December 28, 2006

A Graduating Senior’s Perspective on Debt

Posted in Private Loans, Student Loan News at 9:19 AM by Joe From Boston

Here’s a great article from the Philadelphia Daily News from a graduating senior that puts a good perspective on borrowing for college.

By Taryn Jedlicka

I’M A college senior, and this spring I’ll proudly accept a diploma that I’ve paid a lot of money for. Well, I haven’t paid for it quite yet. Actually, I owe $88,718.75 to various lenders, a sum I expect will take more than 20 years to repay. It’s a daunting prospect.

How does a 21-year-old end up with such a huge debt? For me, it was because I wanted to go to the best college I could, and, at the time I made the decision, I really didn’t understand the burden I was taking on.

As a high-school senior, I considered a range of schools: State University of New York schools; other state colleges, and a few less-expensive private colleges. But, in my heart, I really wanted to go to the best college I could possibly get into.

In high school, I took challenging classes and studied hard to earn good grades. I played soccer and joined school clubs. I practiced taking the SATs for months so I would score competitively.

I applied for a nearly decision to New York University, and the answer came on a rainy November afternoon. I remember slowly opening the damp envelope, being careful not to damage the life-altering information inside. When I saw the word “accepted,” I felt like my dream had come true.

My parents made it clear that the $40K-plus a year tuition and fees were out of reach for our middle-class family. They both had respectable jobs – my mom is a teacher and my dad owns a small business – but we live in a high-priced New York suburb, and they had lots of other financial obligations. They warned me that if I wanted to go to such an expensive school, I would bear the bulk of responsibility for paying the costs. At the time, it didn’t seem like such a big deal. Didn’t everyone take out loans to go to college?

With the help of my family, we figured out a way to make it work. NYU’s College of Arts and Science gave me an $8,000 yearly academic scholarship. I emptied my savings account and contributed almost $15,000 to my first year’s tuition. My mom took out nearly $23,000 in loans to help alleviate some of the costs in my first two years.

I was also eligible for the maximum amount in federally subsidized Stafford loans that don’t accrue interest until six months after graduation, when repayment must begin. I also got a $2,000 Perkins loan, which accrues 5 percent once repayment begins 10 months after graduation, for the first two years. As a state resident attending an in-state university, I was awarded a state grant of $500 a year, not much, but every little bit helped.

The rest – about $53,000 at 7 percent interest – came from a private student loan from Citibank. Over the last four years, I’ve signed close to 15 loan documents, and the bottom line is this:

I’m left with $88,718.75 in student loans – all of which I’ll be paying back myself.

I take some comfort in knowing I’m not the only student saddled with such a responsibility: According to the Project on Student Debt, a non-profit research and education organization, more students than ever are using loans to pay for college, and their debt is at an all-time high – up about 60 percent over a seven-year period. Though the College Board reports that the typical student who borrows to finance a bachelor’s degree at a private for-profit four-year college owes only $24,600, I’ve met plenty of other students who owe as much as I do – or more.

ALOT OF my classmates are counting the days to graduation. I’m a little less eager. While there won’t be dollar signs plastered on my cap and gown, I’ll be thinking about them, instead of about the money I’ll make after graduation.

But I’m still grateful for being able to attend my first-choice school. I’ve enjoyed every bit of my experience: I’ve taken interesting classes, made lifelong friends and soaked up New York City along the way. As far as my future, I’m hoping that my diploma from a “brand-name” school will give me an edge in my career. Did I make the right decision?

Check in with me in another 20 years.

December 27, 2006

FAFSA – a refresher course

Posted in FAFSA, The Financial Aid Process at 1:48 PM by Joe From Boston

Since FAFSA season begins in 4 days, I’m bringing you a refresher on what the FAFSA is and why you need it.

Students must complete and submit the Free Application for Federal Student Aid (FAFSA) to the U.S. Department of Education every year in order to qualify for financial aid – including loans! It’s not required but you REALLY want to submit this every year, by January 30th is possible.

Why do I say January 30th if he deadline listed is in June?  Because the financial aid world is first-come, first-served.  You want to get this form filled in as soon as possible, ideally as soon as you get your tax forms.

Tax forms?!?!?    Yes, I said tax forms.  I mean stuff like your W-2 and your student’s W-2.  THe FAFSA asks about household income and related items, in order to determine how much your family can afford to pay for college.  Here’s the info you need to have on hand to fill it out the 2007/2008 FAFSA:

  • Your Social Security Number (can be found on Social Security card)
  • Your driver’s license or state ID (if any)
  • Your W-2 Forms and other records of money earned
  • Your (and your spouse’s, if you are married) 2006/2007 Federal Income Tax Return – IRS Form 1040, 1040A, 1040EZ, 1040TeleFile, foreign tax return, or tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia
  • Your parents’ Federal Income Tax Return (if you are a dependent student)
  • Your untaxed income records – Social Security, Temporary Assistance to Needy Families, welfare, or veterans benefits records
  • Your current bank statements
  • Your current business and investment mortgage information, business and farm records, stock, bond, and other investment records
  • Your alien registration or permanent residence card (if you are not a U.S. citizen)

More FAFSA info coming soon!

December 26, 2006

Former Senator, Father of Stafford Loan, Dies at 93

Posted in Student Loan News at 10:00 AM by Joe From Boston

Most people don’t know anything about the history of student loans in the U.S.  I thought I’d share this article with you, about the man who helped create the Stafford Loan.

The Associated Press

Former U.S. senator Robert Stafford, a staunch environmentalist and champion of education whose name is familiar to countless college students through a loan program named for him, died yesterday. He was 93. Stafford was surrounded by family at a Rutland nursing home when he died at 9:30 a.m., said Neal Houston, his former chief of staff.

A Republican, Stafford served two years as governor, 11 years in the House and 17 in the Senate before retiring in 1988.

Gov. Jim Douglas ordered flags lowered to half staff yesterday as he saluted Stafford. “Governor Stafford was a tremendous public servant, a man of the deepest personal integrity and someone whom I admired greatly,” Douglas said in a statement. “From the higher education finance program that now bears his name or his advocacy for clean air and water, Americans will continue to benefit greatly from his legacy of success.”

Stafford became a defender of the environment during his 28 years in Washington. Time and again he came to the defense of the Superfund program to clean up contaminated sites across the country. He guided bills combating acid rain and air pollution from automobiles through the Congress from his position as ranking Republican on the Senate’s environment committee.

He also dedicated himself to education from his perch on the Senate Subcommittee on Education, Arts and the Humanities. Congress saluted his dedication in 1988, renaming the Federal Guaranteed Student Loan program the Robert T. Stafford Student Loan program. The low-interest loans to students are now known almost universally as “Stafford loans” to the millions who qualify for them each year. According to the federal Education Department, about 14 million Stafford loans were given to postsecondary students in 2006.

Stafford wasn’t shy about bucking presidents of his own party, leading a successful effort to override President Reagan’s veto of amendments that strengthened the Clean Water Act. He also tangled with industry when he believed it was thwarting efforts to clean the environment.

“If you ever want a piece of paper saying you are a certified (S.O.B.), come to me,'” he was told once by an auto industry executive.

Stafford co-sponsored the Wilderness Protection Act in the early 1980s. A 22,758-acre tract of the Green Mountain National Forest in Bennington and Rutland counties, which was designated by that law a national recreation area, was renamed earlier this year the Robert T. Stafford White Rocks National Recreation Area.

Stafford’s reputation as a moderate Republican and sometime maverick in Washington was the end of a long journey for a man who once considered himself conservative, even hawkish. He attributed the transformation to education.

“When I was young and in the Rutland city’s prosecutor’s office and then the state’s attorney’s office, I thought in terms of local problems,” Stafford told the Associated Press in 1998, on the 10th anniversary of his Senate retirement. “Then I got involved in statewide politics and began to realize that some things had to be dealt with on a statewide basis.

“The same process of personal education continued when I went to Washington and began to realize that the problems in many cases were nationwide – air and water, maintaining a military – and had to be thought of that way.”

Born Aug. 8, 1913, Stafford was a true son of Rutland. He got an undergraduate degree from Middlebury College in 1935 and a law degree from Boston University in 1938. Education became a lifetime pursuit. He listed in his official biography with the state degrees from the University of Vermont, St. Michael’s College and Norwich University from the 1950s through 1970.

But it was to Rutland he always returned and where he ultimately retired with his wife, Helen.

Reserved and almost shy at times, Stafford ended up with a long career in public service that he hadn’t anticipated. “I never really intended to be a politician myself,” Stafford told the AP.

December 20, 2006

Get Ready to File your FAFSA…January 1st

Posted in FAFSA at 3:38 PM by kpops

Need to complete your Fafsa for 2007-2008 school year? Visit on or after January 1st and the application will be available. Remember, you do need to complete your Fafsa each academic year in order to be eligible for Federal Aid. Once you complete your application online keep your eyes open for your Student Aid Report. This will provide a summary of the information submitted on your Fafsa. Your school will also get a copy of the SAR and will then send out a Financial Aid Award Letter. Your award letter will state what Federal Aid you are eligible for. Make sure if you are awarded a Stafford Loan that you complete your Master Promissory Note as well. This can be done online at

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans

Sports and Education

Posted in Student Loan News at 9:54 AM by Joe From Boston

Here’s an editorial I found on the New York Times websites that I thought would provoke a debate. I don’t normally post opinion pieces, but I think this one is worthwhile reading, and really thinking about. This editorial does contain factual information about the ongoing issues at Auburn University that I think would be great talking points with your children.

“Top Grades, Without the Classes
Published: December 20, 2006

The House Ways and Means Committee sent shock waves through college sports when it asked the National Collegiate Athletic Association to justify its federal tax exemption by explaining how cash-consuming, win-at-all-cost athletics departments serve educational purposes.

The short answer is that they don’t. Indeed, they often undermine the mission of higher education by recruiting athletes who aren’t prepared, then encouraging grade-padding and preferential treatment to keep them eligible for sports.

That process has been on vivid display at Auburn University, which is embroiled in a scandal involving athletes who are said to have padded their grades and remained eligible to play by taking courses that required no attendance and little if any work. This summer, James Gundlach, an Auburn sociology professor, laid out the problem in startling detail, telling reporters that corruption at the university was pervasive.

An internal audit by the university, made public this month, has uncovered a new round of problems. It found that a grade for a scholarship athlete had been changed — from an incomplete to an A — without the professor’s knowledge. This conveniently raised the athlete’s grade point average in the final semester just above the minimum required for graduation. In addition, the athlete received three other A’s from so-called “directed reading” courses that required no classroom attendance. The professor who issued the initial incomplete in 2003 — and only recently learned it had been changed — suggested that someone in the university had guided the athlete through the scheduling process.

Auburn’s administration promised swift and decisive action to address the problem. But it has also taken pains to point out that the suspect courses were open not just to athletes, but to all students.

That’s no reason to feel relieved. The deeper and more alarming lesson is that the unethical behavior often associated with big-time college sports doesn’t always end with athletes. It can easily seep outward, undermining academic standards and corrupting behavior in the university as a whole.”

December 18, 2006

Good news for taxpayers

Posted in Student Loan News at 3:14 PM by Joe From Boston

Here’s a great article from last week – the tuition tax breaks that parents and college students have come to rely on were passed on Saturday, Dec. 9th!  Read the full article below from Inside Higher Ed.

Tuition Tax Break Extended

In the wee hours of Saturday morning, the U.S. Senate joined the House of Representatives in passing legislation that will extend a slew of popular tax breaks, including two with coveted by colleges. The measure, passed by a 79 to 9 margin in the Senate, is on its way to President Bush, who is expected to sign it.

One provision would extend through 2007 a tax deduction for “qualified higher education expenses,” which is available even to taxpayers who do not itemize deductions on their federal returns. The provision, which expired at the end of 2005, applies retroactively to the current 2006 calendar year.

Under the provision, individuals who earn less than $65,000, and couples who earn less than $130,000, can deduct up to $4,000 in tuition and some other college costs for themselves or their children. Individual taxpayers who earn between $65,000 and $80,000, and couples who earn between $130,000 and $160,000, can deduct up to $2,000 in such expenses.

“America is in a race with the rest of the world to grow the
strongest, most educated workforce available to attract and keep good-paying jobs here at home,” said Sen. Max Baucus, the Montana Democrat who will head the Senate Finance Committee, which makes tax policy, in the next Congress. “So the tuition deduction is about more than taxes. It’s really about making higher education, whether college or vocational school, affordable and accessible for more of our citizens.”

The tuition tax deduction was estimated to cost about $3.5 billion over 10 years, with the bulk of that money coming in the early years.

The other provision of interest to higher education that was extended by the bill is a corporate tax credit for investments in university research and development. It, too, will continue through 2007, although advocates had pushed for a permanent extension.

Also before it closed up shop for the year, Congress approved legislation that will continue the federal government’s ability to operate until February 15, which will put substantive decisions about funding for the 2007-8 fiscal year — which is nearly one quarter over at this point — in the hands of the Democrat-controlled 110th Congress.

The current Congress passed only two of the appropriations bills that finance the federal government, and lawmakers in the newly configured Congress are likely to choose among three options: (1) passing all of the remaining bills separately (which is highly unlikely); (2) passing a continuing resolution for the entire year, which would finance most federal agencies at the same funding levels in 2007-8 that they received in 2006-7; or (3) enacting an “omnibus” measure lumping together all or most of the unpassed bills, and choosing to increase funds for some programs and perhaps cut them for others.

That decision is likely to revolve around whether Democratic leaders want to spend on much time on a 2007-8 budget when they will also be forced to start worrying about 2008-9 spending in early February, when President Bush presents his budget plan for that year.

— Doug Lederman

December 14, 2006

I’m back with more news

Posted in Student Loan News at 9:37 AM by Joe From Boston

Hi folks! Sorry for disappearing for a week – I worked all weekend (literally) and am still recovering. 🙂

But here’s a cool article I found today:

When Harvard and Princeton universities announced in September that they were nixing early admissions beginning next year, both schools expressed hope that other institutions would follow their lead. They’re still waiting.

Unwilling to concede an edge in nabbing top students and unmoved by arguments that their policies are inequitable, many colleges have redoubled their commitment to early admission. In fact, many schools have come up with inventive new variations on early decision, whereby students get a quick answer and an advantage in the admissions process.

You can read the rest of the article here, but a subscription is required.

December 5, 2006

Families brace for possible loss of tuition deduction

Posted in Student Loan News at 10:07 AM by Joe From Boston

Here’s an article I thought you’d all find interesting


Kathy Marsico of Emerson has $1,000 riding on whether Congress extends a tax deduction for college tuition that expired at the start of the year.

That’s how much she was able to lower her taxes by using the deduction for her two sons’ tuition last year, and how much more she’ll have to pay by April 15 if Congress does not act.

Time is running out for her, and thousands of other North Jersey families.

The House and Senate return to Washington on Tuesday for what is expected to be their final two weeks of work before adjourning for 2006.

While there is bipartisan support for extending the tuition deduction, recent history has shown that may not be enough to assure passage, especially if the lame-duck Congress tacks on provisions that lack that broad support.

For last year, couples filing jointly with incomes of up to $130,000 were able to deduct up to $4,000 in tuition and fees; those with incomes between $130,001 and $160,000 could deduct up to $2,000.

“It’s one of the few ways that I consider middle-income families have of getting some relief from the cost of higher education,” said Jean McDonald-Rash, director of financial aid at Rutgers University, where full-time, in-state tuition is more than $7,900 a year.

Middle-income families often are squeezed, she said, because there are more financial aid programs for the poor, and the wealthy can afford tuition more easily.

In 2004, the most recent year for which data are available, more than 168,000 New Jersey families wrote off $447 million in tuition, according the Senate Finance Committee.

For Marsico and other taxpayers in the 25 percent bracket, a $4,000 deduction means a tax cut of $1,000.

With a combined tuition bill of more than $30,000 for two sons in college now, and a daughter likely to start next fall, Marsico wishes she could deduct up to $4,000 for each child. But she’ll settle for not having to pay $1,000 more in taxes.

“It’s a big help,” she said. “A thousand dollars is a thousand dollars you would instead have to take out in extra loans.”

The Congressional Budget Office estimated that extending the tax cut for 2006 would cost the federal budget about $420 million.

Congressional wrangling

An extension of the tuition deduction passed the House twice this year, and the Senate once. But it still has not made it to President Bush’s desk.

In February, both chambers included the tuition deduction in a bill extending capital gains and dividend tax cuts, but the break was stripped out of a final conference committee report that meshed differing House and Senate versions.

Because the capital gains cuts were not due to expire until 2009 and the tuition break had already expired, Democrats complained about Republican priorities, charging they were putting investors ahead of working families.

The tuition deduction also was included in a bill that passed the House in September, but that measure failed in the Senate because it had been packaged with a permanent reduction in the estate tax, which many Democrats opposed.

House and Senate aides say some kind of tax cut extension bill will be considered this month, but no details were available. There are signs that some members of Congress are leery about providing too much support for higher education.

At a hearing Tuesday, the Senate Finance Committee plans to question representatives of colleges and universities about some of their financial priorities, including the use of tax-exempt endowments and big salaries for administrators and coaches.

“With tuition going up every year, endowments growing bigger every year and the salary of another college president breaking the million-dollar mark seemingly ever week, it’s important for the Finance Committee to closely examine what colleges and universities are doing,” said Sen. Chuck Grassley, R-Iowa, the committee chairman. “We need to make sure that colleges and universities don’t respond to every new tax incentive for students and parents with new tuition increases.”

A Senate aide, however, said talks about extending the tax deduction are proceeding on a different track from the investigation of universities’ priorities.

The tuition deduction was created in the first tax cut bill enacted by Bush in 2001. One of its advocates at the time was Sen. Robert Torricelli, D-N.J., who touted the measure often in his aborted 2002 reelection campaign.

To minimize the long-term impact on the federal deficit of the tax cuts, Congress mandated that they expire at certain points. Many of the 2001 tax cuts expire in coming years, setting up a showdown over tax policy.

Read your IRS materials

Even if Congress extends the tuition tax break, however, some taxpayers could end up paying more if they don’t read their tax booklets carefully. That’s because the Internal Revenue Service last month started printing the 17 million tax forms and booklets that will be mailed out in late December and early January.

The final 1040 form does not include a tuition deduction as it did a year ago, but there is a note in the instruction booklet with a large exclamation point explaining that Congress was still considering the issue at press time. Taxpayers were urged to check the IRS Web site,, for the latest information.

“The forms and instructions sent to print reflected the law in effect at that time,” said IRS spokesman Gregg Semanick. “The IRS will issue further guidance and a publication if the legislation is enacted.”


* * *

Tuition tax deduction

Last year, taxpayers were able to deduct up to $4,000 in tuition and fees from their federal tax returns, but that deduction has expired. If Congress does not extend the deduction during its final working days this month, some families could be surprised by an increase in taxes. Here’s how many taxpayers took advantage of the deduction in 2004, and how much their tax liability was reduced.

U.S. N.J.

Tax returns taking deduction 3.6 million 168,246

Amount deducted from taxes $6.7 billion $447 million

Average savings at 25% tax rate $465 $664

Sources: Internal Revenue Service, Senate Finance Committee

December 1, 2006

The intelligence community funding higher education?

Posted in Student Loan News at 2:51 PM by Joe From Boston

I found this article rather interesting on USA Today.

The U.S. intelligence community pours millions into higher education, paying for hundreds of scholarships, intelligence-related courses and fellowships at nearly a dozen universities, public documents and interviews with officials show.

Last month, the Office of the Director of National Intelligence (ODNI) more than doubled the number of schools in its program. The Department of Homeland Security (DHS) is also developing a program for nuclear scientists.

The sponsoring agencies, including the CIA, say the programs help ensure they get enough recruits skilled to wage the war on terrorism. The programs began in 2004.

Agencies also pay for internships and summer “spy camps” aimed at attracting high school students to study intelligence.

Since 2004, more than $16 million has been appropriated for courses and overseas fellowships in Middle Eastern and South Asian language studies, engineering, computer science, analytical thinking, Islamic studies and other specialties.

The new programs differ from earlier government assistance plans such as the Title VI fellowships and the National Security Education Program. Those programs sponsor language study for students interested in careers in foreign affairs but are not tied to intelligence agencies.

The programs recognize that 21st-century intelligence officers need skills that can “translate to a variety of areas,” says Lenora Peters Gant, who runs the ODNI’s university outreach program. “We want to hire an engineer that understands world cultures and religions and speaks Urdu and Farsi or maybe Korean. That’s where (intelligence) is going.”

Increased diversity

The programs also target more women and minorities, Gant says. Three of the 10 schools backed by the agency are historically black colleges. More than 90% of students at a fourth college are women.

“We need really good, young officers off of U.S. college and university campuses,” says Charles Allen, a 47-year CIA veteran who is chief intelligence officer for the DHS. “We need young, bright aggressive Americans who really want to serve their country.”

The programs have revived a decades-old debate about the proper relationship between intelligence agencies and academia. They have also invited comparisons to the 1950s, when the FBI sometimes encouraged students to report on professors’ political leanings, and the 1960s, when the CIA paid for the National Student Association and tapped its members for intelligence work.

One program, the Pat Roberts Intelligence Scholars, keeps the identities of its participants secret.

“Secrecy, in particular, is a problem,” says David Price, anthropology professor at St. Martin’s University in Spokane, Wash., and author of a book on FBI surveillance of academics in the 1950s.

“I’ve looked at far too many old FBI documents to ever be comfortable with the idea” of such agencies funding students, Price says.

Academic and intelligence communities share a complicated history. During World War II, the Office of Strategic Services, the CIA’s predecessor, recruited historians, anthropologists and other specialists, according to historian Robin Winks’ book Cloak & Gown. In the 1950s and ’60s, faculty members at Yale, Harvard, MIT and other elite universities served as talent spotters, steering promising students into intelligence careers.

Intelligence recruiters also liked small Catholic schools such as Trinity University in Washington, D.C., says Robert Maguire, an international relations professor who coordinates Trinity’s intelligence studies program.

These days, demographics make Trinity a target for intelligence agency recruiters. More than 90% of Trinity’s approximately 1,000 undergraduates are women. About 70% are minorities.

“The intelligence community of the 21st century has to look and think a lot more like the world around it,” says T.J. Waters, a former CIA officer who teaches in the Eckerd College intelligence program in St. Petersburg, Fla. “These (programs) are a recognition of that.”

The intelligence community’s sometimes dark reputation made an undergraduate intelligence program a hard sell for faculty members, Maguire says. “The usual reaction to the word ‘intelligence’ was images of the CIA and nuns being murdered in Guatemala.”

What sold the program at Trinity was its popularity with students, says Leah Martin, 21, student body president and intelligence student.

Varied course load

Trinity professors received stipends to revise courses and design new ones when ODNI started its first Center of Academic Excellence there in 2004. Intelligence students study creative problem solving, contemporary diplomatic history and social science research methods. The dozen or so who pursue an “intelligence certificate,” essentially a minor in intelligence studies, are required to serve as summer “spy camp” counselors, chaperoning high school students who visit the CIA and attend lectures by intelligence professionals.

Janie Pacheco, 21, an economics major who is pursuing an intelligence studies certificate, took “Written and Oral Briefings for Professionals” to improve her writing skills. The course assigned a standard 20-page paper — hers was on the economic impact of Hurricane Katrina — but added this twist: Students had to boil their research down into a single paragraph that could be used in an oral briefing to policymakers.

“It was really about designing information, depending on how it’s ultimately going to be used,” says Pacheco of Mount Rainier, Md. “You can see the worth of this (to) intelligence, but really, this is a skill that transfers to almost any job.”

Intelligence work, Martin says, appears to combine travel, excitement and, in the post- 9/11 environment, something approaching job security. “You get to travel, to do something different every day, you’re challenged in your work and you get to serve your country,” says Martin, 21. “How cool is that?”