Posted On: 2005-11-04
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Good morning everyone it is Friday, November 04, 2005. This is the Financial Aid Podcast, episode 107. Got a lot to talk about today, got a lot of fun stuff and some not so fun stuff in the sense of news, and higher education stuff, so let's get started in a bit. First of all I wanted to talk about something kind of funny, a whole bunch of my co-workers have gone recently in the last couple of days to the MASFAA, Massachusetts Association of Student Financial Aid Administrator conference up in Danvers Massachusetts and one of the things-if you've ever been any kind of conference like a technical conference or whatever, there is always an expo floor and that's where vendors and partners of in that industry really put out little booths and tables and stuff and have all sorts of free stuff to give away. I always find that it's very funny to look at what various companies offer as sort of the give away stuff because I sometimes wonder if they think about what the give aways are saying about their company. For example, there are a whole bunch of student lenders there and a lot of them gave away things like cups, letter openers, and paper clip trays, you know the usual stuff at which to me says, we're not particularly outstanding, but we are also not going to do anything silly, we'll just do a decent job. One lender, I am not going to name any of the lenders because I would probably get sued for slander, one of the lenders gave away microwave popcorn and upon looking at the package more closely, it was a very inexpensive, no it was just cheap brand of microwave popcorn, so I thought to myself, what does that say about this lenders products? Well let's see yeah they're fast, yeah they're convenient, yeah they're nicely packaged and everything like that, but ultimately they're greasy, they're not particularly good for you, and not very filling and in the long term using their product will be bad for your health. That was one, the other one was, I though was kind of amusing was, one lender was giving away a jar of salsa with its brand on it, I had to even stretch to even think of something that would-what message is that send than other than we got a really good deal on salsa at the local BJ's or Sam's club or something like that, I couldn't think of anything, it doesn't say anything except that they have a jar of salsa. Incidentally the salsa is not very good, but the best one of course I thought was the ones who give out branded calculators because that actually says a lot, it says we are accurate, we're focused on financial aid, which is a money function and calculators are kind of handy to have with money. I thought that was neat.
The other thing I wanted to talk about briefly before we get started is the $31 billion in unmet financial need each year; that is a very hard number to wrap your mind around on a physical level because it's just so outlandish. Most of us probably will never have that kind of money, it would be nice if we did, I certainly wouldn't turn it down if someone offered it to me, but to put it in better perspective, imagine that each of the 4,146 college campuses, colleges in the United States, you showed up there and you dropped a quarter on the ground, that's .25 cents, now here is another one, I dropped .25 cents per second there, give or take, that is the $31 billion in unmet need. If you go to every single college campus in America and you drop a quarter on the ground every second for an entire year, that is $31 billion, that is how much money is still needed to fill the gap between the cost of college and financial aid available so that is maybe a mental image, you can imagine how long it would take you to even just transport the money in order to pull that experiment off even for an hour.
Let's get to the news. Topping the news today your tax dollars at work for someone else, the Senate re-works financial aid as part of the Budget Reconciliation measure passed yesterday in the Senate, Thursday that was with a 52:47 vote. The Senate has voted to basically try and reconcile the Federal Budget on the backs of just about everyone who goes to college. The plan in the Senate Bill will essentially raise student loan rates in interest rates and fees of costing on average an additional $5,000 to the cost of getting an under graduate degree according to the United States Student Association. One of the big rate hikes is in the PLUS loan. The current rate for the PLUS loan, which okay I got to plug at it, www.parentplusloan.com, the current rate which is 6.1% which is basically T-Bill plus 3.1%, the Senate's new plan is to raise that interest rate to 8.5%. The presumption is by raising the interest rates above market value, above where you can find on the market place, the people who take out the Federal student loans will be paying a little more and then the extra money that was taken from the interest rate hikes will be devoted to other national priorities. This is rapidly becoming the catch phrase in Washington D.C. The other thing is that we will also increase lender fees and things which of course will be passed down to students. The Bill now needs to be reconciled with the House Bill that has very different writing, we've talked a lot about House Bill in the past, the Senate Bill has fewer, I guess fewer overall cuts, but the cuts that it makes are more drastic.
The two organizations the House and the Senate will now need to reconcile their bills and try and figure out how to make them all work together. What does that mean for you? Well, let's take a look; I'm going to go to www.studentloanconsolidator.com here that is the only other place I know that has a calculator that works well in the-I kind of wrote it. $30,000 at 6.1% ; you are basically looking at a $335 monthly payment for 10 years assuming you didn't consolidate, if you did consolidate it, it would be $217 a month. Now let's take that up to the Senates 8.5%, $372 a month or $260 after consolidation. $372 a month, first there's $335 a month; $375 minus $332 you're talking about $43 a month extra on $30,000 of loans $43 a month that is the price of a decent dinner or a couple of lunches out. Let's multiply that time 12, now you are talking about $516 a year times 10 and of course you've got now, $5,160. They're basically talking about adding an extra $5,000 onto the existing loans to try and pay for other national priorities. If you don't like this idea, remember these bills are not final they still have to go through a couple more revisions and so now would be the time to call Washington and let them know-eehh not so much on the student loan, Budget Reconciliation at the cost of Higher Education.
Speaking of the cost of Higher Education, inside Higher Ed reports that there is yet another conference going on right now, the TIAA Craft Institute, the pension giants' research arm brought up a group of college administrators together for a conference to discuss college costs and things and their basic consensus is that the Higher Education system in the United States is basically coming up on a financial crisis, because they continue to have to outspend each other to attract students, professors and talent and things basically to stay in business. Education is a business, but this comes at a time when they expect states at the very least to maintain level funding for Higher Education and in the worst case reduce Higher Education funding to resolve structural budget deficits. A couple of interesting points in the article, one is that those colleges are increasing looking at four profit ways of raising funds to stay in business, this includes technology, transfer licensing, online programs charging different tuition for different programs all sorts of different things, presumably if you are going into Biochemistry you would have a different tuition plan than if you were going into 17th Century Literature. The other interesting aspect is-one of the other interesting aspect is that for profit colleges are actually doing very well in terms of both getting students graduated and keeping the doors open. The downside of for profit colleges according to the article is that they only offer degrees for programs to which there is an immediate bottom line profit. One last interesting point in the article points out that the states, the United States, the individual states are running budget deficits now and are projected to run budget deficits through 2013. This is due to a number of economic factors but the bottom line is that public schools, public state schools can expect basically rapid tuition increases for the next eight years. This is unfortunate because in the past public state schools have generally been much more affordable than private schools, the private non-profited colleges and things like that. Higher Education may very well have to completely change its business model in order to stay in business, never mind growing and things like that, just to keep the doors open they may need to change the way they do just about everything. A very interesting article from there from www.insidehighered.com as well. All right let's get to a scholarship update.
Today's scholarship update, more loan forgiveness programs, got a lot of feedback yesterday and actually we've been getting in general about people who want to know more about how to get loans forgiven after you've taken them out rather than the scholarship aspect. Which we are going to cover both obviously, but here are four programs that involve loan forgiveness. Basically you apply for these the same way you would apply for a scholarship except these usually don't have the essay requirements either, the four we are going to cover today involve volunteering your time. You volunteer with these organizations and in return they will forgive a portion of your student loans. First one AmeriCorp, serve for 12 months and receive $7,400 in stipends plus $4,725 to be used towards your loan. Now that is annually, you can find more information at www.americorp.org. The Peace Corp, volunteers may a deferment in Stafford and Perkins consolidation loans and partial cancellations in Perkins loans, the 15% for each year of service. Volunteers to Service to America the VISTA program, volunteer with private non-profit groups that help eradicate hunger, homelessness, poverty and illiteracy, provide 1,700 hours of service and receive $4,725. 1,700 hours of service by the way works out to 70 days total, if you figure that on an 8 hour day, that is 212 days so effectively it's about 1 year of business. 212, what is that 52 times 5, yeah it's slightly less than a year. The final program of course is, let's see, how could I forget it, the Army National Guard. Volunteer in the Army National Guard and qualify for their student loan repayment program, that is part of the Montgomery G.I. bill which offers up to $10,000, the only downside for volunteering for the National Guard is that you may end up going to places that are very sandy. If you don't like that idea, that's probably not the best one to volunteer for.
As always you can find this scholarship information on our new experimental site, I do emphasize the experimental part, www.studentscholarshipsearch.com spent some time yesterday getting a few of the scholarships from previous shows, so now we've got about 20 some odd scholarships on the site. Again, please take a look at the site, if you have feedback, about it as well, you can e-mail me at firstname.lastname@example.org would be more than happy to take your suggestions into consideration as we build out this scholarship resource. I was looking around yesterday in DEMA, is the open directory for scholarship information hoping that I could find some stuff to import, and I was actually pretty surprised at how sparse the directory was given that DEMA is considered to be the directory of authority when it comes to websites. Hopefully our scholarship search site will prove to be more useful. The loan forgiveness program is today's scholarship update.
Time now for some News You can Use, if you are interested in finding out more information about your student loan, your Federal student loan portfolio, the best way to do that is to use a loan locator service, like the one at www.studenloanconsolidator.com which basically frames in the National Student Loan Database System which is part of the Department of Education. By signing up for the free service by the Department of Education, you can find out basically everything you need to know about your Federal student loans everything from the interest rate you're paying, payments you've made, your current balance, your payoff statements, and really who's got your loans and who's servicing them and everybody involved with your loan portfolio. Check out the loan locator service, it's a free service that is incorporated into www.studentloanconsolidator.com, you can find this on the front page under section 2 of the loan locator service. Works pretty well actually, I was looking at my student loans the other day and realized that I have about 22 grand to go on my graduate school loans, which just are-there's a lot of them. Let's move on now, I think we are going to tie things up here with a piece of Podsafe music, I almost kind of want to do two, I wonder what I am doing for time here, 15 minutes; yeah I'll do one today, maybe I'll do a music show this weekend. Today's Podsafe music is Shelly Cousins, "Same as Me."
That was "Same as Me," by Shelly Cousins and that is going to do it for today's show, that was of course from the Podsafe Music Network the best source for really Indie Music for podcastors. That is today's show as always feedback at email@example.com that we've been doing this new format for a couple of days, let me know what you think about it. If you like the new format, if you don't like the new format, let me know one way or the other. Show notes are also at www.financialaidpodcast.com and if you really like the show get a friend or two subscribed to it, if you are not subscribed to it, if you are just downloading this as an MP3 file get subscribed so that you never miss an episode. You can do so, there is directions for this at the website, simple three step process, you basically download the new version of iTunes, click subscribe to podcast on the advanced menu and type in or copy and paste the URL right off the web pages directions. Reminder also, if you haven't already, the Ipod Nano give away is on the website as well, we're going to do that drawing on December 1 and next Friday November 11 we are going to do the drawing for the iTunes Music Store $15 gift cards. We are going to give away at least five of those, so make sure that you take a look at that, you basically have to fill out a quick survey asking about the sources of financial aid and you'll qualify to be entered into that drawing as well. So we are giving away lots of good stuff and it's not salsa, it's not microwave popcorn, it's actually devices that let the world know that you are plugged into the best in Podsafe Financial Aid. I think we are one of the only ones that offer Podsafe Financial Aid, anyway, see you next week, and take care.