MONEY Student Loans

The Most Terrifying Stat About Student Loan Debt Isn’t What You Think

About half of student loan borrowers underestimate the amount of education debt they have.

It seems some college students need to work on their reading comprehension. Or their vocabulary. Whatever the problem is, some students aren’t grasping the concept of loans: 17% of first-year students who have federal student loans responded to a survey saying they had no student debt, according to a Brookings Institution report.

There are scores of stories and reports about the difficulty borrowers have repaying education debt, and that’s a serious issue, but the statistics about borrowers’ understanding of their loans and the cost of college are much more troubling.

The report from Brookings “Are College Students Borrowing Blindly?” cites some shocking figures, based on two data sets. The first, a survey conducted in spring 2014, included responses from first-time, full-time freshmen who applied for financial aid at their college, a “selective four-year public university in the northeastern U.S.” The second is the most recent result of the National Postsecondary Student Aid Study, a nationally representative analysis of first-year, full-time undergraduates with federal loan information available in the National Student Loan Data System.

The data reveals that students are generally clueless about the costs of higher education and how they’re paying for it. Nearly half of students underestimated their debt loads by at least $1,000, with 25% of students underestimating their debt by $5,000 or more.

I’m in Debt? Really?

There are a lot of reasons students may not fully understand their student loan debt: Students may be confused about the different kinds of loans (like federal or private), their parents may have taken charge of figuring out their education expenses, they’re simply not keeping track of their finances, or they really don’t understand the fact that borrowed money must be repaid. There’s not really a good excuse, considering the students had to sign paperwork saying they’ll repay the loan as agreed.

The gap between perceived and actual student debt is potentially more troubling than the growing student debt load itself. Failing to understand the costs of college and how you’re paying for it sets students up for an unpleasant reality check and regret if they can’t afford the debt they incurred along their chosen career path.

Student loans are rarely discharged in bankruptcy, and failing to repay them has serious consequences on the rest of your financial life. Missing loan payments is one of the worst things you can do to your credit, and if you default on student loans, you may face wage garnishment and calls from debt collectors.

Consequently, a low credit score can leave you unable to secure other forms of credit at affordable interest rates, not to mention rent an apartment or get a job. To see how student loans and your other financial behaviors affect your credit score, you can review two of your credit scores for free every 30 days on Credit.com.

Ideally, you’re well prepared to handle your student loans when you enter repayment, but if you think your loan payments will be unaffordable, you have a few options. If you have federal student loans, you may qualify for a variety of student loan repayment and forgiveness options. If you have private loans, you may be able to refinance. At the very least, you should reach out to your student loan servicer to see if there’s any way to avoid defaulting on your education debt.

More from Credit.com:

MONEY Taxes

10 Last-Minute Ways to Save on Your Taxes This Year

woman donating clothes
Clean out your closet by Dec. 31 and cut your tax bill. JGI/Jamie Grill—Getty Images

In between your holiday shopping and New Year's plans, make time for these time-sensitive tax moves.

The window of time to cut your 2014 tax bill is closing. Before you pop open the champagne on New Year’s Eve, make sure you’ve ticked off these valuable tax tasks.

1. Be Charitable Now

Individual Americans donate some $250 billion dollars to charity every year, according to the annual Giving USA report, and December is high season for giving.

By donating to charity, you can trim next your tax bill next April. You must itemize to get a write-off, and the organization must be a qualified charity. Check at IRS.gov.

Then you simply need to get a check in the mail by Dec. 31. Or put the gift on a credit card before year-end and pay the bill in January. Make sure you have a receipt, be it a cancelled check or your credit-card statement. But if you donate $250 or more, you must get a written record from the charity.

If you give away clothes or stuff from around the house, you’ll be able to deduct the fair market value, as long as the goods are in good condition or better.

“The end of the year is a great time to donate some items to charity,” says financial planner Trent Porter. “Your good deed will be rewarded with a bigger tax refund and a clean closet”

2. Be Charitable Later

If you’re in search of a big deduction in 2014, but you’re not ready to support a single charity now, here’s a good option. With as little as $5,000, you can set up a donor advised fund with a brokerage of fund company such as Fidelity or Schwab. You get the upfront tax savings, the money is invested, and you can then donate a portion of the fund to the charities of your choice for years to come.

“These accounts make it easy to use appreciated securities and other assets to fund your philanthropy, thus avoiding paying capital gains tax on the appreciation,” says financial planner Eric Lewis.

3. Invest in Education

A year of tuition and fees at even a public college will cost you more than $23,000 today. You need all the tax breaks you can get.

If you’re saving for school in a 529 college savings plan, that money grows tax-free, and withdrawals are tax-free as long as the money goes toward higher ed.

You can’t deduct those contributions on your federal return. But in 34 states and the District of Columbia, you can qualify for at least a partial deduction or a credit on your state tax return, as long as you fund the account by Dec. 31. Look up your state’s rules at savingforcollege.com.

4. Speed Up Deductions

A popular strategy for cutting your tax bill is to move up as many deductible expenses as you can. This is especially smart if your income will be high this year—say you cashed out winning investments or sold property.

One simple way is to donate more to charity. You can also make your January mortgage payment in December, which will give you extra interest to deduct. You could also prepay your property taxes, or send in estimated state and local taxes that you would otherwise pay in January. Or pay next year’s professional dues and subscriptions to trade publications.

Don’t employ this strategy, however, if you expect to be in a higher tax bracket in 2015. In that case, the deductions will be more valuable to you next year.

5. Top Off Retirement Plans

In 2014, you can save $17,500 in a 401(k) plan, or $23,000 if you’re 50 or older. If you haven’t saved that much, see if your employer will let you make an extra lump-sum contribution before Dec. 31. If you can’t, make sure you hit the max next year by raising your contribution rate now. The limit will rise to $18,000 in 2015, or $24,000 if you’re 50 or older.

You have until next April 15 to fund a traditional or Roth IRA for 2014, but the sooner you save the more time you’ll have to get the benefit of tax-deferred growth. What’s more, planning ahead might make for better investment choices. A recent Vanguard study found that last-minute IRA investors are more likely to simply park the money in cash and leave it there.

You can contribute $5,500 dollars to an IRA in 2014, or $6,500 if you’re 50 or older.

If you run your own business and want to save in a solo 401(k), you must open that plan by Dec. 31, though you can still fund it through next April 15.

6. Look for Losers

Nearly six years into this bull market, long-term stock investors are sitting on big gains. Maybe you cashed in a profitable stock or mutual fund this year. Or you trimmed back your winners when you rebalanced your portfolio. Unless you sold within a retirement account, you’ll face a tax bill come April. And the best way to cut that is to offset your investment gains with investment losses.

By pairing gains with losses, you can avoid paying capital gains taxes. If you have more losses than gains, you can use up to $3,000 worth to offset your ordinary income, and then save the rest of the losses for future years.

However, don’t let tax avoidance get in the way of sound investing. You should sell a stock or fund before year-end because it doesn’t fit with your investing strategy, not just because you have a loss.

If you want to buy the investment back, you must wait 31 days. Do so sooner, and the IRS will disallow the write-off (what’s called the “wash sale” rule).

7. Part With Big Winners

If you donate winning stocks, bonds, or mutual funds directly to a charity, you can enjoy two tax breaks. You won’t owe any taxes on your capital gains. And you can deduct the full market value of the investment on your 2014 return.

8. Tap Your IRA

With a tax-deferred plan like an IRA, once you hit age 70 1/2 you must take out some money every year. You have to take your first distribution by April 1 the year after you turn 70 1/2. Then the annual deadline for your required minimum distribution, or RMD, is Dec. 31.

This rule doesn’t apply to Roth IRAs, and if you have a 401(k) plan and you’re still working, you can usually wait until you do retire to start withdrawing money.

The IRS minimum is based on your account balance at the end of last year and your current life expectancy. Your broker or adviser can help you with the calculation, but you’re responsible for making the withdrawal. If you fail to do so, you’ll owe a 50% penalty on the amount you should have withdrawn.

You can also donate your RMD directly to charity and avoid paying income taxes on the withdrawal. In mid-December, Congress extended that rule, which had expired, for at least one more year.

9. Spread the Wealth

Making outright gifts is a smart move tax-wise, says Ann Arbor financial planner Mo Vidwans. Your heirs are less likely to face estate taxes down the road—and you can help out your kids or grandchildren when they need it the most. In 2014, you can give as many people as you want up to $14,000 tax-free. If both you and your spouse both make gifts, that’s $28,000.

If you’re funding 529 plan, you can frontload five years worth of gifts and put $70,000 into a child’s account now.

10. Pay Taxes Now and Never Again

With a traditional individual retirement account, your contributions are tax deductible, but you’ll owe income taxes on your withdrawals. A Roth IRA is the opposite: You invest after-tax money, but your withdrawals are 100% tax free.

Before year-end, you can convert a traditional IRA to a Roth. You’ll have to pay taxes on the conversion in 2014. But then you’ll never owe taxes on that money again.

Converting to a Roth is an especially smart move if your income was down this year and you’re in a low tax bracket. “If you have a low-income year, do a Roth conversion,” says New York City financial planner Annette Clearwaters. “Whenever I see a tax return with negative taxable income I cringe, because it’s such a wasted opportunity.”

And if you later change your mind, you have until the extended tax-filing deadline next October to switch back to a traditional IRA. Clearwaters recommends undoing any conversion that puts you above the 15% federal tax bracket.

Update: This post was updated to reflect Congress’s extension of the rule allowing for direct charitable donations of RMDs.

MONEY College

A New Jersey Woman Sued Her Parents for College Tuition – and Won

The parents of a 21-year-old New Jersey woman have been ordered to pay $16,000 a year in college fees for her, even though they haven’t had a relationship with her in two years.

But don’t expect them to pay up anytime soon.

“They can hold me in contempt of court. They can do whatever they want. I’m not going to pay,” Caitlyn Ricci’s father, Michael Ricci, tells WPVI-TV. “I’m not going to give them any money until my daughter has a relationship with me and we start to heal our family.”

The standoff – which recalls a similar New Jersey case earlier this year, in which 18-year-old Rachel Canning sued her parents – came to a head in November, when a judge ruled for Caitlyn and told her parents to help fund her out-of-state tuition at Temple University.

The family was back in court this week, with Caitlyn filing a motion to hold her parents in contempt of court after refusing to pay.

“It is nice to see that she is alive and doing well, but it is hurtful because she wouldn’t look at us,” Caitlyn’s mother, Maura McGarvey, says. “When I got emotional in the courtroom and when Michael got emotional in the courtoom, she doesn’t have any emotion.”

Caitlyn has been estranged from her divorced parents for almost two years. They claim she moved out voluntarily after they clashed when she refused to follow the rules. Caitlyn has been living with her grandmother, who funded the lawsuit.

“A lot of people call her a spoiled brat because she wants her parents to pay 100 percent of her college. And in fact, she is not asking for that, never has been,” Caitlyn’s attorney said.

This article originally appeared on People.com.

MONEY College

How To Get Your (Or Your Kid’s) College Application to the Top of the Pile

Hand putting piece of paper on top of pile
PM Images—Getty Images

Fix this essay, don't answer that question, and don't think the college application process is over when you hit "submit."

Time is running out: As you no doubt know if you’re a college senior (or related to one), college application deadlines are fast approaching. And what you do in the next several weeks could still tip the scales in your favor.

Right now, you’re probably worried that your dream school won’t want you. So maybe it’ll make you feel better to know that schools will soon start worrying about whether you really want them. To tip this balance of power in your favor, you need to think carefully about how to present yourself to each school.

Happily, that’s not as hard as it sounds. Read on for seven application strategies that will make your applications rise to the top of the pile.

1) Find out what your favorite schools care about most.

You’ve heard the debates: The college essay is more important than ever before. No, it really doesn’t matter; it’s all about numbers. A low SAT score isn’t a deal-breaker. Except when it can be. The college admissions process is a total crapshoot. Actually, strategy does matter and isn’t that hard to execute.

The truth is, none of this conventional wisdom is true or false across the board because various institutions use a wide range of criteria and weigh them in different ways.

The good news: You can just look up how your favorite schools do it.

Lynn O’Shaughnessy, nationally-recognized college expert of The College Solution, recommends checking each school’s “common data set.” There, schools assemble a wealth of information about demographics, academic offerings, student life, tuition—and how they weigh different admissions criteria.

The answers may surprise you. For example, at the University of California Berkeley, the essay is “very important,” while class rank isn’t even considered.

Many schools post their common data set on their websites; search for it and then check section C7, “Relative Importance of Common Academic and Non-Academic Admission Criteria.” Or check collegedata.com to compare different schools, O’Shaughnessy says.

2) Narrow your personal essay topic.

“A lot of students do a miserable job of writing their college essay,” O’Shaughnessy says. “This is one of the ways to let a school know more about you, and students often do a very generic or very boring essay.”

The most common mistake? Trying to jam the essay with too much information. “The best essays are highly focused,” O’Shaughnessy says. For example, instead of writing about your love of music, O’Shaughnessy suggests focusing on just one event, like how you overcame stage fright at your senior recital.

Peter Van Buskirk, former dean of admission at Franklin and Marshall College and current president of Best College Fit, an advocacy group in support of students and parents in the college application process, agrees that it’s a mistake to just repeat what’s already in your resume.

“Take me to some part of your life experience I cannot find anywhere else in the application,” Van Buskirk says. “Get people to see the invisible you.”

3) Write shorter paragraphs—with more dashes.

You’ve got your winning topic. Now make sure the admissions officer will actually read your essay.

“The mistake that kids make is they don’t think creatively about their presentation,” Van Buskirk says. “This is a creative process. It’s not an academic process. If they have any level of creativity within them, they need to let it show.”

Start by forgetting what your English teacher may have taught you about writing. A lot of applicants submit personal essays with an ploddingly academic, five-paragraph format, Van Buskirk says. “It won’t hurt, but it doesn’t help,” he adds.

Instead, break up your paragraphs. Try using dashes, italics… even ellipses. Experiment with tone and style.

“What kids need to remember is their applications will be read by tired eyes,” Van Buskirk says. “When a set of tired eyes comes across an essay with three or four paragraphs, 150 words each, that’s dense stuff. Tired eyes wander away from it. It’s important to establish a flow.”

4) Rewrite your response to this question.

Many schools ask some version of the question, “Why do you want to go to this school?” If you could sub in the name of any other school and it would still make sense, throw out the essay and start over. Really.

“Kids tend to just do a boilerplate answer to all of them, like, ‘The academics are great, you’re located in a city, you have great faculty,'” O’Shaughnessy says. “That could describe any number of schools. [Admissions officers] will pick that up immediately.”

Van Buskirk says what the school is really asking with this question is “If we admit you to this institution, what do we get? What do you, the student, have to offer us that is different than the next guy?”

Be very specific and do some research. For example, don’t just say you want to major in neuroscience. Talk about how your volunteer work with disabled children has inspired you to pursue that field and how a particular academic program at the university could help you develop your expertise, Van Buskirk says.

The key is to demonstrate that you have thought about how this particular institution is uniquely able to help you achieve your goals.

5) Either skip this question, or double down.

Some schools, and some financial aid forms, will ask you to list other schools that you’re applying to. This question poses some risk, so tread carefully.

Most schools aim to maximize their “yield,” i.e. the percentage of students admitted who actually attend. So you could gain an edge if a school believes it’s one of your top choices. But if admissions officers have reason to think you’ll go elsewhere—if you reveal a preference for other comparably competitive schools, for example—they may turn you down even if you otherwise meet their criteria.

If your heart is absolutely set on a particular school, you may want to rank it at the top of these lists even at the risk of alienating other institutions. It also can help when it comes to aid because your second or third choices may try to lure you with money. Scott Bierman, president of Beloit College, recently told MONEY’s Kim Clark that his school’s best merit aid offers go to top students who have also ranked Beloit in their top three picks. (That’s why it’s helpful to check that “common data set” and see how much a school considers the “level of applicant’s interest.”)

On the other hand, some experts think ranking a school high on these lists can hurt you even when it comes to merit aid. “The No. 1 choice school will say, ‘They really want to go here, so we don’t have to give them money,'” O’Shaughnessy says.

The upshot? “There is no good that can come to the student in providing that information,” argues Van Buskirk. “My advice to the student, when the school asks, is to leave it blank.”

Sometimes, of course, you have no choice. The Free Application for Federal Student Aid (FAFSA) asks for a list of schools. In that case, you just have to realize that you might be showing your hand. You can try to maintain your poker face by putting the schools in alphabetical order. Just know that admissions officers may still draw inferences about your list.

6) Explain any weaknesses.

Maybe your grades dipped one semester. Maybe you didn’t do as well on the SAT as you had expected. Maybe you got into some trouble at school. Providing an explanation can make a big difference.

“Students need to understand admissions officers are cynics by nature,” Van Buskirk says. “In many applications, the student has an opportunity to complete an optional essay. I strongly recommend the students do that. They don’t want to put the reader in the position of having to piece it together themselves.”

The optional essay is an opportunity to disclose a learning disability, explain other medical or family issues that have impacted your performance, or talk about what you’ve done to make amends after a disciplinary issue, O’Shaughnessy says. Make the essay about “how you’ve overcome the challenges other kids don’t have,” O’Shaughnessy says. “Those are things that can help you get in.”

7) Don’t think you’re done when you hit “submit.”

At competitive schools, your make-or-break moment might not be the day you submit your application, or the day an admissions officer first reads your application, or the day you get moved to the admit list. It might be a moment during the last two weeks of March, called the “move down weeks,” Van Buskirk says.

That’s the moment when enrollment managers often realize they have too many applicants on their admit lists, and they risk overspending their financial aid budgets. Representatives for each geographical region might be instructed to move a certain number of students in their area from the admit list to the waitlist, and the college might reduce the amount of aid it had planned to offer certain students.

“It is at this point when the little things can make a difference,” Van Buskirk says.

Here’s how Van Buskirk says you can stay off the waitlist: First, keep your grades up. Second, keep in touch. If you receive email surveys and other communications that prompt a response, respond. If you have the option of interviewing with an alum, sign up. If you can visit, pack your bag. If you have a question about the school that you can’t answer with some Googling, send your regional recruiter an email.

“A big mistake is the students assume that once the application is submitted, they don’t have to manage it anymore,” Van Buskirk says. “The whole business of predicting who will enroll has become really big business. Kids need to make sure they continue to be alert.”

 

For more:

MONEY Student Loans

Help! I Owe $37K for My Kids’ College But I Make Only $28K a Year

knife cutting dollar bill
David Franklin

A student loan expert explains why there's hope for a parent saddled with student loan debt from two kids.

Brent Strine, 65, sent a blog comment to us describing what he thought was probably an impossible situation, and he despaired of ever being able to get out of debt. He wasn’t asking for help so much as describing a sense of hopelessness. Here’s what he told us:

I have 45k in parent loans from two children who cannot help me pay on them. Every time I defer them it costs over 1k added to the principal. I am 65, our (total household income) is 28k . . . (We have) no savings, no retirement plans or funds. Seems the only way out of debt is through the grave.

When we contacted him, he quickly noted that he feels grateful for his home and family, “and I am not in any way a ‘victim.’” He had deferred the loans when his wife was hospitalized after a serious car accident and when he had cancer surgery. He continues to work full time as a custodial supervisor, though he plans to retire in May 2015 because of some physical limitations. At that point, he wants to find part-time work. He was clearly worried about his debt, though.

He gave us the balances of his loans, down to the penny. And though he knew exactly how much he owes, he hadn’t a clue about how he could possibly repay it. He wondered if there’s some way he can get lower interest rates — he has several loans, $37K total, with rates of 8% or 8.5%. (The rest of the loans have much lower interest rates.)

We spoke with Joshua Cohen, “The Student Loan Lawyer,” on Strine’s behalf. The good news is Strine probably need not worry about unaffordable payments or high interest rates. Because he has federal Parent PLUS loans, he — and not his children — is on the hook for the debts, Cohen noted. And although Strine won’t be able to get lower interest rates, it won’t matter, said Cohen.

That’s because Strine’s $28K income should make him eligible for a repayment plan based on the borrower’s income. Cohen said a family of two with an adjusted gross income (reported on federal tax return) of $28K would have a monthly payment of $205. However, when we reached out to Strine, he told us his most recent tax return had an AGI well under $20K. That would result in a payment of just $71 per month, and possibly even less, Cohen said.

“The plan I’m talking about is called Income-Contingent Repayment (ICR) — the only income-based plan allowed for Parent PLUS loans,” Cohen wrote in an email. He had more good news for Strine: “It comes with 25-year forgiveness, which means if you live to 90, your loans will be forgiven. If you pass away before then, the loan goes with you — it will not attach to your estate.

“Bottom line, you can survive this loan,” Cohen said. “It would have been nice if the servicer gave you this information. After all, that’s what us taxpayers are paying for — to help borrowers stay out of default and continue paying.”

Student loans have an impact on your credit, for better or worse. Making arrangements with the servicer for payments you can afford can help you stay afloat financially, as well as help your credit standing — by making the payments on time and as agreed. You can see how your student loans are affecting your credit for free on Credit.com, where you can get two free scores updated monthly.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Kids and Money

Forget College, This Is the Expense New Parents Should Be Freaking Out About

childcare costs are as expensive as college
Eric Meola—Getty Images

Daycare can be just as expensive as higher ed—if not more so, a new Child Care Aware America report finds.

New parents may live in fear of what they’ll pay for their child to attend college—but a nearer-term expense may have an even bigger impact on their wallets, a new survey finds.

Child Care Aware of America’s 2014 report on child care costs found that, in 30 states plus Washington, D.C., the average annual cost of enrolling an infant in a center-based daycare program is more than a year’s worth of tuition and fees at a public college in that state.

If that’s not daunting enough, the report released Thursday also notes that infant center-based child care costs twice as much as the average amount families across the country spend on food, and exceeds transportation costs in almost every region in the United States. And for those with two kids, child care costs in 23 states and D.C. exceed the average housing costs for homeowners with a mortgage.

The report notes that the average cost for child care varies widely according to state. But if you live in the Northeast ($22,513), Midwest ($17,258) or South ($15,409), expect childcare to be the highest single household expense on your budget. Though still expensive in the West ($17,941), childcare there comes in second behind housing.

When the costs were compared to median income for a married couple, New York topped the list for least affordable center-based care across three different age groups: infant care (16% of income), four year olds (13%) and before/after school care for school-aged kids (12%).

Most parents aren’t prepared for these costs, a separate study from Care.com released this April found. Three quarters of families surveyed in that poll were surprised or overwhelmed by the costs of childcare, and 42% don’t budget for it.

So what can a parent or parent-to-be do to get ready for this overwhelming expense? We reached out to Donna Levin, co-founder of Care.com, and Carmen Rita Wong, financial contributor for Babycenter.com, for tips.

Start Budgeting Early

The moment you know you’re expecting is the time to start saving and budgeting, Levin said.

But before you can do that, you’ll need to determine the type of care that best suits your family’s needs and resources. Options range from family-based daycare in someone’s home on the cheapest end ($127 a week on average, according to Care.com) to nannies ($472 a week). Online resources can help you navigate the pros and cons.

Another option that parents-to-be often consider is having one person cut back his or her work hours or take time off. That may save on childcare expenses in the short term, but you need to consider the ramifications in the long-term, warns Wong. Working parents have to weigh the opportunity cost of leaving the workforce—e.g. how much knowledge will you lose? How much potential income growth will you lose? How tough will it be to break back in?

Take Advantage of Tax Breaks

Depending on your circumstances, you might qualify for the Child and Dependent Care Tax Credit. The total credit can be up to 35% of up to $3,000 in qualifying expenses paid to care for a child under 13 while you’re working (or $6,000 for two children), but the exact amount is based on adjusted gross income.

“Many folks land on the cusp of qualifying year after year,” Wong says. “It’s important to realize just how close you are as you may be able to find deductions that can get you under the limit and save you more.”

Also check in with your HR department to see if your company offers a dependent-care flexible spending account. This allows you to set aside up to $5,000 pretax toward qualifying expenses like daycare, preschool and some summer day camps.

(While you’re at it, see if they offer any other child care help, says Levin. “A lot of great employers are providing child care subsidies or discounts to childcare centers.”)

Share in Care

They say it takes a village to raise a child—and as a mom, Wong can attest to the money-saving benefits of establishing a strong social network in your local area. “Though you may save $1,000 a year with all the tax credits, you can save another $1,000 by utilizing neighborhood networks,” she says.

You might be able to find a parenting group in your area on platforms like The Big Tent Network and Meetup. Such sites allow moms and dads to find play dates or learning opportunities, and also let parents establish relationships that can become helpful when looking for child care resources.

Nanny shares are one good example. With this kind of arrangement, multiple families pay for one nanny, therefore reducing the cost of care. Often, nannies will watch the kids at the same time, but families can also establish schedules that are based around each family’s individual need.

Additionally, establishing a connection with parent group is a great resource if the nanny gets sick or is unavailable.

When parents can say, “If you watch my kids while I do errands, I’ll watch yours after school,” it can be really beneficial for all parties involved, Levin says. Kids also love it, because in the long run “they’re just one big play date.”

Read next: 4 Costly Money Mistakes You’re Making With Your Kids

TIME Education

UVA President: Eliminate All Booze Except Beer

The Phi Kappa Psi fraternity house at the University of Virginia in Charlottesville, Va. on Nov. 24, 2014.
The Phi Kappa Psi fraternity house at the University of Virginia in Charlottesville, Va. on Nov. 24, 2014. Steve Helber—AP

Following a report detailing an alleged gang rape at a University of Virginia fraternity, Teresa Sullivan, the school's president, discusses her plans to reform the school's culture in an interview with TIME

In one of her first interviews since the publication of an account of an alleged gang rape at a University of Virginia fraternity, University President Teresa Sullivan said that fraternities should regulate themselves by limiting alcohol provided at parties to beer and said the university must expand its own social options to provide alternatives to the Greek scene.

The campus of the prestigious public university is still reeling, two weeks after Rolling Stone published the story of a horrific gang rape, igniting protests even as critics have begun to question the nature of the reporting behind the allegation.

On Nov. 22, Sullivan announced she was suspending fraternity social activities until Jan. 9. She said the university would use the period to solicit proposals on the best reforms from students, alumni, faculty and members of the university’s board of trustees.

Since the fraternities operate off campus, they are largely self-regulated. Sullivan said she has been working with student leaders of the fraternities to insure that their governing agreement “has more teeth in it.”

“I’d also give them some other ideas I’d like them to write into their proposal. One would be serving only beer and only in the original container. The days of the trashcan full of punch have to be over,” Sullivan said.

One proposal suggested by the students would require that bedroom doors be locked when fraternities host parties. Another proposal would restructure the university’s bid night–when fraternities give out bids to prospective members each February–which has become an evening of particularly high risk for sexual assault.

Sullivan said reforming fraternities will only solve part of the problems that confront the university, which was once ranked by Playboy magazine as the nation’s top party school.

“It’s a mistake to view the Greek system as monolithic. They are very different from one another. A lot of that leadership comes from some of the Greek houses, so I think it is important when we talk about this, to try not to stereotype them as if the are all exactly the same,” Sullivan said. She added that off-campus housing should also be discussed. “In some ways, apartment culture worries me just as much [as fraternities]. We don’t have any leverage at all, and what’s happening there is as bad or worse.”

The university has little control over what are essentially no different from privately owned homes. The University of Virginia has what is called a Fraternal Organization Agreement with the national fraternities that allows them to get some recognition from the University, but leaves the fraternities to operate independently. For fraternities to consent to increased monitoring they would have to update that agreement.

To solve a lot of these problems, Sullivan hopes to offer more opportunities for students to socialize beyond Greek life. “What students tell me, particularly, is that Saturdays are an issue. Lots of student groups have events on Sundays. Fridays are busy. Saturdays are empty. It is important for us to think about alternative forms of entertainment…We are talking to students and faculty about more ways to encourage a greater variety of student life that is not dominated by one group,” Sullivan said.

Sullivan said she would like to improve communication between the university and the Charlottesville police, which has jurisdiction over most of the fraternity houses. “The chief of police and I have talked about a workshop—we both recognize the myths on both sides, we’d like an opportunity to talk about those and improve communications,” Sullivan said.

The university needs to do more to make people feel safe reporting sexual assault, Sullivan said. “We are very interested in changing the culture so that people are more free to come forward and don’t pay a high social cost,” she said. “I think the most important thing for people to understand is how profoundly subversive sexual assault is to our educational vision. It makes it impossible to concentrate on studies while reliving a traumatizing event like this—that’s one of the reasons it has to stop, and it’s under our mission.”

Read next: No Formal Police Investigation Yet in UVA Rape Case

TIME College football

University of Alabama-Birmingham Officially Shuts Down Football Program

UAB Blazers v Arkansas Razorbacks
Head Coach Bill Clark of the University of Alabama at Birmingham Blazers is seen with his team during a game against the Arkansas Razorbacks at Razorback Stadium on October 25, 2014 in Fayetteville, Arkansas. Wesley Hitt—Getty Images

The "financial realities" it faces from an administrative standpoint made the football program unsustainable

The University of Alabama at Birmingham announced Tuesday that it has shut down its football program. Sports Illustrated’s Thayer Evans reported on Sunday that the announcement was expected some time this week.

In the press release announcing the decision, President Ray L. Watts said the “financial realities” it faces from an administrative standpoint made the football program unsustainable. The bowling and rifle programs will also be dropped in the 2014-15 academic year.

“The fiscal realities we face — both from an operating and a capital investment standpoint — are starker than ever and demand that we take decisive action for the greater good of the Athletic Department and UAB,” Watts said. “As we look at the evolving landscape of NCAA football, we see expenses only continuing to increase. When considering a model that best protects the financial future and prominence of the Athletic Department, football is simply not sustainable.”

Watts also announced that athletic director Brian Mackin has been reassigned from his position, at Mackin’s request. Mackin will fill the role of “the newly created position of special assistant for Athletics,” according to the release. Mackin will “assist student-athletes and coaches affected by the discontinuation of programs.” Mackin had been UAB’s athletic director since 2007.

“While Brian has been leading the strategic review process for the Athletic Department, working closely with our consultants to inform and guide their analysis, he does not wish to lead our newly constituted Athletic Department,” Watts said. “I respect his decision and thank him for his 12 years of service. In his new role, Brian has a great opportunity to make this transition easier for the affected athletes and coaches as they work to make the best decisions for their futures.”

UAB finished this season 6-6 under first-year coach Bill Clark. Clark took over a program already lacking financial support and one that hadn’t had a winning season since 2004.

UAB football players were told about the decision in a meeting with Watts on Tuesday.

This article originally appeared on SI.com

MONEY Student Loans

The Surprising Downside of Steering Clear of Student Loans

Headlines about daunting student loan burdens may leave you scared to borrow altogether. But a college degree is worth the investment, even if that means taking on some debt.

The next generation of college students has heard the message loud and clear about the perils of taking on too much student loan debt—so much so that many are unwilling to go into debt at all in order to attend college.

The drawback to this wariness is that for those who do not borrow, they are unlikely to get four-year degrees.

The vast majority of people aged 16-19 recognize the importance of a college degree, but most say they either want to avoid education debt entirely or to limit their borrowing to nominal amounts, according to a recent survey by Northeastern University of 1,000 teenagers nationwide.

About a quarter of those polled said they want to remain debt-free, while 45% felt they could afford to pay a maximum of $100 a month, which at current interest rates means borrowing no more than about $10,000.

That amount would not cover a single year at many public four-year colleges, even after financial aid is taken into account.

The problem with not borrowing is that most families do not have nearly enough saved to pay for college. About half of U.S. families are not saving for their children’s educations at all, according to a survey by Sallie Mae. Among those who are, the average amount saved is around $15,000. (To see if a school you’re interested in is worth borrowing for, see MONEY’s rankings of the Best College Values.)

Meanwhile, some commonly recommended ways to cut costs—such as starting at a community college or working your way through school—dramatically increase the chances of a student dropping out without a degree.

One recent study found a 17-percentage-point difference in bachelor’s degree completion between those who start at a four-year college and those who start at a two-year school intending to transfer.

Another study found that those who work 30 hours a week or less, excluding work study, were 140% more likely to graduate college within six years than those who worked more.

Now no one expects teenagers to be financially savvy. Many do not understand the difference between bad debt that can sink their finances and good debt that can help them get ahead. The trouble comes when teenagers make an all-or-nothing decision based on their ignorance.

That is true for those who will spend anything to get their degree and those who are so averse to debt they will borrow nothing.

The nuance that the debt-avoiding teens are missing is that those sob stories about unemployed or barely employed college graduates with six-figure student loan debt are very much the minority. (Still, see how you could end up with a six-figure debt for film degree here.)

Even though student loan debt is rising, just 7% of borrowers take out more than $50,000, according to the Brookings Institution’s Brown Center on Education Policy. Only 2% take more than $100,000.

The average debt at graduation for bachelor’s degree recipients is $33,000, said Mark Kantrowitz, author of Filing the FAFSA and publisher of Edvisors.com, a higher education resources site.

That amount may seem formidable, but for most graduates it is not.

“If total student loan debt at graduation is less than the annual starting salary, the borrower will be able to repay his or her student loans in ten years or less,” Kantrowitz says.

For most graduates, that’s the case. The average starting salary for new college graduates this year was $45,473, according to the National Association of Colleges and Employers, ranging from a low of $38,365 for humanities and social science majors to a high of $62,719 for engineers.

Even larger debts may not be cause for concern. About a quarter of the increase in student loan debt comes from rising levels of education—more people attending graduate and professional schools.

Advanced degrees typically confer higher incomes, according to Georgetown University’s Center on Education and the Workforce. Master’s degree holders can expect to earn $2.7 million over a lifetime while professional degree holders can expect $3.6 million.

That compares to the $2.3 million someone with a bachelor’s degree can expect to earn and the $1.3 million expected earnings for those with only a high school diploma.

Of course, not everyone needs or wants a four-year degree. The payoff for a two-year associate’s degree from a community college—an education mostly covered by that $10,000 in borrowing—can be considerable. The Georgetown researchers figured an associate’s degree-holder can expect to earn $1.7 million over a lifetime. What’s more, 28% of associate’s degree make more than the median earned by a four-year degree holder.

For most people, though, the investment in a four-year degree will pay off handsomely in terms of higher incomes and lower unemployment. An unreasonable fear of debt should not be the deciding factor between a good education and something less.

 

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