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.

140617_FF_CHEAPDEGREE
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.”

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