The Law of Unintended Consequences

Tuition locks are becoming common at many colleges, but schools are making up the difference by increasing fees. That’s the jist of the story from reporter Pete Nickeas. In his recent article titled… Tuition Law May be Having Unintended Consequence, Pete describes how many states (Illinois in this particular case) passed laws to lock in tuition at their public universities for incoming Freshmen. That way, students and their families would be able to plan on consistent costs throughout their time in school. At least that was the intent.

But as with most things government does to regulate costs, it doesn’t work out the way you want it to. Colleges still have costs they have to manage, and those costs don’t care about a law passed by some legislative body. There were two very noticable consequences:

  1. Colleges and Universities resorted to increasing various fees to make up the revenue short fall. These fees included items such as: Sports Fees, and Building & Grounds Maintenance Fees.
  2. There were dramatic increases to first year tuition rates at the state universities.

The second consequence has really put state schools at a disadvantage. By increasing their first year tuition costs in anticipation of freezing those costs for the students throught the next four years, the state universities in Illinois have driven their prices through the roof. This makes schools like the University of Illinois and Western Illinois University much less attractive. At this time, you can send a student out of state to any of the Missouri Univerisities next door at a lower cost than the in-state rates at the Illinois colleges.

This also means that the private colleges are going to find it much easier to compete with colleges that have adopted frozen tuition policies. Because the state colleges typically do not have the per-student resources common at many private colleges, private colleges will find it much easier to lower the student’s out of pocket costs when compared to the state schools.

So here are my recommendations based upon Pete’s article:

1 — Do not be taken in by the good sounding marketing of tuition freezes. You have to pay attention to your bottom line, out-of-pocket costs.

2 — Do not ignore out of state colleges. Just like in the case of Missouri vs Illinois, many out of state rates may be less than your state’s in state rates.

3 — Do not ignore private colleges. Private colleges may appear to be more expensive at first glance. But the private colleges typically have much more in per student funds available to lower your out of pocket costs at those schools.

If you would like to read Pete Nickeas’ article, click here.

Consolidating Private Student Loans - Helps You Go Back to School

Consolidating private student loans is known to be the process of merging various college loans into a brand new single loan. This is meant to decrease the payment amount that one needs to meet every month. There are a number of benefits that one can enjoy when he avails of school loan refinancing program and some of these are decreased payment amounts every month, payment incentives, deferments and fixed rates of interest.

Enrolling again is possible, when consolidating private student loans

Many graduates and students left school for their career, families and other financial reasons. More surely, some of them would certainly one want to return to school and finish their college if given the chance.

However, many fail to make payments some of the college debts while these students were out of college. These can a be a good reason for them to be denied further student loans should they decide to enroll again. Most financial service and loan companies are not willing to provide someone who had lapses on loan repayment in the past more new loans; otherwise these borrowers would just find themselves in further financial chaos.

The best way to be considered for new loans is by going for college loan refinance and beginning to address the problem of paying the previous loans. Prompt repayment of the new student loans is certainly a road towards improvement of credit ratings.

Eventually students who avail of these programs consolidating private student loans and work towards betterment of their credit score are candidate for new student loans in the future.
Image credit: venana

Changes in FAFSA could save some money

There were some significant changes in the FAFSA with regards to dependent/independent status of students. This is very important considering independent students are often eligible for much more financial aid than dependent students.

Previously, the FAFSA had a very hard 7 question test to determine whether or not the student was a dependent or independent student.

  • Is the student older than 23?
  • Is the student working on a graduate level degree?
  • Is the student married?
  • Does the student have children that they support more than 50%?
  • Does the student have other dependents living with them?
  • Are the student's parents deceased, or is the student a ward of the court?
  • And finally, is the student a veteran?
The questions were virtually impossible to get around. Although the student may have been a position of recieving no support from their parents, they could not be an independent student unless they could answer "yes" to one of the above questions.

Now let's look at the new set of qualifying questions FAFSA is using for 2009...

  1. Are you older than 23?
  2. Are you married?
  3. Are you working on a graduate level degree?
  4. Are you currently serving in the US Armed Forces other than training?
  5. Are you a veteran?
  6. Do you have children you support more than 50%?
  7. Do you have other dependents you support more than 50%?
  8. At any time since you were 13 regardless of present condition... are your parents deceased, or in foster care, or a ward of the court?
  9. Are you or were you an emancipated minor as determined by a court?
  10. Are you or were you in legal guardianship as determined by a court?
  11. At any time on or after July 1, 2008, did your high school or district determine you to be an unaccompanied youth who was homeless?
  12. At any time on or after July 1, 2008, did the director of an emergency shelter or federally funded transitional housing program determine you were a unaccompanied, homeless youth?
  13. At any time on or after July 1,2008, did the director of a runaway or homeless youth center you to be an unaccompanied youth who was homeless or were self-supporting at risk of being homeless?

If the student can now answer "yes" to any of the above questions, they are considered independent and typically eligible for much more financial aid.

The question that is likely to get a lot of attention from many parents is #9 -- Are you an emancipated minor as determined by a court. Over the years, I have had a number of people ask me if it would make any difference if their student was declared emancipated. Previously, the FAFSA had no means of indicating emancipation. Obviously, that has changed. This could mean the potential of thousands of students seeking emancipation.

My concern is what are the hidden ramifications of emancipating a minor. I asked Attorney Elizabeth Cervantes for an opinion. Here is a summary or her comments...

Emancipation in some states is not a cut and dry process. Some states have a defined process, others are vague.

Courts most often will require the minor to show they can support themselves.

Courts typically want to keep the family intact.

Eligibility for additional financial aid may not be a sufficient reason for the court to grant emancipation.

If you are going to investigate emancipation, I highly encourage you to seek professional, legal advice early in the process. You can contact Elizabeth Cervantes at the law firm of Katz, Huntoon & Fieweger in Moline, Illinois at the following email address --