Big corporations recruit from larger state colleges

September 26, 2010
Employers Favor State Schools for Hires By JENNIFER MERRITT from the Wall Street Journal U.S. companies largely favor graduates of big state universities over Ivy League and other elite liberal-arts schools when hiring to fill entry-level jobs, a Wall Street Journal study found. Jennifer Merritt discusses a new Wall Street Journal survey, which reveals recruiters […]

Employers Favor State Schools for Hires

By JENNIFER MERRITT from the Wall Street Journal

U.S. companies largely favor graduates of big state universities over Ivy League and other elite liberal-arts schools when hiring to fill entry-level jobs, a Wall Street Journal study found.

Jennifer Merritt discusses a new Wall Street Journal survey, which reveals recruiters are shifting their attention away from elite private schools to focus instead on state universities.

In the study—which surveyed 479 of the largest public and private companies, nonprofits and government agencies—Pennsylvania State University, Texas A&M University and University of Illinois at Urbana-Champaign ranked as top picks for graduates best prepared and most able to succeed.

Of the top 25 schools as rated by these employers, 19 were public, one was Ivy League (Cornell University) and the rest were private, including Carnegie Mellon and University of Notre Dame.

The Journal research represents a systematic effort to assess colleges by surveying employers' recruiters—who decide where to seek out new hires—instead of relying primarily on measures such as student test scores, college admission rates or graduates' starting salaries. As a group, the survey participants hired more than 43,000 new graduates in the past year.

The recruiters' perceptions matter all the more given that employers today are visiting fewer schools, partly due to the weak economy. Instead of casting a wide net, the Journal found, big employers are focusing more intently on nearby or strategically located research institutions with whom they can forge deeper partnerships with faculty.

The Journal study didn't examine smaller companies because they generally don't interact with as many colleges. In addition, the survey focused on hiring students with bachelor's as opposed to graduate degrees.

The research highlighted a split in perception about state and private schools. Recruiters who named an Ivy League or elite liberal-arts school as a top pick say they prize their graduates' intellect and cachet among clients, as well as "soft skills" like critical thinking and communication. But many companies said they need people with practical skills to serve as operations managers, product developers, business analysts and engineers. For those employees—the bulk of their work force—they turn to state institutions or other private schools offering that.

original article here

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Does a college degree guarantee job security -WSJ

September 23, 2010
College Grads Expand Lead in Job Security By CONOR DOUGHERTY from the Wall Street Journal GARY, Ind.—Fifteen years after high school, the working lives of Tremell Sinclair and Phyllis Sellars have evolved very differently, largely because of a single decision. That decision has always shaped their economic prospects, but never more so than during the […]

College Grads Expand Lead in Job Security

By CONOR DOUGHERTY from the Wall Street Journal

GARY, Ind.—Fifteen years after high school, the working lives of Tremell Sinclair and Phyllis Sellars have evolved very differently, largely because of a single decision.

That decision has always shaped their economic prospects, but never more so than during the recent recession: Ms. Sellars kept her white-collar job, recently landing a pay raise, while Mr. Sinclair was laid off from his forklift driving job last year and only just found a new one—at a 46% lower salary.

The classmates illustrate a divide between the fortunes of Americans with college degrees and those without. It's not only that the college educated earn more, but that they are far more likely to keep their jobs when times get tough.

By some measures, recession has exacerbated the divide. The unemployment rate for workers 25-and-older with a bachelor's degree or higher was 4.6% in August, for example, compared with 10.3% for those with just a high-school diploma. That's a 5.7-percentage-point gap, compared with a gap of only 2.6 percentage points in December 2007 when the recession began.

Laid-off college graduates are also finding work faster. Their median duration of unemployment was 18.4 weeks as of August, compared with 27.5 weeks for high-school grads. Three years ago, that figure was roughly the same for both groups—9.5 weeks and 9.6, respectively. And among the worst-off 25-and-older workers, the 5.2 million who have been out of work six months or more, only 19% are those who graduated from college, even though that group makes up a third of the work force.

Yet because college is increasingly expensive and doesn't guarantee a good job at a good wage, skepticism about the value of college is rising, even as the government pours more money into helping people get degrees. As part of the health-care legislation passed in March, Congress approved a student-loan overhaul that replaces private lenders with the federal Department of Education and redirects some $60 billion to community colleges and programs such as Pell Grants, which are college loans for the needy.

To economists who look at the numbers, college is a necessary, even if not sufficient, ticket to the middle class. "We are experiencing a period of shared misery, where workers at all education levels are struggling, including those with a college degree," says Lawrence Mishel, president of the Economic Policy Institute, a left-leaning Washington think tank. Still, he says, "It is certainly evident that those with college educations are faring much better than those with less education."

Not that a diploma is the slam-dunk it once was. It no longer guarantees a wage that rises faster than inflation. And while people with four-year college degrees make, on average, 64% more than those with only high-school degrees, that wage premium hasn't climbed much since 2001, after rising sharply for two decades.

Meantime, the unemployment rate for people with a college degree or higher, though lower than others', is the highest it has been since comparable data begin in 1979, according to an analysis of Labor Department data by the Economic Policy Institute. Even in the early 1980s recession, when national unemployment hit 10.8%, the rate for people with college degree or higher never eclipsed 3.9%.

College tuition has also grown faster than the rate of inflation for more than two decades, including a 6% increase in 2009—a period when overall prices fell. Some 64% of Americans thought college was a good investment in July, down from 79% a year earlier, according to a telephone poll of 3,000 individuals conducted in July for Country Financial, a Bloomington, Ill., financial-services company.

In Gary, many still see college as a ticket out of town. The predominantly African-American city sits on the tip of Lake Michigan, just outside Chicago. The city was named for a founder of United States Steel Corp., Elbert Gary, and steel remains the biggest private industry. But over the decades, Gary has hemorrhaged manufacturing jobs.

At a recent reunion picnic for West Side High's class of 1995, the school's orange-and-blue colors were everywhere, coloring tablecloths, balloons and even the shoelaces of Shantel Douglas, the reunion's primary organizer. The recession has hit almost everyone, she says, which is why she made it a "recession friendly" weekend. Instead of in a restaurant or hall, she held the picnic on the worn playing fields behind the school. The school let them gather there for free.

Ms. Sellars, 33, says she still feels tightly connected to her alma mater. Raised by a single mother, she says the industrial decline she saw growing up made her determined to get an education. She studied hard and gravitated toward friends also bound for college. Mr. Sinclair was part of her high school group of friends and on occasion she has gone to dinner with him on visits to Gary.

Lately, though, she says, the two haven't spoken as frequently, in part because she is so busy at work. "I'm busy and have a high-stress job," she says.

After West Side, Ms. Sellars majored in sociology at Indiana University. After graduation she went to work at Covance Inc., which is based in Princeton, N.J., but has facilities in Indianapolis. Her first job with the company, which runs clinical-drug trials, was editing company manuals.

Ms. Sellars worked her way up through progressively better jobs. In January was promoted to supervisor in a division that receives samples sent in for processing. She bought a condominium in 2004, and shares responsibility for overseeing 52 employees.

"I knew if I didn't go to college, I wouldn't have had a chance," she says.

Mr. Sinclair, 34, says he thought about going to college, too. But his mother couldn't afford to send him. Instead, he got a $12-per-hour job operating heavy equipment after he graduated. Over the years he worked his way up through a series of blue-collar jobs, topping out at $24 per hour driving a forklift.

But then last summer, just before his high-school class began planning its 15-year reunion, he got laid off. He spent a year seeking work as a heavy-equipment operator, and also in retail stores. He says he got a callback from Menards, but didn't pursue it after he learned that job paid less than his unemployment checks.

Mr. Sinclair says he recently found another forklift job. But it doesn't start until October and pays only $13 an hour, about as much as he was making just after he graduated.

To keep costs low during his unemployment, he cut out cable television and restaurant meals. Instead of paying for the reunion barbeque, Mr. Sinclair set up a backyard grill in the parking lot, where he cooked chicken wings he'd brought from home in a plastic bag sealed tight with marinade. "It's rough," he said as he turned the wings over with tongs.

Workers like Mr. Sinclair were losing ground relative to their college-educated counterparts long before the recession. Workers with a college degree or more saw inflation-adjusted hourly earnings grow 20%, on average, between 1979 and 2007, while those with graduate and professional degrees saw a 31% rise, according to an analysis of government data by David Autor, an economist at the Massachusetts Institute of Technology. Earnings for workers with a high-school diploma fell over that period.

That actually understates the case, Prof. Autor adds, because degree-holders generally have jobs with better health-care and retirement benefits.

Despite this, the recession has sharpened a longstanding debate about the value of a college degree. For Brandon Fleming, another 1995 West Side graduate, the burden of college debt loads, coupled with stagnant wages, has made him question whether it was worth getting his diploma.

He attended Kentucky State University and today is a compliance analyst at an insurance company in Indianapolis. He makes just under $40,000 a year, almost as much as he had in loans for college and an MBA degree. "I wouldn't tell someone not to go to college," he said as he ate his reunion lunch behind his old high school. "But they have to go in with the proper expectations, and I didn't understand that."

His classmate, Rick "Big Rick" Castillo, went to a technical college but dropped out after a year to work at a local steel mill. Now he makes $58,000 annually, enough to afford things like the shiny Ninja motorcycle he rode to the reunion. "It's one of the better jobs in the area," he says.

Today, with unemployment at 9.6% and 15 million people looking for work, employers are receiving a flood of resumes from college-educated workers who might not have applied for jobs that require less education when times were better. That's another obstacle to applicants with less education.

Ms. Sellars has seen this up close. The employees she oversees aren't required to have college degrees, though some do. Recently, the company has seen a spike in applications from candidates with bachelor's degrees, says Deborah Tanner, a senior vice president at Covance.

"We have probably hired more degreed people [in Ms. Sellars' unit] that we had in the past," says Ms. Tanner. "What the recession has done is broadened the talent pool."

The Wall Street Journal article here

Need help reducing your costs of a college degree, contact us now!

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College fair Phoenix, Scottsdale, Chandler

September 21, 2010
Phoenix Convention Center is host a college fair on September 26th Sunday. Fair Hours: Sunday, September 26, 2010 11:00 a.m. – 3:30 p.m. (200 colleges will be in attendance.) Also on the same day is the Scottsdale College Fair in the evening, Sunday, September 26, 2010 5:00 - 7:00 p.m. at the Scottsdale Center for […]

Phoenix Convention Center is host a college fair on September 26th Sunday. Fair Hours: Sunday, September 26, 2010 11:00 a.m. – 3:30 p.m. (200 colleges will be in attendance.)

Also on the same day is the Scottsdale College Fair in the evening, Sunday, September 26, 2010 5:00 - 7:00 p.m. at the Scottsdale Center for the Performing Arts. This website is easier to use than the NACAC website. (100 colleges will be in attendance)

Scottsdale Christian Academy SCA 4400 N Tatum Boulevard, Phoenix, is hosting the National Christian College Fair from 6 PM to 8 PM see the website for more information (34 colleges will be in attendance)

And for those of you who live in the east valley, Valley Christian High School, 6900 W. Galveston Street, Chandler is hosting the National Christian College Fair from 6 PM to 8 PM on October 18th.  See the website for more information (34 colleges will be in attendance)

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Why an airline ticket is the same as college

September 21, 2010
The next time you are on an airplane, or see a commercial on TV for an airline, know that every passenger around you paid a different price for their seat. Some paid more, some paid less. College is no different.  In both cases, whether you’re buying an airline ticket or paying for college, the best and […]

The next time you are on an airplane, or see a commercial on TV for an airline, know that every passenger around you paid a different price for their seat. Some paid more, some paid less. College is no different.  In both cases, whether you’re buying an airline ticket or paying for college, the best and most knowledgeable person pays the least. We are here to give you that expert advice.

J.D. Wyczalek (why-zall-ick)
AZCollegePlanning.com

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Expert reveals how to reduce what you pay for a college higher education.

September 20, 2010
Expert reveals how to reduce what you pay for a college higher education. Buy the best education for less than what you would be paying for second best or a third-rate college using closely guarded secrets the college financial aid department hopes you never discover. Do you want the best for your child but don’t […]

Expert reveals how to reduce what you pay for a college higher education.

Buy the best education for less than what you would be paying for second best or a third-rate college using closely guarded secrets the college financial aid department hopes you never discover.

Do you want the best for your child but don’t want to go broke sending him/her to college? There is an answer.

As a service to the community, FREE workshop are provided to give parents and students a head start on what they should and shouldn’t be doing when it comes to college.

Next workshops October 20 Wednesday or October 28 Thursday at the Mustang Library Scottsdale (101/Shea) 6:15 PM to 7:30 PM. Registration is required. Click the RSVP button

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MTV prompts ads to promote finding financial aid ideas

September 16, 2010
Is this a marketing ploy or does the College Board and MTV really want to help find a solution? Here is an article by JACQUES STEINBERG a writer for the New York Times. MTV — Yes, MTV — Wants Your Financial Aid Ideas As the stern proctor of the hardly hip SAT exam, the College […]

Is this a marketing ploy or does the College Board and MTV really want to help find a solution?

Here is an article by JACQUES STEINBERG a writer for the New York Times.

MTV — Yes, MTV — Wants Your Financial Aid Ideas

As the stern proctor of the hardly hip SAT exam, the College Board would seem an odd recipient of prominent attention on MTV. It is difficult to imagine a scantily clad, lip-synching Katy Perry – to say nothing of Snooki or the Situation – rolling on a beach with a No. 2 pencil and a bubble sheet.

And yet, the music channel and the College Board are scheduled to announce this morning that they are joining together to stage a contest, the “Get Schooled College Affordability Challenge.’’ In it, “current and aspiring college students’’ are being asked to create “an innovative digital tool that helps more low- and middle-income students connect with money for school.’’

The winning individual or team will get $10,000, as well as a $100,000 budget to bring the idea to fruition. The Bill & Melinda Gates Foundation is helping to underwrite the project.

The announcement was made by John Legend, the Grammy-winning rhythm-and-blues singer, in a classroom at Howard University. His visit was recorded for the series “Stand In,’’ where celebrities play professor for a day; the series is shown on mtvU, the network’s channel for college and university students.

Mr. Legend’s educational background is a story in itself: mostly home-schooled through the sixth grade, he went on to graduate magna cum laude from the University of Pennsylvania in 1999.

In a statement, the partners said that the contest was intended to raise college completion rates “by making it easier for students to navigate what can be a confusing financial aid maze.’’

“Difficulty paying for college,’’ the statement added, “is a key reason many college students fail to graduate.’’

Need help with college, figuring out how to pay for it, or even what major/career to go into, contact us. We can help. Give us a call.

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Eliminating a college based on the sticker price is bad advice

September 2, 2010
Eliminating a college based solely on the sticker price is just bad advice. The proper thing to do is position the parent’s assets and position the student so that they receive the most amount of aid. As an example, this last year one of my students who took my advice did extremely well. She applied […]

Eliminating a college based solely on the sticker price is just bad advice.

The proper thing to do is position the parent’s assets and position the student so that they receive the most amount of aid.

As an example, this last year one of my students who took my advice did extremely well. She applied to 7 colleges per my recommendation. These colleges ranged from a local state college, a private college in Oregon and a private college in Washington, plus a few others.

Had this family taken the advice to apply to “cheaper” colleges she would have missed out tremendously! After everything was said and done the out the door sticker price for this student at the so called cheaper in-state college was $8,000 for one year PLUS student loans of $5500 for a grand total of $13,500. She received $7,500 in scholarship/grant aid at the public state college. The in state sticker price is $21,000.

The Oregon school has a sticker price of $47,161. She was offered $25,000 in scholarship/grant money to attend this school. With a difference of $22,000, it puts this school out of reach compared to in state public college.

However, let’s look at the last school. The private college in Washington has a sticker price of $45,300 which is double the cost of the state school. Because this student was properly packaged, this private college bent over backwards to get her to attend their school and offered her an amazing scholarship package totaling $40,750 in free money scholarships/grants. They also offered her a pittance student loan of $3500. Out of pocket cost for this family is ONLY $1,500 per year. That's even cheaper than a community or junior college!

With numbers like that it is no comparison.

Looking long term, had the student chosen the state college she would have graduated with $22,000 in student loans versus $14,000 in loans.

You can’t base a school on the sticker price. The key is to properly package the student so that the college is highly aggressive in recruiting the student.

Now I know what you may be thinking, this student has perfect test scores and perfect grades. Not the case. The key point is proper packaging of the student.

Do not base a school on the sticker price until and only until after ALL the numbers have been crunched.

To many times families believe that state schools are less expensive and do not even consider a private college or university. It’s time to keep your options open.

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what grade level is your writing?

August 30, 2010
Fear crept over the class room like an icy hand. The teacher’s lips moved but no sound could be heard as she wrote the assignment on the board. ‘Write an 800 word essay’. The groans of dissatisfaction were evident on every student in the class, save one. You. The kid with the ripped Misfits t-shirt […]

Fear crept over the class room like an icy hand. The teacher’s lips moved but no sound could be heard as she wrote the assignment on the board. Write an 800 word essay’.

The groans of dissatisfaction were evident on every student in the class, save one. You.

The kid with the ripped Misfits t-shirt turn to you and asks why you are not freaked out by the assignment, ‘cause everyone knows this teacher gives a lower score if you don’t write at your grade level or above’.

“I know the secret.” You reply.

Later that night, calm and collected, the words flow off your fingers as you type out your essay in Microsoft Word. You have turned on “Readability with Grade Level Ranking”.

Ha, the poor saps don’t know it’s all at their finger tips. It’s simple to enable.

  • Open MS Word, click the Microsoft Office Button, then click Word Options (at the bottom), click Proofing, enable Check Grammar with Spelling, then click the Show Readability Statistics. Viola!

The next time spell check (F7) is activated, the stats window opens and there it is at the bottom of the pop up window. Flesch-Kincaid Grade Level.

At asignment turn-in day, you are calm. You know exactaly how many words are in your essay and your grade level ranking.

Parents can use this tip too!

Get the Best Grades with the Least Amount of Effort

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test anxiety, how to avoid it

August 27, 2010
With the new SAT and ACT test season quickly coming upon us, I found this information. A recent study showed 61% of students suffer from test anxiety. The SAT and ACT are *implied to carry so much weight that this unseen stress can jump on anyone’s back. To crack the SAT/ACT, become familiar with the […]

With the new SAT and ACT test season quickly coming upon us, I found this information. A recent study showed 61% of students suffer from test anxiety.

The SAT and ACT are *implied to carry so much weight that this unseen stress can jump on anyone’s back.

To crack the SAT/ACT, become familiar with the test, its process and its directions. Do these by taking the test multiple times, pick up an official prep book and review sample and retired tests.

I have seen some weird stuff and then some really weird stuff. This one takes the prize. It is a product to relive text anxiety through clinical hypnotherapy. <click. I am not endorsing this; it is just an example of some of the more bizarre things that are out there.

This YouTube video has some tips on how to deal with test anxiety, including eating right. Click Here

I had an opportunity to meet the master of the SAT. Dr. Beasley. This page shows you some of his secrets on cracking the SAT. How to score better, get a higher score. A higher score could mean a higher scholarship.

Do you think the hypnotherapy is crazy? Email me your thoughts.

*Contact me for a list of colleges that do not require the SAT.

-JD

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Is help on the way?

August 6, 2010
Financial Aid: Help Is on the Way Changes to big financial aid programs, including federal student loans and Pell grants, will make more students eligible and terms more attractive By Alison Damast Students taking out federal student loans will be confronted with a bevy of changes when they visit their school's financial aid office this […]

Financial Aid: Help Is on the Way

Changes to big financial aid programs, including federal student loans and Pell grants, will make more students eligible and terms more attractive

By Alison Damast

Students taking out federal student loans will be confronted with a bevy of changes when they visit their school's financial aid office this fall. This spring, the U.S. Senate passed a student loan bill—the Student Aid & Fiscal Responsibility Act—that led to a major revamping of the federal student loan program, shifting everything from how students obtain their loans to the amount of aid doled out through such programs as the Pell Grant.

"This bill was the largest investment in higher education since the GI bill," says Edie Irons, a spokeswoman for The Project on Student Debt, an initiative of the Institute for College Access & Success, referring to the 1944 legislation that provided educational and other benefits for returning World War II veterans. "It is definitely a historic change."

The new student aid regulations went into effect on July 1, and college financial aid officers will be spending the next few weeks getting students up to speed on the updated guidelines before the start of the school year. In addition to these changes, there are important updates to the Income-Based Repayment loan program, which caps monthly loan payments for borrowers. Some of these changes will be obvious to families, but others will require borrowers to do more research to determine if they qualify for the revamped programs. For most families, the transition should be relatively seamless, says Allesandra Lanza, a spokeswoman for American Student Assistance, a Boston-based nonprofit that helps students and families manage higher education debt.

"People might not be aware that some of these changes have occurred, but I think schools and colleges are by and large ready for this," Lanza says.

For borrowers who want to prepare themselves beforehand, here's a roundup of some of the most important new federal loan reforms for recent graduates and current students, as well as strategies on how to get the maximum benefit out of them:

Federal Student Loans

Previously, the majority of families and students who obtained federal loans did so through the Family Education Loan Program (FELP), rather than directly through the government's Direct Loan Program. Under the FELP program, the government paid commercial banks such as Sallie Mae and Nelnet fees to act as intermediaries between the government and the student borrower. The banks would originate the federal loans to students, administer them, and collect payments after graduation. As of July 1st, that program is no longer in place; now all federal student loans are available from the U.S. Education Dept. through the Direct Loan program, and students can no longer obtain such loans through commercial banks. This is an important step that will make the student loan process more transparent for students and families, says Irons. "[When] private lenders were making both federal and private loans, it could sometimes be hard for the consumer to know what type of student loan they were getting," she says. "From now on, it should be clearer."

Still, students who used to obtain federal loans through the FELP program may temporarily be confused by the transition to the Direct Loan program, says Kalman Chany, author of Paying for College Without Going Broke. In the last few weeks, he has received several "panicked" phone calls from parents who thought the federal student loan program had ended. "Don't believe those rumors," Chany says. "The only thing that has changed is that the middleman—the banks—are now removed from the federal loan program."

The move to the direct lending program will have immediate benefits for students and families, including lower interest rates and accessibility, says Mark Kantrowitz, a student loan expert who runs the website FinAid. Borrowers who took out federal Parent PLUS Loans, which are repaid by the student's parents, were charged an 8.5 percent interest rate by banks under the old FELP program; under the new Direct Loan program, the interest rate on the loan is just 7.9 percent. Another benefit? More families will be eligible for federal loans under the Direct Loan Program. About 42 percent of parents who tried to take out PLUS loans through the FELP program were denied the loans by banks because of an adverse credit history. The denial rate for those applying for a PLUS loan through the Direct Loan program is half that, says Kantrowitz. "The changes mean that PLUS loans will be cheaper and more available in the Direct Loan program, and it is going to be a smoother process," he says.

Loan Consolidation

Students who hold federal loans typically can't consolidate them until after they've graduated or left school. Now there's an exception to that rule. Students who hold at least two of three different types of federal loans will be able to consolidate them while they are still in college, during the period starting this past July 1 and ending June 30, 2011. The loans that qualify for consolidation: FELP loans issued by a private lender, Direct Loan Program loans, and FELP loans that were sold to the Education Dept. during the financial crisis. Some students hold several of these loans and might want to consolidate to avoid the trouble of making payments to two or three different lenders after college, says Lanza. "This way," he explains, "they'll have only one payment and less confusion."

But Finaid's Kantrowitz says students should think long and hard before they consolidate their loans this year. Consolidation would result in savings, but the amount is minimal, he points out. What's more, he notes, most federal loans come with a six-month grace repayment period, which students would lose if they consolidate their loans while still in college. Students would be wiser to wait to consolidate their loans until after college. "The ability to have that grace period is a really valuable benefit," Kantrowitz says. "Consolidating during this school period may do more harm than good."

Pell Grants

The revamping of the Federal Loan program will yield some immediate returns for students. The government will be saving $60 million in fees previously paid under FELP to the commercial bank lenders, some of which will now be funneled into the Pell Grant program, one of the most popular need-based grant aid programs. As a result, the maximum annual Pell Grant for the 2010-11 academic year will rise to $5,550, up from $5,350 last year, and the average grant is expected to be $3,685, about $220 more than last year.

Even more encouraging, more students than ever will be eligible for the Pell Grant come fall because of a change in the expected family cutoff, or the minimum amount a family is expected to pay toward the cost of college, says Kantrowitz. The cutoff has been raised to $5,273, from $4,617, making the grant available to a much larger group of students. About 8.4 million students—617,000 more than last year—will be eligible for Pell Grant aid, according to the Education Dept. "This is going to be a fairly substantial improvement in financial aid for some of these families," Kantrowitz says.

Income-Based Repayment Program

The popular Income-Based Repayment (IBR) plan launched last July is designed for borrowers with federal student loans who have high debt relative to their income. It caps most borrowers' monthly payments at less than 10 percent of their gross income for 25 years, after which their remaining student loan debt is forgiven. The original structure of the program included some flaws, however, and in some instances borrowers were paying more in monthly payments than they should have, says Irons, of the Project for Student Debt. These flaws have since been corrected by the Education Dept., and the changes went into effect July 1.

The first fix to the program applies to married couples. Previously, a lender for the IBR program would look at a married person's student loan debt and use the couple's joint income to calculate what the monthly payments should be for the program. The program did not take into account that the IBR participant's spouse could have federal student debt as well. The result: married couples were charged up to twice as much as two single borrowers in the same situation, says Irons. That glitch has since been fixed, and now the IBR program will take both spouses' federal loan debt, as well as their total income, into account when calculating their monthly payments, Irons says. For example, if both spouses have federal loans and file a joint federal tax return, the calculated IBR payment amount for each borrower will be adjusted based on each borrower's percentage of the couple's total eligible loan debt. The end result: The couple will pay less. "This is better for married borrowers, because it is not fair to assume that a joint income is totally available for one's debt," Irons says. This change will go into effect automatically for new IBR users who apply for the program this year. It will not happen automatically, however, for couples who already use IBR and file jointly. Borrowers in that situation should contact their lender this summer and make certain that their IBR payment is adjusted to reflect the change, says Irons.

Another update to IBR this July will expand eligibility for the program. Previously, a lender calculated whether borrowers were eligible for the IBR program based on the original, or baseline, amount of debt the borrowers first owed when they entered the repayment period on their loan. Many borrowers' original loan balances increase, however, because of accrued interest during periods of loan deferment or forbearance. For example, a person who owed $40,000 in loans when she first graduated could easily owe $50,000 a few years later if she deferred payment of her loan for a few years, says Irons. Under the new guidelines, eligibility for the IBR program will now be calculated based either on the original balance of the loan when the borrower first entered repayment or on the current loan amount, whichever is larger. For the first time, borrowers will be able to qualify for the program based on what they actually owe, says Irons. "These changes are going to make more people eligible for IBR and make the program more fair and accessible," Irons says.

original article here:

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