Breaking the Small Business Code

Comment on Direct Vs Private Loans - Misdirection is the Game

    This morning I posted a comment to an article from Inside HIgher Ed on the muted response from Financial Aid Advisors (FAA) on the proposal to eliminate private lenders from student loans and let the Federal Government be the only provider  effectively making ALL Federal Family Education Loans (FFEL) DIrect Loans. 

    The article itself is interesting but it is in the comments that we see the REAL problem with student loans!  It is a "them versus us" dialog that shows the gulf is between the colleges and the recipients!      The premise of manyof the comments is the "evil" nature of FAAs and their representative body the National Association of Student Financial Aid Advisors (NASFAA).  Following is my comment to the dialog:

   

We all know one (or more) rotten apples in any group. We also know many good people in that same group. The "good" or "rotten" actions of indivuduals is not evidence of the value or honesty of the group. It is the VALUE of the service that the group renders that counts. The service itself needs to be judged.

New Spouse Pays for Step-Kids College

    Right on schedule -  I just got my annual call from a divorced parent who got remarried last year and is now trying to keep the new spouse's income and assets "off the college forms".  I usually hear lots of yelling when the new step-parent discovers that their income and assets are now included for college support.

    Then I am always told about the (1) prenuptial agreement clearly stating the new spouse is NOT responsible for the new step-kids and (2) her lawyer has put all her money into a "trust" so it's not really available anymore.  Both of which mean NOTHING to the FAFSA or FAP process!

    So here is today's teachable moment - You get married while you have children in college, the new spouse's income and assets are INCLUDED for the FAFSA if you are the tax custodial parent. They are included for the FAP regardless of whether you are the custodial or noncustodial parent!

    If your ex has tax custody (take a tax deduction), then your new spouse (and you) are not included on the FAFSA. But if your student is at a college requiring the FAP, your new spouse will be included either as the custodial spouse or the noncustodial spouse, period

     PRE-NUPTIALS:  Financial aid providers - the Department of Ed, your state and the college - were not parties to the pre-nuptial and are not legally bound to the agreement.  So the process requires that custodial parents (including step) are included in the income and asset calculation for the FAFSA.  ALL parents including steps are included for the FAP.

    TRUSTS: When parents tell me about a trust tht was set up by a new spouse, they almost always mean a "living" or inter-vivos trust.  But if the new step (or any parent for that matter) has "control and receipt" of the assets in a trust, they are included in the financial aid process.  That means a "living trust" is NOT a real "trust" for college purposes because the donor is usually the trustee and can use the assets any way they like.  The trust would have to be irrevocable and the new spouse would NOT have access to the assets for it to be "invisible" for college purposes.

    If you have any questions, make a comment or go to http://www.CollegeFundingNetwork.com and use the Contact Us form.

   

The Brick Walls Keeping Education from Improving

    US News & World Report's Education Blog has a GREAT blog article on how the eduation "community" received President Obama's proposals for improving education. The differing opinions on what he said and what needs to be done is sadly another example of why it will be so difficult to improve education in America.

    To refresh your recollection, President Obama said he wants the United States to have the highest proportion of college graduates in the world by 2020 and asked every American to complete a year or more of college or career training. He talked about the need for more reform in education and said he wants to reward teacher performance and grow the number of charter schools. He also talked about providing ore financial support from pre-school through college.

    Sadly, as usual, the "education community" was NOT pulling together. As usual the entrenched interests looked at their position and as the comments of the various "experts" show - they are all going in different directions.

    I am becoming so frustrated that I voiced my opinion in the comments section!  To read the article AND my comments, go to the On Education Blog Comment Section.  Then add your own comments there or here!

Is The Idea of Need-Based Aid Flawed?

     An article in the February 21st New York Times focused on the infamous FAFSA - Free Application for Student Aid - the gateway form for getting money for college.  The story focused on how terrifying, confusing and frustrating completing the form has become.  As with just about everything associated with college, the views of the people interviewed show that change is not going to happen anytime soon.

    In my opinion - and the opinion of many others involved in helping families pay for college - the basic premise of need-based financial aid is flawed. Therefore, the system designed to measure the need and then determine how to meet that need is flawed! 

    What is that flawed premise? 

     The idea is that (a) everyone should have access to college regardless of ability to pay and (b) if you cannot afford the cost of a particular college, the "system" should fill in the gap between what you can afford and what it costs. 

      This premise sets up the need to detemine how much you should pay based on your financial situation called the Expected Family Contribution (EFC).  That means someone has to decide how to measure your ability to pay (EFC) and then set some value or percentage that you should pay before getting outside help.

     This also sets up the assumption that someone else will fill in your gap between cost of attendance (COA) and your EFC.  That "someone" starts with the government (Federal and State) and then the individual college. What has happened is the need gap is NOT being filled.  For too many families, the FAFSA has simply become a loan application!

    I have several students with ZERO EFC getting nothing but Federal loans. The get the maximum in loans, grants and work-study but still cannot get close enough to the cost to make college affordable.  Unless a college meets 100% of need for all admitted students, families will face gaps as severe as before the premise of need-based aid!

    So before we discuss changing the FAFSA, how about revisiting the ENTIRE concept of paying for college!  Your comments?

   

Cutting College Costs - A Fable that is not so Fictional

    As the financial markets and tax revenues tumble, states like California are making steep cuts to education including cuts to the support for state-run colleges like the University of California (UC) and the California State Universities (CSU). The budget that will be signed today imposes a 10 percent across-the-board cut to the UCs and CSUs, saving $264.4 million.

    California is not alone. Massachussetts is planning 11.6 percent in cuts for their state colleges. Florida is starting at 4 percent but more cuts are planned. New York state is cutting between 6 and 7 percent. Google the phrase "xxx budget cuts to colleges" and insert your state for xxx and you'll see what you are facing.

    This means college administrators will soon be living the fable presented by John Lombardi of Louisiana State University at his blog "Reality Check" called "Budget Crisis, Academic Change:A Fable"!

    I STRONGLY recommend that everyone who cares about higher education - both inside and outside the education "industry" - read Lombardi's blog.  How you react to the story will help you understand why there is no clear path to making colleges more accountable and affordable!  Politics, political correctness, turf wars, protectionism, etc., etc., keeps the colleges stuck where they are. 

    What do you think is going to be cut by the all these colleges?  What do you think should be done? What sacrifices/changes can be made?  One thing for sure, aid will go down, class size will go up, space for new students will go down, services will go down, and tuition will go up!

   As the daughter of a college dean, I understand the desire to protect and provide resources that serve more intangible needs like obscure languages, art and music. But when your children are starving, having a Monet on the wall is probably NOT the best use of your resources.

    This brings me back to my question to the social media universe - "What is College For"?  What should we focus on in these times? What should money be spent on?

   

  

What is College For?

   

    FABULOUS article in today's Inside Higher Education!  The topic was 3 year degrees. But it was reading both the article and the comments that made it clear that there is an even more basic question to be answered before deciding on how many years college should take.That question is . . .

WHAT IS COLLEGE FOR?

    Comments show the opinion on what college is all about varies from getting a job, having fun, gaining wisdom, getting an education (as opposed to a degree), research, money, etc.  It is very clear that without lack of clarity on WHY go to college, it is no wonder there is no agreement on how long that process -- whatever it is and it is for -- would take!!

    My first reaction to the article was to talk about my experience that much of the problem today is students simply "choosing" or being "forced" to take 5 years to get a 4 year degree. Sometimes it is the student’s fault by taking light loads for various reasons.  But more and more it is due to the student's inability to get their required courses! State colleges and universities are especially difficult right now because classes are not being offered during this semester/quarter or too few sections are offered to handle all the students who need it or the program is changed, etc.

     I originally was thinking about credit "creep" where more and more units/classes have been added to majors in order to graduate. I was thinking about students who start college with no clear path or major which means they are taking classes that may or may not be appropriate to the final major.

    But I think the dialogue first needs to be What is college for?  I know this both an individual AND a national dialog that needs to be held!  What do you think?

MBA and Jobs - Part 2

    I just read another article on how MBAs are having their visions of "corporate jets" crushed by the realities of the economy. One of the trends Business Week reports is MBA programs are seeing is more graduates interested in nonprofit and government jobs. Here is one of the most illuminating segments of the article:

"Better than Nothing

      Business schools have already been seeing some movement toward nonprofit professions, though historically those students have been outnumbered by investment bankers and consultants. Few new graduates—4.4% last year—typically take positions in nonprofits or government, says Kip Harrell, president of the CSC and vice-president for professional and career management at Thunderbird School of Global Management. However, the financial crisis and the scarcity of six-figure offers, could accelerate the do-gooder trend. Patrick Perrella, the director of MBA career development at the University of Notre Dame Mendoza College of Business, broke it down this way: It's an easy decision "if your choice is a government job at a lower salary or no job at all."

    What I find interesting is how this is positioned as a cynical trend with students looking for jobs, period. I would hope that students who enter nonprofit and government service have a passion and an interest in their new industries.  As a taxpayer and advisor to several nonprofits, I would hate to think that these students are working in their jobs by default. 

     Something NOT mentioned in this article is the enormous cost of an elite/Ivy League MBA and the return on investment the student (and/or parents) get. Is it still a good "investment" if the job you get pays similar to one you could have gotten with just a bachelor's degree?

    Any comments from students who took a nonprofit or government job because it was available instead of their vision? Are you still okay with the cost and time you invested?

MBA Schools "Retooling Emphasis" and Business Grads With No Jobs

     I recommend those interested in high end business schools read this article about Wharton MBAs in Reuters.  It is an interesting analysis of two key problems facing business schools and their graduates.

     The first problem is many of the banks, financial houses and major corporations had CEOs and senior advisors who were graduates of some of the most elite business schools in the country.  Yet having degrees from the exclusive programs at Harvard, Yale, Wharton and others did NOT stop the melt-down, bank failures, etc.  As a matter of fact, many insiders are saying the pride and hubris of these elite graduates would not let them consider there could be downsides to their actions!

     This "failure to plan for failure" has led schools like Wharton to rethink the curriculum being taught.  Many of the major companies had used the programs and skills they learned in Biz schools to justify their flawed thinking. So schools are now looking at planning for downside assumptions and using the melt-down as a "teachable moment".  As an engineer, I was taught to ALWAYS plan for failure.  Makes me wonder if maybe tech geeks would make better managers to help lead us out of this crisis!

     This leads to the second problem which is the lack of jobs for graduates. The article presents the obvious reason which is the traditional employers are gone or in serious contraction.  But what was unsaid is many employers do not want to hire students whose predecessors have not done such a good job! 

     I don't think graduating from a name brand MBA program will become a "Scarlett Letter" that keeps graduates out of good jobs. But many companies are not giving graduates a "free pass" just because they came from an elite school.  I see more and more companies looking for "dirty hands" and experience in making things work and grow. I am recommending more internships, MLM/network marketing businesses, and/or running a business from a "dorm" to my students!

    Comments and experiences from recent graduates are welcome!

New Stimulus Bill 's Housing Related Benefits & College

     We don't know all the details yet but the recently passed Stimulus Package looks to have three potential benefits for families thinking about buying or refinancing a home. I wanted to share how these items can have possible benefits for college planning:

• In 2008, the conforming loan limits were increased to $729,750.  The American Recovery and Reinvestment Act of 2009 (ARRA 09) reinstates the $729,750 conforming loan limits until December 31, 2009.  This means lower interest rates for loans up to this amount. Higher rates come with "jumbo loans" that exceed this amount.  If your home still has equity, this could be a good thing to take advantage of lower interest rates for college planning!

• The 2009 bill will offer first-time home buyers a tax credit in the amount of $8,000 providing you purchase a home between January 1, 2009 to December 31, 2009.  The credit does NOT have to be paid back to the government unless the buyers sell their home within 3 years after the date of close of escrow on the home.  If you have the means, this could be a great time to help your student(s) buy their first home in lieu of a dorm. 

• The American Recovery and Reinvestment Act of 2009 offers incentives to existing home owners for going Green.  A tax credit of up to $1500 is given to home owners who make some “Green” home improvements.  These Green home improvements include, but not limited to, energy efficient windows, doors, and furnaces.  So doing something to save energy costs could help reduce taxes both of which can improve tax flow for college.

     As I learn more about ARRA 09, my team and I will look for ways to help college-bound families use the benefits to help pay for college!

College Kids and Monkeys About Equal on Math

 "College Kids and Monkeys About Equal on Math" is an eye-catching title of an article posted by MSN Health today,  (PDF copy available here if it is missing from the MSN Site: LPT_PDF02142009).

Elizabeth Brannon, an assistant professor of psychology and neuroscience at Duke University is studying how human adults and infants, lemurs and monkeys think about numbers without using language. She is trying to identify which parts of the brain house "number sense" and the she is trying to determine how this math skills develop.

Among other things, she found college students and macaque have similar speed and accuracy (!) when doing a rough sort of math by summing sets of objects without actually counting them! As an engineer who speaks "math", I found it very interesting that math skills are apparently inherent to primates!

When I first saw the title I was prepared for an article on the sad state of math skills in our college students.  So while it didn't turn out to be that, it got me thinking about why students fight math when it is such a critical tool for college and life success.

I regularly have students tell me they are picking their college major based on NOT wanting anything with "math in it".  I have also lost count on the number of times one of my solid "B to B+" students ended up in a remedial math class in college - a situation which added time AND costs for getting their undergraduate degree!

I started my college planning career with college funding and scholarships, then added admissions, then majors and careers, and eventually added test prep.  But over the last 15 years it has become apparent that focusing on those 4 college-related steps with just high school juniors and seniors was not addressing the real needs of my client families.  Something was missing in their tool kits for success in college and for life!

Basic math skills are critical in the increasingly high tech economy.  Math is needed for personal financial literacy. A lot of our current economic problems can be blamed on people's inability to understand their personal cash flow. That is because virtually all the studies show our students are NOT getting what they need for math success.

I am not going to point fingers at anyone in the education "system" for failing to create math "literate" students. Blaming schools, teachers, parents, administrators, and/or the government is not the way to find solutions. Instead, I went looking for PROVEN TOOLS to make basic skills accessible and successful for more students regardless of the system.  I wanted to find something for teaching 21st century students using 21st century technology.

I am taking an engineering approach to building a SYSTEM for success in education available to anyone with internet access. I am proud to announce the launch on March 1 of a new initiative from Linda P. Taylor's Insider Secrets:  "Creating Access to Higher Scores and the Education Edge" (CAHSEE). 

CAHSEE is designed to pull together the tool kit that middle school, high school, college, and even adults need for learning success!  I want to give families access to the FUNDAMENTAL SKILLS we ALL need for a lifetime of success.  

I will soon announce the CAHSEE program for creating mastery in Math and English Language Arts (ELA).  But in the meantime, I want suggestions from readers about what other needs and especially what tools, programs, and systems you think should be included.  PLEASE send me comments, suggestions, ideas and referrals to make CAHSEE rock!