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.

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

Dorm Costs Have Soared, but Many Freshmen Have No Choice

Living in the dorms is a rite of passage for millions of first-year college students. But like the rest of the college experience, it’s costly. And in many cases it’s mandatory.

Moving my only daughter into the dorms of scenic Appalachian State University her freshman year was tough on us both, but an exciting time. She received an academic scholarship for tuition and fees, so room and board were among our only financial obligations. Well, the only official ones — college kids have many “needs.”

As with many four-year colleges and universities, App State requires freshmen to live on campus. They’re the only ones guaranteed housing. Students beyond their first year interested in staying in the dorms enter a lottery system to battle for the remaining rooms. By early spring of her freshman year (2019-20), she got word she had “won” a room for sophomore year. But then COVID-19 hit, and like many other college students, she finished her 2020 spring semester at home.

As summer 2020 passed, the thought of living in tight dorm quarters looked less and less appealing, so we began apartment hunting. We found that although the rental market in the small college town of Boone, North Carolina, is competitive, she could get into an apartment for less than the cost of a dorm.

Student housing is a boon to universities and colleges across the country, and dorm costs have skyrocketed 111% at public four-year institutions over the past 30 years, far faster than rents. In many markets, first-year students could rent apartments nearby for less than they pay on campus, particularly if they’re sharing the costs with roommates. But they’re not always given that option.

It isn’t clear how many colleges and universities currently require most freshmen to live on campus. The Department of Education does not collect this data, though 74 schools report requiring all first-time degree-seeking students — no matter their year — to live on campus, no exceptions. Whatever the exact figure, many schools do this, often under the justification that on-campus living is a good transition into adulthood. But if we allow 18-year-olds (or their parents, by proxy) to incur the costs of college and, in many cases, take on student loan debt to cover them, isn’t the better transition into adulthood allowing them to determine just how that money is best spent?

Housing is a considerable source of college revenue

As COVID-19 spread and dorms shuttered in 2020, colleges’ reliance on student housing as a source of revenue became apparent. Indeed, auxiliary revenue (which includes housing, dining, athletics and other sources), was one of the hardest-hit categories of revenue loss, especially among larger institutions, according to data obtained from 107 schools by the Chronicle of Higher Education. In an effort to minimize this loss early on, some schools debated whether to provide refunds for the remainder of the semester when students were sent home and dorm rooms sat empty, and added language to 2020-21 housing contracts protecting them against potential future refunds. This is because institutes of higher learning make considerable money on student housing, though pinpointing exact figures is difficult.

Four-year institutions made $28 billion on “ancillary enterprises” in the 2018-19 school year, roughly 8% of all revenue, according to the National Center on Education Statistics. This figure lumps housing and dining in with parking, on-campus stores and other sources of revenue. New York University’s 2021 fiscal budget, one of few publicly available online, reveals 10% of its revenue comes from student housing and dining.

This isn’t to say on-campus living requirements are rooted in money alone. Some of the arguments colleges make for policies are sound: Living in a dorm can be enjoyable, convenient, good for grades and retention, and a more gradual segue into adulthood. However, this doesn’t make it the right fit for everyone.

Making on-campus housing optional and at the discretion of students (and their parents, no doubt) could lead to an increased supply of available dorm rooms for upperclassmen. In other words, the housing would more likely be available to students for whom it’s a good fit, no matter their academic year.

Most schools with on-campus freshman housing requirements have ways to bypass those mandates, but what passes as proper justification for living off-campus is often very narrow, if it’s clear at all. At my daughter’s college, for example, only some nontraditional students, those living at a parent’s home within 30 miles of campus, or those taking only online courses while living with a parent are eligible for an exemption. That last option was added only during the pandemic. Unfortunately not eligible for an exemption: those who have made a sound and thoughtful decision that living off-campus is a better fit, whether for financial or other reasons.

On-campus housing costs rise more steeply than off-campus

From 1989-90 to 2019-20, the average room rate among public four-year institutions rose 111% after accounting for inflation, to $6,655 per academic year, generally 30 weeks, according to data from the Department of Education. Incidentally, public four-year institutions are some of the most affordable. Compare this to the national median gross rent — the Census measure that includes both the contracted rent amount plus utilities — which grew just 24% during that same period.

At that average room rate, the student’s weekly housing cost is $222. Median gross rent works out to about $253 per week. So, dorms are cheaper? Hang tight. Lest you think I’m undercutting my own argument here, let’s not forget the costs incurred moving into and out of the dorms at least once per academic year, if not per semester, along with the costs of finding other housing during the remaining 22 weeks of the year, and the fact that very few college students are paying the entire rent of an apartment or house on their own.

If that national median rent was shared with a roomie, you’d be looking at $127 per week. But the national median is just a ballpark estimate.

Is it always cheaper off campus? No

New York City is one of the priciest and most competitive rental markets, so students attending college at highly competitive and expensive institutions such as New York University or Columbia University may breathe a sigh of relief knowing they have on-campus living options. In fact, the weekly room rate at Columbia’s freshman dorms is a couple of hundred dollars cheaper than one person’s share of rent on a median-priced two-person, two-bedroom apartment in Manhattan, according to the June 2021 Elliman Report, a monthly rental market report. However, the difference is negligible between several of NYU’s freshman dorms and that same median rent.

The COVID pandemic brought with it slowed rent growth and even declines in many urban centers, according to data from Realtor.com. As of May, some pricey metro areas including New York City, San Francisco and San Jose are still seeing rents lower than last year. Students able to freely participate in local rental markets may have been able to lock in rents lower than what they’d pay in the dorms, even in big cities.

These big cities often have extreme housing prices, and students in more representative college towns across the country would likely find more comparable prices when weighing dorm costs against local rentals.

App State is a public four-year college nestled in the mountains of Western North Carolina. It’s a gorgeous place and a welcoming institution. The mascot is a Mountaineer named Yosef wearing a flannel shirt and a beard, for crying out loud. And their football is some of the best. Go ‘Neers! The freshman dorm my daughter was assigned to in 2019-20 opened to students in 1970 and doesn’t have air conditioning. The weekly rate there is roughly $50 more than that of one person’s share of a two-bedroom rental, according to Census data. Her sophomore year, she managed to find a shared four-bedroom home, where her portion of the rent is about $140 per week, and includes parking and all utilities.

Navigating limited options

It doesn’t always make sense — financial or otherwise — to rent an apartment as a college student. However, when it does make sense, students should be able to elect that option, or any other option that fits their budget, long-term goals and any other personal factors. We allow, even encourage, 18-year-olds to take on student loan debt — debt that they’ll typically carry for at least the first decade of their career, if not longer. On-campus housing requirements add insult to the mounting costs of higher education by not giving students latitude to decide how their money — and first year away from home — are best spent.

Students opting for a college that requires on-campus housing have little to no say in the matter. In that case, the best advice is to look into possible exemptions from the requirement if staying in the dorms would cause considerable hardship, and always be strategic with your use of student loans.

For those with a choice, a careful comparison of your options will help ensure you’re making the right choice for your budget and your long-term educational goals. Make sure to include:

  • Direct costs such as rent and utilities versus on-campus housing rates and the costs of living when school isn’t in session.
  • Transportation and parking.
  • Convenience and time considerations.
  • Possible social trade-offs like being farther away from college social clubs but perhaps having the luxury to choose roommates.
  • Academic preferences such as how a living arrangement may affect study location or quality.

Elizabeth Renter writes for NerdWallet. Email: elizabeth@nerdwallet.com. Twitter: @elizabethrenter.

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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.

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This Time, the Stimulus Package Helps More College Students

In the third round of COVID-19 relief, college students and their families could see more money in their pockets than before.

The $1.9 trillion American Rescue Plan Act, signed by President Joe Biden on Thursday, provides students with immediate and long-lasting financial benefits, including:

  • Relief checks, even for dependent students.
  • Emergency financial aid grants from their schools.
  • Child tax credits for students who have children.

Students were largely left out of earlier relief bills. Connel Fullenkamp, an economics professor at Duke University, says that’s because students are overlooked by politicians.

Fullenkamp says he thinks the latest relief package could have a significant and much-needed impact on students. “We are not going to pay their tuition, but we can help defray some of the costs of living,” Fullenkamp adds.

Here are the details on what college students can expect from the relief package.

Parents of dependent students can get a stimulus check

In previous relief legislation, there was an age cutoff. Students 17 or older who were claimed as dependents didn’t qualify for a payment, which left out many high school seniors and college students. This time, they qualify; the money goes to the taxpayer who claims them.

If someone else claims you on their taxes, you are eligible for the same payment the filer gets. All household members included on a qualifying tax return get a check of up to $1,400. If you are a dependent, the person who claimed you will receive payment on your behalf.

The maximum you can receive is $1,400, but the amount will gradually decrease with higher incomes. Those with reported incomes of more than $75,000 for individuals, $112,500 for head of household and $150,000 for joint filers will receive diminished checks. If the person who claimed you makes more than the qualifying maximum, you won’t get a payment at all.

Independent students qualified for earlier relief, and do so again.

If you have a Social Security number, file your taxes independently and have an adjusted gross income of $80,000 or less — which is the qualifying maximum — you are eligible for payment. That adjusted gross income maximum increases depending on your filing status — $120,000 if you file head of household and $160,000 if you file jointly. Income totals are based on your 2019 or 2020 tax refund.

If you file independently, you will receive payment in the same manner you receive your tax refund, via direct deposit or physical check.

Checks are expected to start rolling out this month.

You could qualify for emergency aid from your school

The relief package provides nearly $40 billion in funding to colleges and universities. They’re required to spend half on students in the form of emergency financial aid grants to be distributed through Sept. 30, 2023.

It’s the largest pot of money allotted to students yet. In the original Coronavirus Aid, Relief and Economic Security Act, schools received $14 billion, while the second relief package provided $22.7 billion to colleges. Both packages required colleges to use half on grants for students.

The amount a school receives is based on factors around the numbers of Pell Grant recipients enrolled. Delivery of the emergency aid into students’ hands was largely left up to schools to decide. Some sent money to students automatically based on their eligibility for need-based aid. Other schools required students to apply for it.

What remains unclear is if this time the aid will be accessible to students with Deferred Action for Childhood Arrivals, or DACA, status and international students. Megan Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators says she expects the Department of Education to issue guidance on this in the coming weeks.

Students who have kids might be eligible for more money

As part of the relief bill, parents will receive up to $3,600 a year per child through the child tax credit. Though there is support to make this credit permanent, this new provision is set to last only a year.

“Hopefully it’s going to keep some people afloat in terms of being able to continue their education and not have to stop out,” says Douglas Webber, associate professor of economics at Temple University. “Once you stop out it’s just so hard to come back.”

Lawmakers intend to distribute the sum through monthly checks starting in July. With this arrangement, parents will receive $300 per child for children below age 6 and $250 per month for children between 6 and 17. The remaining credit will pay out after you file taxes.

Unlike with the previous child tax credit, this one is fully refundable. That means even families without a tax obligation will qualify. But payments will phase out for those with a reported income of more than $75,000 for individuals, $112,500 for head of household and $150,000 for joint filers.

Like other measures in the relief bill, payments are based on your most recent tax return — 2019 or 2020.

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

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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/

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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.

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The FAFSA Just Opened: Why You Should Apply Now

An influx of college financial aid applications this year means that money could run out for students who don’t file early.

Due to financial strain caused by COVID-19, nearly 40% of families that didn’t previously plan to apply for federal financial aid now expect to do so, according to a recently released survey from Discover Student Loans.

The federal government, states, colleges and other organizations use the Free Application for Federal Student Aid, or FAFSA, to award financial aid. You must complete the FAFSA to be considered for financial aid.

You have 21 months to submit the FAFSA for any given academic year. For the 2021-22 school year, the FAFSA opens Oct. 1, 2020, and closes June 30, 2022. But that doesn’t mean you should wait.

“There is no downside to applying early, but a lot of risk in applying late,” says Manny Chagas, vice president and head of marketing and product at Discover Student Loans.

Here’s why you should file the FAFSA now.

Better shot at more free money

The sooner you submit the FAFSA, the greater your chances are of getting free aid you don’t have to repay, such as grants or scholarships.

Federal Pell Grant money likely won’t run out, but other need-based aid, including that awarded through your school and state, is limited and awarded on a first-come, first-served basis. Jack Murphy, financial aid counselor at the University of Northern Iowa, named the Federal Supplemental Educational Opportunity Grant and his school’s tuition assistance grant as examples.

The Federal Work-Study Program also has limited funds, so you’ll want to file the FAFSA early to take advantage of it.

More time to appeal a financial aid decision

Students and parents who are dissatisfied with their aid amounts or have a change in economic circumstances can appeal the financial aid award from their school. To do this, you need to petition your school with a financial aid appeal letter and provide evidence to support your need for more aid. If you wait too long, the aid money could run out.

Those who file the FAFSA early are more likely to receive their school-based financial aid awards with their college acceptance letters. While your federal aid will be the same no matter where you attend college, you can send your FAFSA information to several schools to see which will give you the best school-based aid package. Doing so early will allow you to compare offers and appeal if necessary.

If you apply for the FAFSA late, you not only risk a smaller award to begin with, but you also have less opportunity to “shop around” and submit a successful appeal letter.

A quarter of parents surveyed by Discover Student Loans say they’ll appeal their financial aid decision because of previous award amounts and pandemic-induced changes in family finances. In speaking about the survey, Chagas emphasizes that there tends to be more money available early in the process, so students should make the FAFSA a priority.

Murphy agrees. “Filing early makes sure you’re in the running to receive as many awards as possible,” he says. “We see students that get [aid] one year, but not the next.”

They don’t lose out on aid because they no longer qualify, Murphy explains. They just waited too long.

Cecilia Clark is a writer at NerdWallet. Email: cclark@nerdwallet.com.

The article The FAFSA Just Opened: Why You Should Apply Now originally appeared on NerdWallet.

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Will You Get a Refund If COVID-19 Closes Your Campus?

Many colleges are welcoming students back for in-person learning and dormitory living this fall semester. Looming over everything: Campuses could shut back down at any time.

With COVID-19 cases still high, many colleges are developing shutdown contingency plans alongside their reopening arrangements.

At the same time, the pandemic is fueling new debate about whether colleges should charge the same tuition for online and in-person classes. Tuition typically covers the cost of instruction — salaries, software, labs and such — and that cost at many schools may have increased.

The University of North Carolina Wilmington, as an exception, has a different cost structure for online, hybrid and in-person classes. Still, it announced that students won’t receive a tuition refund if in-person classes move online this fall. And, after the pivot from its sister school at Chapel Hill, it told students to prepare for a similar transition if cases rise.

That leaves freshman Owen Palmer weighing the possibility that the education he is paying for may not be the one he gets. “I’m taking a risk because (the university) mentioned they can’t do refunds,” says Palmer. For him, the risk is worth it, but he does wonder what he’ll do if the campus has to close.

Here’s what he and other students can expect as the fall shapes up.

Don’t expect a break on tuition

Some schools have cut tuition. Hampton University is offering students a 15% discount, bringing undergraduate tuition to $12,519. Other schools are offering additional scholarships and grants.

But tuition decreases and additional aid aren’t the norm.

“If I had to make bets, I would say a lot of colleges will be (freezing tuition) until they get a better sense of the economy,” says Arun Ponnusamy, chief academic officer at the college admissions and application counseling company Collegewise. “But there will be other colleges that say, ‘We need money to run this school.’”

That may be happening already. George Mason University in Virginia approved a tuition increase of $450. The University of Michigan approved a 1.9% tuition increase. Both schools are planning a mix of online and in-person instruction.

Meals and housing refunds likely

Many colleges aren’t publicizing their shutdown contingency plans — or how refunds will work. But students can look to how their school handled refunds in the spring to gauge how fall might play out.

Florida Agricultural and Mechanical University gave refunds for on-campus housing and meal plans, says William Hudson Jr., the school’s vice president for student affairs. If the campus has to shut down this fall, Hudson says the refund structure “would probably be the same.”

Other colleges also offered direct refunds for students. For example, Temple University automatically deposited partial refunds for room and board in students’ bank accounts. The University of North Carolina Wilmington gave prorated refunds for room and board.

But some colleges opted for account credit instead.

  • The University of Arkansas refunded about 20% of room and board costs to student accounts. They haven’t announced an official plan in case of a fall shutdown, but staff members expect it’ll be the same.
  • The University of Alabama offered a prorated refund for room and board, and parking. Students could take a cash refund immediately or apply that amount and an extra 10% as an account credit for the fall.

How can you prepare?

If you’re planning to return to campus housing, contact your school and ask about its shutdown contingency plans. You’ll want to know what factors would cause it to shut down again. This could be a campus COVID-19 outbreak of a certain size, an increase in local cases or other factors.

You can’t stop a campus shutdown, but if you know the metrics your school is looking at, you can anticipate it and react more confidently.

  • Make backup plans for housing if your campus closes. Determine if you’ll go home, stay with a friend, get your own apartment or something else. Communicate your intentions with those you plan to stay with or scope out affordable apartments in advance. That way, if the campus shuts down suddenly, you know exactly where you’ll go.
  • Ask your college about emergency funds and grants if a campus closure will cause you financial hardship. Many colleges have funds available for students.
  • Plan how you’d use a refund. If your school offers a direct refund, consider whether you’ll need that money for living expenses. If you don’t need the money for living expenses, send the refund back to your student loan servicer. Doing so will keep your overall loan balance down and save you money in the long run.

The article Will You Get a Refund If COVID-19 Closes Your Campus? originally appeared on NerdWallet.

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Why Missing College This Fall Is a Bad Idea

As colleges figure out how to structure classes this fall, many students are questioning whether to enroll at all. The idea of taking a gap year might sound enticing, but returning students should think twice.

Many colleges have official gap year or deferred enrollment policies for incoming freshmen. But returning students who choose to take time off and re-enroll once the uncertainties of the COVID-19 pandemic have passed aren’t “gappers.” They’re “stopouts,” and they face risks that don’t come with a traditional gap year.

The president and founder of The Institute of Student Loan Advisors, Betsy Mayotte, explains that colleges have individual leave of absence and withdrawal policies for students who want to take time off. Students who don’t follow those rules might end up with unexpected debt and be blocked from accessing their academic transcripts.

“I see a lot of students that just stop going to school and don’t understand why they’re being charged,” says Mayotte.

Taking a break from college this fall could derail your overall educational and financial goals. Here’s why you should stay enrolled.

You might have to reapply to get back in

Unless the college makes concessions, students without an approved leave of absence are at the mercy of the readmission policy to determine if they can return. Even with an approved leave of absence, you can miss only 180 days in a 12-month period, according to the Department of Education’s Code of Federal Regulations.

Schools also don’t have to readmit students who take time off unofficially. For example, University of Arizona’s Graduate college usually requires a new application, application fee and a minimum 3.0 GPA on all previous coursework at the university before readmission.

But University of Arizona Graduate College Dean, Andrew Carnie, says the college is making exceptions for students during the COVID-19 pandemic.

“We are being very flexible with students who want to take off the fall,” says Carnie. “Students can take a leave of absence and we are approving leaves of absence retroactively. These are extraordinary circumstances.”

Communicating with your college and knowing their COVID-19 plans and policies is key. “Students have to weigh their options and look at what’s going on with their university,” says Kenneth Stephens, director of the Department of Human Services for Florida’s Southeastern University. He notes that while his school has systems in place for students dealing with the COVID-19 crisis, others are still trying to figure it out.

Some colleges allow students without a leave of absence to re-enroll after two years off with no hassle. But others, like the University of Miami or East Carolina University, require students to submit an application for readmission and pay a fee after missing only one semester of school.

You might have to make student loan payments

If you have student loans, taking time off could trigger repayment to begin. Contact your student loan servicer or lender to find out their policy.

All federal student loans are in an administrative forbearance through Sept. 30, due to a provision in the federal government’s coronavirus relief package. So until then, you don’t have to worry about your loans gaining interest or going into repayment.

But if you plan on missing the school year, you will exhaust that window and payments will begin after your six-month grace period ends. While there is speculation that the forbearance could be extended, nothing has been announced.

Federal student loans only get one grace period, so if you use it now you won’t have it available after you graduate, says Mayotte.

The coronavirus relief package forbearance doesn’t apply to private student loans. If you decide to stopout due to COVID-19, your private loans might enter the grace period and then head into repayment. And not all private lenders allow academic deferments for students who return to school, so you could be on the hook for loan payments even when you return to full-time student status.

You might not find stable work

Students planning to work full time must contend with the highest unemployment rate since the Great Depression. The coronavirus remains a threat, and a second wave could cause more shutdowns, which might make finding and keeping a job even harder.

“I’ve had students who mentioned stopping-out, and I told them they should really think about that,” says Sharon Taylor, director of academic advising and professional enhancement at Virginia State University. “The first thing they say is they will work, and I ask them to look at how many people are out of work right now.”

Taylor advises students to continue school if they can afford it and says, “It’s better to wait out the pandemic in school than out of school.”

If you want to minimize coronavirus-related uncertainties with your school, there are options other than withdrawing completely.

  • Take a half-time schedule: Students can take fewer classes and still maintain some of their financial aid benefits while making progress toward graduation. Not all students are comfortable with online learning. Taking fewer classes will give you more flexibility in case your school shuts down early to go online.  
  • Take online classes at a community college: If you need to complete general education requirements, you may be able to do them online at a local community college. That way you can save money on tuition, avoid the unknowns with in-person classes and complete graduation requirements. Before taking community college classes, check with your school to make sure the classes will transfer and that you are in compliance with your school’s dual enrollment policies.
  • Take an official leave of absence: If you decide not to take classes this fall, work with your school to take an official leave of absence. Communicate with your college to let them know why you want to take time off and when you plan to return. Make sure you ask questions about financial aid implications and try to work out exceptions to get more favorable terms with your school and loan servicer. If you have private loans, contact your lender to discuss your leave of absence and ask questions about how it will affect your loan’s status.

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

Cecilia Clark is a writer at NerdWallet. Email: cclark@nerdwallet.com.

The article Why Missing College This Fall Is a Bad Idea originally appeared on NerdWallet.

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When Colleges Say Stay Home: Options for Undergrad, Grad, Veteran and International Students

UPDATES rules for international students in the last section.

Now that big-name colleges are announcing plans to go remote in the fall due to the coronavirus pandemic, others are expected to follow. How does that change the financial math?

The answer can differ from school to school and depending on whether you are an undergrad, grad, veteran or international student.

Here’s how a switch to remote learning could affect your costs and financial aid.

Don’t expect a break on tuition

Colleges that aren’t fully opening campuses for fall 2020 or are planning a hybrid model (a split between in-person and remote learning) are generally not cutting tuition.

Keep in mind, you’ll be earning the same credits for the courses you complete, even if you’re not getting the same college experience.

But tuition is just one of many expenses you encounter on campus. Your school calculates those expenses — tuition and fees; books and supplies; room and board; transportation and personal expenses — in a single number known as total cost of attendance.

While tuition may not fall, your other expenses might

You may not be paying for meals and a dorm room on campus, but you’ll still eat and sleep.

And your school still needs an official total cost of attendance: It’s used to calculate financial aid, your family’s financial contribution and even how much you can borrow.

Colleges that go remote this fall are factoring at-home living expenses into the cost of attendance. Including these expenses as part of the cost of attendance means you can get financial aid and loans to help cover the amount. At-home costs are typically calculated as less money than room and board.

For example, Harvard University is charging tuition and fees for students studying from home, and it factors personal expenses into the overall cost of attendance.

At UCLA, part of the University of California system that announced it would be majority remote learning for the fall, the cost of attendance includes a higher amount for room and meals if you’re living in an off-campus apartment versus living at home with family.

You may not be able to borrow as much

If you need to borrow to pay for college, there are annual and overall limits for federal loans for undergraduates. Parent or graduate PLUS loans and private loans limit borrowing to the total cost of attendance minus other financial aid.

You can use student loans to help pay for tuition and fees, as well as living expenses, which are factored into the official cost of attendance. Your school determines the cost of attendance, and it is confirmed by your lender. Call to double-check what the new total cost of attendance is if your college goes remote since its website might not have the most up-to-date information.

Be ready to adapt to changing circumstances

If you need more money for college due to a change in your family’s financial situation, you can appeal your financial aid award with your school’s financial aid office. You should also update the Free Application for Federal Student Aid, or FAFSA, you submitted to apply for aid.

If you have short-term financial needs during the semester, your college may have emergency aid available in the form of loans and small cash grants, scholarships to complete a semester, dining hall vouchers and food pantries.

Alternative options for undergraduates

To lower your costs altogether, you could defer enrollment at your preferred four-year school and spare yourself some debt by knocking out prerequisite courses at a community college — in person or online. But you’ll have to make sure credits will transfer to your school of choice.

You can also defer enrollment and take a gap semester or year. If you’re a current student with loans, taking a gap year could trigger repayment to begin. And a gap year mired in travel restrictions, high unemployment and health risks might not be the best option.

You may feel strongly that remote learning is not for you, so you could opt to transfer to a school that’s opening in-person. But consider this: If COVID-19 cases are high enough in your area, schools may shift to remote learning anyway, as they did this past spring.

Alternative options for graduate students

If you’re getting a graduate degree, it’s best to stay the course due to the time, effort and money you’ve already put toward your education.

Being on campus may be necessary — especially if your program requires hands-on research or you rely on student housing. Some schools are prioritizing graduate students when reopening. For example, Yale University has said all grad students can return to campus, while only some undergraduates will be allowed.

Even if your program has shifted to remote learning, you may still be eligible for housing and able to work as a teaching assistant. For example, MIT did not require graduate students to leave its campus and has said that students will receive their stipends, no matter where they work.

If you don’t feel comfortable on campus, your school may let you study remotely or take a leave of absence. Incoming students may also be able to defer admission for a term or year, depending on their graduate degree program and its policies.

If you take time off, any existing student loans you have will likely enter repayment before you reenroll. You can defer federal loans once you’re back in school, but not every private lender offers this option.

Veteran and service member students

GI Bill recipients: A new law allows the Department of Veterans Affairs to continue GI Bill payments for programs that have converted from in-person to online. Normally, online programs need to be approved before the VA will pay benefits, but the new law, S.3503, provides an exception through Dec. 21, 2020, and applies to new and current GI Bill recipients.

Under the new guidelines, if your in-person or hybrid program switches to complete remote learning, you’ll receive the same housing allowance. And the rules haven’t changed for those in online-only programs: You need to enroll in at least one class that normally has a face-to-face requirement to get a housing allowance.

If you are considering changing your education plans and reducing your course load, remember that you need to take a full-time schedule to maximize your GI Bill benefits — you’ll lose out on housing benefits if you’re enrolled half-time or less.

Tuition assistance recipients: If you’re currently serving, consider using your tuition assistance benefits instead of your GI Bill. Tuition assistance typically covers up to $250 per semester hour with a maximum of $4,500 per year and doesn’t have a course-load requirement.

You can use tuition assistance for lower-cost online courses at approved colleges now and save your GI Bill for later to get the most out of your benefits.

International students

Considerations: On July 14, 2020, the federal government rescinded its guidance that would have barred international students through the Student and Exchange Visitor Program from entering with an F or M student visa or remaining in the U.S. if their full course load is online. The announcement came following multiple lawsuits by universities and states against the policy. International students with visas can take all classes online or through a hybrid model and still remain legally in the U.S.

Taking loans: Multiple U.S.-based private lenders offer international student loans to borrowers who have a cosigner who is a U.S. citizen and can qualify. Otherwise, there are two niche lenders that offer loans to international students studying in the U.S.: MPOWER and Prodigy Finance. Contact those lenders to find out what might happen to your loan if your studies are interrupted due to the coronavirus.

Getting more financial aid: International students have few resources when it comes to financial aid since federal aid isn’t an option. But there may be scholarships available for international students from your school or a private organization.

Alternative options: You could consider deferring enrollment with a U.S. university or opt to attend a college in your home country or another one instead.

If you plan to study abroad or in your home country, look for a school that has an existing relationship with a U.S. institution since it can be difficult to transfer credits.

The two niche lenders for international students in the U.S. also finance loans abroad: MPOWER finances loans for international students studying in Canada, while Prodigy Finance lends to students studying in several other countries, including Canada, China, Denmark, France, India, Singapore, Spain, Switzerland, United Arab Emirates and the United Kingdom.

Anna Helhoski is a writer at NerdWallet. Email: anna@nerdwallet.com. Twitter: @AnnaHelhoski.

The article When Colleges Say Stay Home: Options for Undergrad, Grad, Veteran and International Students originally appeared on NerdWallet.

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