This month we continue the discussion about kids and money on the topic that often feels like a looming gray cloud from birth: paying for college. Get to know two of our student loan experts from Credit Union Student Choice: David Rodriguez and Tracie McGetrick. Our host Janene offers the perspective of a parent who crossed the "paying for college" finish line just a few years ago.
(Yes, even if your storm hits this year!) Whether you have saved a lot or a little, you can help your student make post-high-school education possible, and you don't have to do it all alone. Learn about the value of the FAFSA (even if you think you won't get anything...surprise! you might!), and how to understand and prioritize loan options. Learn about the annual "calendar of events" that plays out each year a student is enrolled, and how it changes between freshman year and the rest. (Surprise #2: being the squeaky wheel can truly pay off, too: ask for more, and you just might get it.) Just like last time, learning about this topic can never happen too early. And if your student is enrolled this fall, this episode is especially important!
(2:39) Get to know today’s guests, starting with David Rodriguez, Credit Union Student Choice Director of Strategic Partnerships, and,
(7:43) Tracie McGetrick, Credit Union Student Choice Vice President of Business Development
(9:40) Paying for College is possible! Let's get start
(11:00) Where to begin? It's all about the FAFSA. It is open for students and their parents starting October of the senior year in high school. It's not as hard as you may think and only takes about 20 minutes.
(12:45) The first FAFSA benefit: Federal Direct Loans. They are in the student's name and are not dependent on income or credit history, but they are limited. This is a low cost loan, or as David noted: "This is the cheap money," but they still need to be paid back in most cases.
(14:35) the second FAFSA benefit: state and university grants, otherwise known as gifts. These do not need to be paid back, but apply early for best results. They often set FAFSA application deadlines.
(18:36) Tracie shares that there is a big fallacy out there: "I'm not going to get anything, so I won't complete the FAFSA." The FAFSA holds the keys to many things, even academic scholarships sometimes require a FAFSA application.
(20:30)Will mom and/or dad contribute to expenses through savings? Will they budget a monthly amount? Will they apply for a Parent PLUS loan (just be aware that the student is not responsible for them) or other traditional loan?
(22:20) Tracie reminds us that universities often offer payment plans if parents want to budget a monthly amount for the school year. She also suggests that it is important to plan for more than just the first year. Look at the big 4-5 year picture and plan accordingly
(24:20) Remember that you don't have to figure this all out on your own. Help is available, from online resources like www.uecu.org/cueitup, to staff at UECU and Student Choice (info below).
(27:50) After the federal loans, grants and scholarships, how do you fill the gap that remains? That is where traditional loans or private student loans come in. For most of these loans, you must reapply for a new loan every year.
(29:30) UECU's Undergraduate Student Loan works differently. It's a line of credit that can be used each year that a student is enrolled, and requires only a quick check in with UECU to release a new amount each year. One loan means just one payment after school is over. Simple and easy.
(31:30) There is an annual "calendar of events" each year that a student is enrolled. It starts with the FAFSA in October of the prior year, and is followed by university award letters so you know what the gap is for the coming year. Janene notes that those award letters come fairly early for Freshman, but returning students may not hear from their university until July. Private student loans typically open up for applications in May.
(35:00) If your student is attending a technical or trade school, the options for student loans are not always as readily available, but UECU has traditional loan options available for parents. UECU believes in the value of skilled trades, and we want to help the next generation enter these careers.
(39:00) As your student heads off to school there are still ways to save money. Not everything is a fixed cost. Help your student finds ways to save where they can to keep the student loan totals as low as possible. (They can even have a job, even if only in the summer. Paying some costs out of pocket is always a great idea.)
(42:15) Talk to your students about money, the earlier the better, and involve them in the loan and FAFSA application process. On the back end, some of these loans will be their responsibility.
(44:00) After they leave school (hopefully as a graduate!), deferred payments will have a start date! Even with the current deferments of Federal loans, that is not the case for private loans. And for those in deferment, it's important to know who the servicer is, and to begin to work with them. Keep your information updated for when payments begin (again).
(46:51) Once repayment begins, you have options. Find out what they are. They may include a co-signer release (for private loans) like UECU's student loan where after a few years of on-time payments, you can apply to have your co-signer released from the loan obligation. What a nice way to say "Thanks Mom/Dad!"
(52:48) Refinancing isn't just for mortgages! If you have a high rate private student loan, now is a good time to consider refinancing while rates are still low. Even if you hold back on Federal loans until decisions are made about them politically, you can apply to refinance a portion of your loans to lock in lower payments at UECU. You can refinance again later to add Federal loans to the mix if it makes sense to do so at that time.
(54:48) Ask for help from an expert: Student Choice has college counselors available to discuss your options. More knowledge is always a good thing.
(17:00) David: "Ask for more." After your initial reward letter comes in as a Freshman, call the University Financial Aid office after you accept. Others chose to go somewhere else, and the funds set aside for them may be available to increase the amount awarded to you. Don't be afraid to ask. David noted that in most cases, the student gets more...but only if you ask.
(58:50) Tracie: Regarding the whole paying-for-college challenge, "It starts with choosing the school." Help your student look for an affordable option that is best for them and their course of study. General guidance: Your first year's salary should be pretty close to your student loan total. (Check online for starting wages in their chosen field...that's a great place to start.)
(59:23) Janene: "Allow extra." When you apply for a loan to fill the gap the first year, apply for a bit extra. Set the extra aside as a cushion for unexpected expenses (like next year's rent due early!). If you never need it, you can simply pay it back to the loan.
UECU's partners at Credit Union Student Choice:
UECU's free CueItUp E-courses discussed today:
Free government website all about Student Financial Aid: www.studentaid.gov
What will your student's entry level salary be?: www.salary.com