into my new job, I picked up a second job, delivering for Pizza Hut, to help pay off my debt. I would start work at the insurance agency at 8:30 a.m., change in the waiter-pizzabathroom at 4:50 p.m., get to Pizza Hut by 5, deliver pizzas until about 9:30, get home around 10, then shower, eat, and go to bed.

My monthly take-home pay from the insurance company was about $2,200, and I made about $1,000 at Pizza Hut. After gas, car insurance, tithing to my church, entertainment and food, I could put about $2,000 towards my debt every month.

At that rate, I was projected to pay off my debt in May 2014. But I got a $3,000 refund on my taxes, and paid off the rest of my debt with that.

How I celebrated being debt-free

I made my last payment the first of March, then I went to Florida with some friends two weeks later. It was pretty rewarding after a 10-month battle. I had probably worked 65 to 70 hours a week for seven or eight months. It was exhausting, but it was worth it.

What I’d tell someone else in my place

If you have a game plan, you can accomplish your goals. I have an account on Mint.com, that’s where I kept my budget. That’s a big part of it—just seeing your progress and knowing you’re getting closer.

Also, have an emergency fund. While I was paying off that debt, I had a small car accident. I was delivering a pizza, and I hit something in someone’s driveway. It cost me about $760 to fix the car. But I had a $1,000 emergency fund, which was kind of a buffer that I kept because life happens.

Finally, don’t be afraid to move home if you have to. That was a big part of how I got out of debt.

My plan for the future

I quit my Pizza Hut job in April after paying off my debt, and now work at a bank analyzing commercial and agricultural loans, which is more in line with what I wanted to do.

I actually haven’t moved out of my parents’ house yet. Instead I’m saving up for a down payment on a house. I’m putting away 50% of my take-home income for that, and I should have a down payment by mid-summer. I also started investing. I started a Roth IRA, and I plan to max it out this year.

Staying true to myself

Some people have made the argument, ‘Maybe you shouldn’t have paid off the debt so fast because the interest rate is cheaper than what it will be for you to borrow for a home.’

That makes sense in my head, but in my heart, I didn’t want this hanging over me. I want to be responsible with my money and build a strong foundation.

The bottomline is the plan to get a great education without borrowing more than absolutely necessary then creating a schedule for retiring the debt.  Pinching pennies only hurts for as long as you take to pay it off!

Looking for debt reducing strategies?  Stephanie can point you in the right direction.  stephanie@accessguidance.com or call/text 610-212-6679.