Paying interest on a student loan and still haven’t filed your tax return?
You can reduce your taxable income by the amount of student loan interest you paid in 2010, up to $2,500.
That’s true even if you don’t itemize deductions. Unfortunately, married folks have to file joint tax returns to take the student loan interest deduction, and some married people will want to file separately in order to separate their incomes for figuring Income-Based Repayment.
Figure your deduction using the Student Loan Interest Deduction Worksheet. Your lender (a bank or the government) should have sent you a Form 1098-E, showing the interest you paid.
More detail is in IRS Publication 970.
Early Look at College Net Price Calculators Finds Mixed Results
By the end of October, colleges must create online calculators to help prospective students judge college costs. The price of tuition doesn’t tell students everything they need to know about cost. Students are also responsible for fees, books, food and housing, and transportation costs. Also, some high-tuition schools offer generous grants and scholarships.
The new “net price calculators” can help students understand which schools they can afford. A report by the Institute for College Access & Success (TICAS) casts light on how these soon-to-be-required calculators can best help students and families.
In its review, TICAS found that the calculators were mixed. Some were easy to find, use and understand, but others were difficult to locate, required detailed information from users’ financial records, and presented confusing results.
Several calculators subtracted expected student loans from the net price, potentially minimizing the fact that student loans are part of the net price shouldered by students and families.
The findings are detailed in a spiffy new report, Adding It All Up: An Early Look at Net Price Calculators, which includes examples of actual calculators.
Thanks go to TICAS for its great research and the Project on Student Debt and IBRInfo.org.
Are student loan borrowers effectively managing their student loan debt?
Many more student loan borrowers are having difficulty repaying their student loans than is generally recognized.
The Institute for Higher Education Policy (IHEP) studied data on 8.7 million student loan borrowers and 27.5 million student loans, focusing on the 1.8 million borrowers who entered repayment in 2005 and issued an illuminating report: Delinquency: The Untold Story of Student Loan Borrowing.
Student Loan Default Rates Don’t Tell the Whole Story
Default rates only tell us so much. Deferment and forbearance allow borrowers to temporarily suspend repayment in times of financial stress and avoid delinquency and default.
A borrower isn’t considered “delinquent” on his student loan until after his payment is 60 days late. A borrower faces “default” after another 270 days.
But how many borrowers manage to repay their student loans on schedule without having to postpone or delay payments?
Graduate and Professional Borrowers Struggle to Repay Student Loans
About 14% of the borrowers IHEP studied were graduate or professional students.
Although graduate and professional borrowers were less likely than other borrowers to have been delinquent or defaulted on their student loans, 42% couldn’t manage to make timely payments without either postponing their payments, becoming delinquent, or defaulting on their student loans.
Of graduate and professional borrowers entering repayment in 2005:
- 19% faced delinquency or default
- 22% had to temporarily suspend their student loan payments using deferment or forbearance options
- Only 58% made timely payments without using deferment or forbearance options
Those who graduated with a degree fared better than those leaving school without attaining a degree
68% of graduate and professional students who earned their degree were able to repay without delay but only 47% of those who left before attaining a degree did so.
| Graduate/Professional Students | Left without degree | Graduated | All borrowers |
| Timely repayment | 47% | 68% | 58%
|
| Deferment/forbearance without delinquency | 25% | 20% | 22%
|
| Delinquency without default | 24% | 10% | 16%
|
| Default | 5% | 2% | 3%
|
| Total | 100% | 100% | 100%
|
Does not include borrowers with consolidation loans
Source: Delinquency: The Untold Story of Student Loan Borrowing.
Borrower’s ability to deal with repayment problems depends on receiving good information
IHEP research found that borrowers:
- Do not fully understand loan terms
- Are rarely familiar with all the repayment options
- Are often not aware of options that could have helped them manage their loans
Student loan borrowers need specific student loan repayment guidance and general financial literacy information in order to succeed.
Read the full report
Increased Oversight of Tuition Assistance Program is Needed
The Government Accountability Office (GAO) is calling for expanded education quality review procedures after auditing the Department of Defense’s (DOD) oversight of the Military Tuition Assistance Program.
The Military Tuition Assistance Program provided $517 million in tuition assistance to approximately 377,000 service members in fiscal year 2009. These funds help service members pay for higher education.
The GAO found that DOD review of the quality of academic courses and services was too narrow. Although 71% of the courses taken by service members were distance courses, DOD focused its oversight on traditional classroom instruction.
The GAO reports that DOD review can also be improved by increased accountability. For example, DOD currently lacks a system to track complaints about schools and their outcomes and does not gather information such as whether schools are in jeopardy of losing their accreditation.
As a result, DOD may have difficultly accurately identifying problems that can negatively affect student service members.
DOD plans to implement more uniform oversight policies and procedures and an expanded quality review process.
Read more:
United States Government Accountability Office Report: DOD Education Benefits: Increased Oversight of Tuition Assistance Program Is Needed (March 2011).
More Financial Need, Less Student Aid
The economic downturn has shrunk college endowments creating financial pressures for colleges.
Some colleges are responding to the financial downturn by changing their financial aid policies in ways that raise costs for wealthier families. Other colleges are adjusting “need-blind” admissions policies and admitting fewer students who cannot afford to pay full tuition. A shift to “need aware” policies grants admissions advantage to students from affluent families.
Just when more students than ever need financial aid, schools are having a harder time providing it.
Read More:
Cash-Strapped Colleges Shift Admission Policies
What to Do as Colleges Cut Back on Financial Aid
Senate Bill Would Preserve Pell Grant Funding
Senate Democrats have introduced a spending bill for Fiscal Year 2011 that maintains the current maximum Pell Grant – $5500. The House-passed spending bill seeks to cut the maximum Pell Grant award by more than $800. Currently, the federal government is operating under a continuing resolution that is set to expire on March 18th.
Are Financial Worries Making College Students Sick?
The American Freshman: National Norms for 2010 presents troubling results about the financial concerns college freshman face. The Higher Education Research Institute at UCLA reports that 4.9 percent of incoming college freshman say their father is unemployed, a record number. The incoming students surveyed also report emotional health at its lowest point since UCLA first asked the question, 25 years ago.
More Incoming Students Face Financial Stressors
The recession seems to be affecting student’s choice of colleges. In its latest survey, UCLA found that nearly two-thirds of incoming students reported that the “current economic situation significantly affected my college choice”. Those students were much less likely to be attending their first-choice college and were more likely to also have “major” financial concerns about financing their education. Apparently, a lack of adequate financial support influenced incoming freshman in their choice of school.
The study finds that rising numbers of students must draw upon more than one source to finance their educations. For example, the recent study found that 73.4 percent of incoming college freshman received grants and scholarships to attend college, a higher percentage than in the last 10 years.
Meanwhile, 53.1 percent of incoming students report using loans to attend college.
Emotional Health of Incoming College Students at All Time Low
Self-rated emotional health for incoming first-year students is at the lowest point since UCLA began its annual survey 25 years ago. Student responses show that while emotional health has decreased, feeling overwhelmed has increased. More women report feeling overwhelmed than men, and fewer women than men report their emotional health as high.
Most College Freshman Expect College to Pay Off
More than 84 percent of the surveyed college freshman reported that they attend college in order to get a better job. Most incoming college students agree that “the chief benefit of college is that it increases one’s earning power” and that earning power was a “very important” factor in their decision to go to college.
But Student Debt Levels for College Graduates Continue to Rise
Although the UCLA study demonstrates that students are hopeful that college will them find their way out of the financial difficulties they face, many of those students will graduate with significant debt burdens. The Project on Student Debt reports that college seniors who graduated in 2009 carried an average of $24,000 in student loan debt, up 6% from the previous year.
Meanwhile, unemployment for recent college graduates climbed from 5.8% in 2008 to 8.7% in 2009 – the highest annual rate on record for college graduates aged 20 to 24.
How does graduating debt at your college stack up?
Look up average graduating debt for all 50 states, the District of Columbia, and more than 1,000 public and private nonprofit four-year colleges in the Project on Student Debt Report: Student Debt and the Class of 2009 with companion interactive map.
Higher Education Research Institute at UCLA Report: The American Freshman: National Norms for 2010
Class action case against Sallie Mae mov
Class action case against Sallie Mae moves forward. Higher Ed Watch reports on suit over private loan practices. http://ow.ly/46zTg
Control Cost With 3-Year College Degrees?
Is standardizing 3-year college degrees one way to get higher education into shape? I see it as one way to control cost. http://ow.ly/3Z0ea
Heather Jarvis 