First, the amounts of borrowing have been increased in an effort to keep pace with rising post-secondary education costs. Both subsidized and unsubsidized student loans are affected.

Subsidized loans are those loans offered as a part of a need-based financial aid award. They do not require payback until after the student leaves college or grad school and while in college, interest does not accrue. For undergraduates, the new interest rate beginning with loans disbursed after July 1, 2008 is 6.0% and 6.8% for graduate students and unsubsidized loans at both undergraduate and graduate levels.

New this year for dependent students is the eligibility to borrow an additional $2,000 unsubsidized loan annually. The new total amounts for student loans looks like this:

The aggregate total each year includes both subsidized and unsubsidized loans. For instance, if the student has been awarded a $2,700 subsidized loan in the freshman year, total eligibility for an unsubsidized loan is limited to the total eligibility for that year or, in this case, $2,800. Unsubsidized loans have a fixed rate of 6.8% and become due and payable while the student is in school. However, the student can elect to defer payment until after college but the interest will accrue during the deferment period.

Aggregate Dependent Student Loan limits:
Base: $23,000
Extra: $8,000
Total: $31,000

Interest rates on undergraduate subsidized student loans are slated to decrease over the next four years to 3.4%.

Rates in unsubsidized loans will remain at the current 6.8%.

In some instances, a dependent student may borrow more than the standard limits on unsubsidized loans. If the parent has been turned down for a PLUS (Parent Loan for Undergraduate Student) loan, a federal loan program that allows parents to borrow whatever amount they need to pay college costs not covered by financial aid, the student becomes eligible for additional unsubsidized student loans dollars every year the parent is rejected for a PLUS loan.

For Independent undergraduate students and dependent students whose parents were denied a PLUS loan have higher loan eligibility.

The amount of unsubsidized loan eligibility each year is reduced by any subsidized loans awarded. Regardless, the total amount that can be borrowed cannot exceed the total maximum eligibility each year.

Aggregate Independent Totals (including those dependent students whose parents were denied PLUS loans:
Base: $23,000
Extra: $34,500
Total: $57,500

For graduate school students, each year you can borrow:

In addition to the FFELP and Direct Loan programs, colleges still use Perkins loans in financial aid award packages. They are ten year notes with a fixed interest rate of 5%. The amounts are up to $4,000 per year for undergraduates and $6,000 for graduate students. Undergraduates have a cumulative limit of $20,000 and a $40,000 aggregate limit for undergraduate and graduate Perkins Loans.

There is also the private loan marketplace. As a general rule, private loans are more expensive than public loans (the current national average is about 11%) since they are created to satisfy the needs of the investors who fund the loan. In the absence of any wide-spread, coherent plan to ensure the likelihood that the loan will be repaid, those rates will continue to be high as an offset to the risk associated with student loans. Private loans should always be used as a last resort when all other options have been exhausted. Before turning to private loans, every family should carefully review financial aid applications and awards to be certain all other avenues of support have been fully explored. The many resources in TuitionCoach can be very helpful in that process.

Regardless of which loans one uses, it should be part of an approach to paying for college that practices our ongoing mantra: “You can always borrow for college but you can never borrow for retirement!” Look for loans that are low cost with flexible payback options. And ALWAYS be aware of any tax benefits associated with both student and parent loans. This can be checked by downloading the IRS Publication 970 and/or visiting “Paul’s Corner” in the late winter every year when we will publish an annual update and overview of all education tax benefits relevant to families and students dealing with the monetary challenges inherent in the higher education process.

As we near the twilight of the first decade of the new century, it is fitting to assess the contract to see how it is working. If freedom is a centerpiece of the deal, let’s look at it. How well is the government, that child of the people’s will, doing?

How free are we, the people, to determine the activities of the government when money drives elections and the creation of legislation?

How truly free are the people who have to work two or three jobs to meet their mortgage or rental obligations?

How free are the people who can’t pay for the fuel needed to get to work or to heat their homes?

How free are citizens who can’t afford medical care because of a health system bloated by legions of bureaucrats who never cured anybody?

How free are people whose quality of life is often dictated by credit bureaus and credit card companies who collude to arbitrarily raise rates on debt at any time for reasons only they know?

How free are people who because they can’t afford higher education, are excluded from equal access to the “American Dream”?

How free are Americans who go to bed hungry every night in this land of plenty?

How truly free are people who feel the need to triple latch their homes for fear of criminal activity?

How free are our kids who can’t walk to school or to a friend’s house without the fear of predators and how free are the parents who worry about those kids?

How free are we as a people as thousands of our fellow citizens die at the hands of gun-toting Americans in every city and town across the nation?

How free are American citizens when our highest courts demonstrate a greater allegiance to political parties and politically motivated positions than to the law?

How free are Americans who routinely lose their jobs at the hands of our business leaders who either ship our jobs overseas or simply lay off workers because of their own failed leadership or their need to reap personal fortunes at the expense of their workers who created that wealth?

How free are we when we pay taxes to better this nation only to see that revenue shipped to foreign capitals to allegedly improve the lives of citizens of other nations?

How free are we when our elected officials violate their solemn responsibility to protect and defend the Constitution of the United States by tolerating and sometimes abetting violations of that document every day?

How free are we when our elected officials appear to have more loyalty to political parties than to the people of this nation?

How truly free are we as a people when we are angry all the time and consumed with vilifying neighbors and public officials who may harbor political or religious views that differ from our own?

You can answer these questions and others as you choose. But if you find that our freedoms are not enhanced by our government and that something else is afoot, then we as citizens, the sole arbiters of our common fate, need to do something about it. That is the job of each of us. You see, as the descendents of the Founding Fathers and those who came before us, we are also signers of that Declaration. If we don’t insist on adhering to the terms of that original contract we so readily honor, who will?

So during this time of celebration, it is also a time of reflection. In fact, it is always time to assess whether the original contact signed on July 4, 1776 still holds. It is time for us all to return to those marching orders found in that document, things that include phrases like, “But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such government and to provide new Guards for their future security.”

Just because our leaders of every political stripe extol our freedoms and parade about with flag pins on their lapels, it is our task as citizens to look beyond that easy rhetoric and behavior to determine whether the contract, ratified on July 4, 1776, has been violated in a manner described by Thomas Jefferson. If it has, we as the American people and as custodians of that extraordinary legacy, have some work to do.

As most of you know, the Common Application was developed a few years ago to lighten the paperwork burden for college applicants and to lend some standardization to the application process. Each year, more and more colleges and universities have signed on to accept it. In general, it has been a huge benefit to all the players in the college admissions world. The one unintended consequence is because it makes applying to college more efficient, it is easier for students to apply to more colleges. The resulting flood of applications has made an already over-burdened system even more unwieldy.

Two areas of some concern are on page one of the Common Application. There are questions about the student’s intent relating to early decision and plans about financial aid. Answers to both issues could have an admissions effect regardless of the actual talent of the student. Since both issues are sometimes flash points in the admissions process, care must be taken when addressing them.

Colleges want to know not only whether the student is talented but they also are very interested in the likelihood of attending their college if the student is accepted. Many elite colleges, for instance, don’t want to be anyone’s second choice and an answer to an early action or early decision question on the Common Application may provide a college preference hint. Moreover, the whole issue of early decision is problematic. It is fairly well acknowledged that early decision enhances one’s chances of admission to a college. That advantage is countered by another reality; what a student loves in November, he/she may hate in May. Adolescents are clearly works in progress. They are changing almost daily so as a general rule, the longer one delays the final choice of college, the greater the probability of a more appropriate fit.

Colleges are also businesses. At some point most colleges treat application decisions as business decisions. For example, if there are a limited number of available spaces and there is an array of applicants who are similarly qualified but not extraordinary except for financial capabilities…and if there are no affirmative action/minority issues at stake, the college is likely to choose the wealthier students as a wise business choice. Surely, not all colleges do this but just as surely, some do and in the current economy, it is understandable.

Later on the revised Common Application, the colleges are requesting lots of information about any parent or guardian even if that adult is deceased, divorced or no longer has any legal obligation of any kind toward the student. It seems to be adding information that is likely to open all sorts of issues when the student files a subsequent financial aid form that doesn’t ask for that data. College personnel have told me that the information submitted about non-custodial parents or adults on the Common Application is not relevant. To that I ask, “If it isn’t relevant, why do you ask the question in the first place?” Truth be told, it IS relevant in ways to be determined by each college.

As an old government teacher, I have always been uneasy about the self-incrimination requirement in the Common Application. By asking about disciplinary actions at the school or even criminal convictions, colleges set themselves up for equivocation or simply lying on the part of the applicant. I believe those issues should be the sole responsibility of the high school or the staff of whatever secondary institution the student attends and that it should be the institution’s judgment as to whether the disciplinary action was serious enough to be reported to the college. I believe strongly that when there is a possibility for the student to expunge a violation through good works and improved behavior, the secondary school and indeed the student’s community are the likely co-beneficiaries. To have a foolish act done as an impulsive teenager, affect the remainder of one’s life seems to be overkill and a penalty far in excess of the “crime”. And by denying a college education to the presumably flawed student, the public is likely to pay a much higher price in the future as the angry, denied young person acts out that aggression in anti-social ways over the remainder of his/her lifetime.

So the Common Application is almost ready for distribution. Despite its possible flaws, it is still the best game in town and I heartily recommend that where possible, students should use it. With that said, students should also be tracking down great teachers to serve as references being sure to get teachers who will add some new information about the student rather than merely confirming things already revealed on the application or the high school transcript. In addition, students should be thinking about the college essay, one that will shed some light on the student’s soul and his/her ability to put words together in a coherent and artful way.

Finally and most important, the student should define the kind of college environment that seems to address the student’s academic and social needs and match that up with appropriate colleges so that those Common Applications are directed to an array of colleges that have many attributes in common.

Part of the problem relates to the teacher’s professional commitment and part is created by the quality of the training and credentialing process in the field of education. Traditional education courses, to put it kindly, are pretty much irrelevant in terms of enhancing classroom performance. They serve merely as an attempt at trying to validate teaching as a profession by creating a series of requirements that somehow suggest that there is a body of knowledge unique to teachers and teaching. Like medicine, these essential prerequisites purport to screen out ne’er-do-wells and produce credentialed, quality professionals. All of this, of course, is nonsense and in the end may produce just the opposite.

Of all the programs I participated in during my pre-teaching years, only one had it right. Sadly, it no longer exists but while it did, the Wesleyan Master of Arts in Teaching Program for secondary school education teachers was the hands-down, gold standard.

The best variation of Wesleyan’s programs was its two-year plan. It enrolled smart, creative and passionate young people and honored them by providing an academically challenging experience. The first year involved a required “tip of the hat” to the basic credentialing education courses and it was done so in an atmosphere that included discussion groups and projects that provided some signs of intellectual life in a largely moribund body of knowledge. Part of that credentialing process included a stint of practice teaching at a local high school usually involving teachers at the high school whom had been well “vetted” by Wesleyan as appropriately qualified to serve as an on-site mentor. The rest of the year-one curriculum focused on graduate level classes in the teacher’s planned field of teaching. They were rigorous courses steeped in substantive challenges and populated by serous students many of whom were on their way to a Ph.D. in that field of study.

In year two, the students paired up and were assigned a high school in a wide neighboring area around Wesleyan. In the first semester, one of the paired students served as a full-time teacher at the school and was paid according to the school’s regular salary schedule. The other student spent the semester at Wesleyan to continue courses in the major. At regular intervals the students assembled at Wesleyan to discuss issues relating to their teaching experiences and other program-generated issues and assignments. Before the semester ended the second student in the pair could observe classes at the high school and even teach a few sessions so that the changeover for the second semester could be as seamless as possible. In semester two, the Wesleyan pair simply switched places.

The net result was the production of two experienced, academically prepared teachers who could move into a full-time teaching job with relative ease. Moreover, the salary each gained from the full-time teaching at the local high school helped to pay for the Wesleyan MAT degree. It was the best, most appropriate education I ever received given the objectives of the program. Recruiters lined up at Wesleyan’s door every year and placed the participants of the Wesleyan program in whatever school the student wanted. Across the board, the schools that recruited the Wesleyan students generally raved about the quality of the program and the effectiveness of its graduates.

Colleges across the nation have an obligation to create a cadre of teachers for our schools. With leadership, imagination and a will to do so, the Wesleyan program could be recreated on any campus anywhere. For secondary schools, it is by far the best model I have ever seen and for so many of its graduates, it was the gateway to a rewarding career as a leader in what may be the nation’s most important profession.

In moments like this, I often return to one of my favorite Thomas Jefferson quotes. In a letter to Colonel Yancey, he said “If a nation expects to be ignorant and free…it expects what never was and never will be.” If you need to understand the import of this quote in today’s world, just open your eyes, look around and listen.

It happened during an intercollegiate softball game between Central Washington and Western Oregon. Western Oregon’s Sara Tucholsky hit a home run with two teammates on base. It was the first in the senior’s career. As Mr. Vecsey pointed out, she had not developed the traditional home run trot. She had never needed it. Because she was watching the flight of the ball, Sara had missed first base and had to turn quickly to make certain she touched it. In doing so she twisted her knee and fell to the ground writhing in pain. Under the rules, if any of Sara’s teammates came out to physically help her, she would not have been able to take another base and the home run would be nullified and Sara would only be credited with a single.

And then, a remarkable thing happened. Central Washington’s first baseman, Mallory Holtman, asked the umpire whether it would be OK if she and a teammate carried Sara around the bases. The umpires huddled and determined it would be legal. So Mallory and her teammate, Liz Wallace, gently carried Sara around the diamond making certain she touched every base. The extraordinary display of sportsmanship and character brought the crowd to its feet as the three circled the bases. Applause and cheers were liberally mingled with tears from players and fans. Character does that to people who exhibit it and to those who bear witness to it. Character is always the most satisfying and uplifting human trait and Mr. Vecsey helped to remind us.

I am not a huge fan of equating sports to life but in this instance, I cannot resist the temptation. Imagine what a better world it would be if we, all of us, seized every opportunity to help our neighbors who may not have the opportunity nor the tools to circle the bases on the way to a better life? In the college arena so central to my life, how satisfying it would be for those of us who have already hit a home run which, in this instance, is a college degree, to help others to do the same. In this game, if we all raised our character to the level of Mallory Holtman and Liz Wallace and their coaches, so that we had a hand in helping talented young people achieve their vision of a college education and a slice of the American dream, we as a nation and a people would be forever richer in every imaginable dimension.

But it takes character. It means demanding the best from our schools and reforming the college funding system and providing the tools for our kids to even begin their journey around the academic baseball diamond. It means that we as a people have to reorder our priorities to put the welfare and opportunities of our neighbors at the top of the list. The “we” may have to replace the “me” from time to time. It means that we must understand that it will cost money to do this. It means that we may have to rearrange our public budgeting agenda to make that happen. It means that we may have to avoid the safety of political pandering and do some character-driven heavy lifting.

The story quickly caught the public’s imagination. The predicted appearances on TV followed and the nation rejoiced in this moment of light in a largely dark world landscape. But unlike so many other stories, the reporters and the media personalities were never able to transcend the event and become the story. What those selfless young women did that afternoon was all that mattered and it endured on its merits, a nice change from most other events of the day.

The moments on that softball diamond remind us that we are all in this together. When we stand by and watch our fellow man suffer, unable to continue, we, as a people are diminished. But when we reach out and carry our fellow man around the bases, we as a people are elevated. When we show the character that this demands then and only then will the first three word’s to the Preamble of the United States Constitution take real meaning. You know them well. Remember “We the people…”?

The great “Gordian Knot” in any democracy is that the gatekeepers to reform are often the very people who created the need for reform in the first place. In the world of college financial aid, that gate is manned by Congress, a largely dysfunctional body during the first decade of the twenty-first century.

Let me suggest a partial solution that has a little Democratic slant and a smattering of Republican philosophy. It addresses the issue of student debt.

We should immediately build into the tax code the following possibility:

If a firm (for-profit and non-profit) hires a college grad with student loan debt, the firm has a sensible option of helping the new hire repay the debt as a condition of employment. It should work like this:

• The student will be responsible for monthly payment of the interest only and will do so through a payroll deduction for as long as it takes to retire the debt. While the former student’s take-home pay may be negatively affected, it will be offset, in part, by being able to deduct the student loan interest paid on his/her income tax.
• The firm will pay the monthly principal on the debt. Depending upon the way it is structured, that employee benefit may have some significant, positive tax implications for the firm. Remember too, the firm is one of the chief beneficiaries of the college education of the new hire. Organizationally, the firm’s participation in repaying the student loans is likely to engender greater employee loyalty which, in turn, is often manifested in greater productivity and lower rates of employee turnover both of which carry significant, positive bottom-line effects. A somewhat different arrangement that may include some federal reimbursement is in order for a non-profit entity that elects to adopt the plan for its organization. While a student loan principal from the government could simply be forgiven, a public reimbursement will be needed to ensure that a private lender is fully reimbursed.

The upside of this approach is that unlike up-front financial aid grants, college students receive this benefit after the fact, not before it. The incentives to complete the degree are real and compelling and there is a built-in incentive to do so in regulation time (4 years) in order to minimize the total student debt. To a firm offering the plan, a potential new hire with an unusually large student debt becomes less attractive because of that debt. The plan has this inherent, built-in safeguard against irresponsible student borrowing.

“Paul’s Plan” removes much of the risk for lenders since they are likely to be paid by a fully employed former student who now enjoys the backing of a commercial entity in addition to the student’s own resources as a gainfully employed worker. And because of the reduced risk, private lenders are more likely to provide favorable rates during the payback phase of the loan. In fact, it would not be a terrible idea to require an automatic reduction in the interest rate when the student loan is backed by an employer who participates in the repayment phase of the student loan.

Another benefit is that because currently, the ultimate burden for payback in the instance of the private student loan could fall to the co-signing parents, they are pretty much off the hook when the student is employed by a firm that uses the plan. For co-signing parents, this approach could be the best stress reducer since Valium.

As a protection for the former student, any company using the plan ought to be able to protect the employee’s interests in the event of the failure of the business. The tax code should require that the remainder of the student debt should be paid out ahead of the firm’s other creditors in a bankruptcy situation creating an added measure of security for both the borrower and the lender. Moreover, the plan should automatically transfer in the event of a business sale or consolidation with another business. There are no doubt other protections that need to be considered given the many possibilities in the world of commerce.

When students can see a reasonable system in place across the economy that will help them pay back their student loans, students will once again be free to choose a career that they may love rather than one that will enable them to afford to repay their student loans

The point is that a new approach is needed in light of the failure of the public sector to provide adequate assistance to families overly challenged by college costs. When responsibility is shared by many, the pressure on any one party is mitigated. This proposal is entirely voluntary. Businesses and non-profit entities are not required to offer this benefit but it makes sense to do so.

This proposal is not a cure but it is a sort of red tag triage for a critically ill system of need-based and supplemental college financial aid. It may buy some time to provide a window for some smart people to do some zero-based thinking about ways to take cost out of the college choice equation. What we are doing now is not working; it does not make much sense; and it discriminates against the great middle class, the bulwark of any viable democracy.

The greatest risk inherent in this approach may come from an unlikely source. Some colleges may decide that since there is a possibility that some commercial entity is likely to repay student loans, they are no longer obligated to do everything necessary to fully fund the demonstrated need of students and/or to try to minimize the amount of student borrowing. To deal with this, it is time for the Department of Education to monitor the performance of colleges and other entities offering federal student aid to ensure reasonable campus-based contributions to address the demonstrated need of students. Failure to do so should affect the college’s continued eligibility to provide federal aid to its students.

Students should help to pay for their college education. After all, they are the ultimate beneficiaries of that education. If the statistics are at all believable, a college grad is likely to increase his lifetime earnings by $1 or $2 million over a person who did not get a degree. Just a tiny part of the taxes paid by this newly-educated member of our society will pay the public cost of this plan several times over. Don’t forget that college graduates typically need fewer public services like prisons and welfare programs which might be translated into lower public expenditures on those programs thus increasing the return on a public/private investment like this. And, to use a line coined by one of our credit card firms, the societal value of a highly-educated citizenry is, in the final analysis, priceless.

I remember well when my father was upset with me, the most devastating thing he could say was, “Son, I’m disappointed in you!” Because I loved and respected him so much, he could not have said anything worse. I sometimes feel that way about our colleges. They feel like a part of my own family but when it comes to providing financial aid to needy families, I often have the urge to say, “I am disappointed in you!”

The financial aid system was created with the intent of providing a level playing field so that any qualified student could attend college regardless of the family’s economic circumstances. If the numbers justify it, the federal and state programs such as they are, are fully activated on behalf of the family but when the need exceeds the limits of publicly-funded help and the college is faced with making up the difference, the record of support changes, often dramatically.

Across the higher education spectrum, the practice of “gapping” is on the increase with colleges routinely short-falling families in the financial aid arena. Of course, our colleges happily offer the full complement of public funding; subsidized student loans, work/study, Pell Grants and state-sponsored support programs. But all too often, when there is still further demonstrated need, colleges fill that by masquerading PLUS loans as legitimate need-based financial aid. These are public loans that are not and never were considered to be a need-based loan.

Yet in the absence of incentives to do otherwise, colleges continue to escalate tuition and fees creating even greater financial need and even wider gaps which all too often force families to enter the costly and uncertain world of private student and parent loans. It is a system out of control because the agencies that can control it have chosen not to use their considerable leverage on behalf of the people who elected them and/or whose taxes help to put food on their tables. Those agencies are our elected officials at the federal and state levels along with the US Department of Education and their counterparts at the state level.

The “hammer” is a simple one. We need to create a condition of continued public support for a college’s financial aid program that requires colleges to provide enough campus-based aid to bring the financial aid package up to at least 90% of the demonstrated need. Failure to do so will result in forfeiture of further public financial aid support for those colleges. Currently, without such a condition, public resources amount to a reliable “cash cow” for our colleges. They simply use whatever public money is available and feel no urgency to contribute campus-based money to address any remaining demonstrated need not covered by public money. Since the colleges themselves, by raising their rates, have created much of the demonstrated need, they should be required to take an active role in addressing that need. There is a nearly endless array of colleges who simply opt out and leave families twisting slowly in the troubling winds of high debt or no college.

Currently, there is little incentive for colleges to both stem their ever-rising costs or to adequately supplement public funds in the need-based financial aid arena. As a college advocate, I have been a constant voice on behalf of a far greater public investment in financial aid resources. While costs and inflation have taken a toll on the affordability of college, public funding to match that reality has remained relatively stagnant for over two decades. And whatever growth there has been in the total public contribution is used to address the greater number of college-bound students, not the quantity of the award per student. That must be corrected if the nation is to compete in the global economy in the 21st century.

But at the same time, the colleges must be required to get off the free-ride, public “gravy train” and provide their fair share of resources to help financially challenged families. That incentive should be in the form of a mandated basic standard that will qualify colleges to receive continued federal and state support for their financial aid operations. In fact, I would recommend that any college exceeding that standard should be eligible for extra public money reflect of the degree to which the college exceeds the minimum benchmark.

Across the board, objective oversight of the use of public money is often lacking. In the financial aid arena what oversight there is demands close adherence to how the financial aid funds are disbursed rather than the way those funds are integrated into a more comprehensive program of creating full access to higher education for families of all incomes. Unless or until the colleges reliably contribute their fair share to the financial aid system, college for an increasing segment of the American citizenry, will remain an unfulfilled vision, victims of near-sighted politicians and an unregulated college community that feels no particular pressure to play by the rules and to do what they can to make that increasingly elusive dream of a college degree a reality.

Since 1980, the value of the dollar has shrunk by about 271%. That is, it will take about $2.71 to buy what one dollar bought in 1980. Thus, if college costs kept up with inflation, a private college costing $35,000 in 1980 could cost about $94,000 in 2008. Public colleges with student budgets of about $10,000 in 1980 should cost about $27,100 today. The fact is that if colleges kept pace with the dropping value of the dollar, they are priced about right or maybe even less than the shrinking dollar might justify. So why are we struggling? Who is the bad guy?

Not surprisingly, it is us. Across the board, salaries have not been upwardly adjusted to adequately compensate for the rate of inflation. That aside, the real culprit in the college world is the failure of the usual support systems to reflect the lower buying power of the dollar. For instance, the normal total amount of subsidized loans for a four-year college student in 1980 was about $16,125. If those loan amounts had kept pace with the falling dollar, that total should be about $43,700 today, an amount that without loan forgiveness provisions is admittedly too high. Currently, private lenders are called upon to fill the student loan gap. In the 2008 marketplace where securitization for loans is extremely difficult, these loan companies struggle to provide a necessary resource as the public support systems continue to underachieve. While the interest rates for private loans are sometimes very high and should always be considered as a last resort, for some they mark the difference between attaining a college degree and unmet dreams and potential for young adults. The private loan industry is the stepchild of the failure of publicly-funded programs like Stafford and Direct Loans, federal work/study, the Pell Grant and other federal grant programs along with state-sponsored grants to keep pace with the effects of the lower purchasing power of the dollar. And last, but surely not least, the need for a privately-funded support system is made more compelling by the increasing practice of “gapping”, the failure of colleges to provide sufficient financial aid to families to fully cover their calculated demonstrated need…. Good people and institutions behaving badly.

The victims in all of this are tax-paying parents, their mortgages and retirement funds along with students who simply have nowhere to turn except the private student loan market which may save them but in doing so will surely extend the cost of college over many years beyond graduation. This grim reality even now forces some students to pick careers that will help them deal with the lingering cost of their college degrees rather than the quality-of-life dimensions of a more appropriate career path.

Many enlightened nations have come to realize that providing free or massively supported college education for its youth enhances the nation’s future for all the citizens. It isn’t socialism; it is simply good economics. Those words in the Preamble to the Constitution of the United States…phrases like “…promote the general welfare and secure the blessings of liberty to ourselves and our posterity…” are closely and irrevocably tied to the quality and availability of our system of higher education. Those eloquent yet simply-stated goals of our society are non-negotiable. They are written in the sweat and blood of our forebears and as such, they should be honored above all else by our politicians and by all of us. Real patriots are in the business of delivering on those promises ratified by the required majority of states in 1788. For Americans, all Americans, everything else should pale by comparison.

1. Revisit your reasons for applying to the colleges in the first place. What were you looking for socially and academically? Then, measure the colleges that admitted you against that list of college attributes. Eliminate those choices that seem inconsistent with your college wish list.
2. Be careful not to base your decision solely on the financial aid award particularly if the college doesn’t seem to fit your requirements.
3. Always try to visit the college BEFORE you make a final decision. Some colleges may help to fund a visit if it feels that it will result in your enrollment. Check with the admissions office at the colleges to see if they will help financially or if they can advise you on travel and lodging options that will lower the cost of a visit.
4. When you visit, be sure the college is actually in session. You will learn very little about the place if there are no students on campus and no classes are being held. The soul of any college is students and staff, not buildings and grounds.
5. Many colleges have special weekends for new students. While they are OK, they are often carefully orchestrated and are clearly not reflective of the normal rhythm and flavor of the day-to-day experience of students at the college. I recommend a visit that includes a Thursday and/or Friday and a weekend day to see what the social life is like. Do kids stay on campus on the weekends? This is particularly important for students attending college far from home since you don’t want to be the only one on campus because most students go home or off campus on weekends. Do students go into an intense weekend party mode that would make you feel out of place and/or threatened?
6. Try to spend at least part of your campus visit apart from your parents if they happen to be with you. See how you feel in the absence of the comfort and familiarity of close family. That can be achieved by arranging to spend a night in a dorm, an experience that is likely to be an eye-opener in more ways than one.
7. Visit a couple of classes to see what the students are like and to get a sense of the relationship between the students and the teaching staff.
8. Eat a meal in the dining hall. See if you can survive the cuisine and maybe even like it.
9. If you are an athlete, check out the facilities and chat with the coach of any sport that interests you.
10. Hang out in the student center. Most colleges have a place where students congregate over a light snack or coffee. Just listen to the conversations around you. Also, check the bulletin boards or any surface that has notes and announcements for students. They will give you insights about the tone of the college and the things that seem to interest the students.
11. If there is a placement office, visit it to see what happens to kids after they leave the college.
12. Be sure to walk the streets of the area surrounding the college. Is it student friendly and is it an environment that works for you?
13. Always ask students about their gripes with the place. No college is perfect so it is a good idea to explore the imperfections before signing on the dotted line. To that end, a great source for uncovering campus flaws is the most recent copy of the student newspaper. Get a copy and scan it for issues that might concern you.

If you still can’t make up your mind and a decision deadline is imminent, it is often possible to request an extension of the final decision day. Colleges are interested in a happy, well-placed student and they will often work with you on this issue.

Picking the right college is a big deal. It can and will affect the rest of your life. So, as was said in the Indiana Jones movie when “Indy” was faced with selecting the right chalice, you want to “choose wisely”. While you are not likely to dissolve in a gruesome and painful death, you will endure some discomfort if you “choose poorly” and carelessly enroll in an alien college environment. That mistake is something to be avoided at almost any cost.

There are essentially two dimensions to an evaluation of a financial aid award or package: Quantitative and Qualitative.

Quantitative: Does the total award fill the entire demonstrated need? The demonstrated need is the difference between the cost of attendance (COA) and the expected family contribution (EFC). For instance, if the cost of attendance is $41,325 and the EFC is $27,118, the demonstrated need or total eligibility for need-based aid is the difference between the two or $14,207. Thus, this family should look for a financial aid package that totals $14,207. Anything less is called a “gap” and if the gap is significant, it would warrant an attempt to negotiate with the college to close all or part of the gap. To evaluate this dimension, you must know the cost of college, the EFC and the total amount of financial aid contained in the financial aid offer from the college. If any of these three components is missing, you should contact the college and get the number. Without all three, there is no way you can truly evaluate the quantitative merit of the award.

Qualitative: There are two categories of aid, self-help and free money or grants. Financial aid awards should contain a reasonable combination of the two particularly when the demonstrated need is very large. For understandable reasons, small demonstrated needs are usually covered by mostly self-help aid packages. You should carefully examine the package to see what the split is between self-help aid and free money.

When we designed TuitionCoach, we included a component called, “Evaluate and Negotiate Financial Aid Awards”. The user simply enters the components of any award from a college into the labeled data fields and the computer will award the package a grade from “A” to “F”. Any award receiving a grade less than an “A” will contain the reasons for the lower grade and some suggested strategies you can use in your negotiations with the college financial aid administrator to improve the award. It is important to understand that grades are not intended to in any way pass judgment on the quality or character of a college or financial aid office but, rather, it is simply an objective and familiar method of alerting the user to the quality of a financial aid award.

There are many negotiating tips in the “Evaluation and Negotiation…” section in TuitionCoach but the overriding advice is that when interacting with financial aid officers you should always appreciate that they too are hard-working human beings just like you. You should also appreciate that college financial aid administrators have one of the most demanding jobs on the planet and for this reason alone, they should always be treated with respect. If progress is made with an administrator, you should always take the time to send a short “thank you” note to acknowledge their kindness. Parents of college freshmen should remember that you are likely to be working with that administrator for four years so it is a very good idea to establish a friendly working relationship with him/her. As I tell my clients, your goal is to create a perception that associates your student’s social security number with “warm fuzzies” for that beleaguered professional.

The most compelling stance when trying to improve the award is the injection of a financial component the FAFSA or Profile failed to uncover. Things like recent job loss or health-care issue or some new, unexpected, money-related variable can often be the center of a productive discussion on ways to improve an award. What doesn’t work is the plea that you happen to live in a very expensive part of the nation to which the college will respond that they are not in the business of underwriting your lifestyle and choice of residence but, rather, a reasonable contribution to college given your financial capacity in comparison with a national, one-size-fits-all standard.

Evaluating financial aid awards is a clear process but after that, if negotiations are in the offing, there are no sure bets other than to persevere and create a warm, collegial relationship with the financial aid administrator. You will find that over time, particularly if your student becomes a great student or major force on campus, financial aid awards seem to improve and your leverage in any negotiating stance with the financial aid office is enhanced. No college wants to lose a great kid because of finances. This upside can be especially true in the private college sector because they are eager to show a higher graduation rate in order to improve their standing in the college rating game which, of course, demonstrates in part that the college addresses issues important to the student and the family.

As a final word of caution, be careful about pitting one college against another. It is an old game, one that usually results in pretty direct advice from the “low-balled” college, “If you are unhappy with our award, then you should certainly go to the other college.” End of story. If, on the other hand, there are only some very marginal differences, you might make some headway in the comparison game but again be very careful.

Evaluating and negotiating is one part book learning and one part street savvy. The former is the knowledge-based stuff and the latter is a measure of your social skills. If, through your knowledge of how financial aid works, an upgrade of a financial aid offer is warranted, that improvement in the absence of well-honed social skills is less likely to occur.

NOTE: For those readers who are still without direction concerning a prudent approach to funding college, financial aid awards notwithstanding, scroll down to the last installment of “Paul’s Corner” called, “How to Pay for College: A Recipe for Success”

Here is how it should all work:

• Calculate the “bottom line” costs for the year of college. Use the powerful tools on TuitionCoach to minimize those costs. It is nearly impossible to use TuitionCoach and not save an amount equal to many times the modest subscription cost. The “bottom line” is the total student budget or cost of attendance (COA) for a year at the college minus financial aid (if any).
• Take the remaining costs and spread them out over 10 or 12 months to see what they would look like as a monthly bill.
• Decide whether the monthly amount can be comfortably accommodated out of the family’s normal monthly cash flow. If not….
• If it hasn’t been used up in the financial aid award, borrow any remaining eligibility for an unsubsidized student loan. Those amounts are: $3500 for the freshman year, $4500 for sophomores and $5500 each year for juniors, seniors and 5th year students. If the family has to borrow to make monthly costs affordable, public student loans are always the cheapest college options. Moreover, students with loans seem to take college more seriously and because of that they tend to graduate in four years, a clear, money-saving outcome for parents.
• If that still fails to make the now-reduced monthly payments possible, consider borrowing enough PLUS loan money (Parent Loan for Undergraduate Student) to bridge the gap between the amount you can afford monthly and the actual monthly cost of college. Remember, both PLUS loans and unsubsidized student loans will become due and payable about 60 days following the full disbursement of the loan each year, about March or April of that academic year. Both loans are 10 year notes. Servicing these loans will have an impact on the amount you will be able to pay out-of-pocket to the college in future years.
• Sign up for a monthly payment plan at the student’s college and pay the remaining, affordable, out-of-pocket amount over 10 or 12 months. If the college does not have a monthly payment plan, just create one using a PLUS loan or private loan with no pre-payment penalty or other creative borrowing solutions like a home equity line of credit. It will require some personal discipline to maintain those payments in light of the many other claims on your resources.
• Repeat until graduation. After graduation, it is not the worst idea to pretend the student is still in college but instead of sending your monthly money to the college, send it to the PLUS loan or other lender to get the loan off the books as soon as possible while you are still healthy and working.

At no time should you cash in retirement assets. You will need them later on.

This prescription has been successfully used by literally tens of thousands of Americans and by doing so, they have upgraded college choices while securing the family’s long-term financial security and the promise of a fulfilling retirement for the parents.

If there are several college-bound students in the family, the recipe becomes somewhat more challenging as it does when cooking a fine meal for many, many guests but with imagination and patience, it is doable. A good rule of thumb is to stretch your out-of-pocket contributions on the front end of the college years while you are more active and productive as an employee so that you won’t be burdened with old debt as new students enter college. That old debt must be serviced which may reduce the amount you can afford to send to the college every month thus forcing the family to take out larger loans to make ends meet. So maybe a good “spice” for our meal would be to “sacrifice early so you can relax later”.

Entering the college funding arena with a philosophical game plan and some tools to help lower the bottom line is a perfect setting for those years that we at TuitionCoach have always characterized as a “celebration of the family”.