Wednesday’s Parent: Cost, loan-fearsome four-letter college words

Fearsome 4-letter college words. Photo by Wendy David-Gaines

Fearsome 4-letter college words. Photo by Wendy David-Gaines

Cost and loan are four letter words that draw sharp reactions from college-bound families. The truth is loans are the way most people pay for big ticket items. People take out auto loans and home mortgages routinely. What makes assuming debt for a college education so scary is not properly addressing the issue of affordability.

It’s no surprise that too many lack the essential skill of college financial literacy. Before higher ed commitments, high finance is usually something students watch in movies or T.V. shows but don’t directly experience. Parents getting ready to focus on retirement will find college costs have changed substantially since their own attendance. So has the average length of time taken to graduate.

There are government and private loans for student or parent borrowers. Usually students take federal financial aid loans first before considering other types because of their favorable terms. However, the amount offered may not satisfy the college bill. Parents often opt for the federal PLUS loan to make up the difference rather than mortgage their home and risk losing it. Private loans usually require more in depth credit checks and students may need a co-signor. It is always wise to compare and contrast terms, loan forgiveness features, repayment plans and interest rates.

Families may use the parent-student team to meet the monetary challenges ahead. They can balance two facts-there is no loan for retirement and starting a career is different than being in the middle of it. Read the articles for details but here are four points to get a plan going now:

  1. Have a college cost talk. The key is for parents and students to get on the same page about the concept of affordability because most teens’ ideas about money are very different from the adults who support them.
  2. Check out college affordability options. Because of need-based and merit financial aid awards, college sticker price is rarely what the college bill will be. Learn how to estimate your costs and ways to reduce them. (Check out my POCS COA for a more realistic formula of expenses not included by colleges.)
  3. Borrow only what you need and can afford to repay. No one can predict the future, but students and parents can estimate what monies they will need to maintain a particular lifestyle and if their chosen profession will provide enough income. It’s about being prepared, saving where possible, and making smart choices.
  4. Never default. When a car loan isn’t paid, the vehicle can be repossessed. When a home mortgage isn’t paid, the home can be foreclosed. No one comes to take away a diploma when there is a default on a college loan. Instead, credit can be ruined, job opportunities lost and dreams smashed.

Read Suzanne’s post: Avoiding Student Loans 


Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Suzanne Shaffer and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

The bonus is on the fourth Wednesday of each month when Suzanne and I will host Twitter chat #CampusChat at 9pm ET/6pm PT. We will feature an expert on a topic of interest for parents of the college-bound.

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from to and vice versa.

The Political Side of Student Loans

Warning sign to keep up with student loan law changes. Photo by Wendy David-Gaines

Warning sign to keep up with student loan law changes. Photo by Wendy David-Gaines

Please welcome the return of special guest Jenny L. Maxey, blogger and author about financing higher education with minimal debt and maximum opportunities. Read Jenny’s important post about how to keep up with the frequent changes in student loan laws and get involved beyond staying informed:

Summer seems to be the designated time of year to get down to student loan business on Capitol Hill, attempting to beat whatever impending change will go into effect on July 1st. In 2013, a new law was passed tying Federal Direct Loans and PLUS loans to the rates of the Treasury plus a fixed rate based on the type of loan. These rates are determined in the spring and then are fixed for the life of that loan. This summer, the U.S. Department of Education has made a regulatory change to help those in default calculate a repayment plan similar to those not in default using the Income Based Repayment plan, allowing some to have repayments as low as $5. Further, President Obama signed an executive order to go into effect December of 2015 that alters repayment plans to extend repayment in order to become more manageable, especially for older borrowers.

The changes come from all over – legislative, executive, administrative. How are you or your college-bound student expected to keep up with it all? Can you? Here are a few levels of activity to help you keep informed about the political side of student loans.

LEVEL ONE:  Maybe you and your college-bound student have better things to do than follow the ever-changing squabbles on Capitol Hill. However, it is important to be informed about the influence those changes can have on the debt you and/or college-bound student are taking on. Here are a few easy ways to keep up-to-date.

  • Before you sign the terms, make sure you understand what is in them. You’ll need to do this every year, but it’s only once a year.
  • If you don’t understand the terms, visit to get the most up-to-date information on government loans.
  • Speak with your Financial Aid office for additional help in understanding any changes.

LEVEL TWO:  If you have an opportunity to dig a little deeper, try these steps in addition to Level One.

  • Add a Google Alert. You can put in keywords such as “student loans” or “federal loans” and receive daily, weekly or monthly updates on what changes are being ensued. Learn how to set up a Google Alert HERE.
  • Do some bill tracking. While this only follows the changes made legislatively, you can follow the debates and where your elected representatives are hoping to steer the conversation. You can track bills HERE.

LEVEL THREE:  Do you want to do more than just stay informed? Get active!  Have an effect on the outcome. After all, it’s you and/or your college-bound student who are taking on this debt. Now that you know the news and are tracking legislation, you can email or call your state and local representatives and ask them where they stand and give your opinion on the matter. Your effort might make the difference in how the issue is amended or voted upon.


Jenny L. Maxey is the author of Barrister on a Budget: Investing in Law School…without Breaking the Bank. Jenny earned a Master’s degree in Public Administration and a J.D., and is licensed to practice law in Ohio. Although her book is geared toward pre-law and law students, most of the information can be easily applied to any level of higher education. Barrister on a Budget is available on and Barnes & Noble Nook. You can find more information and follow her blog on

Wednesday’s Parent: 6 Circus lessons for balancing the budget

6 Circus lessons for balancing the budget. Photo by WendyDavid-Gaines

6 Circus lessons for balancing the budget. Photo by WendyDavid-Gaines

Many kids and parents are fans of the circus. They marvel at the skills of the aerialists, acrobats and animal tamers. They laugh at the antics of the clowns, consume tasty treats and watch the sideshows. There are also powerful financial lessons that may be learned from these performers to help teens learn about managing money.

Many of the college-bound and their parents are about to take on huge college expenses while trying to maintain a certain life-style and prepare for a future one. There will be a host of new purchase opportunities for an already lean wallet. If a house is on the future acquisition list, student debt may prevent the plan. Read Naughty and nice solutions to cut college costs and increase home ownership for more details.

Use these six questions packed into vivid images to start a serious discussion to teach your teen about money management:

  1. When it comes to balancing your budget, are you a juggler or a tight rope walker? Show your child how to create and use a budget by listing expenses and income.
  2. When it comes to spending money, are you the Master of Ceremonies or a clown? Explain the realities of living within one’s means based on their budget compared to a foolish fantasy without a safety net.
  3. When it comes to making decisions, will you choose cotton candy or unbuttered popcorn? Life is about choices including what to spend money on. Parents may help their kids understand how to include occasional splurges into normal routines and still be nutritionally and financially healthy.
  4. When it comes to preparing for your future, are you the lion or the lion tamer? Most teens live in the present but focusing on the future is a great way to prepare the college-bound for what’s to come. Teach your child the benefits of controlling their own finances rather than having debt decide for them.
  5. When it comes to saving for something special, are you the sideshow’s Strong man or the whole three-ring circus? Teach your child how to prioritize financial goals to achieve them one at a time or they may spread themselves too thin and not focus on any well.
  6. When it comes to financial security, are you an acrobat or an aerialist? Both are strong, have great timing and get the job done. The message parents may teach is these are the skills needed to achieve a student’s financial dreams.

For more budgeting tips for teens before college check out Suzanne’s blog:  Wednesday’s Parent: A Crash Course in Money Management 


Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Suzanne Shaffer and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from to and vice versa.