Student Loans

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Article: This Is One Case Where A PLUS Is Not So Positive

WSJ article out today warning of the dangers of Parent PLUS loans. I thought this was particularly pertinent as high school seniors pore over their financial aid award letters before making a May 1st decision. Here’s the lede:

Millions of U.S. parents have taken out loans from the government to help their children pay for college. Now a crushing bill is coming due. Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government.

What makes this even more disconcerting is the financial aid “packaging” that often occurs where the PLUS loan becomes the

By |April 24th, 2017|Article, Current Events, Paying for College, Student Loans|

What Do High School Seniors Think About the Financial Aid Process?

It’s April so I thought I would do a temperature check for my AVID class just before we dove into an activity analyzing aid award packages. Here’s the word cloud that came from their individual responses (with some mentor comments sprinkled in which tended to be more on the positive side):

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Why did I do this?

From March Madness to April Anguish…

Yes, it’s that time of the year..thin envelopes, thick envelopes, cost of attendance, financial aid, subsidized loans, unsubsidized loans and the dreaded PLUS loan plug (for the uninitiated, the Parent PLUS loan is often the way that financial aid offices get their offers to balance out). Here are three activities from our Paying for College unit that I used recently with AVID students at Mountain View High School to lessen the anguish of this process and prepare them to analyze their own award letters: 

By |April 2nd, 2017|Activities, Current Events, Paying for College, Student Loans|

What I Have Been Reading This Week…

Here’s a weekly round-up of articles that caught my attention this week that I thought you would find interesting:

  • Want to find out what it feels like to own a volatile stock? Find out how this investor got emotional by making a $3 trade in this MarketWatch article, “I drove myself crazy by investing $3 in the stock market.”

“Turns out, it doesn’t cost much to drive yourself batty over your investments. For the past week, ever since I broke one of my cardinal investing rules by buying an individual stock, I have experienced pronounced emotional swings over the company’s every tick and trade, feeling accomplished when the price rises and despondent when it falls.”

  • You may have heard about robo-advising to create passive investing portfolios, now the largest fund company in the world is investing in algorithms to make stock picks in actively managed funds. Find out more in this NY Times article “At BlackRock, Machines Are Rising over Managers to Pick Stock,”

Resource Lists for Financial Educators (courtesy of Barbara O’Neill of Rutgers Cooperative Extension)

What does a distinguished professor do during her sabbatical? Curate personal finance resources, of course! In this blog post, Barbara O’Neill shares the fruits of her hundreds of hours of labor in putting together three awesome resource lists (see bottom of post for links to her lists), including what what she considered the “best of the best” from the NGPF library. As she describes below, the purpose of her odyssey was to replenish her “well” of creative learning activities. I hope that your “well” overflows as you find resources that will work in your classroom. Thank you Barbara for this tremendous gift to the community! Your commitment and dedication to improving financial literacy in this country inspires us.

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): 

Activity Idea: Write a Column About Money To Help Your Peers

This St. Louis Post-Dispatch reporter, Jim Gallagher, wrote his final column recently. After twenty three years of being on the personal finance beat, he left a gift to his readers by reflecting on all that he had learned. I thought this would be a great activity for educators who are constantly on the prowl for writing assignment ideas. Why not as a final project have your students write a personal finance column highlighting all that they had learned. In terms of structure, here are some additional ideas:

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: