Smart College Buyer

29/07/2024

Car loan 🚗 vs student loans 👨🎓 💸 - How to balance them

This is an unfortunately common question. Student loan balances are at record highs, and car loan payments are higher than ever. Both put a huge strain 🤬 on family finances - and still have to handle a rent or mortgage payment.

In the article by and GOBankingRates , you see the common advice to prioritize the loan with the higher interest rate.

I respectfully disagree with the person who shared that tip.

If loan payments are squeezing family finances, I would argue that prioritizing other loans, regardless of interest rate, may be better.

I also share why I think prioritizing paying car loans, regardless of interest rates, is the right way to go. There are other factors involved.

Thank you to and for including my thoughts in the article.

Link to article - https://www.gobankingrates.com/money/financial-planning/always-picking-between-car-and-student-loan-payments/

The resumption of student loan payments has taken a toll on many borrowers. There are 44 million Americans with student loan debt and the average monthly student loan payment is $503, according to the Education Data Initiative. The average borrower takes 20 years to repay debt, so it's no surprise t...

19/07/2024

Is your college bound student working this summer? 💪 💲

Who's hiring? It's a question that parents and students often ask regarding summer jobs. For students who need a little bit more 💲💲💲 before heading off to college, what are the best choices for work?

Here's an article from my friend drnafeesah discussing different jobs that teens can do - though do paper routes even still exist???

That was my first job. Riding my bike 🚲 to deliver newspapers. And I remember wiping out one day 😵 🩼

Thanks for including my thoughts in this article.

Link to article - https://www.investopedia.com/how-to-make-money-as-a-teen-7550056

Teens can make money with a variety of job types like babysitting, lifeguarding, or lawn work. Now, teens have more opportunities to make money online as well.

17/07/2024

Student loans without co-signers? 🖋

It's a very common question that parents ask on social media. The parents don't necessarily want to take on the debt, but they need to pay for college.

I'll cut to the chase - there are VERY few options for loans without co-signers.

But there are some options, if you meet certain conditions.

Many thanks to and CNN for sharing my thoughts on this topic!

Link to the article - https://www.cnn.com/cnn-underscored/money/best-student-loans-without-cosigner

08/07/2024

4️⃣ BIG student loan mistakes - and none of them is about the interest rate

I see over and over parents asking where to get the lowest interest rate for a student loan. 🤔

Yes, that is important. But it's hardly the most important factor.

All too often families view loans as simply a transaction to purchase something - a house 🏠, a car 🚗, and yes, college 👨🎓. Loans are tools that should be part of an integrated financial plan 💲📈

Many thanks to and CBS News for including my thoughts for this article.

Link to article - https://www.cbsnews.com/news/big-student-loan-mistakes-experts-say-to-avoid/

02/07/2024

Earn, Save, Spend...in color❗️ 🖍

A few weeks ago, I had the honor of connecting with and learning about her financial coaching firm, .

It was a great conversation to learn about how she helps her clients and gets her message into schools and organizations about finances and financial literacy.

The best part - she has a book! 📕 Earn, Save, Spend - and it's illustrated! Not many personal finance books are easy to read and are visually appealing.

Thank you Laura for sending me an autographed copy.

You can buy her book on her website at https://financiallab.us/

01/07/2024

Shhh...it's a secret! 🤫

This article highlights something I've been telling families all along. Grades and test scores are important, but far from the only things that matter in college admissions and financial aid.

I find that item hashtag #4️⃣ has more impact on aid than item hashtag #1️⃣. But that doesn't mean DI doesn't matter. In fact, not only can DI matter, but the lack of DI can also matter.

Several years ago, a well-known private school would admit students with merit aid (if they qualified) even without any DI. However, if that same student then appealed for more aid, the answer was automatically NO❗️

Why?

Because the school knew that the student wasn't serious, and they were likely being used to negotiate against other school offers. But the student would was very unlikely to attend in these cases.

The "problem" with this information is that asking colleges for this info is like asking for the secret formula to Coca-Cola or KFC.

Even I have a hard time sometimes to get this info. It takes asking the right, nuanced question and listening for the right, nuanced answer.

But this is truly the "game" of college admissions and financial aid. And the better a family plays this game, the better their odds of getting in and getting aid 💲

Thanks Robert Farrington and The College Investor for publishing this article!

When applying for college, academics and extracurricular involvement are essential, but not the only factors. Here's what colleges secretly look for in students.

28/06/2024

Last minute aid for college? 🙏 💲

Students are almost off to college, but getting a little bit more aid can always help.

Where do you look?
What do you need to do?

I shared my thoughts with and Forbes for this article.

Link - https://www.forbes.com/sites/robertfarrington/2024/06/28/how-to-secure-last-minute-financial-aid-this-summer/

26/06/2024

A quick primer on need-based aid 🤓

There's so much confusion around aid for college. What it is, how it works, what it is based on, and so on...

Here's a quick article on need-based aid. But note that just because you qualify for need-based aid, that does NOT mean you will get it 🤬

Many thanks to and Business Insider for including my thoughts on the important and confusing topic!

Link to the article - https://www.businessinsider.com/personal-finance/need-based-financial-aid

Learn how to qualify for need-based financial aid, understand the types available (grants, loans, work-study), and navigate the application process.

24/06/2024

Did you get a good aid offer from your student's college? 🤔💲

Reading financial aid award letters 📄 can be extremely confusing. Determining how much you actually got, what each depends on, and what you have to pay back, or not, can is hard enough! 🥵

Even after figuring all of that out, did you actually get a good offer❓

It's hard to tell, but a big thank you to and Forbes for including my thoughts in this article.

Link to the article - https://www.forbes.com/sites/robertfarrington/2024/06/21/how-to-know-if-you-received-a-good-financial-aid-offer/

Families across the country are deciding if they are receiving a good financial aid award, and making final college acceptance decisions.

21/06/2024

Use credit cards 💳 to pay for college? 🤔

Right now, parents and students are trying to figure out how to actually pay the college bill. Direct loans? Parent PLUS loans? Private student loans? Home equity loans?

But credit cards?

You can do that? But don't they have really high interest rates?

Yes, you can. But there are things to watch out for 🤓

I shared my thoughts with in this article for GOBankingRates

Link to the article - https://www.gobankingrates.com/saving-money/education/pay-for-education-with-student-loans-credit-cards/

19/06/2024

Are 529s the best way to save for college❓ 🤔

It's a question that I'm often asked - what is the best way to save for college. While 529 savings plans are extremely popular, 🙌 they might not be the *best*.

Yes, some states even offer state income tax benefits for contributing.

In my opinion, that doesn't overcome my main objection to 529s. 🖐

I shared my thoughts with in an article for .

Link to the article: https://groovemoney.org/5-downsides-but-1-is-a-myth-of-a-529-plan

11/06/2024

$100k of private student loans...or
Why parents need to think about getting their kids THROUGH college and after, not just TO college 🎓

This video came out a while ago, and I don't know this creator. Brandon and Lucy shared their personal finances in this video. There are a lot of takeaways from their situation.

(Now, I think these newly weds have bigger problems than just money. But good for them for at least talking about it!)

There's lots of blame to go around on this. Hindsight is 20/20 🤓, but this situation screams that the family didn't think about the long term. This is nothing against her major or whereever she went to college.

➜ It seems like that her choice of major and going to a private college was hers.
This is quite common as parents don't want to quash their child's dream. Student gets into dream school and maybe didn't get a lot of aid. But student *really* wants to go and parents will "find a way to make it work".

It usually doesn't work down the road. 😭 This is a huge decision that should not be left to an 1️⃣8️⃣ yr old!

➜ Differences between private and Federal loans are important!
Not going to say that they shouldn't have borrowed, because that is done. But they used co-signed private student loans, which do not offer income-based repayment plans.

Private loans offer more choices upfront, but Federal loans offer more options after getting out of college.

These guys are now stuck. For Lucy, her Direct loans could be on the SAVE plan, which waives any interest accrual that exceeds the monthly payment. Her balance may not go down, but it wouldn't go up.

For Dad, he could have used the PLUS loan. Given his job for the National Weather Service ☀️⛅️❄️, he could potentially qualify for Public Service Loan Forgiveness.

How they chose to pay for school is now a huge burden around their necks instead of having clear avenues to help their finances and get out of debt.

Now, I'm not against private student loans. They can offer some competitive interest rates and offer features such as co-signer release that PLUS loans do not.

➜ Dad's retirement plans may not work out
Dad wants to retire in the next couple of years, but he's carrying the bulk of the student loan payments. I have no idea what his finances look like, but I'm certain he's not so excited about making these payments after he leaves work.😢

He is feeling the impact of the decision he made (or lack thereof) 12 years ago (she's 30 in the video, I'm assuming 18 when going to college).

➜ There is a difference between paying down debt 📉 vs building wealth 📈
This is one part where I agree with this husband. Student loans are their own animal, separate from credit cards, auto loans, etc. Consumer debt generally should be paid off, especially if it is high interest rate. But student loans - particularly Federal student loans - should be treated separately as they have features that no other type of debt has.

While most of us are taught to pay off debt, that is not always the smartest play. Saving, investing and building wealth may lead to a better future financial outcome. Not saying to skip making payments on the debt, but any extra payments may be better by saving/investing. After all, when debt is paid off, there's no more interest charged. But when saving/investing, interest can continue to grow for you for years.

As a complete aside, Brandon mentions that his hobby is track days - basically auto racing 🏎 . If you've never done this, it is an EXPENSIVE sport. I used to do this myself. Tires, brakes, maintenace, fees to drive on track, and travel - it all adds up. A lot!

I do feel bad for this couple while wondering exactly how this couple got together. They are now living the consequences of decisions made years ago.

Her family focused on her getting TO school, and not on getting THROUGH school and after.

Here's the video link:
https://www.youtube.com/watch?v=84eAKV7MRd4

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04/06/2024

Co-signer release...AFTER graduation. 👩🎓🧑🎓

One of the most common questions I get about private student loans (besides interest rate) involves the co-signer release provision that some lenders offer. Parents of undergraduate students usually co-sign ✍️ for their student. Traditional students (kids who are generally 18 and going from high school to college, and otherwise financially dependent on their parents) themselves cannot get loans on their own.

One thing to remember is that as a co-signers, parents are LEGALLY responsible for paying the loan, even if they expect their student to pay the loan. Any loans that are co-signed do appear on the parent's credit report and can impact the parent's ability to borrow for other things, such as a mortgage.

Some, but not all, private student loan lenders offer a co-signer release provision. This means that the co-signer can be removed from the loan. Parents want to know how soon they can take their name off!

But it's not quite as simple as parents think.

To qualify for co-signer release, you must meet ALL‼️ of the following criteria (the specific details can vary by lender)

✅ Make 12-48 on-time monthly payments - when payments are actually required
(Typically AFTER graduation)

✅ Student works full-time
(usually means AFTER graduation)

✅ Student earns sufficient income to cover the loan payment at a level the lender requires
(this is the debt-to-income ratio, which includes the loan payment, rent, and any other required payments on other debt or credit cards in the calculation)

✅ Student has a sufficient credit score as determined by the lender, at the time of the release request

❗️Remember, not every private student loan lender offers co-signer release

I've heard too many stories and fielded too many questions from parents with debt asking about getting their name off. Because they didn't research these things in advance, many parents are just stuck until their student can refinance the loan without the parents.

28/05/2024

Federal student loan interest rates are higher for this coming year! 🤬
But is that a bad deal? 🤷

Recently, the Dept of Education announced the student loan interest rates for the upcoming 24/25 academic year.

Direct loans for undergraduate - 6.53%
Direct loans for graduate - 8.08%
Parent PLUS - 9.08%

Each of these is approximately 1️⃣% higher than the rates for the 23/24 year.

Of course, the reaction on social media was immediate and obvious! Most people were asking about private loan options.

While no borrower likes higher interest rates, the real question to ask is how these rates compare to other options? And BTW, it's not just about the rate.

Generally speaking, private loans offer more options upfront.
✅ Choice of borrower - parent, parent co-signing for student
✅ Type of interest rate - fixed or variable
✅ Type of payment while in school - none, interest only, or full payment
✅ Term of repayment - typically between 5 - 20 years
✅ Potential for co-signer release feature

Federal loans are clear on the borrower (student for Direct loans, parent for Parent PLUS loan), the interest rate (fixed), payments (none during school), and repayment term (typically 10 years).

However...for private loans...
❌ No income-based repayment plans
❌ No loan forgiveness programs
❌ Limited forbearance options
❌ No or limited discharge options due to disability
❌ And most importantly...full credit underwriting

I can't tell you how many people said "XYZ lender offers x% interest rates, which is much lower than the PLUS loan".

The fully underwritten part is a key difference between private and PLUS loans. And in large part determines your interest rate.

Lenders look at ✌️ factors - not just student loans. Any type of loan considers these same 2 factors:

Credit score - this basically tells the lender if you make on-time payments
(Yes, there are other factors that go into credit score, but the biggest factor is whether or not you pay your bills on time!)

Debt to income ratio - this is where the rubber meets the road. This tells the lender whether you have the money💲to make the payments. This is the MOST IMPORTANT FACTOR.
(Don't believe me? Walk into a bank and ask to apply for a personal loan. Tell them you have great credit but no income at all. See what happens... 🫣 )

To calculate your debt to income ratio - take the sum of all of the required monthly payments for all of your loans, credit cards, mortgage (or rent). Divide that by your gross monthly income - how much you make per month before taxes, 401k deductions, health insurance deductions, etc.

The bottom line is that there are loan options besides the Federal government. But you might not get a lower interest rate than what the Fed offers.

For many families, the interest rates on Federal loans don't look so bad.

22/05/2024

Those college bills are coming! 😭
When should you finalize plans to pay for college? 🤔

Time is ticking away. ⌛️ With all of the delays and errors this year, it is imperative for families to know what to look for and what questions to ask! 🙋

There's loans to consider, properly taking distributions from , while making sure that the college bill is actually correct❗️

Many thanks to Robert Farrington for including my thoughts in this article for Forbes

Link to the article is here:
https://www.forbes.com/sites/robertfarrington/2024/05/21/when-to-finalize-paying-for-college-this-year/?sh=58a96ed95c9d

While the 2024 - 2025 academic year has gotten off to a rough start, colleges are not delaying when to actually make payments this fall.

10/04/2024

Retirees and student loan debt 😭⚓💵

With the cost of college only going up ↗️, more parents and grandparents are carrying student debt towards or into retirement.

✅ Time when you want to enjoy life
❌ Not a time to be burdened by another payment that might stretch for years

Here's an article from GOBankingRates quoting me on strategies to pay off debt in retirement. Many thanks to for allowing me to contribute.

Link to the article:
https://www.gobankingrates.com/loans/student/how-retirees-pay-off-student-debt/

Tips for folks in their Golden Years to live student debt free.

05/04/2024

A college admissions and financial aid look at the March Madness teams 🏀 Part 3

Let's take a look at the field of 68, but not wins/losses or RPI rankings.

Private schools - highest cost of attendance (2022) - Northwestern University - 89,934
Private schools - lowest cost of attendance - Brigham Young University - 21,120

Public schools - in state - highest cost of attendance - Univ of Virginia Charlottesville - 38,132
Public schools - in state - lowest cost of attendance - Univ of Florida Gainsville - 21,811

Public schools - out of state - highest COA - Univ of Virginia Charlottesville - 73,704
Public schools - out of state - lowest COA - South Dakota State University - 26,444

04/04/2024

A discussion on college financial aid and the 5️⃣ ways to save for college

Many thanks to , host of the Well Informed video podcast for having me as a guest.

We discussed college financial aid, ways to save for college, and considerations for the rest of your finances 💲💲💲

Link to the episode:
https://youtu.be/UEr7zT95_mk?si=iEJzi46g_Y1KFc4l

Well InformedHost Mark CardozaGuest Jack Wang2/20/24

02/04/2024

Federal student loans - subsidized vs unsubsidized
How do they compare? 🤷

It's a question that parents and students will have to think about - as soon as their processes and colleges get out financial aid award letters.

There is an important difference between the two - a difference that can save 💲💲💲💲over time.

Here's an article in CNN Underscored that I was able to contribute some thoughts to.

Many thanks to , , and for including my thoughts.

Link to the article is here: https://edition.cnn.com/cnn-underscored/money/subsidized-vs-unsubsidized-loans

Explore the differences between subsidized and unsubsidized student loans to make an informed borrowing decision.

29/03/2024

A college admissions and financial aid look at the March Madness teams 🏀 Part 2

Let's take a look at the field of 68, but not wins/losses or RPI rankings.

Highest SAT score - Duke University - 1550
Lowest SAT score - Grambling State University - 910
There were 10 schools that did not report or are test blind.

Highest ACT score - Duke University - 35
Lowest ACT score - Grambling State University - 17

Highest 4 year graduation rate - Duke University - 91%
Lowest 4 year graduation rate - Grambling State University - 17%

NOTE: A high or low 4 year graduation rate doesn't indicate educational quality as many students take more than 4 years due to co-ops, internships, or other requirements of a degree program.

22/03/2024

A college admissions and financial aid look at the March Madness teams 🏀 Part 1

It's the first weekend of the March Madness tournament. And my bracket is already busted...oh well! 🤦

Let's take a look at the field of 68, but not wins/losses or RPI rankings.

Private schools - 20
Public schools - 48

Uses CSS Profile - 6
FAFSA only - 62

Largest school (2022 undergrad enrollment) - Grand Canyon Univ - 66,769
Smallest school - Wagner College - 1,653

Received the most applications for 22/23 - San Diego State - 77,250
Received the fewest applications - Wagner College - 2,645

Lowest acceptance rate for 22/23 - Yale University - 5%
Highest acceptance rate - Western Kentucky University - 97%

16/03/2024

Optimize College Funding & Why 2024 is Best for Tuition Negotiation

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Sun, 3/17
800p ET
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20/02/2024

Had a lot of fun this morning recording being a guest on Well Informed, a show produced by Mark Cardoza at .

We discussed all things financial aid.

And he was nice to share a copy of his book.

Thanks Mark!

14/02/2024

If you own it, you have to report it 📝

I hear this from so many people - and twice today and it just drives me F!@ #$% nuts!!! 🤬

Today, I had calls with a few prospective clients where they had some money 💵 that was intended for another purpose other than paying for college. And in both cases, they asked me if they had to report that amount on the .

✅ Yes. The simple answer is Yes.

And in both cases, their response to me was that they heard from someone else who told them that since the money was intended for something else, they did not have to report it.

❌ That is not true at all. Nowhere in the financial aid regulations/instructions state that if you want to use the money for something else, you don't have to report it. ❌

I told both people that when it comes to assets reported on the FAFSA or :
💲 The intended use does not matter
💲 Liquidity - or how easily they could sell an asset - does not matter
💲 Accessibility does not matter
💲 If it is an asset that, when sold, might lead to a huge tax bill does not matter
💲 If they inherited the money or has sentimental value, that does not matter

The rules might not be fair ⚖️, but those are the rules.

Of course, both were disappointed in my answer.

I told both that now they know the correct answer, the next question they should is:

✅ What can be done about the situation so it doesn't blow up their chances for aid?

That is a different question and a different answer. And a question that far too few families ask.

The lesson here:
1. Make sure you get information from those who truly know.
2. Ask the right follow on questions - just because you know something doesn't mean you know what to do about it.

09/02/2024

Taxes - an often overlooked part of paying for college! 😤 💸

Paying for college can sting for many families. And the impact can be worse if a family has to borrow for college.

So...tax deductions and credits can help take a little of the sting out college costs.

Here's an example of a small tax deduction that people often miss but is an easy way to lower your taxes and college costs.

Many thanks to and U.S. News and World Report for allowing me to contribute to this article.

Link to the article below 👇
https://money.usnews.com/loans/student-loans/articles/how-to-claim-your-student-loan-payments-on-your-2023-taxes

If you're eligible, take advantage of the student loan interest deduction to reduce your taxable income.

30/01/2024

Federal Student Aid announced today that FAFSAs will not be processed until mid-March.

This means that no college anywhere will get any FAFSA data from anyone until at least then. And it also means that families won't get financial aid award letters until the end of March or even early April.

Nor will families be able to go in to correct anything put on the FAFSA or send to additional colleges until then.

Why?

In the law that authorized the new FAFSA, signed into law at the end of 2020, the income protection allowance - which is a deduction from income based on household size - should be adjusted for inflation each year.

When Dept of Ed built the new FAFSA, they put in the income protection allowance but did not build in the inflation adjustment. So this delay is all about rebuilding those calculations.

The advantage of the delay is that the fear on the college's part was that they were going to be FAFSA data at the end of Jan, but then had to recalculate aid again when those tables were adjusted. Now, the colleges can be confident that the FAFSA data they receive will be correct with the correct IPA.