MONEY Estate Planning

Should My Daughter Who’s Still in School Get First Dibs on My Estate?

Did you ever want to be a personal-finance advice columnist? Well, here’s your chance.

In MONEY’s “Readers to the Rescue” department, we publish questions from readers seeking help with sticky financial situations, along with advice from other readers on how to solve those problems. Here’s our latest reader question:

We have an older daughter who is married, well-established, and financially secure. I have another daughter who is still in college and will be for at least 5 more years. Is it alright to divide our estate in her favor while she’s in school, then correct it in the future when she has established herself?”

What advice would you give? Fill out the form below and tell us about it. We’ll publish selected reader advice in an upcoming issue. (Your answer may be edited for length and clarity.)

Thank you!

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MONEY Ask the Expert

Avoid the Parent Trap: Why a PLUS Loan Isn’t the Best Way to Pay for College

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Robert A. Di Ieso, Jr.

Q: Would it be more beneficial to take out a Home Equity Loan versus a Parent PLUS to pay for a child’s college education?
—Lou M., Brooklyn

A: PLUS loans should be your last resort.

Sure, these federal loans allow parents to borrow up to the total cost of their child’s college education, minus any other aid the student may be receiving. But that’s where the good news ends: PLUS loans currently carry a 6.41% rate, and without Congressional intervention, that rate will jump to 7.21% come July 1. Plus, these loans also come with an “origination” fee of about 4.3% of the principal amount you borrow.

Additionally, the credit standards required for PLUS loans have gotten tighter in recent years, notes Fred Amrein, a financial planner who specializes in college funding, financial aid and student loan repayment. (Though there is one upside to this: If you’re denied a PLUS loan, your child can receive additional student loan money above the standard limit.)

Rather than you taking on a PLUS loan, Amrein advises pushing your child to take out the full amount they can in federal student loans—$5,500 to $7,500 annually for dependent students whose families weren’t turned down for a parent PLUS loan.

The interest rates for student loans are significantly less: After July 1, they will be 4.66% for subsidized and unsubsidized federal direct undergraduate loans and 6.21% for direct unsubsidized graduate loans. These loans have lower fees, too—about 1.1%. Students also aren’t subject to a credit check as parents are.

Students also have more flexibility with their repayment plans if they can’t keep up with payments than parents have with PLUS loans, says Amrein. And student loans can be forgiven or reduced through the teacher or public service loan forgiveness programs. Parents who take out PLUS loans can only have their loans discharged if the child dies, or if the borrower dies or becomes totally and permanently disabled.

Don’t want your child to be burdened with debt? You can treat the student loan in the same way as the PLUS—and you simply pay the bills for your kid.

If you need additional funds above the student loan limit, home equity financing is probably your next best move. Via a home equity loan or line of credit, you can borrow up to 85% of the equity in your home, with fees similar to those you paid when you financed your original mortgage. And in either case, up to $100,000 of interest you pay on home-equity debt is tax-deductible.

A home equity line of credit will have a lower initial cost of money than a home equity loan, but both have some drawbacks.

With a loan you are borrowing a single lump sum, usually at a fixed interest rate—currently averaging 6.22%, according to Bankrate. You’ll have to know upfront how much you’ll likely need to fund your child’s entire college education, since you probably won’t be able to take out a new home equity loan each year they’re a student. Also, once you have the loan, that amount becomes an asset and can reduce the amount of financial aid your child qualifies for by thousands of dollars, says Amrein.

A line of credit is similar to a credit card, allowing you to draw from a line in smaller sums as needed, up to a certain fixed amount. HELOCs typically only require you to pay interest for the first several years and have an average interest rate of 4.9%. But that rate is variable, meaning your monthly payments can change during the course of your repayment period. Borrowers should be prepared for their rates to rise since interest rates currently remain near historic lows.

Because you are borrowing smaller sums over time and using those to immediately pay bills with a HELOC, the money is not viewed as an asset and won’t affect financial aid awards. But because these loans are variable, they’re considered a little riskier since your interest rates could rise over time, though they do have set lifetime caps of—gulp!—18% in most states.

 

MONEY Kids and Money

The Secret To Raising Financially Independent Kids

What parents can do from the get-go to help their children prosper later in life.

It’s the secret fear of every American parent: failure to launch.

What if, despite your best efforts, your adult kids just aren’t able to sustain themselves financially?

The idea used to give Andy Byron the cold sweats. With a whopping five kids, the 57-year-old financial planner from Pleasanton, Calif. wanted no part of “delayed adults” hanging out in his basement well into their thirties.

So he and his wife turned their household into a virtual factory for churning out financially independent kids. The eldest girl, 29, is an English language teacher. The 26-year-old twin boys work for Apple and PricewaterhouseCoopers, respectively. Their 22-year-old son scored a paid summer internship with medical device manufacturer Stryker Corp, with an eye toward a career in medical sales.

The 19-year-old daughter, a college sophomore in the fall, is combining her studies with a paid summer internship and a part-time accounting job during the school year.

So what’s their secret sauce?

“Start early, be consistent, and make sure they know what their responsibilities are,” Byron says.

As soon as they were 16 or 17, the parents told their kids that they had to get jobs, and would be on their own after graduation. As a result, the three oldest are out of the house and get no more monthly cash from the bank of Mom and Dad; the younger two will follow suit soon.

While the Byron clan appears to have figured it all out, it’s no easy task to nudge kids from the nest. Among people in their 40s and 50s who have adult kids, a stunning 73% report lending financial help over the previous year, according to Pew Research Center, a Washington-based think tank.

Are the successful launches of the 27% due to thoughtful, years-long projects to educate kids about handling finances? Or are they product of tough love, throwing adult kids into the deep end of the pool in order to force them to swim?

“They are more the result of financial education, and talking about money, which ranks right up there with sex as a taboo subject,” says Sally Koslow, author of the book Slouching Toward Adulthood.

For those with children who have yet to launch, there is plenty of time left on the clock. Here is how to prep kids for true financial independence, during college and the critical years that follow:

Do Your Part

If you don’t want your kids financially hanging on, do whatever you can to help them graduate from college debt-free. Seven out of 10 college grads last year had outstanding loans, at an average debt of $29,400, according to the advocacy group Project On Student Debt. To help them avoid indentured servitude, start saving as soon as they’re in swaddling clothes.

Andy Byron and his wife contributed at least $50 a month, and often much more, into 529 college-savings plans for each one of their five kids—”as soon as each child had a Social Security number,” he says.

Byron supplemented that aggressive strategy by “strongly suggesting” the kids go to public, in-state universities. The payoff: All the Byron grads have emerged from their college years free of student debt.

Related: How Much Do I Have to Save for College?

Draft a Wingman

The popular HBO series Girls was premised on a key event: Lena Dunham’s character getting financially cut off by her parents.

That can be excruciating for everyone involved, but necessary nonetheless. “Parents get so emotionally involved,” says Matt Curfman, a vice president with financial advisers Richmond Brothers in Jackson, Mich. “That’s why I tell them, ‘If you need me to jump in and help, even if I end up being the bad guy, I’m happy to do so.'”

It doesn’t have to be done in one fell swoop, Curfman notes. If your adult kid runs into financial trouble, write down a concrete plan to help with a certain amount of dollars for a certain number of months—”but that’s it.”

Become a Part-Time Professor

Kids get plenty of calculus and chemistry in high school and college, but personal finance? Not so much.

That’s where parents can make themselves a critical resource. For 24-year-old Annie-Rose Strasser, home instruction was what set her on the path to become the financially independent young adult she is now. Strasser has a full-time job as a journalist in Washington and lives in her own apartment. “I never learned personal finance when I was in school—401(k)s, saving, balancing a budget: I learned it all from my parents,” she says.

Paired with that informal home-study was the early expectation that Strasser would put herself to work as soon as she was able. A constant stream of it—at summer camps, at office jobs, at paid internships—helped set the table for her successful launch.

“My parents aren’t the kind of people who would say, ‘Go off and explore yourself,'” she laughs. “Instead, they put a lot of stock in the idea of finding a career, saving money—and being extremely financially responsible.”

MONEY College

$182,000 in Student Debt for a Film Major?!?

Film clapper board
A film student can't take too much debt. Losevsky Pavel—Alamy

A financial adviser laments the choice faced by a high school senior: A large amount of college debt vs. a ridiculous amount of college debt.

When a high school senior starts receiving college acceptance letters, it should be a cause for celebration. But this April, when I met with a couple whose son got into two great schools, I was disheartened.

The parents wanted my thoughts on which school their son should attend. He wanted to study film, and the choice before him was between New York University and Emerson College in Boston — two good schools with good film programs. He had to make his decision by May 1.

The parents were convinced that NYU’s program had a better film program. The big issue, though, was money. The list price for NYU’s film school, including all expenses, is around $71,000 a year, and the school didn’t offer any financial assistance to the student other than a $5,500 federal student loan.

Emerson’s list-price cost of attendance would be about $57,000. The school also offered a $17,500 annual scholarship and a $5,500 federal loan.

The parents were willing to chip in $25,000 annually if their son attended NYU, but only $13,000 if he were to attend Emerson. Their reasoning, right or wrong, was that Emerson’s film program was not as good as NYU’s.

So where did that leave the student? With the parents’ contribution figured in, the student would have to come up with nearly $46,000 a year — more than $182,000 over four years. And that’s assuming no price increases over four years.

For Emerson, the student’s cost would be less than $27,000 per year, given the merit award and the parents’ contribution. Total cost over four years: at least $107,000. That’s a much more palatable figure, though still a hefty one.

My first question: Why were the parents not willing to contribute for Emerson the same $25,000 as they would for NYU? If they did, the student would have to pay only about $15,000 per year, or $60,000 over four years.

My second question was about the $182,000 the student would have to pay for NYU: Where was he supposed to get this kind of money? The federal student loan system will only offer him $5,500 as a freshman. The next level of borrowing for this student would be private loans, which have variable interest rates that can rise to 18% or higher, depending on the economy and the indexes to which the rates are tied.

Burdening a student with $182,000 debt upon graduation (and, most likely, monthly payment of $1,800 for 10 years) is intolerable. Even leaving him with $60,000 upon graduation from Emerson (and monthly payments of about $600) is something I find abusive.

This is too much borrowing! You can’t repay that kind of debt on a film major’s starting salary, and you can’t get rid of student loans in bankruptcy. For this family, I might suggest their son could handle about $25,000 in debt for a four-year college education. More than that would seriously limit his living options upon graduation, threatening his ability to buy a car, get married, or have children.

Given the circumstances under which I met the family, their story turned out to have a relatively happy ending. The student will be going to Emerson. I’m hoping that the parents will chip in more than they said they would.

Even so, I wish I had been included in the initial college search, since I most likely would have identified colleges that offered film programs that were reputable, and also satisfied the financial issues facing the family. April of senior year is too late to start grappling with college-finance issues.

—————————————-

Paula Bishop is a Certified Public Accountant and an adviser on financial aid for college. She holds a BS in economics with a major in finance from the Wharton School and an MBA from the University of California at Berkeley. She is a member of the National College Advocacy Group, whose mission is to provide education and resources for college planning professionals, students and families. Her website is www.paulabishop.com.

MONEY Shopping

School’s (Almost) Out! Just In Time for Back-to-School Sales

BSIP SA / Alamy—Alamy

If you thought now was the time to relax and celebrate the end of the school year, J.C. Penney, Walmart, and Lands' End have a back-to-school sale for you.

Last summer, retailers raised eyebrows by rolling out back-to-school sales in early July, within a week or two of when kids escaped the clutches of teachers, principals, and algebra homework. “In seven and a half years, I’ve never once seen so much emphasis put on back-to-school before July 4,” National Retail Federation spokeswoman Kathy Grannis told AdAge at the time.

Fast-forward to June 2014, and retailers are at it again, pushing back-to-school sales earlier than ever. Consumers are getting the message that the time to purchase gear for the upcoming school year is before the current school year has ended. Like, now.

J.C. Penney began promoting back-to-school sales last weekend, according to Consumerist. Walmart already has a back-to-school web page for student fashions, backpacks, and other school gear, as well as another page devoted to back-to-college apparel and tech. Target just introduced a college registry program, so that students can try to get other people to buy them stuff. Apple’s back-to-school promotional deals are expected to be announced any day now. And Lands’ End? It started zapping customers with e-mails a couple of weeks ago, pushing the idea that early June is a fine time to buy school uniforms that kids won’t wear until around Labor Day.

It’s totally understandable why retailers try to move back-to-school shopping earlier and earlier each year. Families generally have finite resources they can allocate to back-to-school fashion and paraphernalia, and once the pencils, protractors, glue sticks, notebooks, and a few new outfits are purchased, their back-to-school expenditures are done (in theory). Retailers want to beat the competition to the punch, before the family’s back-to-school budget is depleted.

“Retailers are going to do what they can to try to get consumers into the stores to shop, but the fact of the matter is they might not have much luck,” Britt Beemer, chairman of America’s Research Group, explained to CNBC. “There aren’t any parents that I can find who have even thought of back-to-school shopping, because for most kids, they haven’t even gotten out of school yet.”

Still, even if shoppers don’t actually buy back-to-school stuff in June, the enticements may get them thinking about their needs for the upcoming school year. Panic sets in for a lot of overwhelmed parents, and they’re more apt to want to cross all of their children’s back-to-school items off their list as soon as possible. How can you relax on a summer vacation when you know there will be dorm rooms to decorate and Number 2 pencils that need to be purchased?

What’s more, early-season promotional efforts are limited mostly to the digital world. It’s much cheaper and easier for a retailer to send out an e-mail blast or put up a back-to-school web page than it is to rearrange shelves and create promotional sections inside thousands of stores. That’ll happen soon enough, of course, during the especially puzzling period when you’re likely to encounter Fourth of July, back to school, Christmas in July, and plain old summer sales in your local megamart, perhaps mixed in with the odd early Halloween aisle.

Of course, retailers risk some customer backlash by taking the expansion of shopping seasons too far. So-called “Christmas creep,” the phenomenon in which the Christmas shopping season kicks off in September and Christmas ads air within a few days of Labor Day weekend, has caused many an observer to groan in exasperation.

When the calendar says one thing and retailers are telling consumers something very different via sales and promotions, the result can be jarring, even off-putting. Yet retailers assume shoppers have short memories, and they hope that whatever bad feelings a too-early sale produces are outweighed by deals that are just too good to pass up.

TIME faith

A Letter to Graduates: Whatever Happened to the Common Good?

When considering what's next after graduation, think of others

It’s that time of year, when eager graduates celebrate the fruit of their hard work and look forward to their first job or graduate school. The air is full of excitement of untapped potential and bright futures.

So to those graduates, I offer you a challenge: in the lives you choose to lead from this point forward, consider how to ensure a bright future for all—not just yourselves or your group.

Because the moral question for the society you’re about to enter is the spiritual battle between “I” and “We.” In culture the “me first” ethos dominates real concern for others. In economics, the metric of “short termism” trumps “stewardship.” In politics, winning replaces governing and instead of solutions, we prefer blame. In religion, private piety is preferred over sacrifice. It is a “selfie” culture, in which the camera is focused on us and our friends, ignoring the beauty of the world. Depending on someone else to take our picture isn’t even necessary anymore.

The spiritual term for these problems is, of course, is “selfishness”–a familiar human seduction and sin. The only redemption from it is to rise above ourselves for something greater.

Yet, almost every day, the news from Washington, Wall Street, and Hollywood raises a very pointed question: Whatever happened to the common good?

Public polling shows that most of us believe our country is headed in the wrong direction. Many of us feel that our society’s major institutions have failed. Many feel politically and spiritually homeless in the raging battles between ideological extremes. And most of us would agree that the common good has become very uncommon.

Still, many of us are hungry for authenticity when we see it and desire something larger than our own self-interests—as the response to Pope Francis has demonstrated, from the religious and non-religious alike. As the Pontiff said during his visit to the Middle East: “The time has come for everyone to find the courage to be generous and creative in the service of the common good.”

Indeed, the ancient idea of “the common good” is a vision that helps us live our best values. For Christians, the common good comes from Jesus’s commandment to love our neighbors as ourselves—including “the least of these.” I know of no other social ethic that is as transformational as this one. But most of our faith traditions agree we must love our neighbor if we say we love God. Seeking the common good means that our treatment of the most vulnerable is the test of our society’s integrity. Promoting the common good is the best way to make sure that we are protecting the life and dignity of all God’s children.

Given the political inability to solve the real problems, given our inability, to focus on those who are most in jeopardy, and given how greed and self-interest have overtaken our markets and our politics, we must go deeper into our best values.

The public discussion we need about the common good concerns all the decisions we make in our personal and public lives. The common good may come last to places like Washington, Wall Street, and Hollywood, but can turn history in different directions. And it begins with our own personal decisions–the way all social movements start.

And that is what I hope you will consider in your academic and professional careers: how to repair a society that has broken down in fundamental ways. A commitment to the common good is also the best way to find common ground with others–even those who disagree with us.

It’s in your power to lead us now, by urging a new ethic of civility between conservatives and liberals. Both personal and social responsibility are necessary for a world in which the common good is embraced.

It’s in your power now, to choose work and make decisions in those workplaces that restores trust in economic decision-making, mobility, and opportunity. It’s up to you make choices that will promote a “moral economy” by embracing values like human dignity, the common good, and stewardship. Let’s take on the big question about the role of government—how can it best serve the common good in partnership with other sectors?

It’s in your power now to seek the common good in the places we call home. How we live well with those closest to us will shape or undermine a common good culture. Whether religious or not, how can we learn to see our neighborhoods, our nation, and the world as our “parish” for which we are all responsible?

And that is my challenge to you. As you continue your education or embark on your career, consider the personal decisions you can make to seek the common good and promote our best values.

Jim Wallis is president of Sojourners. Follow Jim on Twitter @JimWallis.

MONEY College

The Worst Dropout Factories and Diploma Mills: Is Your School on the List?

Paul Quinn College, Texas.
Among students who matriculated as freshmen, Paul Quinn College in Texas had a 2012 graduation rate of 0.6%, according to the Education Trust report. Ashley Daly

A new report identifies underperforming institutions and suggests that the government withhold funding to those that chronically lag their peers.

Every year, the federal government spends more than $150 billion on federal financial aid in the form of student loans, grants and tax benefits—and according to a new report, $15 billion of that is funneled to underperforming schools.

The report, Tough Love: Bottom-Line Quality Standards for Colleges, was released today by the Education Trust, a nonprofit advocacy organization. The report highlights 300 underperforming colleges among for-profit, non-profit, public and private institutions. These underachieving schools include what Education Trust calls “college dropout factories” with six-year graduation rates below 15%, “diploma mills” where roughly three out of 10 student borrowers default on their loans, and “engines of inequality” that fail to enroll at least 17% of low-income students. Scroll down for a list of the 40 schools with the lowest grad rates; you can find the schools with the highest defaults and lowest low-income enrollment on pages 30 and 24 of the study, respectively.

In the report, Education Trust argues that too much taxpayer money is spent on underperforming institutions that fail to meet the most basic standards of graduating students and granting them meaningful degrees.

“Some institutions out there are not improving socioeconomic mobility as they should be,” says Michael Dannenberg, director of higher education and finance policy and a co-author of the report. “Instead of improving socioeconomic differences, they’re calcifying them.”

Of course, certain schools simply serve more students who arrive underprepared for college. Even so, among peer institutions with similar student demographics, some lag behind in graduation rates, the researchers found. Truett-McConnell College, a small private Southern Baptist college in Georgia, is an example. With 14% of students graduating within six years of enrollment, Truett-McConnell has one of the lowest rates in its peer group. But schools with similar student bodies, including Averett University in Virginia and Cazenovia College in New York graduate 41% and 50%, respectively.

“We think what colleges do matters,” says Dannenberg. “Demographics aren’t destiny when it comes to higher education.”

Currently, schools that enroll students on any form of federal financial aid must meet three criteria: they must be accredited by a Department of Education-approved agency, they must be licensed to operate in their state, and they must be judged eligible by the Department of Education. After these three hurdles, however, the government gives minimal consideration to an institution’s performance.

What Dannenberg and co-author Mary Nguyen Barry propose: stricter standards for schools, enforced by the federal government. Their report outlines a plan in which schools with graduation rates of less than 15% for those who matriculate as freshmen, student loan repayment rates ranking in the bottom 5%, or Pell Grant-eligible full-time freshman enrollment of less than 17% would face consequences if they did not improve within a set number of years. Institutional tax benefits would be cut, and in the cases of the so-called dropout factories and diploma mills, the authors suggest that the government should reduce or eliminate students’ eligibility for financial aid at those schools.

But some in the industry say that it would be difficult to effectively implement such a strategy. The six-year graduation rate metric, for instance, isn’t as tidy as it seems. The federal formula for calculating these does not include transfer students, even though more than one-third of college students transfer. And the six-year graduation rate figure also discounts students who take more than six years to earn their diplomas.

“Many students are non-traditional,” says Terry Hartle, senior vice president of the American Council on Education. “To actually have a good idea of what a graduation rate would be, you’d need a national database with individual identifiers for each student so you could track them across postsecondary institutions. But that has been a very controversial proposal for privacy reasons.”

Student default is another messy calculation. The federal government currently measures cohort default rates (CDRs) without accounting for the percentage of any given student body that took out loans. For instance, if two students out of a hundred defaulted on their loans, it may disproportionately skew the default rates. (A different student debt default measure, called the Student Default Risk Index, has been proposed to correct for the percentage of a student population that borrowed.)

Despite some of these data intricacies, Dannenberg says that ultimately it’s in the government’s best interest to identify the “worst of the worst” in higher education and hold institutions accountable for their results.

“At some point we have to ask ourselves, how low is too low to be entitled to government support?” he says.

Colleges Graduating the Lowest Percentages of Those Who Matriculated as Freshman (Based on 2012 Data)

Name State Sector Overall Grad Rate (2011) Overall Grad Rate (2012)
Paul Quinn College TX Non-Profit, HBCU 5% 1%
Oglala Lakota College SD Public, Tribal 5% 1%
University of Phoenix-Wichita KS For-Profit 12.8% 1.5%
ITT Technical Institute-Norfolk VA For-Profit 10% 2%
Yeshiva Toras Chaim NJ Non-Profit 2.9% 2.2%
Western International University AZ For-Profit 2.4% 2.6%
Rabbinical College of Long Island NY Non-Profit 3% 3%
Torah Temimah Talmudical Seminary NY Non-Profit 5% 3%
University of Phoenix-Cincinnati OH For-Profit 9% 3%
Talmudical Seminary Oholei Torah NY Non-Profit 2% 4%
University of Phoenix-Richmond VA For-Profit 3% 4%
University of Phoenix-Online AZ For-Profit 6.2% 4.3%
University of Maryland-University College MD Public 10.3% 4.3%
Chancellor University OH For-Profit 5% 5%
Arkansas Baptist College AR Non-Profit, HBCU 4.2% 4.8%
ITT Technical Institute-Greenfield WI For-Profit 14% 5%
Concordia College-Selma AL Non-Profit, HBCU 3.4% 5.5%
National University College-Bayamon PR For-Profit 9% 6%
Boston Architectural College MA Non-Profit 9.1% 6.8%
University of Phoenix-Milwaukee WI For-Profit 10% 7%
Le Moyne-Owen College TN Non-Profit, HBCU 15% 8%
Harris-Stowe State University MO Public, HBCU 8.5% 8.2%
East-West University IL Non-Profit 7.7% 8.7%
University of Phoenix-Idaho ID For-Profit 9.1% 8.8%
Hebrew Theological College IL Non-Profit 5.7% 8.8%
University of Phoenix-Philadelphia PA For-Profit 11% 9%
Truett-McConnell College GA Non-Profit 13.6% 9.4%
Colorado Technical University-Online CO For-Profit 9.4% 9.5%
Bacone College OK Non-Profit 4% 10%
ITT Technical Institute-Knoxville TN For-Profit 12% 10%
University of Phoenix-Nashville TN For-Profit 14% 10%
University of Phoenix-Springfield MO For-Profit 10.9% 9.7%
University of Phoenix-St Louis MO For-Profit 7.6% 10.2%
ITT Technical Institute-Indianapolis IN For-Profit 8.3% 10.5%
University of Phoenix-Metro Detroit MI For-Profit 11.4% 10.5%
Baker College of Owosso MI Non-Profit 13% 11.1%
ITT Technical Institute-Earth City MO For-Profit 10.7% 11.1%
Salem International University WV For-Profit 14% 11%
University of Phoenix-Oklahoma City OK For-Profit 14% 12%
University of Houston-Downtown TX Public, HSI 15% 12%
Texas Southern University TX Public, HBCU 12% 12%


Notes: HBCU stands for historically black colleges and universities; HSI is Hispanic-serving institutions

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

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