April 24, 2008 by Mara Strom

Don't you just love it when your alma mater does something newsworthy that makes you truly proud to say you went to school there? Well, that's what happened to me yesterday, when I learned some great news about Tufts University!

My alma mater recently unveiled its plans to be the first university in America to help encourage students to work in the public sector by paying off their student loans. Tufts grads working either for non-profit organizations or for government agencies will be eligible for the award, which will cover a portion of their monthly loan payments and make certain career choices a lot more viable.

In 2005, Tufts reported that the average starting salary for one of its grads working in the public sector was about $25,000 a year (more for government, less for non-profit), while private sector job holders earned just over $40,000 their first year out.

Here's what Tufts University president Lawrence Bacow has to say about the new Loan Repayment Assistance Program (LRAP):

I'm hoping that our students' career choices will not be distorted as much as they are otherwise by the debt they've acquired in financing their education. I'm hoping the university can help them follow their passion.

and this, too:

We would like alumni to be able to pursue their passions - to do what they really want to do - without being unduly focused on the need to retire a student loan. It is especially appropriate for Tufts to make this commitment, since as an institution we seek to encourage a spirit of public service in our students.

Here's what I've got to say about the program:

Right on, Jumbos! I'm proud of you for taking this important step and I hope your program will serve as a shining example for other schools around the country. I love that you're putting some bite behind your bark about civic leadership and education. And I especially love that you're opening up this groundbreaking program to alumni as well as current students. (It’s almost a shame I finally finished off paying my Stafford Loan two years ago!)

According to insidehighered.com, about half of Tufts' current undergraduates take out student loans, carrying an average debt burden of $14,400. The annual cost of attending Tufts today runs just over $46,000.

Alumni can download the LRAP application here. Award decisions are based on income level and total indebtedness and are made annually.

April 21, 2008 by Mara Strom

Summer is just around the corner. Which means, it's time to start your search for the perfect summer job or internship — you know, the one with enough earning potential to cover your contribution to tuition, room and board for next year.

Summer jobs are undoubtedly a cash cow for many working students, but if you're looking for a less labor-intensive way to earn some extra money for college, then check out our scholarship update. Today's update includes two great opportunities with deadlines coming up this week. You don’t have much time left, and one of these requires a serious essay, so check them out quickly!

1. The Student-View Scholarship
This is more like Publisher's Clearing House than a traditional scholarship, but hey, $1,000 is a pretty sweet pot to take for just a little luck of the draw. Regardless of your GPA, athletic prowess, extracurricular activities or even financial need, you can be entered into the student-view.com's random drawing to win one of their $1,000 scholarships. The catch? You’ve got to fill out the site's survey about local colleges. (But it should only take you 15-20 minutes, so do it! Stat!) The deadline is April 22.

2. The Fountainhead Essay Contest
We wrote about this Ayn Rand-inspired competition in our 10 Most Unusual Scholarships article, so maybe you've already got your essay signed, sealed and delivered. If not, here’s the run-down for you: The Ayn Rand Institute's Fountainhead Essay Contest awards hundreds of scholarship prizes each year to winning amateur essayists who can eloquently share their thoughts on the philosophy of the novel The Fountainhead. The competition is open to high school juniors and seniors and requires an 800 - 1,600-word essay (typed, double-spaced) on one of three questions. Check out the website for this year's topics. The judging process is intense: Four different panels of expert judges are looking for both style and content; but the reward is well worth the investment: The grand prize winner gets a $10,000 check. There are also 5 second-place prizes ($2,000 each), 10 third-place prizes ($1,000 each), 45 finalists ($100 each) and 175 semi-finalists ($50). Essays must be postmarked no later than April 25, so get to your computer now.

Good luck!

Check out: Scholarship Essays >>>

April 17, 2008 by Mara Strom

If you’re a recent college grad straddled with a sizeable chunk of student debt, you’re in good company. In fact, a study by The National Center for Education Statistics indicates that 50% of all college grads have an average of $10,000 or more to pay back on their college loans.

Let’s say you’re a little better than average and take out $18K in loans. Here’s what you'll be looking at: $207 per month for 10 years, if you've got a Stafford Loan with a (relatively low) fixed interest rate of 6.8%. And P.S. On the original principle, you'll be paying back another $6,900 in interest. If you want to see the breakdown for your specific loan, check out the nifty student loan calculator at finaid.org.

Now consider that the average starting salary for an 18-25 year old college grad is $36,000 per year, according to payscale.com. After taxes and deductions, your take-home pay on $36,000 will be something like $2300 per month (to figure out exactly how much you’ll take home, plug in your numbers on paycheckcity.com's paycheck calculator.)

All this means that your student loan of "just" $18,000 is going to eat up 10% of your take-home pay. When rent, utilities and food seem impossible to handle on your salary, adding in another $200 will probably have your head swimming. Rather than helping you get a leg up, a college degree earned via student loans is chaining that leg to a 10-year+ ball and chain.

Clark University graduate Luke Livingston wanted to break free of his college loan, but couldn't even make his monthly payments. So he got creative: He launched sponsormyloans.com, where he sells ad space in exchange for his $200 monthly loan bill. In his website's FAQ section, Luke explains that even with his good job – which he landed thanks to his degree from a good school - he was still struggling to make ends meet and pay back his debt.

Luke's definitely not alone in that struggle. Which is why, in addition to finding the cash to pay off his own college debt, Luke is also using his website to raise awareness about the long-term costs of student loans.

Some have called Luke a pan-handler, begging for charity when the loan should be his responsibility. But I say Luke's just being entrepreneurial, which is the spirit that has time and again moved mountains in this country. Will his entrepreneurialism move enough mountains to pay off all his student debt? Only time will tell, but right now, the future is looking bright: Luke's blog reports that he's got advertising commitments through September '08.

So, what about you? What steps — creative or otherwise — are you taking to cast off the yoke of your student loan debt?

If you're really worried about paying back your student loans, be sure to check out our

Top 10 Tips to Prevent Defaulting on Your Loans

Taxes Are Due… And So Are Some Scholarships Applications

April 14, 2008

With the IRS filing deadline looming, you may not even realize that the week of April 15th is also a popular deadline for many scholarships.

Hopefully you’ll be getting some money back from the government’s stimulus package (unless, of course, your parents still claim you as a dependent) – but even still, applying for scholarships is a better long-term strategy to pay for your educational future. You don’t have much time for these three scholarships with deadlines later this week, so check them out now!

1. Sallie Mae Fund American Dream Scholarship
The United Negro College Fund has teamed up with the Sallie Mae Fund to offer scholarships to African American students from low-income families. Scholarships range for $500 – $5000. Applicants must be attending a two- or four-year college, university or vocational school anywhere in the United States. Only Pell Grant-eligible students who have American citizenship or are permanent residents of the United States may apply. The application deadline is tomorrow, April 15th. Online applications are available.

2. The 12th Annual Signet Classics Student Scholarship
If you're a fan of Dr. Jekyll and Mr. Hyde, you're in luck! This year’s annual Signet essay contest is awarding five high school juniors or seniors with a $1,000 scholarship (plus a Signet Classics library for their high school) for writing a winning essay on the Robert Louis Stevenson classic. The four optional topics and other application details are listed on the Signet website. Entries must be postmarked by tomorrow, April 15th and submitted by your English teacher (who can only submit one junior and one senior essay.) If you've struggling with major writer's block, don't forget about The 8 Steps to a Better Scholarship Essay.

3. The National Candy Technologists Scholarship
Sugar addicts look no further! Your college financing woes are over (or at least reduced by $5,000) if you can win the American Association of Candy Technologist’s annual scholarship for confectionery technologists. Applicants must have a minimum 3.0 GPA, be a junior or senior, and be majoring in food science, chemistry, biology or related field. The Financial Aid Finder wrote about the candy scholarship in our article on the 10 Most Unusual Scholarships – and we still maintain that five grand is one sweet prize! The submission deadline is April 18th.

One more Tax Week update: If you’re applying for financial aid through your school, April 15th is the closing date to file your FAFSA in Alaska and Delaware. (The federal deadline is June 30th, but many states and private colleges set their own closing dates – so be sure to check with your school’s financial aid office.)

>>> To learn how to search for more college scholarships, see the Financial Aid Finder's
Guide to Free Scholarship Searches

April 10, 2008

America's largest not-for-profit guarantor of private student loans declared bankruptcy Monday night. The Education Resource Institute or "TERI" explained its decision to seek Chapter 11 bankruptcy by citing a sharp increase in the number of borrowers defaulting on their loans plus the troubled credit market. TERI currently has more than $17 billion in outstanding guarantees.

How could TERI's announcement impact you? For current borrowers, your loan will likely be unaffected. Future borrowers, however, may encounter problems. Here's the rundown on some possible scenarios.

How Guarantors Work
When you are approved for a student loan, the bank or lending organization seeks a guarantor to repay the loan should you default on it. The guarantor covers the bank’s costs – and then turns around and pursues collections from you to cover its expenses. For federal student loans, that guarantor is the federal government. I.e. Congress foots the bill if you default on your loans. But it's not a free ride, since the government will actively pursue you until it gets its money back – usually either by garnishing your wages or intercepting your tax refunds.

What Happens Now That TERI's Out of the Picture?
Without a guarantor like TERI for private student loans, banks may seek other ways to cover their risks. According to Christopher S. Penn of the Financial Aid Podcast, they might do this by raising their standards for evaluating your credit history before approving a student loan. Your credit score (aka, FICO score) utilizes mathematical models to determine a single, numerical value that represents your credit history. Unless your history is flawless, many banks won't be willing to risk that you'll reliably pay them back.

Penn says another way banks could cover their increased risk is by raising interest rates across the board. Even if a higher percentage of borrowers are defaulting, banks could still run a profit from the increased interest being charged on each loan. For a new private student loan holder, this potential interest hike could cost several thousand dollars more over the life of the loan.

Of course, increasing interest rates and denying loan applications are just supposition at this point. If you've exhausted all other options for paying for college – including federal student loans, grants and scholarships – then start talking to lenders now about how TERI's announcement may affect your private student loan offer.

America’s Top Colleges Are More Popular Than Ever

April 7, 2008

It’s April, which means that if you were one of the hundred thousand high school seniors shooting for an Ivy League education, you already know your fate.

Hopefully you’ve spent the past few days celebrating that golden acceptance letter. But if you’ve been consoling yourself instead, perhaps this will help: you’re in very good company. The number of applicants to America’s Ivy League has reached an all-time high (the rates are double what they were just 10 years ago), and the percentage of students offered admission is scraping the bottom of the award letter barrel.

Here are some stats: According to The New York Times, Harvard fielded over 27,000 applicants – and only 7 out of every 100 got in. Yale was a bit more accepting: 8.3 out every 100 got the nod. The Ivy Leagues have always been a top choice for American high school seniors, but what’s behind the recent meteoric rise in the number of applicants? It might have a little something to do with the amazing financial aid deals they’re offering incoming freshmen.

• In December 2007, Harvard kicked off the good news for the American middle class, announcing that it was capping family contribution at 10 percent of income for those that earn as much as $180,000 a year. The tuition discount trend started back in 2004, when Harvard gave a free ride to any student whose family earned $40K or less a year. In 2006, the school – which has largest endowment of any college in America (topping $34.6 billion) – extended the ride to families making less than $60,000. Under the new plan, families earning $60,000-$120,000 annually will contribute on a sliding scale, up to 10 percent, and those making $120,000-180,000 will pay exactly 10 percent of their income.

• Not to be outdone, Yale University announced in January that it would cut tuition by 50% from students from families earning as much as $200,000 a year. For those whose parents make less than $60,000, Yale’s a free ride.

• In February, Brown University announced that it was eliminating tuition for families earning less than $60,000/year and would substitute grants for loans in award packages to families making less than $100,000.

• In March, Columbia University followed suit, announcing that families making up to $60,000 a year could send their kids for free. Also in March, MIT (the Massachusetts Institute of Technology) said it would give a free ride to undergraduates from families making less than $75,000 a year.

If you’re a sophomore or junior in high school, and Harvard isn't even a pipe dream, don’t sweat it: The discounted tuition trend is already having a trickle-down effect. From elite liberal arts colleges to state universities, university budget officials are putting their costs up on the chopping block in an effort to make school more affordable.

The ATIA Foundation is offering scholarships for college. The ATIA Foundation annually funds scholarships valued at over $20,000 - and they're not just for young people! All people interested in travel and tourism careers are encouraged to apply - Download the Application! (PDF)

More information is available on their ATIA scholarship webpage.

Scholarship Application Deadline is April 15.

April 3, 2008 by Mara Strom

Did you know that a Stafford or Perkins student loan is one of the only forms of debt that cannot be discharged in a bankruptcy claim?

Student loans are with you for life – so you need to be serious about paying them back.

If you haven't paid back your loans for 270 days (and have not arranged for deferment or forbearance), then you’re in default. Three out of four people who default on their loans do so after dropping out of school.

In addition to trashing your credit rating and bringing collection agencies to your front door, defaulting on your student loans entitles the government to intercept your tax returns and garner up to 15% of your take-home pay. Convinced that defaulting is serious? Here are 10 steps to prevent it:

1. Don’t bite off more than you can chew. The cut-off point is a loan that’s twice your expected salary. Prepare to live like a starving student while you're in college, so that you don’t have to when you graduate.

2. Read your note. Before you sign on the dotted line, make sure you fully understand the terms. This loan is your responsibility. Not even getting hitched will change that – since your student loans can no longer be consolidated with your spouse’s.

3. Get organized. Make a spreadsheet with the names of your lenders, amounts of each loan, interest rates and monthly payments. Tally up the total and confirm that you can pay that big number on your monthly salary. If not, consider consolidation (see #7).

4. Be a bookkeeping nerd. Once your grace period ends, make sure you have a file for each student loan that contains the following: all personalized communication with your lenders, cancelled checks, consolidation offers and approvals of deferment or forebearance (see #8).

5. Be punctual. Make your monthly payments on time. Set up an automatic debit from your checking account, if you’re lax about deadlines.

6. Stay in touch. Notify lenders immediately if you move, get married or change your student status.

7. Consider consolidation. You can reduce your total monthly student loan payment by consolidating – either by getting a lower interest rate or by extending the life of your loan. Either way, you’ll only have to worry about one monthly payment.

8. Ask your lenders for help. If you lose your job or have to take a pay cut, you may not be able to make your monthly student loan payments. Apply to your lenders for deferment or forbearance. While you’re waiting for approval, keep paying back your loans. Remember: You can’t get approved if you’re in default.

9. Ask your lenders for more help. If your loss of income is permanent, ask your lender about alternate repayment, which will reduce your monthly bill by lengthening the life of your loan. You will pay more in the long-run, since interest never steps accruing, so consider this an almost last-resort option.

10. In the worst-case scenario, pay back the federal government first. If you’ve got both federal and private student loans and you’re about to default on them, do whatever it takes to keeping afloat on the federal ones. They have more flexible repayment options – and harsher penalties for default.

>>> For more on student loans