Balancing Hopes, Dreams and a Low-Paying College Major

Humanities majors are more than a punchline. Not everyone can or wants to be a STEM major, and the world would be a poorer place if they were.

To have great things to read, music that inspires, perspectives that challenge us — to have a sense of reward and meaning in life —  we must have students who pursue college degrees that don’t lead directly to a big paycheck.

That turns the pursuit of intellectual curiosity and artistic appreciation into a balancing act: the likelihood you’ll make a good living versus the debt you incur along the way.

“I encourage students to find this balance between what they like and what pays,” says Nicole Smith, research professor and chief economist at the Georgetown University Center for Education and the Workforce. “I’m not discounting how beneficial these positions are to our society as a whole, but if you can’t pay back your student loan, you’ll be in a serious state,” Smith says.

Liberal arts grads face longer odds compared with science, technology, engineering and mathematics degrees, but a well-chosen humanities major doesn’t have to be a vow of poverty.

How long does it take to recoup what you paid?

To assess the value of earning a specific degree at a specific institution, consider the concept of price-to-earnings premium, spearheaded by Michael Itzkowitz, senior fellow of higher education at Third Way, a center-left think tank.

It measures what you pay out of pocket, including loans, against the amount you’ll earn each year above the earnings of a typical high school graduate. The results show how quickly you can get a return on investment in your college major.

The majority of liberal arts degrees lead to a “pretty good ROI,” says Itzkowitz, but the specific program you graduate with and the type of degree you earn will affect individual outcomes.

The bachelor’s degree programs that allow graduates to recoup their costs within five years or less include what you’d expect: Registered nursing, electrical engineering and dental assistants all make the list.

Among the programs with no economic ROI at all: drama, fine arts and anthropology.

Itzkowitz says the majority of college programs enable students to recoup costs within 10 years or less. “College is still worth it the vast majority of the time,” he says.

Unfortunately, his research also found nearly one-quarter of all college programs of study show graduates failing to recoup their costs in the 20 years after graduation.

There are several tools that can help you compare data on costs, earnings and debt:

  • The College Scorecard, a data tool from the U.S. Department of Education.
  • An interactive map of price-to-earnings premiums from Third Way.
  • The Buyer Beware tool from the Georgetown Center for Education and the Workforce.

Of course, education and major aren’t the only predictors of income. Your wages will also be affected by where you live, your gender and race, whether you work in the public or private sector, and your experience level.

Should you get a graduate degree?

Your humanities degree could go much further if you get an advanced degree — generally, the more education you have, the greater your earnings, according to Bureau of Labor Statistics data.

But you should continue to weigh cost versus benefit since it’s also easier to rack up debt. A graduate degree may increase your earning potential, or it may just increase your debt.

For example, if you majored in liberal arts for your bachelor’s degree you can expect a median annual wage of $50,000, according to the Bureau of Labor Statistics.

But if you get a graduate degree in law, taking on more debt, you could earn a median of $126,930. A master’s of fine arts, on the other hand, is unlikely to yield higher earnings: The annual median wage is $42,000.

Your other options could include a minor in a field with higher earnings, an internship to get on-the-job experience or finding less-expensive graduate programs if your intended field requires it.

If you’re taking on additional student debt, remember that the federal government offers payment plans that tie the size of your payment to your income. Most private loans don’t.

What are your options if your earnings are low?

If you’re already working in a low-paying field and you have student loan debt, look at how you can lower payments or discharge your debt.

If you’re having trouble making payments, consider enrolling in an income-driven repayment plan, which ties payments to your monthly income. Your payment amounts will increase as your earnings do, too.

Those working in public sector fields should learn the ins and outs of public service loan forgiveness, a red-tape-laden process of getting your loans discharged after 10 years of payments on a qualifying payment plan while working full time in a qualifying field.

This article was written by NerdWallet and was originally published by The Associated Press. 


Anna Helhoski writes for NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

Image from: 123rf.com

Image ID: 58541950

6 Things to Know About Student Loans Before You Start School

The summer before your freshman year in college means choosing classes, checking out your future roommate’s Instagram and figuring out how you’re going to pay the bills.

Chances are you will need a loan: 2 out of 3 students have debt when they leave school, according to 2017 graduate data from the Institute for College Access and Success. But consider a loan after you’ve accepted grants, scholarships and work-study. You can get these by submitting the Free Application for Federal Student Aid, or FAFSA.

Here are six things you need to know about getting your first student loan.

1. Opt for federal loans before private ones

There are two main loan types: federal and private. Get federal loans first by completing the FAFSA. They’re preferable because you don’t need credit history to qualify, and federal loans have income-driven repayment plans and forgiveness that private loans don’t.

You may be offered two types of federal loans: unsubsidized and subsidized. Subsidized loans — for students with financial need — don’t build interest while you’re in school. Unsubsidized loans do.

Take a private loan only after maxing out federal aid.

2. Borrow only what you need — and can reasonably repay

Undergraduate students can borrow up to $12,500 annually and $57,500 total in federal student loans. Private loan borrowers are limited to the cost of attendance — tuition, fees, room, board, books, transportation and personal expenses — minus financial aid that you don’t have to pay back.

Aim to borrow an amount that will keep your payments at around 10% of your projected after-tax monthly income. If you expect to earn an annual salary of $50,000, your student loan payments shouldn’t be over $279 a month, which means you can borrow about $26,000 at current rates.

To find future earnings, look up average salaries in the U.S. Department of Labor’s Occupation Outlook Handbook. Then, use a student loan affordability calculator to estimate payments.

Your school should provide instruction on accepting and rejecting financial aid in your award letter. If you’re not sure how to do it, contact your financial aid office.

“We’re not scary people,” says Jill Rayner, director of financial aid at the University of North Georgia in Dahlonega, Georgia. “We really do want students and families to come in and talk with us so we can help strategize with them.”

3. You’ll pay fees and interest on the loan

You’re going to owe more than the amount you borrowed due to loan fees and interest.

Federal loans all require that you pay a loan fee, or a percentage of the total loan amount. The current loan fee for direct student loans for undergraduates is 1.062%.

You’ll also pay interest that accrues daily on your loan and will be added to the total amount you owe when repayment begins. Federal undergraduate loans currently have a 5.05% fixed rate, but it changes each year. Private lenders will use your or your co-signer’s credit history to determine your rate.

4. After you agree to the loan, your school will handle the rest

Your loan will be paid out to the school after you sign a master promissory note agreeing to repay.

“All the money is going to be sent through and processed through the financial aid office — whether it’s a federal loan or a private loan — and applied to the student’s account,” says Joseph Cooper, director of the Student Financial Services Center at Michigan Technical University in Houghton, Michigan. Then, students are refunded leftover money to use for other expenses.

5. You can use loan money only for certain things

Loan money can be used for education-related expenses only.

“You cannot use it to buy a car,” says Robert Muhammad, director of the office of scholarships and financial aid at Winston-Salem State University in North Carolina. “It’s specifically for educational purposes: books, clothing, anything that is specifically tied to the pursuit of their education.”

You can’t use your loan for entertainment, takeout or vacations, but you should use it for transportation, groceries, study abroad costs, personal supplies or off-campus housing.

6. Find out who your servicer is and when payments begin

If you take federal loans, your debt will be turned over to a student loan servicer contracted by the federal government to manage loan payments. If you have private loans, your lender may be your servicer or it may similarly transfer you to another company.

Find your servicer while you’re still in school and ask any questions before your first bill arrives, says John Falleroni, senior associate director of financial aid at Duquesne University in Pittsburgh. They’re also whom you’ll talk to if you have trouble making payments in the future.

When you leave school, you have a six-month grace period before the first bill arrives.


Photo From: 123rf.com

Photo ID: 38260166

The article 6 Things to Know About Student Loans Before You Start School originally appeared on NerdWallet.

How to Make Some Cash Before Heading Back to School

Whether you’re going back to high school or college classes this fall, you might as well return with some extra cash. And, no, it’s not too late to find a paying gig.

The Bureau of Labor Statistics reported 9.3 million job openings in April — that’s the most since the BLS started tracking this data more than 20 years ago. So put yourself out there and try to snag one of those positions.

Here’s how to make money this summer:

4 tips for landing a summer job

1. Create a resume

Try a resume template through Microsoft Office software, the Google Docs online word processor or a job search site like Monster.

As for the contents of that resume, it’s OK if your work experience is lean or nonexistent. Include paid gigs if you can, like babysitting, as well as unpaid work you’re proud of, says Monster career expert Vicki Salemi. For example, volunteer experiences and school projects can make the cut, she says.

2. Tap the folks you know

At this point in the summer, it may be a little late to apply for positions via job boards. Weeks of emails and interviews could go by before you secure a job.

Instead, reach out to people you know. “I can assure you that everyone has a bigger personal network than they realize,” says Nickolas Lantz, executive director for University Experiential Learning at Johns Hopkins University in Baltimore.

Make a list of teachers, parents’ friends, friends’ parents, neighbors and other people who may be in a position to hire you. They may own or manage a business, for example, or need extra help with a project.

Prepare a succinct pitch about how you’re looking for a short-term, paid opportunity and that you’re eager to learn. Also mention how hiring you would benefit the person you’re contacting, Lantz says. For example, ask if there are opportunities for you to help them reach their business goals.

Once you’re ready, email your contact a personalized version of this note, along with your resume. Or better yet, call. That “old-school” approach will help you stand out, Lantz says. If you don’t want to catch your contact off guard, text or email first and set up a time to jump on the phone that week.

3. Show up in person

Here’s another efficient and effective approach that takes a bit of guts: Simply walk into a place of business and chat with the manager.

“Put on some professional attire and just go out there,” Lantz says. “You gotta get out of your comfort zone.”

Introduce yourself and politely ask if there are any opportunities for you this summer. And leave your resume. If you make a good impression, Lantz says, “you can really knock out weeks of back-and-forth emails and interviewing.”

As to where to make your in-person intro, try nearby businesses you patronize or note where you’ve seen hiring signs.

If that’s no help, consider that hires increased in accommodation and food services, according to the BLS report that reflects April. Also, in May, Domino’s, Applebee’s, Wendy’s and McDonald’s, as well as Home Depot and Lowe’s, were among the top 20 companies with the most job postings in the ZipRecruiter Marketplace, according to the job-search site’s report.

4. Prepare to work and learn

Between the labor shortage, your focus on seasonal work and your direct approach to job-seeking, you may be asked to begin right away. “Start to look today and expect to start working tomorrow,” Salemi says.

Once you clock in, be open to learning as you work. Use every job as an opportunity to practice being professional and working with others. In fact, your managers and coworkers this summer can become your references and mentors later.

Other ways to make money

If you’re unable or uninterested in securing an in-person job, or if you want a second way to make money this summer, consider these options.

Sell your stuff

Declutter and rake in some cash at the same time by hosting a yard or garage sale. Or sell stuff online through sites such as eBay or Shopify. If you aim to sell homemade pieces or artwork, try making money on Etsy.

Freelance online

If you’re down to park in front of the computer for a while, explore sites such as Fiverr and Freelancer.com. You may find paid opportunities for skills you’re looking to hone, such as writing, coding or managing social media accounts. If you’re younger than 18, check the age requirements of these freelance and marketplace sites before signing up.

As you scope out those sites and other online gigs, be careful with your information to avoid job scams. For example, click far, far away if asked to give your Social Security number, Salemi says. Search for user reviews of online money-making sites, as well as community forums like subreddits.

Also look for employer names within the Better Business Bureau website (bbb.org) to see reviews, complaints and other company details.

Whether you earn your cash online or through an in-person job, well done. That’s one more gig to add to your resume for the next time you need to make money.


Laura McMullen writes for NerdWallet. Email: lmcmullen@nerdwallet.com. Twitter: @lauraemcmullen.

Image from: 123rf.com

Image ID: 15399330

Federal Student Loan Interest Rates to Increase July 1

Federal student loans will be more expensive for 2021-22 school year. Even so, borrowers will still see some of the lowest student loan interest rates of the past decade.

Interest rates for new undergraduate federal student loans will rise from 2.75% to 3.73% for 2021-22. The interest rates for undergraduate, graduate and PLUS loans are determined by results of the U.S. Treasury Department’s May auction of 10-year notes, according to New America, a public policy think tank. The Treasury sells 10-year notes to raise money.

PLUS loans, or direct Parent Loans for Undergraduate Students, are federal student loans that parents can receive to help pay for college. Graduate students can also receive PLUS loans.

Interest rates for the 10-year notes plunged last year when investors aggressively sought the safety of federal debt as the coronavirus pandemic unfolded. As a result, federal student loan interest rates fell to a historic low in 2020.

Since late last year, investors have moved their money away from federal debt, pushing interest rates back up, according to the Financial Times.

The federal student loan interest rate is set by adding the interest rate on the May 10-year note, 1.68%, to margins set by Congress. Lawmakers vote on the margins each year and while these haven’t yet been set for 2021-22, the margins aren’t expected to change from last year.

For undergraduate student loans, 2.05 percentage points will be added to the interest rate. For other loans, 3.6 points will be added for graduate student loans and 4.6 points to PLUS loans. Here are the higher rates for each type of federal student loan:

  • Undergraduate direct loans: 3.73%.
  • Graduate direct loans: 5.28%.
  • PLUS loans: 6.28%.

Although interest rates for student loans are increasing, rates are low compared with the last decade, when rates reached as high as 5.05% for undergraduate students in 2018-19.

Interest rates for federal student loans are fixed through the duration of the loan, so loans taken out before July 1 will still have this academic year’s 2.75% interest rate. Currently, under the first COVID-19 relief bill, federal student loan interest rates are at 0% and are in forbearance until October 2021.

Impact of the rise in interest rates

Borrowing $5,500 in federal loans for 2021-22 — the maximum loan amount for dependent first-year undergraduate students — for a standard 10-year term will cost $1,098 in interest with monthly payments of $55. That is $3 more a month and $301 more in total interest compared with the same loan taken out at this year’s rates.

The increase in interest rates will have a bigger impact on borrowers who take out PLUS loans given the higher interest rates on such loans. There are also no specific limits on the amount of a loan; rather, it is determined by the school’s cost of attendance.

If a parent borrows around the average for a PLUS loan, or $16,500, for a 10-year term at next year’s rate of 6.28%, the cost would be $186 a month and $5,762 in total interest. That’s $9 more a month and $969 more in total interest for the same loan this year.

Federal vs. private student loans

While federal student loan interest rates will increase next year, borrowers should still pursue and exhaust federal loans before turning to private lenders. Unlike private student loans, federal student loans don’t require co-signers and all borrowers receive the same interest rate.

Interest rates on private student loans are typically higher than those on federal loans and depend on a borrower’s credit history and term length. Private student loans aren’t included in any student loan forgiveness programs and are excluded from the current pause on federal student loan payments.

But students shouldn’t turn to loans until after they’ve filled out the Free Application for Federal Student Aid — the FAFSA — and heard back from their college about scholarships, grants and other aid that doesn’t need to be repaid.

Image provided by 123rf.com

Image ID: 143687352

College, Interrupted: The Case for Going (Back) to School

A cautionary note for the high school classes of 2020 and 2021: Waiting to enroll in college decreases the likelihood you’ll ever attend or complete a degree.

It’s a valid concern for both cohorts. Due to the pandemic, undergraduate enrollment was down 2.5% in fall 2020 and down 4.5% for spring 2021, compared with the previous fall and spring, respectively, according to the National Student Clearinghouse Research Center.

There are also warning signs of an enrollment slump to come. The class of 2021 is lagging in completing the Free Application for Federal Student Aid, or FAFSA. The application is the gatekeeper for college financial aid and, as of April 2, 2021, completion is down 7% compared with applications completed by the same time last year. FAFSA completions are an indicator of enrollment for the upcoming academic year, says Bill DeBaun, director of data and evaluation at the National College Attainment Network.

“When you’re talking about the senior class that measures millions of students, you’re talking about many students with their postsecondary trajectory potentially altered,” DeBaun says.

Skipping out on college, delaying enrollment or not finishing a degree has consequences:

  • You’ll earn less if you don’t go.
  • If you don’t go soon, you’re less likely to go back.
  • If you start a degree but don’t finish, you’re more likely to default on any student loans you took out.

A gap year made sense for many high school graduates in 2020 and is appealing for 2021 grads, too, experts say. The pandemic resulted in an uneven college experience that may have included hybrid and virtual learning, regular COVID-19 testing and quarantines. And not every student was well-positioned — or had the broadband access — to learn virtually.

“We’ll probably be having this conversation 10 and 20 years from now, as to how this affected the next generation,” says Nicole Smith, research professor and chief economist at the Georgetown University Center on Education and the Workforce.

If you sat out from college because of the pandemic or are planning to, experts argue that you should reconsider. Here are three key reasons why.

You’ll earn more with a degree

So what if you delay or never go to college? Opportunity costs, mostly.

Getting a degree could mean earning nearly a million dollars more over your lifetime, according to data from the Georgetown University Center on Education and the Workforce.

Delaying enrollment for one year can cost a year’s worth of wages over your lifetime, which you never recoup, according to a July 2020 report from the Federal Reserve Bank of New York.

Earnings, no matter the education level, will vary by occupation, region, gender and race. But bachelor’s degree holders still earn, on average, 31% more in their lifetimes than associate degree holders and 84% more than those with only a high school diploma.

That’s not to say you can’t consider education alternatives — short-term credential and trade programs, apprenticeships and associate degrees are all viable options. Statistically, though, a four-year degree or higher is a stronger insurance for greater earnings over your lifetime.

For low-income students and students of color who statistically have less generational wealth, degrees are also the best vehicle for upward mobility, says Michelle Dimino, education senior policy advisor at Third Way, a public policy think tank. A recent Third Way study found that most bachelor’s degree programs net low-income students high enough wages to justify out-of-pocket costs.

“What we’re seeing is students who would most benefit from the socioeconomic benefits a college degree can provide are the least likely to be enrolling at this point in time,” Dimino says. “The biggest concern that we have for those students delaying enrollment is it might lead to permanently forgoing college.”

The longer the pause, the harder it is to finish a degree

According to federal data, there are millions of adult learners who don’t start college until they’re well into their 20s or older.

But you’re less likely to complete a degree if you delay: Nearly half of those who delayed enrollment left college without earning a degree, compared with 27% of those who didn’t delay, according to a 2005 report from the National Center for Education Statistics.

The further you get from high school, the less academic support and one-on-one encouragement you have to attend college, experts say. It’s also more likely you’ll get a job, start a family and have other income demands.

“There’s something about that window of 18 to 24; if you start out at that point, you’re likely to get to where you need to be,” Smith says.

You’re more likely to default on student loans if you don’t finish

Returning to college is especially important if you have student debt, as most students do. Without a degree, federal data shows, you’re statistically more likely to be late on payments and default. This outcome can lead to a damaged credit score, collection costs and wage garnishment.

Federal data shows that among a cohort of students who started college in 2003-2004 and defaulted on student debt, nearly half didn’t complete their education, while 10% finished a bachelor’s degree.

The situation is the worst for Black student borrowers: The Brookings Institution found that Black first-time college students default at a rate three times higher than their white counterparts.

How to pay for college if your family’s finances have changed

If you’re reconsidering your decision to delay or forgo college, first figure out the best way to pay.

Start by submitting the FAFSA as soon as possible to qualify for federal, state and school financial aid, including Pell Grants, scholarships, work-study and federal student loans.

If your family’s financial situation has changed due to the pandemic, request a professional judgment from your prospective or current school’s financial aid office. You’ll need to request a specific amount and submit documentation of why you need more aid, like confirmation of a parent’s unemployment or medical bills.

If there’s still a gap to fill, consider private loans.

Alternately, you could think about entering community college for a year or two, then transferring. Find out if the community college you’re considering has credit transfer agreements (known as an articulation agreement) with any four-year colleges you’re interested in attending.


Anna Helhoski writes for NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

Image provided by 123rf.com

Image ID: 120571196

5 Options for People Who Can’t Afford Their Tax Bills

If you know you’re getting a refund come tax time, filing your taxes can almost feel fun. But if you suspect you’re going to owe the IRS money you don’t have, it can be hard to even start the process.

According to a NerdWallet survey, of those who failed to file by last year’s extended July 15, 2020, deadline, 24% knew they owed money but were unable to pay, and 18% didn’t know if they owed, but were afraid to receive a bill they couldn’t pay.

The tax bill you know is better than the tax bill you don’t

Like most problems, stuffing your tax bill in a drawer and forgetting about it won’t make it go away.

If filing your taxes to begin with is burdensome, it may be possible to get help. The federal government has a few programs to offer free tax help to qualified individuals, such as Volunteer Income Tax Assistance and Tax Counseling for the Elderly. Many tax providers also offer a free version of their software for those with simple tax situations, and the IRS itself offers a free file program to those who qualify.

But if you’re pushing off filing because you’re concerned about owing taxes, you should understand your options for tax relief. Here are five ways to get some tax debt help.

1. Pay what you can

No matter what you owe, you should still try to file on time (or file an extension if you can’t make the deadline). Filing an extension will give you more time to file your taxes, not more time to pay your bill, but skipping the extension can lead to harsher penalties.

If you don’t pay your taxes, the IRS charges interest on what you owe. You may not be able to afford your whole tax bill, but if you pay a portion of that bill, you’ll cut down on the amount of interest you’ll have to pay on the rest of your owed taxes.

2. Consider an IRS payment plan

An IRS payment plan, also called an installment agreement, allows you to pay the taxes you owe within an extended time frame.

According to Jordie V. Neth, a certified public accountant and owner of RainCity CPA in Seattle, once you set a monthly payment plan, you can’t renegotiate those payments. “The IRS allows you to pay it off over [up to] 72 months. If you do that option, you can always pay extra, but you can never pay less,” Neth says.

Neth recommends breaking your payments over the longest possible time frame so they are set at the lowest possible amount. “That way, if push comes to shove and you’re in a hardship, you actually have the ability to pay the minimal amount due for any given month,” Neth says.

Keep in mind, a payment plan will incur some interest and penalty charges. You may also have to pay a processing fee for using a debit or credit card and a setup fee, depending on the length of your payment plan and whether or not you apply online.

3. Apply for an offer in compromise

An offer in compromise lets you settle your tax debt. According to Tina Pittman, a CPA and owner of Your Accountant in Chambersburg, Pennsylvania, one of the major benefits of an offer in compromise is that you will end up paying less than what you really owe. Pittman says there are other benefits to an offer in compromise as well, such as avoiding collection calls and letters from the IRS.

Applying for an offer in compromise is a long process that involves a lot of documentation to prove you can’t afford your tax bill, a $205 application fee and an initial payment toward your bill. While your application is being considered, your payments and fees will be applied to your balance, which you will still need to pay off eventually — even if the IRS agrees to reduce it.

Keep in mind, the IRS rejects most applications for offers in compromise. In this case, your initial payment will likely be applied to your balance. Your application fee may be refundable in certain situations.

If you meet the low-income certification requirements, you may not need to pay the application fee or initial payment. You also won’t need to make monthly payments while your offer is being evaluated.

4. Ask for a ‘currently not collectible’ status

Those who can’t pay their tax bill may ask to be put into “currently not collectible” status by the IRS. This means the IRS will temporarily delay collection until your financial situation improves. Keep in mind that this is just a temporary label the IRS puts on your account; the status is not permanent, and you will eventually need to pay your tax debt. (The IRS can also still file a lien against you while you have this status.)

To obtain a currently not collectible status, you’ll need to fill out a form and provide information about your assets, monthly income and expenses.

5. Consult a specialist if you can

Pittman advises people to see a tax professional before taking action with the IRS.

“People are not aware that there are different options with the IRS. They automatically assume all they have is the installment agreement, on which you have to pay the penalties and interest.”

If you can’t afford to work with a tax professional, there are resources for free tax help that may clarify what options would be right for you.


Alana Benson writes for NerdWallet. Email: abenson@nerdwallet.com.

Image provided by 123rf.com

Image ID: 45107458

10 Money Insights From 25 Years of Financial Writing

The importance of money has less to do with affording the newest iPhone or measuring career success, and far more to do with the core of being human: freedom, ego, stress and relationships.

How we use and think about money — not just accumulating lots of it — literally can determine our happiness during the roughly 30,000 days many of us are privileged to be alive.

Those are a few of the big-picture insights I learned in 25 years of writing about money.

In 1995, some of the last millennials were being born, a jury said O.J. Simpson was not guilty and “Toy Story” played in theaters. It’s also the year I became business news editor at a daily newspaper in Pennsylvania, where I started editing guest columns written by local financial planners and stock brokers. I quickly became fascinated with the baffling world of personal finance.

How could I graduate from college — with a business degree, no less — and still not know the basics of how money works for real people in the real world? Saving, investing, taxes, credit and insurance — it’s almost like personal finance was confusing on purpose.

Tl;dr: Sometimes, it is.

I had the privilege as a financial journalist to figure out some of it by interviewing smart people about money for the next 25 years — through the dot-com bubble of 2001, the housing bubble of 2008 and the pandemic of 2020.

Here are 10 things I learned.

1. It will rain

If the COVID-19 pandemic taught us anything, it’s that bad stuff happens, no matter who you are. A rainy-day fund is fundamental to keep us financially safer in case of an unexpected large expense, job loss or even globe-ravaging viruses.

Start with $500 squirreled away and aim to build it to three to six months of living expenses. Breadwinners die, people get sick and cars crash. You also need the right insurance to keep you from financial ruin.

2. Marketing matters

Advertising existed 25 years ago, but not on a computer in your pocket that you look at 100 times a day. And not with ads targeting you as an individual. Temptation to buy has never been greater thanks to the evolution of technology and social media.

3. Score a goal

The antidote to the poison of constant marketing is having a reason to say no to temptations. You do that by establishing financial goals. That doesn’t just mean the far-off “saving for retirement.” It could mean saving for a trip to the Bahamas. You know, when people get back to traveling to the Bahamas.

4. Where goals live

To help set goals, review your calendar and bank statements. Where you spend your time and money is who you are. Time and money are what you change to become who you want to be.

5. Budgeting is overrated

There, I said it. But if you’re not going to create a household budget, at least regularly examine your past spending and categorize it. Financial websites and apps can help. Money leaks will be obvious, as will ideas for intentional spending.

6. The ledger has two sides

You can’t out-earn dumb spending and you can’t nickel-and-dime your way to prosperity. When it comes to money management, you have income and outgo. The rest is just details.

On the other hand, it really helps to know some details.

7. Time-for-money is a fail

Most people cannot get ahead solely by trading their time for money at a job. Instead, your money needs to make its own money. You can’t do that with minuscule bank interest anymore, so it means investing.

8. Where credit’s due

In 1995, you couldn’t even look up your credit score or see your credit reports. Now, you can and should. Poor credit means you could be denied for not only a loan or credit card but also for a job or an account with the electric company to turn the lights on.

9. Ride to prosperity

If you’re vigilant with only one purchase in your life, make it your next car. New cars, especially luxury brands, are wealth-repellent to all but the richest among us. That’s because of high new-car prices and their wicked depreciation, not to mention interest if you’re financing it.

Buying used is far better advice now than in 1995, when that often meant “buying someone else’s problems.” Today, used cars are far more dependable.

10. It’s unfair

Money smarts are insufficient to overcome some financial woes: stagnant wages coupled with rocketing costs for health care, housing and education, to name a few. And some careers simply don’t pay as much as others, despite requiring similar skills. That leads to different money problems and opportunities for different people. And yes, economic inequities also exist by race and sex. That means those with extra can be sloppier with money.

Those living closer to the margin? They are forced to make better money decisions every day.

This article was written by NerdWallet and was originally published by The Associated Press. 


Gregory Karp writes for NerdWallet. Email: gkarp@nerdwallet.com. Twitter: @spendingsmart.

The article 10 Money Insights From 25 Years of Financial Writing originally appeared on NerdWallet.

Image provided by 123rf.com

Image ID: 30146430

Hey college students: have you seen this scam?

Scammers are targeting college students. In the last year, we told you about a car wrap scam and a COVID-19 scam hitting college students. Today, we want to tell you about a fake check scam.

In this one, a scammer posing as a professor sends you an email. It uses a college domain name and a format like your.name@collegename.edu. The scammer offers you a part-time job, like personal assistant or dog walker. Then, the scammer sends you a check, asks you to deposit it, send some of the money to someone else, and keep the rest as payment. A while later, the bank realizes the check was fake and deducts the original check amount from your account. So, if you deposited a $1,000 check, they’ll take that back. But if you sent $400 to someone else, you’re now out $400 of your own money.

People report losing a lot of money to fake check scams. The median loss in 2019 was $1,988. That’s a lot of money for anyone to lose. But an FTC analysis published earlier this year showed that people in their twenties are more than twice as likely as people over 30 to report losing money to fake check scams.

Fake Check Scams Infographic

So how do you avoid a fake check scam? Never use money from a check to send gift cards, money orders, or wire money to someone. It’s always a scam. And, once you send the money or put it on a gift card and give someone the gift card PIN, it‘s like giving them cash. It’s almost impossible to get your money back.

Banks have to give you money from deposited checks within a few days. But if the check turns out to be a fake, they’ll make sure they get that money back from your account. The bottom line is, if someone sends you a check and tells you to send money by wire transfer or gift card — it’s a scam.


The article Hey college students: have you seen this scam? originally appeared on https://www.consumer.ftc.gov/

Image provided by 123rf.com

Image ID: 116422488

Don’t Skip These Steps When Borrowing Parent Student Loans

In more than one-third of U.S. families, parents decide how to pay for college, according to a July 2020 report from private lender Sallie Mae.

Half of those parents don’t inform the child of their decision.

Joe Allen, 51, of Frederick, Maryland, did talk about college costs with his daughter, a freshman at the University of Dayton in Ohio. But he understands why some families avoid the topic.

“As a parent, you want to protect your children,” Allen says. “You want to do what’s best for them.”

But what seems best for children may be bad for mom or dad — especially if it means taking out hefty parent student loans without discussing them. Here’s how to avoid that misstep and others when borrowing parent loans.

Assess your situation

Students should exhaust free money and federal loans in their names to pay for college. Parents can then cover the remaining costs with federal parent PLUS loans or private loans.

But first, review your current financial situation with your child.

“Have a realistic sit-down with yourself and your family in terms of what (your) finances look like and what’s the best decision for you,” says Rick Castellano, spokesperson for Sallie Mae.

Don’t borrow parent student loans if they’ll put your retirement at risk, you’re deep in debt or you can’t afford the payments. For example, the nonprofit Trellis Company surveyed more than 59,000 parents whose children attended school in Texas and found that most said they struggled with loan repayment at some point.

Have a conversation

Kathleen Burns Kingsbury, a wealth psychology expert and host of the Breaking Money Silence podcast, says talking about big expenses like college tuition can make people uncomfortable and emotional.

That doesn’t mean you should avoid the conversation.

“It’s OK if people get upset,” Kingsbury says. “The pitfall is if people get upset and don’t get back to it.”

Instead, use this opportunity to talk about how much you’ll borrow and to teach your child how to analyze the value of a large purchase.

Allen says he went through a sample budget with his daughter to illustrate the cost of her loans and how they might limit her flexibility in the future.

He liked that the exercise made things more concrete than “just saying don’t take out debt.”

Figure out who’s responsible

A conversation is also necessary to determine who’ll repay the parent’s loans.

If your child will — and 45% of families expect the parent and child to at least share this responsibility, according to the Sallie Mae report — that can affect your decisions.

Angela Colatriano, chief marketing officer for College Ave Student Loans, says some families want the child’s name on the loan because he or she will repay it.

“They don’t want a handshake agreement,” she says.

But only the parent is legally responsible for a parent PLUS loan. You’ll need to weigh that when considering borrowing options.

PLUS loans have less stringent credit requirements than private loans and offer everyone the same fixed interest rate. However, PLUS loans also have large origination fees and are available only to parents — guardians and grandparents aren’t eligible, for example.

Your ultimate goal should be getting the least expensive loan you qualify for. If that’s a PLUS loan, make sure everyone is on the same page for repayment.

Kingsbury suggests writing a simple, one-page agreement that “would spell out what the expectation is and what happens if there’s a conflict.”

Consider co-signing

Parents who prefer private loans can borrow in their name or co-sign with their child. Either option means you’ll be responsible for the loan.

“It comes down to a family decision,” Castellano says. “Families should explore both options.”

But he says that co-signing can benefit students in ways that borrowing on your own can’t, such as helping them build credit.

Also, because a co-signed loan has two applicants, you may get a better interest rate. However, lender underwriting policies differ.

For example, Allen initially got a much higher rate on a co-signed loan than he expected. The lender told him that was because it combined his credit score with his daughter’s.

“I didn’t understand that,” Allen says. “I thought if I’m co-signing and bringing good credit to the equation it should be a better rate.”

He applied with a different lender and got what he called a “much better” rate. Allen plans to take out that loan once his family can no longer fund the education on their own.

This article was written by NerdWallet and was originally published by The Associated Press.


Ryan Lane is a writer at NerdWallet. Email: rlane@nerdwallet.com.

The article Don’t Skip These Steps When Borrowing Parent Student Loans originally appeared on NerdWallet.

Image provided by 123rf.com

Image ID: 54904766

More Grads Are Going Back to School: Should You?

College enrollment is down overall compared with last year due to the coronavirus. But the economic effects of the pandemic may actually be pushing some students back to school.

“(It’s) probably the worst time to graduate from college in this generation,” says Doug Shapiro, executive director of the National Student Clearinghouse Research Center. “What are you going to do?”

The answer, for many, is getting additional education: As of Sept. 10, graduate program enrollment was up 3.9% and post-baccalaureate certificate program enrollment was up 24.2%, according to the National Student Clearinghouse Research Center.

If you’re thinking about continuing your education — because you can’t get a job or lost yours — here’s what to consider before you enroll.

Know your timeline

It’s not surprising that recent college graduates or those who’ve lost jobs or been furloughed are looking to gain new skills.

Alana Burns, chief marketing officer of Southern New Hampshire University, said via email that the school saw similar behavior due to the 2008 recession.

Burns said enrollment in SNHU’s graduate-level programs is currently up roughly 55% compared with this time last year. That includes master’s-level courses and graduate certificate programs.

Either option could make sense if you want to make yourself more marketable. But make sure whichever you choose addresses your short-term needs or your long-term goals.

“If you are looking for a specific skill or industry-specific certification, a certificate might be best,” Burns said. “If you’re looking to stand out in the job market or change careers, a full graduate degree program might be the best fit.”

Certificate programs take less time and don’t require the entrance exams that graduate degree programs do. Shapiro points to those lower barriers as potential reasons for what he calls the “outrageous” increase in these programs’ enrollment. A degree will require more planning.

“It’s not the kind of thing you can do on the spur of the moment,” he says.

Have a plan to pay for it

Certificate programs also likely cost less, but that doesn’t necessarily mean they’re inexpensive.

For example, Kent State University in Ohio estimates the cost of its nursing administration and health systems leadership graduate certificate at $12,300. Its online master’s degree in nursing costs up to an estimated $22,500.

Bradley Sommer, president and CEO of the National Association of Graduate-Professional Students, says to consider the financial implications when deciding whether to go back to school.

“Is it something you can afford?” Sommer says. “Are there scholarships available to you?”

If you can’t get free money — via a scholarship or research grant, for example — you’ll need a plan to pay for a graduate program.

More than half of graduate students turn to loans, finishing their programs with an average debt of $71,000 in 2015-16, according to the most recent data from the National Center for Education Statistics. That total does not include any existing undergraduate loans.

But you may not be able to take out federal financial aid or private graduate student loans for a certificate. Ask the school’s financial aid office what aid a program is eligible for.

If you need to finance a certificate, you may have to put it on a credit card or take out a personal loan. Both options usually come with higher interest rates than student loans and lack those loans’ protections — like letting you pause payments if you lose your job.

Understand your return on investment

People with advanced degrees earn more money than those with a bachelor’s degree; they also face lower unemployment rates, according to the Bureau of Labor Statistics.

But not all graduate degrees offer equal returns.

For example, Edwin Koc, director of research, public policy and legislative affairs for the National Association of Colleges and Employers, says earnings increase 100% if you go from a bachelor’s degree in biology to a master’s degree. The benefit isn’t nearly as great for those with history degrees, he says.

It’s unclear how much you might gain financially from a certificate.

“It might translate into better prospects for you,” Koc says, “but I don’t have the data to support that.”

You can find data like median earnings for some graduate-level programs in the U.S. Department of Education’s College Scorecard. That can help you estimate if a program is affordable. Ideally, your total monthly loan payments would be no more than 10% of your take-home pay.

Keep in mind that those payments can be paused if you’re enrolled at least half-time, but interest may accrue on all your loans, further increasing the amount you owe.

Sommer also recommends reaching out to professional organizations to understand how a school or certificate is perceived. For example, he says there are plenty of accounting organizations across the country to contact, if you were interested in such a program.

“Or even just find a CPA in your town,” he adds, “and say do you know anything about the program at (a specific) university?”


Ryan Lane is a writer at NerdWallet. Email: rlane@nerdwallet.com.

The article More Grads Are Going Back to School: Should You? originally appeared on NerdWallet.

Image provided by 123rf.com

Image ID: 105937061