In - Your Guide to College Admissions from The Princeton Review

A “Fair and Balanced” Take on College Costs

News outlets tend to favor a negative spin on current events, and this is certainly the case when it comes to college costs.

Obviously, college costs and student debt have increased dramatically in recent years. Both schools and students need to be more fiscally responsible.

Unfortunately, many media outlets have opted for negatively charged speculations when covering this issue. If taken to heart, statements such as “students borrow way too much” and “student loans are the next mortgage bubble,” can discourage students from investing in their education.

A recent article from University Business addresses some of these speculations and aims for a more rational viewpoint. Click here to check it out.

Do Private Scholarships Help Rich Kids the Most?

Outside or "private" scholarships are awards given by nonprofit organizations, corporations, and businesses to help students to pay for college.

Unfortunately, such awards are often of little help to students who receive need-based financial aid.

Why? A private scholarship lowers a student’s financial need. As a result, many colleges reduce the need-based monies the recipient’s aid package.

On the other hand, affluent students—those who do not receive any need-based financial aid—actually get to use private scholarships to offset the cost of college.

Click here to read more on CollegeAdmissionsPartners.com.

Your Loan-Repayment Options

If you’re a college-bound student, you’ll have a lot to think about when considering the student loans in your financial aid offers.

First, there’s the amount of each loan—how far will it put you into debt?

Next there’s the interest rate—how much more expensive will it become during repayment?

While students are generally aware of the factors above, many will neglect to consider a loan’s specific repayment terms.

Knowing these terms is important. For example, a 10-year repayment term and a 20-year repayment term can feel very different after you graduate. (With the former, you’d make much larger monthly payments but pay less overall.)

A recent post from U.S. News’s Student Loan Ranger notes that certain loans come with more student-friendly repayment terms. For example, many federal loans offer either Income-Based Repayment (IBR) or Income-Contingent Repayment (ICR) options. Depending on how much you make, IBR or ICR can cap your monthly payments at 20, 15, or 10 percent of your income.

Additionally, some federal loans can be dismissed if you make 10 years of on-time payments while working in public service.

It’s important to consider a loan’s repayment options when evaluating financial aid offers. Click here to read more from the Student Loan Ranger.

The Serious State of Student Debt

The New York Times recently began a new series of articles on student debt in the U.S.

As college costs have risen, so has the prevalence of student loans. According to the Times, 94 percent of bachelor's degree recipients now carry student debt.

Recently, the federal government has attempted to help students to better understand the ramifications of college costs. It has mandated the net price calculators seen on college websites and proposed a standardized form for financial aid offers.

However, the responsibility for paying for college ultimately lies with students.

Students should know the consequences of any student loans they might be considering, including the amount and number of monthly payments involved. Additionally, before they borrow, they should realistically evaluate the job market and starting salaries in their fields of interest.

Click here to read more on the Times.

Political Parties Disagree on How to Save Student-Loan Interest Rate

Both Democrats and Republicans say they want the same thing. However, they cannot agree on how to get it done.

Members of both parties say they want to prevent the interest rate on the subsidized Stafford Loan from doubling this July 1. The Stafford is one of the most popular loans for college students with financial need. If its interest rate doubles, borrowers would pay an extra $5,000 in interest on the maximum $23,000 loan.

However, two weeks ago, President Obama threatened to veto a bill passed in the House of Representatives that would reallocate funds from preventative care programs to keep the Stafford’s interest rate low.

This week, Republicans in the Senate filibustered a bill that would pay for the low interest rate by closing tax loopholes.

Frustrated by the political impasse? Speak your mind in the comments section below!

Do Merit Scholarships Drive Up the Cost of College?

For some, the month of April is a sweet reversal on the norm in college admissions.

It is the only time of year when colleges are at the mercy of their applicants; schools can say who is in and who is out, but they cannot force anyone to enroll.

However, colleges rarely leave themselves without any say in students’ decisions. Most use merit-based financial aid to woo the applicants they want most. They know that, regardless of how much money a student has, a financial gift makes an offer of admission much more appealing.

Currently, about a third of college students receive merit aid. At public institutions, merit aid comprises more than half of all funds awarded.

Merit aid might seem like a fairly innocuous strategy; after all, the kids who receive it have earned it through their hard work. However, a recent NPR segment argues that the rise in merit aid has actually made college more expensive overall.

Because merit aid is awarded to students who do not need the money, it reduces the funds available for students with financial need. On the whole, it depletes a school’s available resources and drives up its cost of attendance.

Click here to check out the full segment on NPR.

The Real Impact of the Planned Stafford Loan Hike

Chances are you’ve heard that the interest rate on the Stafford Loan is set to double this summer.

While this has become a major political issue in recent weeks, the actual impact this increase would have on future college students has received surprisingly little attention.

Earlier today, Kal Chany—author of the book Paying for College Without Going Broke—provided USA Today's Money page with some perspective on the loan increase. His points include the following:

• The scheduled interest-rate hike only applies to the subsidized version of the Stafford Loan, which has a borrowing limit of $23,000 for undergraduates. No other federal loans would be affected.
• If the hike occurs, students in a 10-year repayment plan would pay an extra $5,000 in interest for a $23,000 loan.

Click here to read more on USA Today.

A Primer on Student-Loan Interest Rates

With the interest rate on the Stafford Loan set to double this summer, student loans have been in the news as of late.

Amid this news, you may be wondering: how exactly do lending agencies determine the interest rates for different loans? And how will they determine the specific interest rate for your loan?

A recent post on StudentLoanNetwork.com sheds some light on this subject. Click here to check it out.

Obama “Slow Jams” About Student Loans

As you may know, President Obama has been actively campaigning against the scheduled interest-rate hike for the Stafford Loan, which is one of the most popular federal loans for college students.

Earlier this week, he appeared on the “Late Night With Jimmy Fallon” show to deliver a special musical version of his message. Check it out below.

“Buyer Beware” for College Applicants

Unfortunately, those who wish to purchase a college education face several potential pitfalls.

A story appearing on the Huffington Post yesterday states that many financial aid offers mislead students because they describe loans as “awards” and list them alongside grants and scholarships.

To this end, a recent segment on NPR profiles college students who have only a dim understanding of their loans; another Huffington article reminds us that student-loan debt is not dischargeable by bankruptcy.

Want to be a savvy college shopper? Check out the book Paying for College Without Going Broke by The Princeton Review’s financial aid expert, Kal Chany.