TIME Higher Education

Fewer Students Are Working Their Way Through College

Students taking on more debt to handle rising costs

Fewer students are taking up part-time jobs in college despite the soaring cost of higher education.

Citing data from the Labor Department, the Wall Street Journal reports that just 44% of college students between the ages of 16 and 24 held down either part- or full-time work during 2013, down from a peak of 56% in 2000. The 2013 figure was the lowest since 1985. The overall unemployment rate for job-seekers in this cohort has ticked down steadily in recent years along with the broader population.

Though fewer students are working, college costs are rising rapidly. Over the last decade, the average cost for tuition, room and board at a public four-year university has risen 37% to $18,400 during the 2013-14 school year, according to The College Board. Private university costs have risen 24% over the same time period. Students are taking on these costs by assuming more debt. More than 70% of seniors graduated with student loans in 2012, up from 68% in 2008, according to the Institute for College Access & Success. Seniors’ loans totaled $29,400 on average in 2012, up from $23,450 in 2008.

MONEY College

Scholarship Judges’ Secrets Revealed: Three Essay Topics Likely To Win Money

...And one topic that will definitely get your application forwarded to the circular file.

Every year, companies, non-profits, charities, churches and clubs award about $6 billion in private scholarships to undergraduates.

But many students fail to apply because they get stumped by the essay requirements, while those that do decide to submit often recycle a familiar theme—”here’s why I need the money.” But everybody who’s applying needs money.

The more likely path to reward, judges say, is to demonstrate why you’ll be a good investment of their scholarship dollars. Three topics that can give you that edge:

1. What you love and why. Do you love your dog? Your church? Basketball? Your shoes? Great! There’s your topic! But scholarship providers want to know why you love something, not just that you do. An ability to analyze the whys and wherefores of your own likes and dislikes is an indication that you’ll do well in life. There’s nothing too mundane, as long as you’re passionate about it. Says Amy Murphy, who oversees 35 different scholarship programs worth more than $1.3 million through the Greater St. Louis Community Foundation: “One of the best essays that crossed my desk was about a student’s shoes—where they had been, what messes they had gotten into and out of, how they supported the student as troubles were averted and successes achieved.”

2. How you recovered from a mistake, challenge or disappointment. “We’re looking for qualities like persistence, determination, optimism and a maturity of decision making,” explains Oscar Sweeten-Lopez who runs the Dell Scholars Program, which awards 300 scholarships of up to $20,000 each year. “Since college life brings new challenges and adversities, students need to demonstrate self-determination to succeed.” So tell them about a time when you faced a challenge and carried on. Did you make a mistake? Write about what you did, how you took responsibility for your actions, and what you learned. Did you fail at something? What happened, and how did you recover from that? Were problems at home hurting your ability to succeed in school? What were they, and how did you handle them?

3. Your family history. “Many students limit their scholarship essays to what they want to study, their income level or their ethnicity, completely missing out on other opportunities,” says Kim Stezala, a scholarship coach. Instead, she suggests students ask relatives about military service, clubs they belong to, or causes they have been active in. What you learn can serve as a winning essay topic. Students who can show that they can think broadly, and see themselves as a part of a bigger history, are demonstrating critical thinking skills needed to succeed.

Amy Weinstein is an expert on private scholarships and directs the National Scholarship Providers Association (NSPA).

MONEY College

Degrees on the Cheap! Some Colleges Now Let You Pass a Test to Earn a B.A.

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Scantron Optical Scan Exam and Pencil rafal—Getty Images

A handful of schools are letting mid-career folks place out of classes based on exams testing their knowledge. For some, these programs offer a faster, cheaper way to a diploma.

Think you know as much as a college graduate but never got a degree? More colleges and universities are giving you the chance to prove it—and to get that degree in the process.

A small but growing number of schools are letting students skip straight to final exams and earn academic credit in subjects they know well, often from years working in related fields. Some students can complete their bachelor’s degrees this way in a matter of months, usually online, and save thousands of dollars in the process by avoiding superfluous courses covering material they already know.

Take Sara Jones, a 32-year-old court clerk in Tucson, Arizona, who went into the working world straight out of high school before finally deciding to go back to college to improve her chances at at promotion. “I heard from a supervisor that it would be advantageous, if I wanted to move up at all, to get a [bachelor’s] degree,” says Jones, who had an associate’s degree before starting at a Northern Arizona University program that let her cash in her experience for credit.

As in similar so-called competency-based programs, Northern Arizona lets students take exams to prove how much they know. Because she had the ability to test out of classes, Jones is only nine months into the program yet expects to finish by early next year.

Testing your way to a degree is not only faster than taking the conventional route. It’s much, much cheaper. Students in these programs pay a flat amount for a fixed period of time. At Northern Arizona, a six-month subscription costs $2,500, including all books and materials. That means Jones would pay a maximum of $7,500 to finish her degree, thousands less than most universities charge for traditional programs. “I’m not 100% sure I’ll use the degree, so it’s hard to talk myself into $40,000 to $60,000 in debt,” she says.

A growing trend

The idea for competency-based programs was pioneered by Western Governors University, a nonprofit, online school founded in 1997 by 19 U.S. governors. The university offers six-month subscriptions for $3,000, a price that has not increased since 2008, says WGU President Robert Mendenhall. A handful of students have finished a bachelor’s degree in a single six-month period, Mendenhall says.

Since WGU began offering the program, other schools have followed.

They include traditional nonprofit schools such as Northern Arizona University ($2,500 for six months), Southern New Hampshire University ($2,500 per year), and University of Wisconsin ($2,250 for three months; other tuition options available) as well as for-profit universities such as Capella and Argosy.

A growing need

The trend toward competency-based degrees is a nod to economic realities, said Cathy Sandeen, vice president for educational attainment and innovation at the American Council on Education. Only a quarter of U.S. students, she said, follow the traditional college path: entering as freshmen immediately following high school and attending full-time until graduation.

A Georgetown University report estimated that 65% of U.S. jobs will require some college education by 2020—and that the country will fall 5 million workers short of that.

“Right now you can see there is a gap,” Sandeen says. “We need to educate more people quickly. We have a large percentage of students in this country who are nontraditional students. Those students have needs.”

Competency-based programs are perfect for older students who are daunted by the prospect of attending college for four or more years in order to advance their careers, adds WGU’s Mendenhall. At that school, the average student is 37.

“Frankly their jobs are either disappearing or they’re stuck in a job where they have no chance of advancement,” Mendenhall says. “We free students up to learn what they don’t know. It makes a lot of sense for people who have been in the work force and gained competencies.”

But it’s not right for everyone

Thinking of taking advantage of one of these programs? Keep in mind that there are often some caveats.

WGU, for example, only accepts students who agree to attend full time.

Meanwhile, Southern New Hampshire University offers its competency-based bachelor’s programs only to employees of companies that have partnered with the school. It has about 55 partners so far, including McDonald’s, the Gap, and Panera, says Kristine Clerkin, executive director of the university’s College for America program.

Students should carefully look into programs that interest them, experts say, to see whether the curriculum has been approved by regional accreditors, whether they have knowledgeable professors on hand to offer help, and, if needed, whether federal financial aid is available.

Some schools are still figuring out how to match the programs with guidelines that allow students to use federal loans and scholarships. Regulators have been reluctant to give federal financial aid for such unconventional programs, though they’re starting to bend; students at Capella and Southern New Hampshire can now get government aid. So can those at Northern Arizona.

Most importantly, make a call to your human resources departments—and that of one or two other companies where you’d like to work, says Sylvia Manning, president of the Higher Learning Commission, a Chicago-based accreditor. “You’re going to want to know whether this degree is going to be recognized by the employers that interest you,” Manning said.

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

More stories from The Hechinger Report:

Veterans’ new battle: Getting credit for what they already know

What law schools can teach colleges about lowering tuition

Needing revenue, old universities open new campuses where the students are

TIME Bitcoin

King’s College Becomes First U.S. School to Accept Bitcoin

King's College Will Accept Bitcoin Payments
A Bitcoin medal. Karen Bleier—AFP/Getty Images

First accredited U.S. college to accept the digital currency

At King’s College, bitcoins—used to purchase items from satellite TV to illegal drugs—can now be used to pay tuition.

The New York City school announced Friday that it will accept bitcoin payments, the first accredited U.S. college to do so, according to a press release. Through a partnership with Coin.co, a company that facilitates bitcoin transactions, King’s College will allow use of the digital currency to pay tuition, submit donations and deal with other expenses.

The school hopes this move will immerse students in new technology, as bitcoin has become increasingly popular over the past year. It will also eliminate the 2-3% transaction fees charged to the college when students pay tuition via credit card, as Coin.co does not have transaction fees.

“Allowing bitcoin to be used to pay for a King’s education decreases our costs while simultaneously allowing our students to be a part of this exciting new technology,” King’s College President Dr. Gregory Alan Thornbury said in the statement.

The school follows the trend of two other higher education institutions that accept bitcoin: Cyprus’ University of Nicosia in November, and the UK’s University of Cumbria in January. The University of Puget Sound accepted an alumnus’ $10,0oo donation via bitcoin in February, though the Tacoma school does not have an official bitcoin payment policy.

Currently, a semester’s tuition at King’s College costs about 28 bitcoin.

MONEY Careers

Work for the Man? That’s So Over, New College Grads Say

With banks dissing them and peers largely underemployed, Millennials are finding an alternative financial future.

Big companies still have many high-paying positions, and with the job market perking up those opportunities will expand. But young adults are still having trouble establishing basic financial security—or landing a decently paying entry-level job. Instead, they are forging different paths to financial success.

This search for alternatives starts with checking and saving. Banks haven’t figured out how to serve this new generation. Millennials have big debts from college, and instead of a single, steady full-time job, a recent grad may have four or five paying gigs. Banks can’t fit them into an existing box. But this new generation still needs credit and banking services.

Faced with this inflexibility, one third of Millennials seek to cut ties with traditional banks and financial companies, according to market researchers. Half say they are counting on start-up firms to overhaul how banks work, and 75% say they would prefer financial services from the likes of Google, Amazon, and PayPal. They are also turning to alternative financial firms like Square, Betterment, Robinhood, and Wealthfront to manage their payments and manage their money.

In their search for financial options, young adults are also finding new ways to launch their careers. Millennials have seen under-saved Boomers delay retirement, while corporations have shed workers and their peers are settling for jobs below their ability. As a solution, more twentysomethings are turning to entrepreneurship. Six in 10 recent college graduates are interested in starting a company, according to a new survey by CT Corp., a small business services firm. Those results mirror similar findings by other polls.

Entrepreneurial pursuits offer the potential to put individuals squarely in charge of their future. This is the mindset that the Thiel Foundation capitalizes on with its 20-under-20 fellowship, which seeks to develop entrepreneurs right out of high school and convince them they don’t need college or the student debt that comes with it.

The problem is that while many recent college graduates say they want to be their own boss, a large portion doesn’t really understand what that entails. So while 61% say they’d like to start a company, only 45% believe it’s feasible, CT found. Meanwhile, 67% display a knowledge gap around practical aspects like incorporating, registering a business name, securing a domain, and marketing their products or services.

Still, the entrepreneurial spirit runs deep in this crowd. One in five recent grads started a business while in college, and even among those who don’t believe they’ll ever start a company a third dream about doing so. More than half believe that being their own boss offers greater rewards and more financial security over the long run. Let’s hope they are right because in the new normal this is the path often taken.

TIME Parenting

7 Things to Do Before Your Kid Goes to College

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Teenager loads car for college Blend Images - Terry Vine—Getty Images/Brand X

Teaching them to do laundry and how to open a bank account are important, but don’t forget to spend time together and have fun

For the millions of parents who will send a son or daughter off to college in the fall, this is the summer of lists: making travel arrangements, picking meal plans and ordering linens and other items for the dorm.

But two lists, in particular, are of the utmost importance: One will help kids with the realities of being on their own for the first time. The other will prepare them—and you—for the emotional toll of this major milestone.

The first list is practical. As parents, we pride ourselves on getting our kids ready to leave the nest and soar on their own. But then reality sets in—and the kids land with a thump.

I remember feeling like a terrible parent when my oldest, Emma, called home at the beginning of freshman year to ask me how many stamps she needed to mail an envelope and where to buy them.

My good friend, Mindy, says she felt like a failure when her daughter called to ask, “Do you separate laundry by weight?”

Another friend, Ruth, who has seen three children through college, recalled a litany of first-year cluelessness: “How do you know what light bulbs to buy?” “How do I send a box by mail?” “How do I find a dentist?” “I think I broke my foot. Did I?”

Whether such ineptitude is a byproduct of us having overindulged our kids is beside the point. No need to beat yourself up now. Just use this summer to teach a few of life’s basic skills—and save yourself some panicky late-night calls, not to mention feelings of parental inadequacy.

  1. Teach them to do laundry and then insist that they do their own—clothing, sheets and towels—for the entire summer. By the time they get to college with a roll of quarters in hand, they’ll have the hang of it.
  2. Teach them the basics of banking—how to use an ATM card, how to write a check (or make a payment online), how to deposit money and how to balance their account. As an added bonus, then ask them to teach you how to use Venmo.
  3. Teach them how to navigate public transportation. Most kids go off to college without access to a car, and obviously they won’t have you to schlep them places. If they don’t already know, teach them how to get around on buses, subways and trains, and then take away the car keys for a while so that they gain confidence.
  4. Teach them how to cook a few things. While most freshmen are on some kind of meal plan, knowing how to cook at college can come in handy. Many dorms have communal kitchens, and it can be fun to occasionally make a meal and eat with friends. And just in case your kid ends up living off campus at some point, knowing his or her way around the kitchen will be useful. Plus, making a point of cooking and eating together a few times a week over the summer is a nice way of spending time together as a family.

That said, don’t be surprised if the last thing your teen wants to do is hang out with you. As I wrote at the time, the summer before my daughter left for college, she went AWOL. As far as I was concerned, Emma went out with her friends too much, spent too much time at her boyfriend’s house and stayed out way too late.

Over time, I came to understand that Emma’s uncharacteristic rebellion and moodiness were her ways of “soiling the nest.” In order to make it easier for her to leave in the fall, she was going to make my husband and I so miserable that we couldn’t wait for her to go. In other words, she was doing exactly what she was supposed to do—getting ready to grow up and out.

Given all this, emotions can run high, so as promised, here are a few more tips to make it easier to let your son or daughter go:

  1. Make sure your grad sets aside some one-on-one time with you, your spouse and any sisters or brothers, and does so regularly through the summer. It doesn’t matter what you do as long as it’s fun. (This does not include going to Bed Bath & Beyond to buy stuff for college.) Head on a hike, take a walk on the beach, go out for lunch or coffee, watch a movie—whatever makes sense for your family.
  2. If you can manage it, take a family vacation. It doesn’t have to be anywhere fancy (and can even be a long weekend away). My friend Ellie and her husband, David, took their kids on a road trip up the California coast before their eldest went off to college. “All the kids have said it was their favorite trip we ever did,” Ellie says.
  3. Buy them one beautiful thing. This advice comes from Lisa Heffernan, cofounder of Grown and Flown, a parenting blog for teens and older children. “This moment, these last days, are worthy of commemorating,” she says. “Do not let them slip by unmarked. Jewelry and watches are traditional choices for senior year, but beauty and meaning, not expense, are the salient factors in this purchase.”

On that front, I indulged Emma—something I don’t usually do. I bought her a somewhat extravagant comforter for her bed at school to make her feel cozy, comfortable and at home. It was my way of tucking her in from afar.

MONEY Student Loans

Finally, More Ways to Refinance Student Loans

Thought you couldn’t do anything about that debt? Think again.

UPDATED June 11, 1:30 pm

Borrowers routinely refinance mortgages and other loans when interest rates drop. So why not student loans?

Refinancing options for student-loan debt have been hard to come by, but a handful of promising developments are giving borrowers better chances of climbing out from under the $1 trillion owed by former students for their college costs.

President Obama this week vowed to expand a program limiting repayment of federal student loans to 10% of a borrower’s income, and the U.S. Senate is considering a bill that would give more protection to students who use private loans.

“We want more young people becoming teachers and nurses and social workers,” Obama said Monday while announcing the expansion of the Pay As You Earn program. “We want young people to be in a position to pursue their dreams. And we want more young people who act responsibly to be able to manage their debt over time.”

But some in the private sector are stepping up as well.

While it is still difficult to refinance through big banks, a handful of newer, more innovative startups have figured out a way to make life easier for student borrowers while still making a profit for themselves.

Now that it is getting easier to repay federal student loans, a growing number of private lenders are offering new ways to ease repayment of high-interest private educational loans as well.

One company, called Pave and based in New York, essentially uses crowdfunding to buy out existing loans, which are then repaid based on the borrower’s income.

Even without interest, Pave loans end up costing borrowers about the same as other loans because of fees—a $25,000 loan, for example, costs $35,212 to repay, compared to $35,329 for a private loan with 7.32% interest—but the company allows more flexibility and forgiveness than most banks.

For example, if students (Pave calls them “talent”) go to graduate school or make less than one and a half times the poverty level, their payments can be deferred, something conventional lenders mostly don’t allow. Repayment rates vary with each borrower, depending on their profession and other factors.

SoFi, a San Francisco company, says it saves borrowers who refinance their loans an average of $9,400 over 10 years by offering low fixed-rate and variable interest and career coaching, but its loans are limited to “highly qualified” graduates and do not include the same flexibility that Pave does—except for a six-month forbearance for borrowers trying to set up their own companies, though interest continues to accrue during that time.

Other startups also are designed to save money for “high-quality” borrowers. Founded by former Google employees, Upstart considers which school a borrower attended, academic performance and work history before providing low-interest loans to students it considers good bets. The company’s backers include Google’s Eric Schmidt and Dallas Mavericks owner Mark Cuban.

And CommonBond allows some borrowers with MBA, law, medical and engineering graduate degrees to save thousands, with 10-year rates as low as 5.99%.

This new attention to the student-loan market isn’t particularly surprising. Two-thirds of students at four-year private, nonprofit universities and colleges take out loans, and more than half of students at public institutions, the U.S. Department of Education reports. The proportion of all students who borrow is up 11 percentage points since 2000, and their average debt has risen 36%, to $6,800. At private, for-profit colleges and universities, it’s $8,400.

Yet repayment terms are extremely rigid. Only in rare cases can student loans be forgiven, even in bankruptcy. And the recession made things worse, leaving student borrowers with far fewer refinancing options than holders of mortgages and other types of loans, said Rory O’Sullivan, deputy director of Young Invincibles, an advocacy group representing 18- to 34-year-olds.

“The private loan industry pretty much dried up,” O’Sullivan said. “It can be pretty challenging, and it’s not guaranteed that everyone is going to qualify.”

About 10% of the 4.7 million students who graduated with federal loan debt in 2011 had defaulted by 2012, meaning they didn’t make any payments for at least nine months, the government reports.

That’s why most of the new, lower-cost lenders are only going after students they consider sure bets.

Darien Rowayton Bank refinances graduate-school loans, for example, specifically those from MBA, law, medical, nursing, pharmacy, and engineering programs. With fixed rates as low as 3.5%, the bank’s loans are among the cheaper options on the market.

Also for borrowers with graduate-school loans, CommonBond refinances at interest rates as low as 5.99%. Using that rate, a borrower with $100,000 in debt and a 7.9% rate would save more than $15,000 over a decade with a CommonBond loan.

Federal loans are usually better deals than private ones, but many borrowers don’t know how to have them delayed, lowered, or entirely forgiven—or even that those alternatives exist.

Federal loans allow early repayment without penalty, saving money on interest, and deferments, which freeze principal and interest payments for students who stay in college or enroll in graduate school at least half time, are unemployed, or serve in the military.

There also is an income-based repayment program, called Pay as You Earn, available since 2012 and under which federal student-loan borrowers can cap their monthly payments at 10% of their income and have their loans forgiven altogether after 20 years. But fewer people know about, and take advantage of, this program than are estimated to be eligible.

Graduates employed full-time for at least 10 years in public service or government jobs or by nonprofit organizations can have their federal loans forgiven altogether. So can students enrolled at a university or college that closes, and, under new rules, borrowers with disabilities.

With any refinancing, the small print is important, experts said.

“You want to look at disclosures, whether it’s fixed-rate or variable, whether there’s a balloon payment,” said Deanne Loonin, an attorney with the National Consumer Law Center. “People really have to exercise caution.”

Some bigger banks will consolidate student loans so borrowers can make one payment per month, but refinancing is harder to come by at those banks. The same goes for credit unions, although they’re sometimes easier to work with and may be willing to discuss refinancing with members.

Refinancing student loans into a home equity loan is also risky, said Rohit Chopra, the student-loan ombudsman for the federal Consumer Financial Protection Bureau. “Your rate may be lower, but it puts your home at risk.”

And home equity loans lack the tax advantages student loans have, he said.

Those looking to restructure their private loans should consider credit unions and startups, Chopra said, especially given the dearth of other options.

“I think many of the existing lenders are reluctant to offer student loan refinancing,” he said. “In some ways, (refinancing) is reducing their own profit margins.”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet affiliated with Teachers College, Columbia University.

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MONEY Student Loans

New Student Loan Relief Plan Leaves Many Out in the Cold

President Obama signing a Presidential Memorandum reducing burden of student loan debt
Surrounded by college students, President Barack Obama signs a presidential memorandum on reducing the burden of student loan debt, Monday, June 9, 2014, in the White House East Room. Jacquelyn Martin—AP

The plan that President Obama announced yesterday won't help every borrower who's struggling to repay school debts.

President Barack Obama’s expansion of an income-based repayment program offers additional help for millions of Americans struggling with federal student loan debt. Some of the most burdened borrowers, however, will get little if any relief, financial aid experts said.

Private student loans and parent PLUS loans are not eligible for income-based options, and borrowers with huge debt loads can be shut out if their incomes are too high.

“You could really be struggling and still not qualify for one of these programs,” said Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project.

Obama’s executive order extends the Pay as You Earn repayment program to about 5 million more borrowers with older loans.

Pay As You Earn caps payments at 10% of the borrower’s discretionary income, which is defined as the amount exceeding 150% of the poverty level for the household. The program is currently only available to those who were new borrowers as of Oct. 1, 2007, and who received a federal loan disbursement after Oct. 1, 2011.

The expansion to borrowers with older loans is expected by the end of 2015.

Those borrowers are currently eligible for another, older program called Income Based Repayment, or IBR. This program caps payments at 15% of discretionary income. Borrowers with public service jobs can have their remaining balances forgiven after 10 years, while those in other jobs are eligible for forgiveness after 25 years.

Pay As You Earn has the same 10-year requirement for public service jobs but allows forgiveness after 20 years for other jobs.

A third, less-generous option, the Income-Contingent Plan, is available for federal loan borrowers who do not qualify for the other two plans, including parents who shifted their PLUS loans into a direct consolidation loan on or after July 1, 2006. Payments are capped at 20% of discretionary income with forgiveness after 25 years.

In 2012-13, about 700,000 families borrowed nearly $10 billion under the parent PLUS program, which has minimal credit requirements, no underwriting to determine the borrower’s ability to repay the debt and no cap on borrowing. Parents can borrow the full cost of a child’s education, while the student’s federal student loan borrowing is typically limited to $31,000 for an undergraduate degree.

Some students and parents turn to private loans to supplement or even replace federal loans. About $6.2 billion was disbursed in private student loans in 2012-13. Unlike federal loans, private student loans typically have variable interest rates and few repayment options.

Both types of loans allow borrowers to take on far more debt than they can comfortably repay, said Reyna Gobel, author of the book CliffsNotes Graduation Debt: How to Manage Student Loans and Live Your Life.

“Private loans can be a huge problem, depending on how much you owe,” Gobel said.

Student loan debt has topped $1 trillion, with an average of $33,400 for a bachelor’s degree recipient, said Mark Kantrowitz, publisher of Edvisors Network, an education and financial aid site.

With federal and state support of post-secondary education dwindling, students and their families are footing a bigger portion of college bills. As a result, 29% of young American adults, ages 22 to 33, say their biggest concern after covering day-to-day bills is paying off student loans, according to a survey to be released Tuesday by Wells Fargo & Co.

Divided Congress

In the press conference announcing the Pay As You Earn expansion, Obama endorsed a bill by Democratic Senator Elizabeth Warren of Massachusetts that would allow borrowers to refinance both federal and private loans into lower-cost debt. The bill’s prospects are uncertain in a deeply divided Congress.

Obama also addressed persistent concerns that not enough borrowers know about their options and default unnecessarily. The president says he has asked the Treasury and Education departments to work with the two largest tax preparation firms, TurboTax creator Intuit Inc and H&R Block, to let borrowers know about their options during tax filing season.

In addition, Obama said the U.S. Department of Education would renegotiate its contracts with the private companies that service federal student loans. The object, according to a White House press release, is to strengthen financial incentives to help borrowers pay on time and lower their payments.

Servicers giving insufficient or inaccurate advice to struggling borrowers have contributed to delinquencies and defaults, the National Consumer Law Center’s Loonin said.

“It’s a huge problem,” Loonin said. “Servicers are steering people to less optimal options, like forbearance, or giving inaccurate information, or making mistakes when people apply.”

Reducing people’s payments can help people cope with burdensome loans but does nothing to address the conditions that lead them to take on too much debt. Indeed, 47% of younger Americans are allocating half or more of their paychecks to pay off student loan, credit card, mortgage, medical and auto debt, the Wells Fargo survey says.

That is one reason why Edvisors’ Kantrowitz would like to see Congress increase the availability of educational grants to students since they do not have to be paid back.

“The real problem is the amount of debt,” Kantrowitz says, “not the cost of the debt.”

MONEY Savings

Millennials Are Saving, But Men Are Saving More. Here’s Why.

Among young adults, a savings gender gap is starting early. Are you ahead or behind?

You’ve probably heard that Millennials are doing better than previous generations in saving for retirement—those who landed jobs, anyway. But here’s something you may not have heard so much about: young men are saving significantly more than young women.

That’s the finding from a new Wells Fargo survey on Millennial savings habits, which found that overall 55% of young adults are saving for retirement. But that number disguises a wide gender gap. More than 60% of men are stashing money away, compared with just 50% of women.

“We were surprised to see the gap in this generation, when they have such similar profiles,” said Karen Wimbish, director of retail retirement at Wells Fargo. She points to the relatively few number of women in high-paying positions as a key reason for the disparity. For college-educated Millennial men, the median household income is $77,000, according to the survey; for women, it’s $63,000. (Those figures are similar to 2012 data from the Bureau of Labor Statistics, which found that women ages 20 to 24 earn just 89% the median earnings of their male counterparts.)

Given that difference in pay, it’s not that surprising that 26% of young men manage to save more than 10% of their incomes, compared with just 9% of women. The majority of women surveyed (53%) put away only 1% to 5% of their pay.

For both men and women, debt loads are making it more difficult to save. Some 40% of Millennials say they feel overwhelmed by debt. Nearly half say more than 50% of their pay is going toward debt repayment, and 56% “live from paycheck to paycheck,” the survey reported. The largest payments were owed to credit cards (16% of debt), followed by mortgages (15%), student loans (12%), auto loans (9%), and medical bills (5%).

Still, paying off debt, especially high-interest credit-card balances, can be a smart move, even if it delays saving, says Dan Weeks, a financial planner at Sound Stewardship in Overland Park, Kansas. But for many Millennials, those payments are likely to slow their ability to buy a house and start a family.

One bright spot: Millennials are becoming less risk averse—nearly one-third are invested in the stock market. Among college-educated young men, median financial assets, including stocks and bonds, were $58,500; for women, $31,400. And more than two-thirds of Millennial expect their life after retirement to be better than that of their parents. They could be right about that.

MONEY Obamacare

How New College Grads Can Score a Health Insurance Deal

140603_FF_QA_Obamacare_illo_1
Robert A. Di Ieso, Jr.

Obamacare opens up new coverage choices—and another reason not to go without.

Q. I just graduated from college but don’t yet have a full-time job. What are my best health insurance options?

A. Thanks to the Affordable Care Act—a.k.a. Obamacare—you have more good choices than you once did. Since 2010, young adults can stay on a parent’s employer-sponsored plan until age 26. Of the estimated 15 million young adults enrolled in a parent’s plan last year, nearly eight million would not have been eligible before the law took effect, according to a recent report from the Commonwealth Fund.

Even if you have that option, though, you may not want to take advantage of it. If you’re living far from your childhood home, for example, doctors near you likely won’t be included in the plan’s network, and you’ll pay more at out-of-network providers. You might also prefer that your parents not receive any explanation of benefits about your health care. “Your child may decide he or she wants to graduate from the parent plan,” says Bryce Williams, managing director of benefits consultant Towers Watson.

The Financial Aid You Can Find

At this stage of life, breaking free of your parents’ plan doesn’t have to be costly. Even though general enrollment on the new government health insurance exchanges has closed for 2014, you qualify for an exemption if you lost your previous health insurance when you graduated or moved to a new state. You typically must enroll within 60 days of losing coverage. Miss that window, and you’re locked out until 2015. Shop for policies at healthcare.gov.

Since that first year out of school can be a lean one income-wise, you’ll be glad to hear that low earners qualify for subsidies that make plans more affordable. If your income falls between 100% and 400% of the federal poverty leven, or $11,670 and $46,680, you may be eligible. You can’t choose any old plan, though. You’ll need to sign up for a so-called silver level plan to qualify.

You’ll be disqualified for a subsidy if you have a part-time job that offers you an affordable plan, meaning it costs less than 9.5% of your income and is designed to cover 60% of the average enrollee’s costs. You also won’t qualify if your parents claim you as a dependent on their tax return, says Christina Postolowski, a senior policy analyst at Young Invincibles, unless your family’s income is low enough that the whole family qualifies.

Keep in mind that if you land a job and end up making too much money over the course of the year, you’ll have to repay at least part of the subsidy, warns Michael Mahoney, senior vice president of marketing at GoHealth.com, an online insurance marketplace. One workaround is to accept only a portion of the subsidy for now and take the rest at tax filing time, when you’re certain of your total annual income.

Only Insure For the Worse

If subsidized coverage isn’t an option for you, check out so-called catastrophic plans, created specifically for young adults. You’ll find them at healthcare.gov. The premiums are lower than what more comprehensive plans charge. The tradeoff: you’ll owe a higher bill if you need care. “One caution with these plans is they have high deductibles, so if you have a chronic condition you could owe quite a bit out of pocket,” says Postolowski.

What happens if you forgo insurance all together? Nothing, necessarily, if it is only for a month or two, assuming you remain healthy. If you are uninsured for more than three months over the course of a year, though, you may end up paying a penalty come April 15 when you file your 2014 taxes. The penalty is either $95 or 1% of your income, whichever is greater, though it rises next year.

Will mom and dad be okay with you going without? Likely not. “The worse decision of all in today’s world is to let a child remain uninsured,” says Williams. “Either put them on your plan, or nag them to enroll in an exchange plan.”

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