FINANCE

Student Loan Repayments

Pay For College Federal Aid College Costs Financial Aid Give The Gift Of Education Prepaid College Financial Plans Save For College: Budget Tips Student Loans Return On Education Community Colleges

Student Loan Repayments Come Knocking--Answer The Door!

(NAPSI)—And so it begins--you're an adult and in charge of your future. After graduation last spring and six months of transition time, it's time to take on the responsibility of starting to make payments on your student loan(s). Determine how much you owe on your student loan(s) and your monthly payment. Prioritize how you spend your income. Discretionary spending, like eating out, takes a backseat to paying your bills.

Put together a spending plan. List your monthly income and how you're going to spend the money. Housing, food, utilities, student loan payments, car and credit cards are all mandatory spending items. Pay rent and utilities before you pay your loans, but the loans still need to be paid before buying lattes.

If you still have money left to spend, you have choices. An emergency fund should come first because that provides the financial cushion against uncertainty in your life. Then decide between additional student loan payments and your discretionary spending.

Graduates have a lot of competing claims on their income: a new car, a place to live and furnishing that place. Look at ways to economize to free up income. Buying a used car and buying furniture at a consignment shop can save hundreds of dollars.

Your student loan payment history gets reported on your credit report and is used to calculate your credit score. A credit score will influence your ability to get other forms of credit as well as auto insurance, and could even impact a job search. Your goal should be to always make your student loan payments in full and on time. Consider making your student loan payment electronically. Some lenders like Sallie Mae may even offer an interest rate reduction if you sign up for automatic debit.

Don't panic if you can't figure out how you're going to make your loan payment. Talk to the lender about your situation and discuss whether the loan offers alternative payment plans or temporary options to postpone payments that you can use to give yourself some breathing room, but then as soon as feasible, resume making regular payments to avoid extra expense.

Don Taylor is a CFP professional who teaches at Penn State University and writes a daily personal finance advice column for Bankrate.

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Understanding Applications

(NAPSI)—Whether starting the college application process early or jumping in late, free online planning tools, tips and resources are invaluable to students looking for ways to successfully complete their college applications. Among the options available to students, BigFuture™ (bigfuture.org) was created with the advice of real students and educators, and offers tips on common concerns such as how to get started if you are overwhelmed or are a procrastinator, how to finalize your application list, how to get a great letter of recommendation, and how to craft your application essays.

"The key to minimizing the stress of the college application process, whether you are starting as early as middle school or are a senior just beginning now, is to get and stay organized," said April Bell, director of counseling at The College Board. "A step-by-step action plan will allow you to keep track of deadlines and various elements of a strong college application."

BigFuture lets students create a personalized action plan that gives them expert advice on all the steps they need to take to apply to college. By answering up to five simple questions, students can create a plan that serves as a road map to guide them through school to college, advise them on what to do and when, and track their progress. Parents can also find action plans on the website to help guide their children as well as information on how to help pay for their child's education.

"A common mistake families make in selecting colleges is considering sticker price rather than net price, [which is] the published price of the college minus the gift aid that the student receives," Bell said. In fact, most full-time college students receive some type of financial aid, and aid options vary by college. Students can get a personalized estimate from more than 300 colleges by using the College Board Net Price Calculator. They can also link to an individual institution's net price calculator by clicking on the "paying" tab on the school's profile page on the college search section of BigFuture.

BigFuture provides four key starter steps for students who are overwhelmed by the college application process or are starting late. They include a breakdown of the anatomy of the college application, an application checklist and important truths about applying to college, such as the fact that college admission isn't as competitive as many students think. Fewer than 100 colleges in the U.S. are highly selective (i.e., they accept less than 25 percent of applicants) and close to 500 four-year colleges accept more than 75 percent of applicants. Open-admission colleges accept all or most high school graduates. BigFuture's college search feature provides comparative information on almost 4,000 college options.

Research shows that applying to at least three colleges improves your chances of successfully enrolling in college. "Also critical is the ability to narrow your list once you've explored all your options," Bell said. "Most counselors recommend that students apply to five to eight colleges—more than that may not be the best use of time and resources." BigFuture provides expert advice on finalizing your college list, including how to narrow, sort and balance your list, as well as how to take cost into consideration.

Two critical elements of a college application are the essays and the letters of recommendation. BigFuture provides "8 Tips for Crafting Your Best College Essay" and "3 Ways to Approach Common College Essay Questions," as well as video tips from experts and real students and an analysis of a sample essay. Students can also learn "How to Get a Great Letter of Recommendation," including specific tips on whom to ask and what to provide letter writers with in order to get the best results.

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Getting The Most Out Of A Campus Visit

(NAPSI)—If you are a high school student or a parent of one, and you're trying to decide on where to attend college, be sure to get on campus and visit top choices and a variety of school types.

Experts report that visiting a school can give you a close-up look; a chance to learn about the course work and experience a school's environment before you make a commitment.

To get the most out of the visit, here are some suggestions from the nation's No. 1 financial services company specializing in education-Sallie Mae:

• Investigate different kinds of schools. For instance, visit both a large and small school or a campus in an urban setting and then a campus in a small town. If you can't visit in person, see if the school offers virtual tours.

• Do some prep work. Before your visit, decide what you want to learn about the school and put together a list of questions. Use the same list for every school so you can make fair comparisons.

• Visit while classes are in session. This is the best time to visit schools because you'll get the feel of the campus while students are walking around. Most counselors suggest scheduling visits from March through late April of your junior year in high school or in the fall of your senior year.

• Plan ahead. Call the admissions office to arrange your visit at least two weeks in advance. See if you can sit in on a class or two and schedule interviews with faculty and admissions staff. Meet with admissions staff to verify admission requirements and to discuss costs and financial aid.

• Get the most out of your visit. If the school offers an escorted tour, take advantage of it. You'll get access to more of the campus, and your escort can be a great source of candid information. The same goes for information sessions, if offered.

• Ask questions. Be sure to talk to students, the faculty and the admissions staff. Ask students what they like best and least; ask them what they'd change.

• Trust your instincts and take notes. Pay attention to how you feel, especially your first impressions. Is this where you want to live for four years?

• Follow up. After you visit a college, remember to send thank-you notes to everyone you met with. It's a little courtesy that will help get you noticed.

To learn more, check out websites designed to help you plan for college, such as Sallie Mae's www.CollegeAnswer.com.

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Give The Gift Of Education

(NAPSI)--Parents, grandparents and others who care about the young people in their lives can give a terrific gift that grows in value year after year: a college savings account.

Consider this: Although college costs and student loan debt are higher than ever before, Pew Research Center reports that the typical college graduate earns an estimated $650,000 more than the typical high school graduate over the course of a 40-year career.

The rise in college costs and burdensome college debt makes education one of the best gifts any young person could receive. And the holidays are a great time to give such a meaningful gift, one that can help set loved ones up for future success.

It's Easy to Give

One of the easiest ways to contribute to a child's education is with a 529 plan. These plans allow any U.S. citizen, regardless of income, to establish one or more tax-favored accounts for any individual. Earnings grow tax-free, and most state-sponsored plans allow a tax deduction or tax credit for annual contributions. When the time comes to use the funds, distributions to pay qualified education expenses are also federal and state tax-free.

It doesn't matter where the child attends college. Most 529 plan funds can be used at any educational institution in the country, including private colleges, public universities, community colleges, graduate schools and trade schools.

Funds can be withdrawn by the account owner if the child does not go to college, subject to tax laws, or can be easily transferred to another beneficiary. The plans can also play a very important role in estate planning.

One of the top plans in the country, as rated by Morningstar, is Ohio's 529 college saving plan, CollegeAdvantage. Paul Paeglis, Executive Director for the Ohio Tuition Trust Authority, which manages the plan, says it can be used at any accredited college or university in the country and offers many other benefits.

"It's never too early or too late to help give the gift of education, and no amount is too small. Parents or grandparents who start early and contribute often will see their savings grow tax-free over time," said Paeglis. "Grandparents and other relatives are realizing more and more what a meaningful gift a college education is. The holidays are a great time to open or contribute to a college savings account for a loved one, and give a gift that will grow in value for years to come."

Learn More

You can find further information about CollegeAdvantage online at www.CollegeAdvantage.com or call (800)-AFFORD-IT.

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Giving The Gift Of A College Education

(NAPSI)—There's good news for parents and grandparents who are tired of seeing their holiday and birthday gifts end up at the bottom of the hall closet.

A new website has been created to help them give a gift that can last a lifetime—the gift of an education. By enrolling in the Private College 529 Plan, families and their loved ones can purchase or contribute to tuition certificates that are guaranteed by over 270 participating private colleges and universities.

One of the benefits of this kind of plan, known as a prepaid 529 plan, is that families have the opportunity to purchase future tuition at today's rates. Additionally, students may attend any of the plan's 270 schools to which they are accepted—and there is no need to commit to a particular school when first enrolling in the plan.

To help make this process even easier, Private College 529 Plan has created a website called TomorrowsTuitionToday.org. The site features profiles from member schools, an interactive blog focused on college savings strategies and topics, as well as real stories from families that have successfully used the program.

The creation of this new site underscores the commitment of Private College 529 Plan's member colleges and universities to helping students and their families save for college and make smart decisions about student loans. For more information, visit www.tomorrowstuitiontoday.org and www.privatecollege529.com.

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Saving For College: Seven Super Budget Tips

(NAPSI)—Learning how to create a budget—and stick to it—is vital to proper money management. Techniques will differ. Some people like to jot income and expenses down on paper. Others keep a sophisticated budget spreadsheet, while others prefer using a free, online budget planner that does most of the work for them.

Experts acknowledge there isn't a single "right way" to budget your money. What does matter is to pick a method that makes sense to you and that you will stick with.

Budget Tips

Designing and sticking to a budget can help you pay down debts and save for the future. "If you are ready to make earning your degree a top priority, of course paying for it is going to be a concern," said Dr. Mary Hawkins, president of Bellevue University. "By freeing up funds through debt reduction or reallocating from areas where you may be overspending, you can begin saving for your education." Hawkins' budget-planning tips include:

1. Keep the essentials within budget. Food, gas and toiletries are necessities, so it is easy to pick up everything you need without thinking about the total. Even with these items, you need to stick to the budget you have planned. If you are finding this difficult, carry the amount in cash so you cannot overspend on your debit or credit card.

2. Make all your payments on time. Skipping payments results in late fees, which will only push you deeper and deeper into a financial hole.

3. Live within your means. This sounds simple, but many people do not realize how much they are spending until they write it down or type it out.

As painful as it may be, if you find you are spending more every month or paycheck than you are bringing in, you will need to make some changes. This may mean finding an additional source of income or reducing spending in some areas.

4. Find free offers. There are a wealth of websites and blogs out there devoted to listing free offers—these range from samples to full-size products.

5. Continue to learn. Financial sites such as bankrate.com provide advice on the issues you face as you plan and live by your budget. Education-specific sites like makeithappennow.org provide more advice on paying for your degree.

6. Research your options. Many schools have thousands of scholarship dollars that go unused because students don't take the time to apply. Also check with your employer. A growing number of employers are offering education benefits.

7. Evaluate the plan. Unexpected and periodic expenses (like holidays or car taxes) are inevitable. With each paycheck, re-evaluate the plan to see if it is still the best route or if adjustments need to be made. Be sure to do this before the money is in the bank, as it is tempting to spend irresponsibly if the plan is not established.

Every person must follow his or her own path to education. Perhaps you will save for a long time and complete your degree all at once, or maybe you will pay for one class at a time as your savings accumulate.

Regardless of how you get there or what budget-planning method you use, planning and diligence can keep you on the right path.

Learn more at www.makeithappennow.org.

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Tips On Taking A Strategic Approach To Credit

(NAPSI)—People have different attitudes about credit. For some, taking on any kind of debt is to be avoided. For others, credit is necessary for buying what they want, when they want it.

The fact is, credit is neither inherently good nor bad—it's simply a tool that requires responsible use. And like any tool, the outcome depends on the skill with which you use it.

What Type Of Credit Is Available?

Approaching credit strategically starts by understanding the different types of credit. It's important to carefully consider which type of credit to use for each financial goal you have. For example:

• Credit cards can be used for everyday purchases, unplanned expenses and large purchases.

• Personal loans or lines of credit can be used for large purchases, unplanned expenses and debt consolidation.

• Auto loans are for new or used vehicles, or refinancing a car loan to lower the interest rate or payment.

• Private student loans help pay for tuition and other eligible education-related expenses.

• Home equity loans or lines of credit can be used for major repairs or improvements, debt consolidation or other major purchases or expenses.

• Mortgage loans are for home purchases and/or refinancing to lower the interest rate or payment.

Setting Yourself Up For Success

Qualifying for these different types of credit will include an examination of your credit history-the track record you've established managing credit and making payments over time.

If you don't have an established history, you may need to build one. There are credit products available that use nontraditional information as a substitute for credit history. Once again, strategy comes into play.

For example, if you don't have enough credit history, you might consider applying for and responsibly using a cell phone account, secured credit card, or gas or retail credit card. You could take out a loan with a co-borrower or a loan secured with savings or a CD. To learn how credit scores work, you can visit myfico.com.

If You Have A Less-Than-Perfect Credit History, You Should:

• Be sure to pay bills on time.

• Check your credit reports annually for free at annualcreditreport.com.

• Correct any mistakes on your credit reports.

• Pay down high-interest-rate debt first.

• Pay more than the minimum amount due.

• Avoid opening new credit accounts you don't need.

• Apply for a secured credit card or loan, which is typically easier to qualify for than unsecured credit but will require some kind of collateral in order to open the account.

If you have too much debt for your income, here are some steps you can consider:

• When possible, consider consolidating debt into a lower-interest-rate loan or account.

• Pay off high-interest-rate debt first.

• Build your personal savings.

• Develop a budget and maintain it.

• Consider whether you have other income sources you may want to disclose when you fill out an application for credit.

• Consider whether to include a co-borrower on your loan when you decide the time is right to apply.

As you build your credit portfolio and you're approved for higher credit lines, it remains important to stay current on all your payments. Thirty-five percent of your credit score is based on payment history. As you make regular on-time payments to your loan or credit card, you can begin to build a good credit history.

More important, a late payment on your credit report could lead to being charged a higher interest rate or being declined for credit.

Getting Information About Credit

How you manage your credit can help you reach your goals—or it can hold you back. Learn more about how to use credit responsibly to achieve your goals by visiting the Smarter Credit™ resource center at www.wellsfargo.com/smarter_credit.

To learn more about your credit options, visit www.wellsfargo.com/creditoptions.

 

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As Education Costs Spiral, Community Colleges Can Help Maximize Return On Education

by William D. Green,
Retired Chairman, Accenture

(NAPSI)—By some accounts, U.S. student-loan debt has reached $1 trillion. That's more than the entire national debt was in the 1970s.

Even though students who receive financial aid are graduating from college with an average debt of $25,250, according to the Institute for College Access and Success, finding a job to pay down their loans has become an extremely difficult task. True, seeking a job in the current economy can be very disheartening, but my advice to new graduates is to hang in there and do everything you can to add to your technical, computer, language and communication skills while you're on the hunt. It's also important to let prospective employers know you're taking the initiative to enhance your education and skills.

My advice to this year's high school juniors—and seniors who are trying to decide on their future educational path—is to seriously consider an alternative to a four-year program, especially if you're undecided about your career goals.

Enrolling in one of the country's 1,100-plus community colleges is a compelling education option that students and their families sometimes overlook. Community colleges provide millions of students with excellent grounding in post-high school education and an opportunity to go on to a four-year college and postgraduate studies. They also help millions more earn certification in fields ranging from information technology to emergency medical services, nursing and other areas of health care that can lead directly to a meaningful job.

I began my post-high school education at Dean College in Franklin, Mass.—now a four-year college but a two-year school at the time. It was one of the best decisions I've ever made. At Dean, my professors did a great job teaching the course work, but even more important, they energized and inspired me, gave me a real appreciation for the value of learning and guided me at a time when I had no idea what to do with the rest of my life.

Nowadays, enrolling in a community college makes even more practical sense. First, consider that the average annual tuition and fees at a public community college today are $2,963, compared to an average of $8,244 at a public four-year college for an in-state student, according to the American Association of Community Colleges. The tuition at a four-year public institution for out-of-state students can be four or five times higher than that-and exponentially higher at a private college or university.

Don't get me wrong: I'm not advocating attending a community college just to save money. I think it's a good idea to explore the alternatives, no matter what your family income situation happens to be.

More affluent families, apparently, are drawing the same conclusion. Recently, the journal Inside Higher Education reported on a study from Sallie Mae that showed that 22 percent of college students with annual family incomes greater than $100,000 attended community colleges in 2011, up from 16 percent over the previous four years. That's a very good indicator that people are becoming more thoughtful about their education options.

As a businessman, I can tell you I've been looking at return on investment (ROI) all my professional life. In these times of burgeoning tuition costs, mounting student debt and very slow job growth, parents and their children need to carefully evaluate the potential return on their education (ROE) before choosing a path. Education is a major investment—of time and money—and making the right education choices can make a huge difference in a young person's life.

Taking the time now to carefully consider these basic questions and begin to explore all your education options can be of tremendous help in making a decision that will have a lifelong impact. Starting your post-high school education at a community college or working toward professional certification through a community college course of study may provide you with the best possible ROE.

Related websites that can help you look for and evaluate community colleges:

• The American Association of Community Colleges: a list of community colleges, providing information on school size, courses, tuition, etc. www.aacc.nche.edu/Pages/CCFinder.aspx.

• College Navigator: run by Institute of Education Sciences, a tool to help students find the right college for them, based on location, campus setting, test scores, extended learning opportunities, religious affiliation, etc. http://nces.ed.gov/collegenavigator.

• The College Board: six reasons for students to attend a community college. www.collegeboard.com/prod_downloads/highered/res/cc_tips/SixReasons05.pdf.

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