Some Colleges Help Students Avoid, Handle Debt

Now that President Obama has earned reelection, the Student Loan Ranger is anxious to see if he'll be able to fulfill his promises to address colleges' soaring tuition and skyrocketing student debt balance.

For example, you may remember a promise to hold schools accountable for costs. And the Student Loan Ranger hopes the administration will require schools to adopt initiatives like the Financial Aid Shopping Sheet and College Scorecard.

[See what financial aid could change in next year.]

There are also a few things schools could do—which some are already doing—to help students.

One of the best ways to ensure students aren't laden with student debt is to minimize the need to borrow. One ambitious method has been put at place at schools including Davidson College in North Carolina, which instituted a "no loans" financial aid policy in 2007.

At Davidson, loans aren't included in students' financial aid award letters (although families may still borrow loans), and demonstrated need is funded through grants and student employment.

[See the colleges that claim to meet full financial need.]

Of course, this requires a fair amount of resources; Davidson must raise $70 million to permanently endow the policy. But schools that reduce the need for student loans are doing a lot to free students from heavy debt burdens.

It's also important to ensure students are in a better position to repay their student loans by providing the support necessary for them to complete college. As Education Sector reported in February, borrowers who drop out face higher loan default rates, in addition to higher unemployment and lower incomes. Some schools, including St. John's College in Maryland and Elizabeth City State University in North Carolina, are providing tailored support services to students through graduation.

Larger-scale efforts like the State University of New York's plan to prevent student loan borrowers from defaulting also help. As Inside Higher Ed notes, SUNY may be the first to implement measures system-wide. While SUNY is not trying to convince students to borrow less, it will provide more information to students (including by using the model Financial Aid Shopping Sheet, which it adopted earlier this year), and identify risk factors and provide support services to students who have a greater risk of defaulting throughout their college career.

SUNY also will share information with the Department of Education about the impact of certain factors and strategies that can be used to prevent these students from defaulting to help develop broad-scale policies.

Of course, focusing only on default rates can lead schools to opt out of the federal aid system, according to the Project on Student Debt, putting their students in a worse situation by denying them access to the important borrower protections for federal loans and crucial need-based aid like Pell grants.

[Learn more about paying for college.]

To help, measures to encourage responsible student loan borrowing and prevent defaults are being undertaken by some community colleges, as detailed in a report commissioned by the Institute for College Access and Success (TICAS) and the California Community Colleges Student Financial Aid Administrators Association.

Based on its findings, the report identifies important steps schools can take, including: "Ensure students know that loans are available;" "Provide guidance to help students understand the implications of their borrowing decisions;" "Coordinate … to make students' academic success the top priority;" and "Require additional counseling for students who may be at risk."

But, as the report notes, there are measures that governments are better able to undertake. It encourages them to: "Provide better funding for financial aid administration;" "Communicate positive practices to colleges;" "Provide an information clearinghouse for student borrowers;" "Supplement colleges' technological capabilities;" and "Directly assist colleges with default management activities," among other things.

Students should know as much as they can before borrowing. Something small every school can do to help is work on its net price calculator. TICAS has reported many net price calculators are still difficult to find and use.

[Experiment with net price calculators for the top 300 colleges.] 

Students should also evaluate how they'll repay loans before they borrow. Equal Justice Works provides free webinars and sells a new e-book, "Take Control of Your Future," that can help.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. She has served on student loan committees in the Department of Education's negotiated rulemaking focusing on the College Cost Reduction and Access Act (CCRAA) and other debt relief initiatives. Radhika graduated from Loyola Law School Los Angeles. Prior to joining Equal Justice Works, she was a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.

Source : usnews.com

3 Steps for International Students to Make U.S. Tuition Payments

Currency exchange and wire transfer fees can add up when paying for a U.S. college education.

Iker Marcaide was shocked to learn in 2008 that sending a tuition payment to MIT's Sloan School of Management via his Spanish bank account would cost more than $1,500. "The fee the bank charged to exchange currency, plus the wire fees, added more than 3 percent to a tuition bill that already topped $50,000," says Marcaide. "Plus, the money wire was lost for several weeks."

The next year, Marcaide started peerTransfer to secure lower group exchange rates for international students. Banks or wire services charge varying percentages to exchange one currency for another. For instance, a student who exchanges Canadian dollars for U.S. dollars when exchange rates are even would still pay a percentage of the exchange rate for the transaction, he says. The wire fee for transferring money is an additional cost.

If Marcaide had found a wire service with similar rates to peerTransfer when he attended MIT, he would have paid less than $750 dollars to exchange currency.

[Learn how international students can cut U.S. college costs.]

International students should follow the tips below to pay the lowest currency exchange fees possible on their tuition payments, while ensuring their payments arrive on time.

1. Only consider university-approved wire services: Students should find out which wire service their school works with by E-mailing the campus bursar or accounting office, says Iowa State University International Recruiter Timothy Tesar. They can also find this information on the university's site, notes Western Union's Vice President of University Solutions Ben Kavalec.

Universities verify the legitimacy of companies they choose to work with, according to Tesar. Given that students are sending substantial amounts of money via these wire transfers, they need to trust that the funds won't get lost or stolen, he notes. Compare the total cost of currency exchange between the wire service your university uses and your home bank, experts recommend.

[Start saving for an American education early.]

2. Wire tuition payments directly to universities: Because of the potential for accruing fees from two different banks, wire money directly from your country's bank or through a wire service to the university the student will attend, Tesar recommends.

This limits the likelihood of lost funds and eliminates the possibility of additional fees charged by a U.S. bank. Generally, schools will charge little to no fees to accept payments from banks or wire services, he says.

Often, the price is higher if students choose to wire funds from home bank accounts to a U.S. bank, peerTransfer's Marcaide adds. For example, a Canadian student exchanged Canadian dollars to U.S. dollars at a one-to-one exchange rate. The home bank added a 3 percent fee on a $10,000 transfer ($300); meanwhile, the student had set up a bank account in the United States to receive the money, which charged another $300. A student who once had $10,000 available to pay for tuition suddenly had $9,400.

[Learn about additional international student fees.]

3. Confirm exact fees and payment arrival: Whether you choose a wire service or a bank, confirm all possible charges and the exact date of arrival for the payment, says Marcaide.

Sometimes a bank will utilize an intermediary bank in the middle of the transaction that charges its own additional wiring fee. If students are unaware of this charge, they won't wire enough money to cover tuition—and the result could be an enrollment block by the school, he cautions. A late payment could lead to the same problem.

"We ensure that the amount that the student is expecting the school to receive is received, taking care of all potential fees that could happen in the process," Marcaide notes of peerTransfer's service. It's important that any bank or wire service that students choose do the same, he recommends.

Reyna Gobel, frequently quoted as an expert on student loans and college costs, is the author of "Graduation Debt: How To Manage Student Loans And Live Your Life" and "How Smart Students Pay for School: The Best Way to Save for College, Get the Right Loans, and Repay Debt." She has appeared on PBS's Nightly Business Report and speaks regularly at CollegeWeekLive.

Source :  usnews.com

 

Child’s Education, but Parents’ Crushing Loans

When Michele Fitzgerald and her daughter, Jenni, go out for dinner, Jenni pays. When they get haircuts, Jenni pays. When they buy groceries, Jenni pays

It has been six years since Ms. Fitzgerald — broke, unemployed and in default on the $18,000 in loans she took out for Jenni’s college education — became a boomerang mom, moving into her daughter’s townhouse apartment in Hingham, Mass.

Jenni pays the rent.

For Jenni, 35, the student loans and the education they bought have worked out: she has a good job in public relations and is paying down the loans in her name. But for her mother, 60, the parental debt has been disastrous.

“It’s not easy,” Ms. Fitzgerald said. “Jenni feels the guilt and I feel the burden.”

There are record numbers of student borrowers in financial distress, according to federal data. But millions of parents who have taken out loans to pay for their children’s college education make up a less visible generation in debt. For the most part, these parents did well enough through midlife to take on sizable loans, but some have since fallen on tough times because of the recession, health problems, job loss or lives that took a sudden hard turn.

And unlike the angry students who have recently taken to the streets to protest their indebtedness, most of these parents are too ashamed to draw attention to themselves.

“You don’t want your children, much less your neighbors and friends, knowing that even though you’re living in a nice house, and you’ve been able to hold onto your job, your retirement money’s gone, you can’t pay your debts,” said a woman in Connecticut who took out $57,000 in federal loans. Between tough times at work and a divorce, she is now teetering on default.

In the first three months of this year, the number of borrowers of student loans age 60 and older was 2.2 million, a figure that has tripled since 2005. That makes them the fastest-growing age group for college debt. All told, those borrowers owed $43 billion, up from $8 billion seven years ago, according to the Federal Reserve Bank of New York.

Almost 10 percent of the borrowers over 60 were at least 90 days delinquent on their payments during the first quarter of 2012, compared with 6 percent in 2005. And more and more of those with unpaid federal student debt are losing a portion of their Social Security benefits to the government — nearly 119,000 through September, compared with 60,000 for all of 2007 and 23,996 in 2001, according to the Treasury Department’s Financial Management Service.

The federal government does not track how many of these older borrowers were taking out loans for their own education rather than for that of their children. But financial analysts say that loans for children are the likely source of almost all the debt. Even adjusted for inflation, so-called Parent PLUS loans — one piece of the pie for parents of all ages — have more than doubled to $10.4 billion since 2000. Colleges often encourage parents to get Parent PLUS loans, to make it possible for their children to enroll. But many borrow more than they can afford to pay back — and discover, too late, that the flexibility of income-based repayment is available only to student borrowers.

Many families with good credit turn to private student loans, with parents co-signing for their children. But those private loans also offer little flexibility in repayment.

The consequences of such debt can be dire because borrowers over 60 have less time — and fewer opportunities — than younger borrowers to get their financial lives back on track. Some, like Ms. Fitzgerald, are forced to move in with their children. Others face an unexpectedly pinched retirement. Still others have gone into bankruptcy, after using all their assets to try to pay the student debt, which is difficult to discharge under any circumstances.

The anguish over college debt has put a severe strain on many family relationships. Parents and students alike say parental debt can be the uncomfortable, unmentionable elephant in the room. Many parents feel they have not fulfilled a basic obligation, while others quietly resent that their children’s education has landed the family in such difficult territory.

Soon after borrowing the money for Jenni’s education, Ms. Fitzgerald divorced and lost her corporate job. She worked part-time jobs and subsisted on food stamps and public assistance.

Source : nytimes.com

College Credit Eyed for Online Courses

While massive open online courses, or MOOCs, are still in their early days, the race has begun to integrate them into traditional colleges — by making them eligible for transfer credits, and by putting them to use in introductory and remedial courses

On Tuesday, the American Council on Education, the leading umbrella group for higher education, and Coursera, a Silicon Valley MOOC provider, announced a pilot project to determine whether some free online courses are similar enough to traditional college courses that they should be eligible for credit.

The council’s credit evaluation process will begin early next year, using faculty teams to begin to assess how much students who successfully complete Coursera MOOCs have learned. Students who want to take the free classes for credit would have to pay a fee to take an identity-verified, proctored exam. If the faculty team deems the course worthy of academic credit, students who do well could pay for a transcript to submit to the college of their choice. Colleges are not required to accept those credits, but similar transcripts are already accepted by 2,000 United States colleges and universities for training courses offered by the military or by employers.

Coursera, founded last year by two Stanford computer professors, Daphne Koller and Andrew Ng, has 33 university partners and nearly two million students, who currently can earn certificates of completion, but not academic credit, for their work.

“I feel strongly that degrees are really valuable to people, and having MOOCs allow for credit down the line will increase the number of students with the confidence and wherewithal to complete degrees,” Professor Koller said. “If you’re a random student from another country, what are your chances of being admitted to a university here? But if you can show you’re a motivated student who’s completing five courses and done well on the proctored exam, I think a university would pay attention.”

The project is being watched closely by higher-education experts who expect MOOCs to broaden access to higher education and bring down the costs.

“With the additional benefits of ACE credit recommendation for Coursera courses, students will have an unprecedented opportunity to obtain recognized credentials for their work,” said William G. Bowen, the former president of Princeton University and the Mellon Foundation, and senior adviser to Ithaka, a nonprofit group devoted to digital technologies in higher education.

Also on Tuesday, the Bill and Melinda Gates Foundation announced 13 grants, totaling more than $3 million, for MOOC research. The grants are intended to encourage the development of MOOCs in introductory courses, like developmental math and writing, to see how they might be integrated into community colleges to bolster completion, and to develop a pathway for MOOC transfer credit.

While there is some overlap between the Coursera project and the Gates grants, only four of the nine schools that received grants are putting their MOOCs on Coursera, while the others use different platforms.

The largest grants go to three groups — the American council, Ithaka and the Association of Public and Land-Grant Universities — that will explore the credit issue, consider a possible consortium for collaborating on digital courseware, and research the University of Maryland’s experience with MOOCs.

“It certainly appears that there is potential here, and we ought to kick all the tires and see what we can learn,” said Molly Corbett Broad, the president of the American council

Source : nytimes.com

Enrollment in Charter Schools Is Increasing

Although charter schools engender fierce debate — most recently over ballot measures in Georgia and Washington State — their ranks are growing rapidly, according to a new report. Between 2010-11 and 2011-12, the number of students in charter schools increased close to 13 percent, to just over two million. 

The National Alliance for Public Charter Schools, a nonprofit advocacy group, released the report on Wednesday. It showed that in some cities, charter schools — which are publicly financed but privately operated — enroll a significant proportion of public school students.

New Orleans, where the city’s schools were essentially destroyed by Hurricane Katrina, leads the nation in the proportion of students in charter schools, at 70 percent. But in six other districts, including Detroit, Washington, D.C., and St. Louis, more than 30 percent of public school students attend a charter school.

According to the report, in 110 school districts, at least 10 percent of students now attend public charter schools, up from 96 a year earlier.

“To the extent families are in need of other options, growth does indicate there is something missing in the public school system,” said Nina Rees, chief executive of the National Alliance.

Opponents argue that charters drain public resources from traditional schools, and tend to attract motivated students, leaving behind those harder to educate.

The performance of charter schools has been mixed, with some helping students achieve higher test results than traditional neighborhood schools, but many others delivering similar, or worse, results.

The fate of a ballot measure in Washington allowing charter schools in the state for the first time has not been determined. In Georgia, a measure creating a new state commission to approve charter schools passed.

In New York City, just over 48,000 — or about 5 percent — of public school students attended charter schools in 2011-12, up 24 percent from the previous year.

Source : nytimes.com