5 Student Loan Terms To Learn

The process of applying for student loans, using them and eventually paying them back can be a decades-long class that teaches you a plethora of difficult lessons about personal finance. One of your first quizzes is something of a vocabulary test when you’re trying to wrap your head around what the terms mean.

MainStreet defines some of the lingo for you:

* Subsidized Loan — A need-based type of loan that’s backed by the government, not requiring you to start paying it back until after graduation.

* Default Rate — The percentage of borrowers who have stopped making payments on their loans. Hopefully you won’t someday add to this rate’s increase.

* Grants — Money that you don’t have to pay back. The more grant money you get, the less you’ll have to borrow.

* Expected Family Contribution — A formula schools use to determine how much you and your family should be able to cough up to cover the cost of school. If your expected contribution is high, the amount of financial aid you’ll qualify for will be lower.

* Borrower grace Period — Federal student loans allow you some breathing room after graduation before you have to start paying them back. You can apply for a grace period if you lose your job or face a severe drop in work hours.

Check the source article for more terms and definitions.

10 Student Loan Terms Explained [MainStreet] (Thanks, Kristin!)

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  1. Don't Bother says:

    “Expected Family Contribution”

    AKA, the “no way in hell’s that happening” number.

    • farcedude2 says:

      That number always amused me – When I was starting school, my dad was just retiring for real, after some deal where he ‘retired’ and was brought back as a consultant. So, for the two years that they asked about, my dad made a decent amount of money. When I was actually in school? Not so much. Thankfully, they had set aside some money for me, and I was able to cover the rest with work-study and a reasonable amount of subsidized federal loans. But yeah, that was annoying.

    • DariusC says:

      Yeah, not sure why they expect families to push their kids through school when most families that do contribute to their kids education will probably pay for it all while those that can’t will tell the kid to get a loan. It’s not always that way i’m sure, but you can either plop down $10-50k on school in cash or you can’t. Most people can’t.

      • BurtReynolds says:

        It always appeared the EFC anticipates that the family lives rent/mortgage free, with no transportation costs, and have no problem eating Ramen noodles everynight for dinner just like their college-bound offspring. Or at least that was what my family’s “expected” contribution would entail.

    • Cat says:

      i just explained that to my daughter ( senior in high school) last night, and it baffles her.

      They don’t care about your obligations, just how much you make. I told her we have nothing to give her, so her choices are:

      Get married. (Yea, that’s not happening. “Daddy got a Gun”)
      Get declared “emancipated” by the courts. (Not easy, and also not happening.)
      Wait until you’re 26, like her daddy did. (And waste 8 years of her life, like her daddy did)

      I think the best option for her may be – military. Do 4, GTFO, take the money and run.

      • FatLynn says:

        Your daughter is graduating high school in 5 months, and you are just telling her NOW that you can’t help her with college expenses?

        • Cat says:

          Nope, it’s not the first time I told her. I just explained the “Expected Family Contribution” to her last night.

      • chargernj says:

        Your daughter will be eligible for Federal student loans if nothing else (unless she has some sort of drug conviction). Almost guaranteed she can afford to go to a community college with just that alone.

        • BurtReynolds says:

          Eligible for federal student loans that probably won’t cover her tuition. It seems the government still expects the PLUS loans to carry the load.

          • chargernj says:

            Nope, federal student loans will cover all or most of 2+ years at just about every community college in the US. Just make sure it’s a public college and not some proprietary school.

          • vorpalette says:

            I paid for my entire degree with federal loans. There was no way in hell I would have been approved for private ones.

            • BurtReynolds says:

              Well I was only offered $2k in unsubsidized loans as part of my “aid package”. The rest of the tuition and room/board was supposed to be PLUS loans. The $2k wouldn’t have even covered my SUNY tuition. Hence why I had to go to Citibank. My Dad co-signing with me was a little more “my loan” than a straight PLUS loan.

      • farcedude2 says:

        Tell her to find an in-state school she likes, then find a community college that they’ll transfer credit for the first year or two of classes from (and be absolutely sure of this) – you save a ton of money, get a lot more attention from professors, and have much smaller class sizes. Then, switch to the big school. As long as she doesn’t waste time, applies for butt-tons of scholarships, and is going for a useful degree that pays decently, she should be all right. Not guaranteed, but better than most.

        • vorpalette says:

          Yep, this is what I did. Unfortunately, I was not eligible for a large number of scholarships, but I managed to get a few smaller ones, especially because my state school offered a transfer scholarship.

          Also, the cut off age is actually 23, not 26. I started school at 21 and only had to report my mother’s income twice.

          • Nigerian prince looking for business partner says:

            Are there more scholarships available today than in the past?

            When I was in school, I applied for virtually everyone that I could find (~ 200 of them a year) and I managed to bring in about $2,000 or $3,000/year. Today, it seems like every young person I meet talks about having no debt and having full ride scholarships. How common are these kinds of scholarships?

            I had the GI Bill, Pell Grants, scholarships, went to a state school, worked full time, and still wound up with loans.

            • vorpalette says:

              No idea. I graduated high school with a 3.89 and that got me absolutely nothing except hand cramps from scholarship applications/essays. I just graduated college last August, and even with grants and the small scholarships I got, I still have like $30k in loans. :(

            • who? says:

              I read an article in the NYT last week that said essentially that, in order to game the US News rankings by attracting top students, schools are giving nearly all of their grant money to the absolute top students, who mostly don’t need the money. It said in the last 30 years, the percentage of students that get need based grants has gone way down, and the percentage of merit based grants has gone way up.

              So, the answer to your question is, if you’re an amazing student, you might get some scholarship money. Otherwise, not. I do have to say that both my brother and I played this card to get school paid for. We were good (but not crazy amazing) high school students from a “disadvantaged” background. We both chose schools that had mediocre academic reputations that they were trying to improve. The schools were more than happy to give us grant money to go there. It ended up working out surprisingly well for us, because as top students at our new schools, we had access to a lot of educational opportunities that we wouldn’t have had as an average undergrad at a better school. Sometimes it isn’t about where you go to school, but what you do while you’re there.

        • whogots is "not computer knowledgeable" says:

          This strategy may not work as well as it should, at least in states that don’t traditionally do the feeder-school thing. It may be possible with research, but don’t hold your breath waiting for the 4-year school to help.

          I’m currently attending a state school, which happens to be the only vaguely reputable school in my area. I have serious scheduling problems (because of the EFC rule, basically — I was eight years into my career by the time I started school, and can’t imagine walking away). The school absolutely will not advise me on using the local community college to knock out core classes. Will. Not. There are explicitly required classes which are only offered during the workweek. Whenever I broach the topic of taking them offsite in the evening, my advisor does something that looks a whole lot like a petit mal seizure and carries on as if I hadn’t said anything. It’s happened every single time I’ve talked to her, far too many for coincidence.

          • rmorin says:

            which happens to be the only vaguely reputable school in my area

            There’s schools that stand out on a resume in a good way, schools that stand out in a bad way, and then everything else.

            In very simple terms: Harvard->Everything Else->Schools that Buy Commercials in the 3-4am time slot.

            It sounds like you choose your school by the U.S. News Rankings and not the actual experience that is good for you.

            • Nigerian prince looking for business partner says:

              For many fields, I do agree that it only matters that you have the two letters after your name. But when applying for grad school, the reputation of your department, as well as your adviser, can go a long way. It’s also much easier to manage to get your name as a contributing author on actual research at a large, research institution, than a small, liberal arts teaching college. A well-published, recent-college graduate stands out from the pack.

              I grew up in Pennsylvania and for many natives, the big debate was Penn State/Pitt/Temple vs. Shippensburg/Bloomsburg/IUP. I think the quality of an education is roughly the same, if not better at the smaller Commonwealth schools but many people opt to pay higher tuition for PSU/Pitt/Temple because of greater national recognition, well known faculty, and the sheer quantity of research.

            • ChuckECheese says:

              People usually have to go to school near where they live. One chooses among what’s available. People don’t have unlimited mobility. Also, local employers often have a soft spot for local grads, so long as the school has a decent reputation locally. You can go to a good school in another part of the country, but if employers in your area don’t know it, they probably don’t care either.

            • whogots is "not computer knowledgeable" says:

              I said nothing about rankings. This town has one engineering-focused state school, two agricultural schools, and some junior colleges. I’m a Unix admin. I *don’t* want to drive a tractor and I *can* compute a factor. Therefore I have to put up with the jerks at the state school.

          • who? says:

            Indeed. You may need to move to California for this to happen. California, for all its faults, does the community college->4 year state school thing very well.

      • Nigerian prince looking for business partner says:

        Joining the military was the only way I was able to go to college. It’s definitely something to consider nowadays, especially now that tuition is getting so expensive, and the Post 9/11 GI Bill is incredibly generous compared to the MGIB. I was lucky enough to get the Montgomery GI Bill to pay for undergrad and then the Post 9/11 GI Bill for grad school.

      • mister_roboto says:

        Yup- my parents didn’t make much, AND couldn’t help me- but I had to have the family contribution on everything, and it lowered what I was eligible for. I lost my workstudy job my Sr. year because one of my parents got a $2 an hour raise at the car dealership they worked at.

      • Mrs. w/1 child says:

        Military service when our country in involved in 3 wars and ready to start pissing in Iran’s cornflakes may not turn out as 4 years and GTFO with the $. There is a greater chance of your daughter getting deployed to a war zone and all the hi-jinks that would ensue (rape at the hands of your own troops, getting blown up by a bomb, permanent psychological damage…)

        Why not allow her to live at home, work full time and save some money, maybe go to school part time? It isn’t a waste of her life for 8 years. College is not the beginning if “life”.

      • jimbobjoe says:

        Reminds me of what my father used to tell me.

        “If there is anything I want for you, it’s for you to find a set of richer parents.”

    • Buckus says:

      I think as long as the student files their own income taxes and is not claimed as a dependent, they can get out of that whole “Expected Family Contribution” deal. I could be wrong. I have been before, once or twice.

      • Cat says:

        No, they can’t. Not until they’re 26, unless… (see my post below)

        • caradrake says:

          I couldn’t even fill out the FAFSA when I got married at age 21. I still had to enter my parent’s income. Not only did she live in another state, but she refused to give me that information. Even though the paperwork says you don’t need parent information when you’re married, it wouldn’t let me bypass that stage.

          I’m finally 26 and have filled out the FAFSA for the first time. I am looking forward to taking some courses this fall.

          • sagodjur says:

            This happened to me. I couldn’t get student loans for years because my mother wouldn’t provide me with her tax or income information. I found out later that she hadn’t done her taxes in six years and was in trouble with the IRS. She still doesn’t understand that she delayed my ability to get a degree for over five years.

  2. Cat says:

    My lender used the term “You’re our bitch now!”

    What do they mean by that?

  3. Extended-Warranty says:

    Here’s another one:

    * Common Sense – Is it worth it to rack up 50-100k in debt for an English degree?

    • Mr. Fix-It says: "Canadian Bacon is best bacon!" says:

      The costs of your post-secondary in America are freaking insane, by the way.

      But then, I’ve had the relative luxury of enjoying a tuition freeze that’s been in place for the last ten years or so…

      • Extended-Warranty says:

        They are. However, there’s nothing wrong with starting off at a community college, then transferring. Pride plays too much in a student’s decision nowadays.

        • vorpalette says:

          See, this is really sad. I LOVED my comm college; I got a way better education there than I did at my state school (not that I didn’t love some of my profs). They’re also a hell of a lot more helpful in guidance areas.

          • sponica says:

            i think its a your mileage may vary scenario….our community colleges are basically technical schools. awesome if you want to be an auto mechanic, plumber or HVAC person…sucktastic if you’re just trying to kill off some gen eds.

            I went to private school and loved it. but I had a half boat scholarship and some money from my grandparents. My loan debt was one year of college and would have cost the same amount at the big old land grant college (which I would have HATED going to)

        • sponica says:

          depends on the community college….if you’re a student who’s ready to LEAVE high school, community college can feel like big high school. drove my sister nuts when she went to finish some prerequisites for her nursing program. they assigned homework and checked it every class…

          i think the ONLY class where I had homework was my applied calc class…

    • pop top says:

      Should any degree, other than say a medical doctor or a lawyer, cost $100,000? Does that sound reasonable at all?

      • unpolloloco says:

        Engineering (average starting in the $55-60k range)

        • farcedude2 says:

          If you come out with a bachelors in engineering and $100,000 in debt, you’re doing it wrong. Without money from my parents, I would have had about $50,000, and I wasted two years in school, too. Work study and scholarships are your friend.

    • chargernj says:

      As a professional financial aid counselor at a rather expensive college I have to say your numbers are quite off for the average student.

      $25,000 is the actual average. http://money.cnn.com/2011/11/03/pf/student_loan_debt/index.htm

      • partofme says:

        Here’s another one: Out-of-state Student. A buddy of mine and I each got National Merit Scholarships. Only, he lived just on the other side of the river, in a state that didn’t have a college with an aerospace engineering department… so he came to my state and we went through the exact same program. I left with close to zero in debt (would have been zero if I hadn’t skipped my senior year of high school.. but that’s another story). He left with something like $80K in debt.

        • Bsamm09 says:

          IIRC some schools will let you have in-state tuition if you are out of state but there is not a program in your state. I had a few friends do this. Tennessee did this.

        • who? says:

          When I was in college (80’s), the out of state tuition to the University of Wyoming was cheaper than the in-state tuition to the University of Colorado.

          Guess which school most of my friends went to?

      • Maltboy wanders aimlessly through the Uncanny Valley says:

        That’s true only for those who don’t pursue an advanced degree. I’d like to see the average of ALL student loans. I’d bet it’s double the $25,000 you cite.

  4. pop top says:

    Anyone have any experience in consolidating their student loans? I’d be interested to hear your experience.

    • PsychicPsycho says:

      I did and couldn’t be happier. I had all federal and consolidated them and am under the IBR repayment plan, since I work for a non-profit and don’t make very much money. Best decision I’ve made.

    • Thaddeus says:

      I was able to consolidate mine. Locked in a set interest rate and went on a different repayment plan, extended (up to 25 years) as opposed to the standard plan (which is 10).

      You can consolidate online though Direct loan: https://loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp

      If you have any Stafford Loans (Direct or FFELP) and Perkins, they can all be grouped into one loan. Somethings to keep in mind: you can’t consolidate private loans and consolidation can impact some loan forgiveness programs – Law, teaching, public service, ect…

      Also, if you have FFELP loans and Direct loans, you might qualify for special consolidation – http://studentaid.ed.gov/PORTALSWebApp/students/english/specialconsolidation.jsp

      • pop top says:

        Thank you very much for those links! My husband will be finishing school soon and we were discussing this over the weekend. I’m actually glad Phil posted this article.

        • Thaddeus says:

          You’re very welcome. I work in Financial Aid and hate to see anyone with questions go unanswered. You can contact the Dept Of Ed at the free help line (800) 433-3243 with all sorts of questions in case you think of more. Good luck in your consolidation!

      • minjche says:

        This is great info for me, too. Thanks a bunch for providing it.

      • winstonthorne says:

        VERY IMPORTANT: I just did two consolidation loans back-to-back in 2011 (I graduated in January, my wife in May) so I have some experience in these matters:

        First, keep an eye on the interest rate – there’s no sense in taking an interest-rate bump on a non-variable rate loan (i.e. if you have a loan fixed at 2.4% and the consol loan is going to be 6.25%….just keep paying the 2.4 separately, if you can afford the slightly higher monthly total. You’ll save a bunch).

        Second, and super-duper importantly:
        After you fill out and submit the application to the dept. of ed, you will receive a welcome packet/spreadsheet in the mail confirming which loans you’re consolidating. DOUBLE-CHECK that they are 1) Including all loans you want included and 2) Excluding those you want excluded. For both consolidation loans I put together last year they had made errors (surprise, surprise).

        • Thaddeus says:

          YES! I totally forgot that. I managed to have a random Perkins excluded for one year and ended up paying it off separately.

  5. TuxthePenguin says:

    *sigh*

    “Subsidized Loan ‚Äî A need-based type of loan that’s backed by the government, not requiring you to start paying it back until after graduation.”

    Ignore the last part, the thing that makes it special is that the government pays for any interest that would accrue while you are in school. Even an unsubsidized loan does not require you to start paying it back until after graduation, plus six (?) months after. The main difference is that interest accrues on that version.

  6. Dr. Ned - This underwear is Sofa King Comfortable! says:

    6. Ramen Noodles — You will be eating them for a long time.

  7. jayphat says:

    Heres one. Bang-for-buck. Maybe you shouldn’t take out 75K in loans for a degree where the starting pay is 20K per year. Just saying.

  8. jayphat says:

    Heres one. Bang-for-buck. Maybe you shouldn’t take out 75K in loans for a degree where the starting pay is 20K per year. Just saying.

  9. winstonthorne says:

    Suggestions for further reading:

    punk (in the jail sense)
    slavery
    indentured servitude
    scam

  10. fsnuffer says:

    How about this term:

    loan /lōn/

    Noun: A thing that is borrowed, esp. a sum of money that is expected to be paid back with interest.

  11. Mr. Fix-It says: "Canadian Bacon is best bacon!" says:

    I did a little research to compare the going rates of Post-Secondary education in Canada versus the United States. I tried to pick two universities in relatively similar cities, speaking in population density. The following is the cost for a new student to attend one year of Undergraduate study of their choosing at the respective universities:

    Canada: Memorial University Newfoundland (MUN)

    Tuition: $2,550 (30 Credit Hours)
    Accomodations: $6,358 (double rooms; 19 meals/week)
    Miscellaneous:
    ~ Student Union Dues: $105
    ~ Health and Dental Plan: $292
    ~ Recreation Fees: $107
    ~ Books / Supplies: approx. $1000 (depending on courses)

    Total Cost: $10,412 /year

    United States: Saint Louis University (SLU)

    Tuition: $33,470
    Miscellaneous Fees: $516
    Room: $3,977 (Cheapest rate; Quad-Room, DeMattias Hall)
    Meal Plan: (included in Residence fee, split between meals and ‘flex’ dollars at student’s choosing (Except for freshmen))
    New Student Orientation Fee: $200
    Books: $400/year (Estimated)

    Total: $38,563/year

    I just gotta say… what the hell, America? Your TUITION costs more than all of our university expenses put together!

    • farcedude2 says:

      While there is quite a divide, I don’t think you picked the best example – MUN is public, while SLU is private, which is where the largest divide in tuition costs is.

      • Mr. Fix-It says: "Canadian Bacon is best bacon!" says:

        Fuck, I knew I forgot to account for something…

        This is another thing I’ve not heard of here in Canuckistan… they probably exist, but I’ve never seen them.

        • Siendra says:

          There are tons of private post secondary institution in Canada. Tons. unaccredited and credited alike. Far more than there are public schools, even (Although none anywhere near as large).

    • Dr. Ned - This underwear is Sofa King Comfortable! says:

      That’s how we roll.

      I’m putting some 24 inch spinners and some underlights on my B.A. degree next year.

    • whogots is "not computer knowledgeable" says:

      MUN is public and SLU is a Jesuit school.

      I think if you did a valid comparison you’d still find that our universities are more expensive, but not THAT much more.

    • chizu says:

      Since someone already pointed out the public vs private institution part. I just want to say be careful of where you’ll be living too. My brother’s friend came from Missouri to live in New Jersey for grad school — he stashed away $3,000 thinking it would last him about half a year on rent. Then when he came, he was in for a real culture shock that the $3,000 he had would last him maybe 2 months.

      I have seriously thought about going out of state for grad school, even with out-of-state tuition, if the cost of living is lower, it might be worth it. (My half of the mortgage in Jersey is about 3x the amount my Ex pays for his monthly rent. My property tax is about 1.5x a month.)

      • sponica says:

        cost of living is what killed me for grad school….I just wasn’t thinking. I also ended up staying an extra year because they changed my program, the extra year was supposed to help me in the short-term but really just ended up killing me debt wise.

        I totally understood I’d have a crapload of debt, I just didn’t plan on being perpetually underemployed and unemployed the past few years.

        • chizu says:

          A lot of people went to school or stayed in school to try to become more qualified or desirable for employers. But even in very career-oriented majors/concentrations, it’s still really competitive and difficult to find a job. This is kind of what I’m struggling through right now. If I were to apply elsewhere, I’m not qualified enough. But going to school doesn’t automatically guarantee me employment. Granted, going to grad school would offer me the freedom that I’m currently seeking, but I’ll be buried in debt in the future.

    • Mr. Fix-It says: "Canadian Bacon is best bacon!" says:

      Okay, new shit has come to light, man… Mizzou is the new comparison:

      University of Missouri – St. Louis (UMSL)

      Tuition: $257.90/credit-hour ($7737 for 30)
      I.T. Fee: 12.40/credit-hour ($372)
      Student Facilities and Health Services Fee: $37.70/credit-hour ($1131)
      Residence Fee: $640.00/month ($7680/year; Mansion Hall Unfurnished – cheapest rate)
      Electricity Bill: approx. $60 ($720)
      Meal Plan: $33.33 ($400)
      Books / Supplies: approx. $950/year

      Total Cost: $18,990 (Does NOT include internet, landline telephone, or cable)

      • chizu says:

        Is that In-State of Out-of-State tuition fee?

        I just compared my U and my Ex’s U — unless I’m rolling in my maximum allowable credits for grad school, my dollar per credit is about $30 cheaper than his school. Except the difference is In-State vs Out-of-State. I knew my school was expensive, but this is getting a little hard for me to swallow, to be honest.

        • sponica says:

          i live in NH now….seriously the out of state per credit rate in NY is cheaper than the in state rate in NH. or it was the last time I checked…and was when I was an out of state student for my MA program. the only difference is that housing is a lot more expensive down in metro NY than in NH.

          • who? says:

            Yeah, but you don’t pay income taxes in NH. People in NH don’t seem to understand that those taxes that the other states levy? They actually pay for something.

      • Remarkable Melba Kramer says:

        Not that it matters to me, but I think that some of my friends would tell you that UMSL is not
        MIZ-ZOU. That would be Columbia.

  12. Nigerian prince looking for business partner says:

    I truly don’t understand how kids do it today.

    When I was an undergrad, I went to a state school, had the GI Bill, Pell Grants, worked full time, had several scholarships, and still finished with close to $20k in debt. I didn’t live a luxurious life by any means (ate mostly rice, no health insurance, no car, lived with four roommates, etc.) and tuition was 1/2 of what it is now.

    • jeb says:

      I’m graduating with roughly the same amount of debt in December of this year.

      This is after getting the highest academic scholarship this private school offers (about half of the cost of going to school), getting Pell grants, and going to college my junior and senior year of high school (shaving a year and a half off of my four year degree.)

      However, we’re essentially required to live on campus and have a meal plan, so change that factor and I’d probably be looking at the same amount of debt as you are.

    • sponica says:

      honestly, I recommend applying to mid-level private schools because you can generally get more institutional aid at the private school than at the public school. Provided you’re in the top 10% of your graduating class and score decently on the SATs. My alma mater appears very committed to the middle class (at least that’s what they tell me at every event I go to where they turn me upside down to shake out my loose change).

      I graduated in 2006 from a Jesuit University with a grand total of 39175 (basically a year’s tuition) whereas had I gone to the public school, I would have graduated with closer to 40k due to the fact the public school couldn’t afford to pay half the charges for me.

      • sponica says:

        my life for an edit button….I meant that the public school tuition debtload would have been the same or more.

      • Nigerian prince looking for business partner says:

        That seems to be the case for my nephew who lives in Pennsylvania. The private schools he’s applying to all seem to adjust his tuition to match Pitt/Penn State/Temple. Even with that being the case, it’s still leaving a great deal left over for tuition and living expenses.

        • sponica says:

          I started college 10 years ago and only applied to two schools and was accepted before Christmas, so I didn’t even apply to the state university.

          Completely different world now…

      • who? says:

        Totally agree. That’s how my brother and I did it. We ended up paying less to go to mid-grade private schools than my friends did to go to state schools that weren’t any better.

        • sponica says:

          I think the quality of my education was MUCH better than the state university would have been….if only because my class sizes were smaller (largest one, intro to bio had 50 students)

          i worry my alma mater is starting to scare the middle class away b/c the sticker price is over 50k now. even though I know very few people who have ever paid sticker price….and usually they have enough money to build a swimming pool and fill it with gold coins a la Scrooge McDuck

    • Groanan says:

      “When I was an undergrad, I went to a state school, had the GI Bill, Pell Grants, worked full time, had several scholarships, and still finished with close to $20k in debt.”

      For a like-comparison:

      2003 Iraqi veteran, I started college in 2004 with the GI Bill, two rather large scholarships (Robert N. Chang Charitable Foundation Transfer Scholarship and DKF Foundation Veterans Scholarship) and many smaller ones, Pell Grants, working security 20 hours a week, with my first two years at a city college, and last two at a state university, graduated in 2008 with $25k in college debt (and with another $10k in credit card debt).

      In 2008 they fixed the GI Bill, making it cover the cost of living (which can be in the $2k / mo range if you live in, say, San Francisco), but they cut back on Pell Grants and tuition is steadily rising, so I’m not sure how much better or worse a veteran starting college this year will be.

    • Maltboy wanders aimlessly through the Uncanny Valley says:

      This is what happens when 100% of graduating High School seniors are told they must either get a degree or be doomed to dig ditches for the rest of their lives.

  13. FreeMarketFan says:

    How about: return on investment.

    Maybe you should think twice about that liberal arts degree that gets you a 25k/yr job when it’s going to leave you 60-80k in debt.

  14. adent1066 says:

    EFC is insane. I did a rough calculation. It appears that for a family of 4 with 1 child in college, the first 28k of parent’s income is excluded, after the exclusion approximately 30-35% is expected to go toward the college. With parent’s assets, approximately, the first 42k in assets are excluded, after that 5.6% is expected to go towards college. Luckily, your first home, and monies in pensions, 401ks, and annuities are excluded.

    For the child, if they work, $6400 in income is excluded, after that, about 46% must go toward college. And for a child’s assets, there is no exclusion, and 20% of assets must go toward college.

    One other positive is that 529 accounts although are in a child’s name actually are counted as a parents asset. So that’s 5.6% rather than 20%.

    One big negative, for the simple EFC which most schools use, they do not consider how much debt you have nor how much property tax.

    • Thaddeus says:

      Yes! the actual calculation is crazy: http://ifap.ed.gov/efcformulaguide/attachments/082511EFCFormulaGuide1213.pdf (its the official Dept of ED 12-13 EFC calc guide… its 36 pages!)

      You can get an accurate (all be it estimated) EFC by using the FAFSA 4Caster: https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1

      Some school do allow for institutional appeals but most do not take things like debt, private tuition, mortgages (ect) into account as they consider it a choice of where to live or what to buy BUT there are many opportunities to try for more aid on the admissions side. Financial Aid offices are locked into state and federal programs, they can only work with the EFC. Admissions might be able to take the larger family financials into account and allow for more institutional funds.

      Short version: EFC is for state and fed but it never hurts to ask the admissions office for more scholarships/school grants.

      • Aesha says:

        Hey Thaddeus. I’m curious, does your institution not make PJ adjustments for federal aid, just institutional? I guess she didn’t mention any kind of unusual circumstances. It’s really interesting to hear about the differences from school to school… are you heading to NASFAA this year?

        • Thaddeus says:

          Yes, there are Professional Judgements done for an EFC change; most of the typical stuff, loss of employment, divorce, medical costs outside of insurance, ect… we don’t look at private HS or college tuition, credit card debt, or mortgage costs though. We also will do a PJ for COA.

          I may be going as I work in the Chicago area where the conference is being held in 2012… maybe I’ll see you there!

          (all non-fa people probably have no idea what the hell NASFAA is)

          • chargernj says:

            Only our bosses get to go every year. It pisses me off cause they come back talking about what a great time they had, yet they never pass on anything they learn to us. I wanted to go to Vegas too, and I don’t even gamble so I probably would have gotten more out of it than my bosses did.

    • who? says:

      Basically, EFC is the amount your family can “afford”, if your family is willing to be totally wiped out in order to send the kids to college. It’s always been that way, it’s just that there are fewer alternatives to being completely wiped out than there used to be.

      The system is totally broken, and it’s affecting our competitiveness as a country.

    • Slave For Turtles says:

      Thank you for these approximations!

  15. u1itn0w2day says:

    How about terms & phrases like debtors prison, the vig, you owe-big time or a LOAN must be payed back sooner or later. Payback includes lack of a social life and/or career because you must stay at your current job to keep those loan payments on schedule.