Paying for College

/Paying for College
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Question: How Many Borrowers Can’t Repay Their Student Loans?

Answer (from Consumer Federation analysis reported by CNBC): In 2016, more than 4.2 million out of 42.4 million borrowers were in default. This is a 1.1 million student increase from 2015.  Default is a condition where the borrower has not made a payment on their loan for 9 months.

What makes this more troubling is that these increases in defaults are occurring at a time when the economic statistics, especially unemployment rates are at historical lows (from Washington Post): 

How Is The New FAFSA Timetable Impacting College Offers?

I was wondering about this question. so was happy to see this article in the WSJ last week (subscription). Our post last September described two of the major changes to the FAFSA. First, families could now complete the FAFSA starting October 1st (previous deadline was January 1st). Secondly, the financial information provided on the FAFSA now will come from prior prior (not a typo) year’s tax return. Let me explain. Those families completing the FAFSA in October 2016 for the 2017-18 school year, data from their 2015 tax year would be used.

The most dramatic impact is that students should expect to receive offer letters from colleges SOONER with about 50% of colleges expecting to send their need-based offers sooner. Here’s the data:

Debate: Student Loans or Your Future Earnings: Which Would You Choose?

Kim Clark from Money describes a radical approach that some schools are taking to slow the growth of student debt:

Sheila Bair, who as head of the Federal Deposit Insurance Corporation from 2006 through 2011 was one of the few officials to warn of the 2008 mortgage crisis, is now hoping to forestall a similar mess in student loans. Her solution: a new kind of college funding option that would let students trade away a portion of future earnings for financial support now.

Here are the details of this student loan alternative:

Please Include Student Loans in Your Lessons!!!!

Connecting the dots on a weekend and thinking about recent student loan news. Most standard personal finance courses spend way too little time on this issue of student loans and more broadly paying for college. Why? One major reason is the national standards have not emphasized this issue of college finance (see how many times you find “college” and “student loans” in this 52 page document).

So, what are the dots that I am connecting and why the imperative to include in your curriculum? 1) almost 50% of student loan borrowers are struggling; 2) the fastest growing segment of student loan market is over 60; 3) the largest student loan servicer is being sued for“systematically and illegally failing borrowers at every stage of repayment.” Kinda makes you wonder how much #3 contributes to #1 but I digress:

NGPF Podcast: Tim Talks to Retired Bankruptcy Judge John Ninfo About His Passion For Financial Literacy

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What does a retired bankruptcy judge do to fill his “golden years?” If you are Hon. John Ninfo, you write a weekly column and visit hundreds of classrooms in upstate New York to teach young people about what it means to be financially responsible. If that isn’t enough, he also created a non-profit, Credit Abuse Resistance Education (CARE), to bring bankruptcy professionals into classrooms throughout the U.S. to share their experiences. Storytelling has an important place in the personal finance classroom (it is personal after all!) and John’s years on the bench in western New York provide him with lots of material to share about the causes of financial distress. In this podcast, you will also hear from the CARE team of Anna Flores and Ian Redman about how you can bring CARE to your classroom. Enjoy!

Details:

What Do Students Know About Financial Aid?

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Catching up on some reading over this break. Enjoying Sarah Goldrick-Rab’s Paying the Price which tracks six students in Wisconsin over six years and chronicles their triumphs and struggles in finding their way through college. She had a chart on page 56 that I found informative in highlighting what students know and don’t know about financial aid.

Here’s what the 2,100 students participating in the Wisconsin Scholars Longitudinal Study (WSLS) who answered their first-year survey knew about financial aid (number is parens is percentage who responded correctly):

By |December 19th, 2016|Case Study, Paying for College, Research, Student Loans|

NGPF Podcast: Tim Talks With “Rock Star” Educator Brian Page of Reading High School (OH)

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What does an extraordinary educator do during their one-year sabbatical away from the classroom? If you are Brian Page, star educator at Reading High School in Ohio, the answer is “a lot of things.” In his return visit to the NGPF podcast, Brian shares how he spent his year away from his beloved classroom. You will learn why he has come back to the classroom even more energized (which, for those of you who know Brian, is saying something) and eager to implement new ideas to engage his students. I encourage you to keep up with Brian on his Twitter feed @FinEdChat. Enjoy!

Details:

  • 0:00~2:25 – Introduction
  • 2:25~4:05 – Brian’s role at Budget Challenge
  • 4:05~8:57 – Instructional design/lessons
  • 8:57~10:13 – Finding scholarships
  • 10:13~11:55 – His creative process
  • 11:55~15:59 – A week in Brian’s class
  • 15:59~18:03 – Explaining the FAFSA
  • 18:03~

NGPF Podcast: Tim Talks to Jonathan Clements About His Latest Book “How To Think About Money”

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I enjoyed catching up with Jonathan Clements recently on the NGPF podcast. Since our conversation a year ago, Jonathan has been busy on a number of projects including teaching a college course in personal finance and writing a book “How To Think About Money” (good choice for a stocking stuffer this holiday season:). His goal with the book is to provide “a coherent way to think about their finances, so they worry less about money, make smarter financial choices and squeeze more happiness out of the dollars that they have.” I always come away from a conversation with Jonathan thinking more deeply about my relationship with money along with some ideas that I can implement in my life. I hope that you will too! Enjoy!