“7 strategies to avoid the college debt trap” plus 1 more |
| 7 strategies to avoid the college debt trap Posted: 04 Sep 2010 08:44 PM PDT Is it worth it to pay $200,000 for a liberal arts education, especially if it means taking out loans? One of my 20-something Kiplinger colleagues answers bluntly: "If I had realized how much debt I was getting into, I would have gone to my state school instead of an expensive private college." As important as education is in today's world, families need to find more affordable ways to pay for it. Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, has calculated that total student-loan debt exceeds revolving credit (mostly credit-card debt). Here's my guide for parents about avoiding the student-debt trap: Save as much as you can. It's never too late to start, especially if you live in a state that gives you an income-tax break for contributions to state-sponsored 529 plans. Plus, money withdrawn from 529 accounts and used to pay for qualified college expenses is tax-free. Don't let the total cost of college discourage you. If it seems intimidating, aim for a more manageable goal -- such as saving enough to pay first-year expenses or one-third of the total cost (the rest could be covered by a combination of current income, both yours and your child's, and financial aid). Remember, every dollar you save is a dollar you won't have to borrow. Be straight with your kids about what you can afford. Have the "college talk" with your teenagers before they start their search so that they know what fits into your budget and how much they'll have to contribute. At a minimum, kids should be expected to earn their own spending money. Choose schools strategically. You're looking for colleges that deliver good value -- a high-quality education at an affordable price. That might mean a state institution, or it could mean a pricey private school that offers a generous financial-aid package. To better their chances for a scholarship, students should focus on schools at which their GPA or other achievements would make them a standout. Think outside the box. Students can follow the example of one of our top Kiplinger editors, who started at a lower-cost community college and then transferred to a four-year school. And more colleges are offering online classes to keep costs under control. Taking Advanced Placement classes in high school can slice a year off your child's education and cut your expenses by 25 percent. Uncle Sam will help pay the bill if your child joins the military. You could also take advantage of the growing number of colleges offering accelerated, three-year degree programs. Or, here's a radical thought: Your child may be better off passing up college, at least for a year. Not everyone is ready for college at 18. It might literally pay if your child takes a year off to mature, earn some money and figure out what he really wants to study. Education and training are critical in today's economy, but rather than spend time and money on a degree from a four-year institution, it might be more appropriate for some kids to consider a one- or two-year certificate program from community college in a field such as health care or engineering. Borrow smart. If your family must borrow to pay the bills, stick with government-sponsored Stafford loans for students and PLUS loans for parents (or a home-equity line of credit, if you qualify). Current interest rates on government loans are 6.8 percent for students (lower if you're eligible for financial subsidies) and 7.9 percent for new PLUS loans (for more information on student loans, go to StudentLoans.gov). With that combination, you shouldn't have to resort to more-expensive private loans. Run the numbers. Perhaps the most important mathematical exercise your child will ever have to do -- and the most widely neglected -- is figure out how much it will cost to pay back her student loans. At FinAid.org, you can use the Student Loan Advisor calculator to determine the monthly payment amount based on a future salary. Let's say your daughter plans to major in accounting, with a projected starting salary of $47,200. If she wanted to hold the loan payments to 10 percent of her monthly income and repay the loans over 10 years, her monthly payment would be $393, assuming a student-loan interest rate of 6.8 percent, and her maximum manageable debt would be $34,200. Pick a marketable major. Majors that are most likely to yield an immediate job offer after college are accounting, business administration, computer science, engineering and math, according to the National Association of Colleges and Employers. But students can still major in liberal arts and make themselves attractive to potential employers by choosing subjects that are marketable. As an editor, I always counsel budding journalists who are majoring in something as general as "mass communications" to add a minor or a concentration in another subject -- business, health or computer skills, for instance. As the editor of a personal-finance magazine, I can attest that our most attractive job candidates are those who combine writing ability with knowledge of the subjects we cover. That applies to other fields as well. If your daughter is majoring in economics, she should take accounting. If she's studying history or government, she could learn a foreign language. An English major could take classes in technical writing. Then she'd have a better shot at landing a well-paying job to help pay back those college loans. -- Kiplinger's Personal Finance This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Down economy means business (programs) at area colleges Posted: 04 Sep 2010 08:23 PM PDT The Johns Hopkins University is pitching a new Global MBA program to students around the world. Loyola University Maryland's business school is luring professionals still fresh in their careers to a new, intensive one-year MBA program. Even the Maryland Institute College of Art is getting down to business, offering students with a creative flair a chance to learn business principles in a new master's program developed for next spring. These programs have sprouted up at Baltimore colleges during one of the bleakest economic periods in decades. Despite the recession — or perhaps because of it — local universities have detected steady interest among potential students in business education programs, and have moved quickly in the past couple of years to tailor new offerings. Recent economic pitfalls, including the mortgage meltdown and the stock market's swoon, haven't taken the sheen off a business education. "We do an excellent job of preparing people to be creative, but many of them also see themselves as individual entrepreneurs," said David Gracyalny, dean of MICA's School for Professional and Continuing Studies, which next year is offering a master of professional studies in the business of art and design. Graduate business degree programs nationwide have expanded over the past decade — through the last recession and as this one began. Enrollment grew an average of 4 percent a year from 1998 through 2008, according to the Council of Graduate Schools. The latest recession began in December 2007. Enrollment may have taken a hit since the recession deepened in recent years. The downturn has curtailed corporate subsidies of employees' executive-level MBA programs, said Jerry Trapnell, chief accreditation officer of the Association to Advance Collegiate Schools of Business, an international accrediting organization for business schools. "Those executive programs appear to be feeling some of the stress in the weaker economic environment," Trapnell said. "Many firms are cutting expenses, and there's less support for people to do this now." But historically, enrollment in all types of graduate schools has increased during recessions, said Nathan Bell, director of research and policy analysis at the council. "We've seen strong growth in business programs" since the late 1990s, with many students seeking specialization in accounting, he said. And schools, clearly seeing a demand, are responding by offering students more chances to specialize in a field of business. Hopkins is launching its Global MBA program this fall. It is Hopkins' first full-time, two-year program, and one that administrators hope will help them compete with the MBA heavyweights, such as Harvard's business school and the University of Pennsylvania's Wharton School. Hopkins' graduate business education programs have consisted of mostly part-time offerings, but the school was looking to create a signature program that would attract students from around the world, officials said. The program costs $46,000 a year and includes travel accommodations for an international learning experience focused on operating a business in a developing market. Yash P. Gupta, dean of Hopkins' Carey Business School, said lessons from the recent economic meltdown will help inform a new type of business student, one who is able to handle both the science and the art of business. "It's the most opportune time for institutions like Hopkins to introduce a new paradigm," Gupta said. "There's never been a better time to redefine a business education." Responding to the times is one reason why MICA is offering a graduate business degree. For one, the school recognizes that artists — from the visual to the literary — are in a new world economy that's connected and fueled by the Internet, according to Gracyalny, MICA's continuing education dean. The school also wants to help its artists take more control over their creative efforts and the distribution of their work. Students enrolled in the master of professional studies program, which begins in May, will be immersed in business education, mostly through online course work, and not the art studio. "They will not be doing any art, per se," Gracyalny said. "We're trying to say, 'We're going to give you the power to control the distribution of what you do creatively,'" he added. "To struggling artists, we're saying, 'You don't have to wait anymore. Go and make this thing happen now.' We don't want our students to wait to be successful." The Robert H. Smith School of Business at the University of Maryland is introducing two new master's degrees in the fall, in supply chain management and information technology. The school has expanded enrollment in its full-time program from about 130 to 150 students. Meanwhile, enrollment in other programs, such as the executive MBA, has remained steady, said Carrie Handwerker, a school spokeswoman. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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