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Archive | February, 2015

New Taxes and Fees Would Pay for Free Community College

New Taxes and Fees Would Pay for Free Community College

freecommunitycollegeWhen President Barack Obama first proposed his plan for two years of free community college for qualifying students, wiser Americans waited to pass judgment until the next part of the plan was announced.

Why? Because they know nothing is really free.

And so it is with the $60 billion community college plan. The White House has released an overview of how they would pay for the plan. The answer: it’s going to come from the richest Americans and from large banks. That is, of course, if it can get past the Republican-controlled Congress.

Tennessee Leads the Way

Obama’s national proposal mirrors “Tennessee Promise,” a plan that also helps pay for high school students to attend community college. The plan is wildly popular in Tennessee – about 90% of the 2015 senior class in Tennessee (58,000 students) have applied to the program, according to The Tennessean.

Enacted last year under Gov. Bill Haslam, a Republican, the “Tennessee Promise” offers high school graduates in the Volunteer State money to help pay for community college. The “last dollar” program gives money to students after they have exhausted all other avenues, including Pell Grants. The “Tennessee Promise” money covers whatever costs are not covered by other means.

The Tennessee program is available to all students, regardless of academic merit or economic need. It is funded by interest earned in the state lottery reserve. The program is part of the state’s “Drive to 55” program, where the state wants 55% of its population to earn college degrees. That number hovers now at about 32%, ranked 43rd out of the 50 states.

Obama’s Plan

The president’s plan has its roots in the same concerns Haslam has in Tennessee – there are an increasing number of jobs that require a college education, and that trend is going to continue in the coming years.

His plan would allow states to cover the costs for qualifying community college students. The federal government would pay two-thirds of the program, the states the other third. Obama proposes paying for the plan through two main avenues. The first is raising taxes on capital gains, a move the White House says will affect only the top 1 percent of taxpayers. The second is raising the fees on institutions that borrow large amounts of money.

The proposal also calls for expanding tax credits to part-time students and also exempt Pell Grants from taxation (currently only money used to pay education expenses is exempt). The proposal also would call for not calculating Pell Grants in applications for the free community college, meaning students could take advantage of both programs (as they do in Tennessee).

Passing the plan as is could prove difficult. Critics argue it would be more effective to simply expand Pell Grants or increase the amount a student can receive. Republicans in Congress have already said they oppose new taxes.

And Ben Nelson of the Minerva School, which works with high tech companies to design a curriculum for information technology that meets the needs of business, said expanding online classes with targeted educational programs would be a better solution. Community colleges, Nelson told Yahoo! Finance, are now more like remedial schools teaching students the basics because high schools are, in his opinion, no longer doing the job.

iFame Media a brand management agency provided this article on behalf of Imagine Sports, the leader in baseball simulation games for over 20 years.

Posted in Paying For College0 Comments

Spring Break: Are You Ready?

Spring Break: Are You Ready?

happy spring breakSpring break is just around the corner. This is your chance to get away from school without going home. Go somewhere fun! StudentUniverse.com offers several suggestions. Whether you’re packing up your buddy’s car for a road trip or are saving up some money for a plane ticket, spring break can cost you if you don’t plan ahead. So how do you keep your costs to a minimum? Here’s a checklist for you and your friends so you don’t waste that hard-earned cash.

Operation Destination

Key West, New Orleans or Las Vegas — no matter where you are headed, it might be a good idea to rent a car. Stay safe while on unfamiliar streets though. Remember each state has different traffic regulations, so if you plan to rent a car, familiarize yourself with the driving laws in the states you might be visiting.

If you’re heading out on a road trip there are some essential items you’ll probably want to take with you. Sunglasses are a must, as well as a smartphone for the long drive. If you don’t have a GPS in your car, it can be a nice addition. Your smartphone likely has GPS, but unless you have an unlimited data plan it’s a good idea to get a designated GPS so you aren’t wasting your data and being charged for overages.

To save money, plot out your route before setting off. This way you won’t get lost and waste gas and time.

What to Bring

What you’ll need will always depend on your destination. But since it’s spring break there are some essentials that can’t be overlooked: a swimsuit, sunblock, a nice shaded hat. Don’t forget chargers for your phone, and your Kindle loaded up with a couple books you’ve been wanting to read.

It might surprise you, but it’s a good idea to take one change of warm clothing. Sometimes cold fronts can move in, even to the most tropical and warm of places.

Plan Ahead

Students don’t have a lot of money, and spring break adventures can be costly, so saving is essential.

There are tons of fees at the beginning of every school quarter. Buy used textbooks each quarter and sell back the textbooks you won’t need anymore. If you can get around with public transportation or a bicycle, drop the car back at the parents’ place. Car insurance, gas and maintenance can really put a drain on your finances. Keep track of your money with one of these two helpful financial resources: Finaid.com or Mint.com. If push comes to shove, the last course of action can be to offload some of the things you might not need. In that case Craigslist can be an invaluable resource when it comes to rounding out the money you will need to have an unforgettable spring break adventure.

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10 Education Loan Hacks that ALL Students Should Know

10 Education Loan Hacks that ALL Students Should Know

studentloanFor the majority of students, borrowing for education is the norm. In order to fund not only their degree program but also the ancillary expenses that go hand in hand with attending school for a minimum of four years, it can be a challenge to keep up with costs simply based on income earned or pre-college savings. Even though student debt is a necessity for most, there are ways to keep the total long-term cost of borrowing low. In an effort to help students keep the financial lid on their student debt and reduce the potential for over-borrowing, educators can share these 10 easy student loan hacks early on.

1.       Encourage students to borrow what they need, not what they want

One of the easiest ways to get into student loan trouble is by over-borrowing. Students can quickly overextend themselves when it comes to taking on debt without being fully aware of the long-term financial implications of doing so. Repayment can be much less of a burden after graduation when students are (constantly) reminded that student loans should only be taken out for what is absolutely necessary to pay for education-related expenses. Debt should not be accrued for extracurricular activities or a lavish social life.

2.       Encourage part-time employment or work-study programs to supplement income

In line with rule number one, students should be encouraged to supplement needs-based borrowing with their own earned income. Most college campuses provide ample opportunities to work part-time or provide mediums for work study that can reduce the total amount of debt necessary to get through a student’s college career. To remove the temptation to borrow, students should be made aware of these opportunities on a regular basis and be encouraged to take advantage of them.

3.       Reinforce the power of paying interest during deferment

For unsubsidized loans, most students are unaware that they are accruing interest even when the loans are in deferment. Instead of letting that interest balloon into hundreds or even thousands more after graduation, students can keep total student loan costs down—and keep their repayment terms more manageable—by paying accrued interest while in school.

4.       Encourage pre-payment when possible

For loans that are not accruing interest while in school, students still have the option of paying down the balance while repayment is deferred. If students have extra funds from working a part-time job, sending a portion of that to their student loan servicer can make a world of difference in future repayment terms and total interest owed down the road.

5.       Reinforce the power of smart spending

Developing a heavy coffee habit can come on early and strong during the first year of college; however, the campus coffee shop may not be the most budget-friendly place to fuel up each morning. If students are consistently coming to class with a to-go cup from the café around the corner or lunch from a nearby fast food place, it may be necessary to remind them of the need for smart spending and sticking with a budget. Students can save a hefty amount of cash and ultimately reduce total borrowing if they are willing to bring coffee or food from home.

6.       Inform students of the auto-debit program

The majority of student loan servicers will offer students a 0.25% interest rate reduction on qualifying loans when they elect to have payments automatically deducted from a checking or savings account when they start to repay their loans. No matter the total balance of debt, this interest rate reduction can lead to an impressive amount of savings over the course of a decade (or more) of loan repayment.

7.       Educate students on consolidation options

If students borrow for each and every semester of their college career, they can end up with a handful of various loans through different servicers upon graduation. Numerous monthly payments can make keeping up with debt obligations a serious challenge, but consolidating some or all of their loans can be a quick, easy fix. Most students are unaware of their options for consolidation, so it is important to educate them on the possibility to refinance their student debt into one manageable monthly payment. Consolidation can, in some cases, also lead to an aggregate interest rate deduction, further saving students money in repayment.

8.       Inform students of the various repayment programs available

Another quandary students can find themselves in when entering repayment of loans directly relates to how much their payment each month ends up being. The standard repayment option for student debt is over the course of ten years, but for students who have more than $30,000 borrowed, the monthly payment on this schedule can be a devastating hit to the wallet. Students should be informed of their various repayment options, including income-based or income-contingent, graduated, and extended repayment terms. Although these may result in higher total cost of student debt, the terms may prove more favorable in helping students steer clear of default.

9.       Educate students on the powerful tax incentives student loans provide

There are numerous tax advantages students can utilize to help reduce the total cost of borrowing both during school and after graduation. Tax credits as well as deductions for student loan interest payments are available to certain qualifying students and graduates that have the potential to create bigger refunds each and every year. In order for students to get the most out of their borrowing, it is important they are made aware of these tax advantages and apply the additional tax savings toward pre-payment or chipping away at accrued interest.

10.   Encourage the use of a financial professional

We as educators and administrators do not have all the answers or remedies for students when it comes to their specific borrowing circumstances. Fortunately, there are a range of professionals able and willing to help students understand their options and the implications of one repayment strategy versus another. Financial planners or advisors as well as CPAs can provide information above and beyond what we are able to, and ultimately, can lead students on the path toward financial wellness for both the short-term and long-term. Encourage students to reach out to trusted advisors in the community and network with financial professionals to whom you may refer students. You may be surprised how many are willing to lend a hand.

In order to help students be successful throughout their years at college and well beyond graduation, they must have a solid understanding of how financial literacy and debt management affect their current and future opportunities. Sharing these easy student loan hacks with students will assist them in getting and staying on a beneficial financial path early in their lives.

About the Author:

Kyle Gonnell is the Marketing Manager at innovative financial literacy education provider iGrad and has over 6-years experience in higher education and financial aid. Kyle is a peanut butter addict, football fanatic, avid traveler and Tough Mudding bicyclist that has recently taken up golf and surfing. For more information about iGrad, please visit iGrad’s website.

 

Posted in Financial Literacy1 Comment

Valentine’s Day in College: Save Here and Spend There

Valentine’s Day in College: Save Here and Spend There

A poll conducted last month by Prosper Insights and Analytics found that, of the 6,375 consumers surveyed, 91 percent will do something special for their significant other this Valentine’s Day and, due to the holiday’s high price tag, 35.2 percent plan to shop at discount stores for gifts.

These results shine light on the trend of carefully budgeting for a Valentine’s Day gift without skipping it altogether, especially for college students who are already on tight budgets. Luckily, there are fun and unique ways to surprise your sweetheart that won’t skimp on the romance or put a huge dent in your bank account.

Create an experience

Expressing your love takes more than just going to dinner and a movie. This year, skip splurging on the overpriced prix fixe meal and, instead, cook a fancy dinner at home. If you live in a dorm, ask your roommate for a few hours of privacy so you and your Valentine can cook and canoodle without an audience.

If you’re more outdoorsy, go on a picnic hike to a picturesque overlook. Stash away a handwritten card or small gift beforehand to surprise him or her with words of endearment

Look for unique discounts

Valentine’s Day specials at local retailers aren’t always easy to come by, but with ingenuity and sleuthing, you can make it work. Look for online discounts for restaurants, gifts, guest passes to a local Botanical Gardens or museum. Find out if there are any nearby art shows or gallery openings that weekend, as those types of events usually offer free wine and hors d’oeuvres, making for a classy evening out.

Spend where it matters

Budgeting for Valentine’s Day is about knowing how to create a memorable experience with or without money. Spend your money where it matters most rather than splurging on an expensive, impersonal gift. An online gift retailer likely has promotions running for Valentine’s Day. For her, save for a gorgeous bouquet of flowers; for him, order a gift basket of assorted gourmet nuts or a meat and cheese crate.

Don’t want to go the food or flowers route? Splurge on a day trip to the mountains or a limo ride through the city.

Enjoy time together

As college students, you spend a lot of time in class and when you’re not in class, you spend a lot of time studying. Instead of spending money on stuff, spend quality time together on the Day of Love. Take a moonlight walk, then head home to queue up some free streaming movies, play a board game, indulge in a delectable dessert or invite a few friends over for a budget-friendly potluck. Make your evening about being with the people you care about most and take the price tag off Valentine’s Day this year.

Fulfill their heart’s desire

You may not be able to afford a new car, fancy jewelry or dinner at a five-star restaurant, but maybe all he really wants is you to finally join him rock climbing at a local gym. She might be dreaming about a flying lesson and you remember her mentioning a place that offers introductory lessons for less than $100. Or maybe it’s as simple as wanting to paint the bathroom, but lacking the motivation to do it; so YOU do it. Basically, if you make an “I wish I could…” moment come true, it will be a Valentine’s Day to remember.

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