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Archive | November, 2010

Wallet Pinching Savings for College Students

Wallet Pinching Savings for College Students

Being a college student used to mean eating three packs of ramen noodles a day and biking around campus because gassing up your 1985 Chevy was too expensive. Whether you work a part-time job or get an allowance from your parents, you can learn some key concepts to saving and spending wisely — now and after college.

Smart Spending
There are plenty of ways to save a few bucks every day. Dr. Dick Verrone, personal-finance professor for the Cameron School of Business at the University of North Carolina, Wilmington, has these penny-pinching tips:

  • Order water. Don’t get soft drinks when you’re eating out. Why pay $2 for 150 soda calories? Also, Verrone says, “Never order orange juice.” OJ is extremely overpriced at restaurants, and most of the time it’s from concentrate.
  • Limit your pocket cash. When going out on the town, take a 20-spot, and leave your cards at home. You’ll be forced to keep your tab under $20.
  • Buy quality clothing items. They may be a little more expensive, but they’ll last longer. Verrone also definitely approves of outlet shopping. But before making purchases, think: Do I need this? If not, don’t buy it!
  • Switch your prescriptions. Change your name-brand medications to generic ones. You can usually save about $20 per med this way.

Clipping “Coups”
OK, most college students don’t have easy access to a daily paper or coupon flyer, so how do you save with coupons and special discounts?

  • Look online. If you’re going to the sporting-goods store, for example, type the name of the store into the search engine, along with the words coupon codes. Lots of websites track down discount codes for online shopping, as well as printable coupons for buying items in-store.
  • Sign up for discount alerts via text. Some campuses have local text-message discount services — check at your student center or information desk. (Of course, this is not a good idea if you don’t have an unlimited cell-phone plan.) Mike Meyer, a UNCW senior, is signed up for deals in North Carolina at CouponstoYourPhone.com. “Every Monday, I get a coupon-text for one of my favorite restaurants,” he says. “It’s awesome.”
  • Purchase a coupon book. These books pack hundreds of coupons, usually for buy-one-get-one-free offers. They’re worth the $25 (if you buy one from a campus organization’s fund-raiser) or even $35 (available online at Entertainment.com) after just a few uses.

Long-term Saving
Verrone recommends getting into the habit of saving now to set yourself up for an easier financial situation after graduation. “Make the amount small enough so you can do it,” he says, such as saving $5 per week or $10 each month.

  • Set up an automatic transfer. Most large banking institutions, such as Bank of America or Wachovia, will let you set up transfers between linked checking and savings accounts. Meyer has $30 a month transferred. “That’s how I saved money for spring break freshman year,” he says.
  • Start an individual retirement account. No, you’re not too young! This is the time to do it. “Once you’ve accumulated $200 to $300, open a Roth IRA and continue to fund it every month from your savings,” advises Verrone. Even if you continue to only save that $10 per month, you’ll be accumulating real money for the future.
  • Watch your money grow. Let your savings work for you by investing in mutual funds with low expenses and superior performance records, suggests Verrone. Consult a financial adviser at your bank for more information.
  • Consider an online banking service. Having an online bank can be a good outlet for putting away large sums of money that you can still access without penalties (unlike with an IRA). Online banks usually provide higher interest rates, although transfers take two to three business days. Meyer has a savings account with INGDirect and loves it: “A two-day transfer is more of a commitment, so I have to really think about it before I make that decision.”

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The Best Approach To Living On Campus – Buy A House!

The Best Approach To Living On Campus – Buy A House!

Are you going to be sending a student away for college this coming year? My guess is that if they are far enough away, they will probably need a place to stay (other than your house). Outside of tuition, room and board costs are the next largest expense associated with going to college. Since we have decided that this expense is just a fact of life for college students, let’s check out all your options when it comes to campus housing.

Residence Halls

Dormitories, residence halls, quads, suites, – no matter what you call them we all know them as the place on campus that provides beds, bathrooms, and lounging areas for students in large quantities. Some have elevators, some just have stairs, some smell like potpourri and others remind you of a musty old gym sock. Regardless of how hard you try to avoid them chances are that you will be spending at least one year in the halls depending on the residency requirement of your campus. Since residence halls provide unlimited electricity, heat, air conditioning, water (hot and cold), bathroom facilities, and usually toilet paper,it is not uncommon for colleges to charge students a premium price to live there. The best approach to avoiding these fees would be to become an RA. Since that is not in the cards for everyone, the next best approach is to not be afraid to make new friends and share a room with one or more people. If you plan on living in a single, you had better be prepared to absorb the extra costs. If you are willing to take on a roommate and live in a double, your expense will be dramatically reduced.

Greek Housing

Just about every college and university has some sort of Greek organization on campus. Fortunately for you, most of the fraternities and sororities have houses and they are jumping at the chance to rent a room out to you – assuming you make it through the hazing and get tapped for membership ;). My experience has been that fraternity and sorority housing is cheaper than university housing. However, after you add in dues, parlor fees, etc… the costs become a lot more comparable.

University Owned Off-Campus Housing

You have paid your dues (living in the residence halls) and now you have the chance to live in a “real house” with 4 or 5 of your best buddies. University owned housing is awesome because they take care of all the general maintenance and upkeep of the house and all you have to do is live in it. Some colleges cover the utility expenses but others expect the students to get the utilities transferred into their name and take responsibility for paying them. Before you take the leap and sign a housing contract with your college make sure you know exactly what you are responsible for. If you do have to foot the bill for gas and electric, drop a call to the local utility company to see what the average monthly expense was on the house in the past year. You may find that one house you are interested in has insulated walls and the other one is scheduled for that upgrade (deferred maintenance) in a couple of years. That little fact could play a big role in your housing budget.

Non-University Owned Off-Campus Housing (aka Slum Lords)

Every college town has them. These are the housing “opportunities” provided to students after the college owned housing has reached maximum capacity and they must release students to live in non-university owned housing. I would say that six out of ten landlords do a decent job of keeping their houses up to code and making sure that the student’s safety is the top concern. However, the other four are the ones that will take every dime you have by charging a crazy premium rent and providing a living environment that has been band-aided over time and time again throughout the years. If you decide to tread down this path, I would do so cautiously. Check references of prior students that have experience with that landlord. Ask the residential life office if they know anything about the property or the landlord. Inspect the house thoroughly and make sure to point out anything that you think may be a safety hazard (faulty wiring, leaky plumbing, broken windows, busted sidewalks/steps, etc…).

Buy A House!

This is starting to gain popularity with many families over the past few years. They are purchasing houses that are on or near campus and becoming the “not so slum lord” for students (including their own!). The return on investment is fairly decent because they are demanding a premium rental rate. Since the house has an ideal location (on or near campus) their probability of resale with a profit is highly likely. They utilize their student to help pre-screen suitable renters (no offense but I can tell you that girls have a far better track record than boys when it comes to rental damages!). If you have the resources, I would definitely consider this option when it comes to housing.

I hope this information helps you as you try to figure out the best approach to living on campus. If you think this article would be of benefit to someone else, please don’t hesitate to utilize the “Share Tab” below.

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Don’t Need Financial Aid? (video)

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Discount Rates For Public College On The Rise

Discount Rates For Public College On The Rise

Anytime you hear about discount rates increasing you need to know that this is a good thing from a student perspective. Discounting has been the practice adopted by colleges and universities across the nation as a way to make education more affordable for the students that they want to attend their institution. However, as you go through the college search process, no one is probably going to bring up the “D” word. They have much more attractive names like scholarships, awards, and prizes that they utilize in lieu of the discounting term. Most families don’t object because they would much rather tell their friends and family about all the scholarships their student receives verses sharing what their discount is (that would just be boring)…

Nicholas Hillman is a professor of educational leadership and policy at the University of Utah. He recently performed a study and released results that indicate public colleges and universities are providing more discount (financial aid) to students as compared to a study performed back in 2002.  He gathered information from 174 public colleges and universities and found that they had an average discount rate of 12.3%. As a person that works in the private higher education sector, I can tell you that 12.3% is nothing compared to the discount provided by the private colleges and universities. However, it is a lot for public schools because they don’t typically carry the same tuition rates as their private counterparts.

Hillman goes on to cite that financial aid budgets (discounting) grew, on average, by at least 47% between 2002 – 2008 even though scholarship support from endowments remained fairly level. From a college administrator perspective, this is definitely not good news if you are spending more money and getting less net revenue to get your students in the door. As for the college student attending these schools, I think it goes to show that now is definitely the time to be getting your education. The sticker price of many colleges may be at an all time high but with discounting (financial aid spending) reaching new heights in the public college sector, the net expense that you will have out-of-pocket is sure to be less.

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Gobble Gobble – Turkey Day Scholarship Round-Up

Gobble Gobble – Turkey Day Scholarship Round-Up

It is official! The Thanksgiving holiday is upon us. Families everywhere are watching their frozen turkeys thaw in the fridge or in a sink full of water in anticipation that the meal they will be dishing up will be the best ever! Pumpkin pies are flying off the shelves quicker than you can say “I love Cool Whip” and stuffing recipes are being shared in mass via every favorite cooking website known to mankind.  Ah… what a wonderful time of year!

In order to appropriately honor the Thanksgiving holiday in a manner that would make any pilgrim proud, I have decided to dedicate this article to all things turkey – more specifically, anything related to scholarships, turkey, pilgrims, etc…

Enjoy the info below, but in the meantime, I want to wish you and your loved ones a safe and happy holiday.

$10,000 National Wild Turkey Federation Scholarship

Are you a hunter? Is hunting an important part of your family heritage? Do you believe in the conservation and preservation of hunting? If you answered yes to any of these questions, then you are an ideal candidate for the NWTF Academic Scholarship Program.

Local chapters of NWTF are now accepting applications from students that would like to be considered for the scholarship award. Recipients can be awarded a minimum of $250 from the local chapter, $1,000 at the state level, and $10,000 as the national scholarship winner. If you want some tips on what it takes to win the $10,000 prize, take a look at this press release from a past winner.

The deadline for scholarship applications is January 1st. If you would like a copy of the application and comprehensive instructions, you can download a copy here.

General Society of Mayflower Descendants (GSMD) Scholarship Program

In the spirit of the Mayflower settlers seeking to better themselves by moving to a new and uncharted world, special consideration will be given to applicants whose demonstrated commitment to bettering themselves makes them especially likely to benefit from the opportunities this scholarship will make possible for them.

Requirements:

Each scholarship recipient must be a graduating senior, must be either a current member of the GSMD or a direct descendant (child, grandchild, great-grandchild) of an active GSMD member whose documentation of Mayflower ancestry would currently be accepted by the Society. Need help researching this information, check out this resource.

Applications are due by the beginning of April. Additional information regarding the scholarship application process is available here.

Scholarships for Studying Abroad in Turkey

When people think about studying abroad, I can tell you that Turkey usually doesn’t even come close to hitting the radar as a potential option. In my years of working in higher education, I think I have witnessed more Turkish students coming over here then I have seen ours visiting Turkey. However, if Turkey is a place that you find interesting, I am glad to share the following opportunities to help you make the trip possible (from a financial standpoint).

Halide Edip Adivar $1000 Scholarship

It is not a lot of money but every bit helps. This scholarship is awarded annually to an undergraduate student that is studying Turkish language, culture, or society. The purpose of the award is to offset any travel costs associated with getting to and from Turkey. If this interests you, you can find more information about the program here. Deadline for application is February 15th.

$20,000 David Boren Scholarship

The Boren scholarship is funded by the National Security Education Program and it provides opportunities for students to study in countries and regions of the world that are of “critical interest to the U.S.” (including Turkey!). The only potential downside to this program is that you agree to work for the Department of Homeland Security following graduation. You are committed to working a year for each year that you received the scholarship. This could be good if you are worried about not getting a job after graduation but it could be bad because you may end up in Turkey for longer than you really wanted…

You can find more information about the David Boren Scholarship program here.

$8,000 Benjamin Gilman International Scholarship

This scholarship program awards 2,300 scholarships each academic year (2010-2011). Students that want to study in the Turkish region are eligible to receive an initial $5,000 and another $3,000 due to the “critical need language supplement” (basically, if the student is going to be studying the Turkish common and vernacular language, they may be eligible for the additional $3,000).

You can find more information about the Benjamin Gilman scholarship program here.

I think that is all I have for now. I hope these Turkey Day Scholarships prove to be useful for you and your family as you look to close the gap on your educational expenses this holiday season.

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KEMBA Financial Credit Union Scholarship

KEMBA Financial Credit Union Scholarship

I am constantly amazed at how local credit unions come through time and time again for their members. When compared to the competition (traditional banks) they seem to always offer better interest rates and usually better customer service. I have witnessed firsthand how credit unions have helped to bridge the gap with education funding so I shouldn’t be surprised when I see a credit union throw some extra scholarship dollars out there to help students cover their college expenses.

The KEMBA Scholarship Opportunity

KEMBA Financial is a credit union that started many years ago (77 years ago to be exact) and it was founded originally for Kroger Employees. Fast forward to 2010 and now it helps to provide financial services for over 55,000 members throughout the Ohio region (Madison, Franklin, Delaware, & Logan counties).

KEMBA is providing a $2,000 college scholarship opportunity to one lucky student. This scholarship is not one of those fly-by-night programs since this is the 19th year that this program has been in existence. An extra bonus for all applicants is that they also get entered into a separate $1000 college scholarship contest provided by the Central Ohio Chapter of Credit Unions. So, by filling out one application you could gain an extra $3,000 to go toward your education expenses (if you win both scholarship programs). Sounds like a no-brainer to me!

The requirements for eligibility are not too stringent and easily met. You must:

• Be a KEMBA member
• Be at least a high school senior
• Be enrolled in or attending an accredited university
• Be a full-time student (taking at least two courses)
• Complete the application and submit the required essays before January 28, 2011

If you are a resident of any of the Ohio counties mentioned above (or know someone who is) and would like to garner some extra scholarship dollars, you can get the application for the KEMBA Scholarship program here. Should you have any questions about the scholarship program or the services (including private education loans) provided by KEMBA, you can reach them at the contact information provided below:

KEMBA Financial Credit Union
555 Officenter Place
P.O. Box 307370
Gahanna, OH 43230
www.KEMBA.org
800.282.6420

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FAFSA – Insider Secrets (video)

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The Past, Present, & Future of the Private Education Loan Industry

The Past, Present, & Future of the Private Education Loan Industry

Private education loans have been and may always prove to be a critical variable in the equation that establishes just how accessible a college education can be for families and students that don’t have the immediate resources (savings or income) to cover the expenses associated with higher education. In an effort to better gauge the impact of the private education loan sector on college accessibility, I recently had the opportunity to sit down and discuss the topic with Peter Carroll, General Manager of the Higher Education Division for Overture Loan Marketplace.

During our session, Peter did a wonderful job of answering all the questions that I threw at him and he painted a detailed picture of how the private education loan industry has evolved over the years and the role that it plays in higher education – now and in the future. So.. lets get started!

Question 1: How do you think the Private Education Loan industry has changed in the past couple of years?  Good changes? Bad changes?

The student loan industry has changed in very fundamental ways over the past couple years.

Most notably, students now receive their Federal Stafford and PLUS Loans directly from the Department of Education, relegating banks and credit unions to serving only as providers of private (or alternative) student loans.  Private loans are unsecured, credit-based loans and lines of credit offered by banks, credit unions, and state agencies that are meant to be a “last resort” if the student needs more money after maximizing their financial aid and federal loans.

What was an approximately $22 billion market in 2007 is now estimated to be only about $8.5 billion in 2010.  Much of the decrease in volume is due to the recent disruptions in the credit market and an increased emphasis by the government on making sure students first maximize their federal aid options – including higher limits on the amount students can borrow.

The change in the private loan market has mixed consequences.  On the good side, more students are seeking financial aid (free money) and fixed rate Federal loans prior to private loans.  That hasn’t always been the case.  Also, the market disruption has permitted new sources of capital such as credit unions and state agencies to enter the market with cheap and innovative products.  On the bad side, we hear of families who have had to settle for a college that is not their first choice due to the reduction in available loans to help them cover their costs.  Hopefully these cases are few and far between.

Question 2: Peter, based upon your experience, how would you gauge the importance of private education loans when it comes to college funding? Are you seeing an increase in use, has participation leveled off or do you actually see a decrease?

As we discussed above, we’ve certainly seen a decrease in use of private student loans, and all things being equal, that’s a good thing.  Generally speaking, if families are able to plan effectively, save money, think hard about the cost and payback of their education, and feel good about their choices, then there is no need for a private student loan.  Then again, there will always be students with great career potential who desire access to high quality education institutions, but have not planned as effectively from a financial perspective or have specific financial or other situations that result in less aid being available to them.  For those students, a private student loan may make sense.

Question 3: How easy is it for families and students to obtain private education loans? Has the bar been raised on credit standards? Do students need co-signers or can they get loans on their own?

It has become more difficult recently.  In 2007, even students and co-signers with FICO scores in the upper 500 ranges could find loans (albeit expensive loans).  Today the average lowest FICO score we see offered is 680 or above (again – the more expensive loans).   Students get the most attractive rates when FICO scores are in the 700 or above range.  So the bar has certainly been raised on some credit standards in the wake of the credit crisis of 2008.  While some students with an established credit history can get a loan without a co-signer, this practice should be avoided.  Having a credit worthy co-signer on your loan equates to better rates and terms and greater access.

Question 4: The Truth In Lending Act (Reg Z) was recently expanded to include private education loans. Has this extra step in the process been a challenge for lenders and students? Do you think it helps to educate families about exhausting all other options before utilizing a private education loan or is it just another part of the process that gets lost in the shuffle?

From a student’s perspective, we certainly don’t think the disclosures have hurt, but we’re also not sure how much they have helped.  In the age of Twitter, where students speak in 140 character phrases, it’s tough to imagine a student pouring over the entire TILA Model Application and Solicitation Disclosure.

Having said that, many of the disclosures do have value when students do take the time to read them. For example, the Self-Certification form that students need to sign before obtaining their private student loan may help save them money by reminding them of the necessity of applying for financial aid at their desired schools before even considering private loans.

At the end of the day, we’ve found that students tend to get their advice on loans from one of two main sources: their school’s financial aid office and Google.  We feel that policies that encourage the former are going to be far more effective in achieving the objectives of Congress and the TILA.  In our view, sending a student to Google for information on loans is like sending a student into a red light district for advice on morality.

Question 5: You work for a company (Overture) that has helped to simplify the private education loan process for a good number of families and students. Can you highlight some of the features provided by Overture that help to streamline what can often be considered a daunting task (finding and securing private education loans)?

The Overture Student Loan Marketplace is a national website that students can use to shop for private student loans from our growing network of participating lenders including national banks, credit unions, and state agencies. Our site allows a student and their co-signer to fill out one form and view accurate rates and terms for loan products that they are eligible to receive from the lenders in our network.  These are the actual rates and terms a student could expect to see if they were to apply with each lender individually.  The benefits to students and their families in 2010 have been amazing and include:

·         An average interest rate selection of 6.18% with zero fees compared to the industry average of nearly 10% or higher with fees.  This equates to thousands of dollars in savings over the life of the loan.

·         A huge reduction in time and frustration spent on the student loan process. Because students can shop for and compare their loan options in one place, we have boiled down a process that used to take days or weeks into 5 minutes.

·         Constant smart borrowing guidance to keep students’ total cost of funds low, such as first maximizing their financial aid and Federal loans before considering a private student loan.

Question 6: If you had to speculate, what do you think the future holds for the private education loan industry? Will it expand? Will it shrink? Will it be replaced by government backed loans (the limitless federal direct loan)?

It’s hard to imagine the private student loan industry shrinking much further than it has.  Cost of attendance continues to rise at most colleges and universities.  But we’ve also seen many schools make great strides to reduce their operating cost, which makes room for larger budgets for financial aid assistance.  So we think the private loan industry is likely to level off this year and resume very slow growth thereafter.  In Congress and in the Obama administration, there seems to be a greater emphasis on fiscal restraint on both sides of the aisle.  This suggests that a limitless Department of Education balance sheet for student lending won’t be a very practical concept and private loans will remain a piece of the education financing puzzle.

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