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A primer on student debt — Know your options
Avoid college debt

A primer on student debt — Know your options

Advice on how to avoid financing pitfalls that can lead to money woes

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High school seniors weighing financial aid packages may be excused if they feel they already need a college degree to understand what they’re getting themselves into.

Financial aid, a mix of loans that must be repaid and grants that do not, is designed to lower the sticker price if not the eventual shock.

Satire and hyperbole aside, a recent Onion headline — “College Graduate First Person in Family to Waste $160,000” — reflects the angst over student debt now totaling $1 trillion nationally.

Here’s advice from a higher-education administrator, a financial adviser and a student on how to avoid pitfalls that pile on the debt:

‘Cost of attendance’

In addition to borrowing for tuition, students can use federal student loans to cover the total attendance cost — including living expenses, books, a computer, study abroad and even transportation.

It’s the area in which students can economize or get themselves deeper into debt, advises Luke Schultheis, Virginia Commonwealth University’s vice provost for strategic enrollment management.

“This is where students get into trouble,” he said, because “all those miscellaneous expenses add up really quickly.”

Colleges and universities set the cost of attendance, known as the COA, which determines how much the student can borrow. The COA can vary by degree program — for example, nursing students pay more than English majors because of the labs and equipment their courses require.

But students have options for cutting costs by forgoing “Cadillac” housing and dining plans, he said. For students who live off-campus, a streamlined course schedule can lower the tab for commuting and dining out simply by reducing the number of days at school.

Also contributing to the debt problem is the way in which students receive what’s left of the loan to cover their expenses after colleges deduct tuition and fees, said Jonathan West, director of College Funding Group in Richmond.

This money is part of a student’s loan, but it is oddly called “a refund.”

“It’s misnomer,” West said. “You always know around campus when the refunds are in because it’s like payday for 18-year-olds.”

The refund is meant to last a semester, but at some schools it goes on a debit card and even the student ID, “and all they need to do is swipe it,” he said.

“It’s convenient, but it’s really too convenient,” West said, especially with no one looking over a freshman’s shoulder to see whether it’s spent on pizza or a textbook.

“There’s nobody intervening,” he said, to tell the student “you’re going to be paying this back for 10 years. That Domino’s pizza is really expensive.”

Graduate in 4 years or less

It’s the ultimate strategy to lower the cost of attendance. For a 120-credit bachelor’s degree, that means taking 15 credit hours per semester, but they have to be the right courses.

So be deliberate about your course selection: Don’t sign up for classes just because they sound fun, Schultheis said.

Students who do that often earn more credits than they need but not necessarily the ones required to graduate on time.

Some schools, including VCU, have software programs to help students stay on track with the courses necessary to complete their degree program.

Also, watch the drop-add dates if you change your mind about a course, Schultheis said. You may not receive a full refund if you drop a class after that grace period.

Schultheis recommends summer school – an additional course or two during summers can add up to “pretty much a full semester.”

Transfer students should determine in advance whether their credits will be accepted at the new school, Schultheis said.

If you didn’t take dual enrollment or advanced placement courses in high school, you still may be able to get credit for high school work through the College Board’s College-Level Examination Program, suggests Lorraine SantaLucia, a VCU senior who helps classmates find ways to reduce what they borrow.

The CLEP exams cover material taught in courses that most students take as requirements in the first two years of college but are “similar to what you might have just learned in high school,” SantaLucia said.

Taking the exam instead will save time and tuition dollars by letting you skip general-education classes and “jump right into the core courses” for your degree, she said.

Apply for scholarships

Students too often think a scholarship for a few hundred dollars isn’t worth their effort, but win a few here and there and they add up.

That’s been the strategy of SantaLucia, who said all her awards will allow her to graduate without debt.

SantaLucia, whose scholarships have ranged from $250 to $5,000, founded the group Scholarship Sharing to spread her philosophy. She hopes to turn the idea into a nonprofit when she graduates.

Her advice: Shop local for scholarship opportunities. The offering from a local organization may be smaller, but you’re not competing against thousands of other students to win it.

Students might think applying for many different scholarships is too time-consuming, she said, but it need not be. You can use your original application as the template for future efforts — just make sure you do your research and tailor the essay to the mission of the group offering the award.

Fill out the FAFSA

FAFSA — the Free Application for Federal Student Aid — is the starting point for receiving all types of aid, including need-based grants, federal student loans and the Plus loans for parents.

Families sometimes think they make too much to qualify for need-based aid, West said. But eligibility can differ by university and change from year to year, depending on the number of children enrolled.

Some colleges also require the PROFILE, administered by the College Scholarship Service, to determine how they will award institutional financial aid.

PROFILE takes a deeper look at a family’s finances. While FAFSA doesn’t include a family’s retirement accounts or home value, PROFILE does.

West recommends listing a realistic value for your home — what you would expect to get in a quick 30-day sale.

And because a student’s assets will factor into aid awards, it makes sense to use those funds to buy a computer and other college necessities before filing either the FAFSA or

PROFILE forms, he said.

Start planning early

Part of the problem is that “colleges let you in and then tell you how much it’s going to cost,” West said.

The worst time to decide how much to borrow is after the acceptance letter is received, but that’s what many families do, he said.

“They don’t figure out how much they can afford to borrow. They just borrow what they need to borrow,” he said, with long-term repercussions for the family’s finances.

“Money shouldn’t be the sole determinant, but the truth is, for many families it is a very important factor,” he said.

West recommends beginning to narrow the “college universe” based on affordability in the 10th or 11th grade with the help of the U.S. Department of Education’s FAFSA4caster, which gives an early estimate of eligibility for aid, and with the net-price calculators that schools must post on their websites., the DOE tool, will help determine whether students are eligible for aid that does not have to be repaid, such as Pell Grants, as well as the families’ expected contribution, and whether they qualify for subsidized or unsubsidized federal loans.

That information can then be applied to colleges’ net-price calculators.

The best of these calculators incorporate the college’s resources, philosophy about aid, government grants, and possible merit scholarships all into one summary, West said.

But be aware: The calculators are also marketing tools, because higher education is a business, too, he said. “It’s not all warm fuzzies and ivy-covered walls.”

Parents often think their bright teen will coast through with merit aid, but that’s unlikely. West describes merit aid as a pot of money that colleges use as an inducement to enroll the most desirable students.

“They want to give you just what it takes to get you to attend, but not more than that,” he said.

State programs

Information on financial aid programs — based on need, merit, both or neither — can be found on the website of the State Council of Higher Education for Virginia (

For example, a Virginia resident attending a private, nonprofit college or university in the state is eligible for a taxpayer-funded Virginia Tuition Assistance Grant that is not based on need or merit. (Religious training degrees are excluded.)

The annual amount, which was $3,100 this academic year for undergraduates, varies depending on how much is appropriated by the General Assembly and the number of students who apply. Graduate students are eligible for a $1,550 award but only for certain health-related fields.

Students earning associate degrees at a two-year public institution may qualify for a transfer grant to a public or private four-year institution in the state based on need and merit.

The grant is up to $1,000, with an additional $1,000 for students pursuing degrees in science, teaching, engineering, math and nursing. The award is annual but contingent on maintaining grades and other criteria for renewal.

While those programs aid Virginians attending in-state schools, students heading out-of-state might get help through the Academic Common Market.

Virginia is one of 16 states participating in the program that allows students to pay in-state tuition rates at out-of-state public institutions provided they are studying certain programs not available in their home state.

So if you want to study aerospace administration at Oklahoma State University, this program might work for you.


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