Here’s some basic information that doesn’t change much… for more help on college planning go to www.collegelifeplanning.com
Financial Aid 101
Financial aid is simply money that helps you pay for college. There are three kinds:
Grants, also called scholarships or gift aid, are the best kind of financial aid. They are free money that you don’t have to pay back. Generally, grants are awarded for one of three reasons:
Merit: The student is being rewarded for good grades, athletic skill, musical talent, etc.
Employment benefit: The student or the parent qualifies for tuition assistance through an employer. Many universities, for example, give employees’ children a break on tuition.
Loans are debts that you have to pay back and are obviously not as good grants. Some loans, such as federal Stafford and Perkins loans for students, are considered financial aid because taxpayers subsidize the rates so that students can borrow at a lower cost than they would get from a bank. A few charities and schools are even offering college loans at zero percent interest. The federal government calls its PLUS loans for parents financial aid. But many counselors note that some parents with good credit can borrow more cheaply from banks than from the PLUS program.
The federal government subsidizes some campus and nonprofit jobs for students. Generally, work-study jobs are awarded only to students who the college says are financially needy. The jobs typically don’t pay especially well. Students may find better-paying jobs off campus. But work-study jobs have advantages. Their earnings don’t reduce the student’s future financial aid awards. Their schedules coincide with the school’s. They are typically on campus, which reduces any commute hassle. And they are typically limited to fewer than 15 hours a week, so they jibe with studies showing that students who work between five and 15 hours a week actually get better grades than those who don’t work at all or work more hours.
“”Maybe half of it was my fault because I didn’t look at the fine print,”” What is sad, is that with some planning, and reading the “fine print”, this could have been avoided. Debt is never good; but it is a tool that can be leveraged if done properly. This is true of student loans as well; with the right planning, and knowing your degree’s ROI, you can make wise decisions when funding your education.
For more information: www.collegelifeplanning.com
The $555,000 student-loan debt
When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000.
“Maybe half of it was my fault because I didn’t look at the fine print,” Bisutti says. “But this is just outrageous now.”
To be sure, Bisutti’s case is extreme, and lenders say student-loan terms are clear and that they try to work with borrowers who get in trouble.
But as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as “good debt,” because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Bisutti learned, responsibility.
There’s no escape
Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can’t make their mortgage payments can hand over the keys to their house to their lender.
Credit card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens.
Graduate education is the Detroit of higher learning. Most graduate programs in universities produce a product for which there is no market (candidates for teaching positions that do not exist) and develop skills for which there is diminishing demand (research in subfields within subfields and publication in journals read by no one other than a few like-minded colleagues), all at a rapidly rising cost (sometimes well over $100,000 in student loans).
The mass-production university model has led to separation where there ought to be collaboration and to ever-increasing specialization. In my own religion department, for example, we have 10 faculty members, working in eight subfields, with little overlap. And as departments fragment, research and publication become more and more about less and less. Each academic becomes the trustee not of a branch of the sciences, but of limited knowledge that all too often is irrelevant for genuinely important problems.
The dirty secret of higher education is that without underpaid graduate students to help in laboratories and with teaching, universities couldn’t conduct research or even instruct their growing undergraduate populations. That’s one of the main reasons we still encourage people to enroll in doctoral programs. It is simply cheaper to provide graduate students with modest stipends and adjunct instructors with as little as $5,000 a course – with no benefits – than it is to hire full-time professors.
In other words, young people enroll in graduate programs, work hard for subsistence pay and assume huge debt burdens, all because of the illusory promise of faculty appointments. But their economical presence, coupled with the intransigence of tenure, ensures that there will always be too many candidates for too few openings.
MARK C. TAYLOR. (2009, May 1). Why universities must change. Telegraph-Journal,A.9. Retrieved November 24, 2009, from Canadian Newsstand Complete. (Document ID: 1693839241).
My goal is to help avoid this. A little bit of research and some soul searching for true passion and clear understanding of the field in which we desire to pursue can help bridge the gap between college and ‘real life’.