Saturday, September
4 2010
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Saturday, September
4 2010
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Announcing a new acquisition!!
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What's New at Forte for the year 2009 March 2009 Is Your Child Headed to College Next Fall? It's Time for Both of You to Take a Crash Course on Borrowing and Spending By Forte News Department Even if
you’ve planned relatively well for your future college student’s expenses, the
credit crunch and downturn in investment income for colleges have changed the
game for financial aid at many schools. That means both parents and students
need to approach the college financial aid scene with unprecedented
caution. Harvard
University, the world’s richest school, announced in February that it was
slashing 25 percent of its investment staff after its $36.9 billion endowment
lost 22 percent of its value in the previous four months and could decline as
much as 30 percent by the end of June.
In two separate surveys released in January, the Commonfund Institute
and TIAA-CREF, in a survey done for the National Association of College and
University Business Officers, reported that college
endowments fell on average 23 percent in the five months ended Nov. 30, 2008. Why is
this important? It’s true that endowments at schools of all sizes mostly pay
for faculty and facilities. But they also provide both grants and scholarships
for talented students who need them and have been under significantly more
pressure to do so. When students have a tougher time finding lower-cost school
financing, the demand for scholarship and grant funding goes sky-high. In many
cases, students are forced down the borrowing chain to increasingly risky loan
options. The
private student loan sector has also been hit by reports of questionable
practices in the last two years. In December, New York Attorney General Andrew
M. Cuomo reached an agreement with the College Board – the developer and
administrator of the SAT and AP – to stop discounting products and services in
exchange for a ranking on colleges’ preferred lenders list. The College Board will now invest $675,000
to develop a set of tools to help financial aid administrators to help students
and parents compare student loan offers and identify the lowest-cost loan
options. What can
you do? One of the best starting points is a meeting with a CERTIFIED FINANCIAL
PLANNER™ professional with specific expertise in planning for college and
financial aid options. The smartest
thing is to work with a planner when kids are young to amass the right amount
of savings for college, but it makes good sense for both parents and students
to meet with a planner before school starts to underscore the complete list of
financial issues the student will face. These include: Planning alternatives for financial
aid shortfalls:
Over the past few years, colleges have not been able to offer adequate amounts
of funding through Perkins, Stafford and Plus federal education loans, and
private student loans through banks have closed up with the credit crunch. For
students already admitted at schools for their freshman year in the fall,
financial aid letters will start going out this month. Here’s
the catch – many college students get in trouble with debt because they are
unaware that many for-profit companies advertising access to federal loans pull
their financing from private sources that cost the borrower far more than
actual federal loans would. The ability
to plan for college well in advance and work with an expert to sift through
proper loan alternatives can make the difference between an affordable debt
load when a student graduates and potential bankruptcy. Setting a budget as early as
possible for basic expenses: Until the student gets to school it
will be tough to tell what actual expenses will be, but it won’t hurt to set a
tentative budget that involves taking full account of the student’s savings,
the parents’ (and possibly the grandparents’) contribution to everyday expenses
and any planned income from work-study or other sources. For a template of a
budget written specifically for college students, go to:
http://www.aie.org/Calculators/budgetworksheetinschool.cfm Start managing credit and debit
cards before school starts: The time to start managing credit
and bank accounts isn’t freshman year. While a teenager won’t build a credit
history as an authorized user on a parent’s card, it’s good to get a little
practice using it under a parent’s watchful eye. When a child goes on to
college, the challenge will be looking for the best credit card offer amongst
many and managing that credit responsibly. This is another good reason for both
parent and student to meet with a financial planner ahead of school to discuss
proper credit card usage and monitoring of a student’s fledgling credit score. March 2009 — This column is produced
by the Financial Planning Association, the membership organization for the
financial planning community, and is provided by David W. Henion, CPA , a local
member of FPA. | ||||||||||||||
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