College Choices

Recently, I was vacationing with an old friend and mother of three.  The weather was gorgeous, the view spectacular and we had not a care in the world. Nirvana.

What do Moms talk about as they lay around poolside, sipping on frosty cocktails?

Afraid so.  Kids. This mother of two teens shared that her daughter just did not want to follow her older brother to the family alma mater.

College Graduation

We talked about how the teen is quieter and more studious than her sibling.  Our discussion dredged up memories of my own quandary as my kids approached decisions about college.   Shortly after this discussion, I happened onto a really interesting article in the WSJ-on choosing a college….

A lengthy article, it contained lots of suggestions about why families so often make bad choices when selecting colleges.

The authors take a reasoned approach to comparing the apples of school financial aid packages.

They give not one solution to how to pay for college or online universities, but better than that, they make you consider why we pay for higher education, whatever the cost.  Finally, and to my mind, the most insightful, is a dissection of the short term gaze we use when making such a long term commitment.

Weighing Costs and other college choice intangibles:

What I took away from the article:

• Cognitive traps and biases can affect the decision making process.
• Recognizing your own cognitive traps and biases can help you lessen their affect on your families college choice.
• As college is a joint production between the student and the school, fit matters. What works for one, may not for another.
• The benefit and the cost requires a long time investment perspective, an uncommon view for most families.
• Use a spreadsheet to compare financial packages.  Real comparisons can be extremely difficult.
• How and how much to finance for a college education requires weighing benefits and costs further than the eye can see-a real cognitive trap when deciding how much to finance.
• College is an investment  for students in themselves and for parents in someone they love.  Perspective is difficult.
• Graduation statistics show a 20% decline in graduation for those who choose a lesser institution over the more selective one they had qualified for.
• Knowing your own child and being willing to be objective about his future potential is so important.

College expense huge for many families

College educations are an enormous expense.

When you feel college is the right choice for your child, paying for the opportunity can be staggering.  With our two children, we made tough choices with the first child and have many regrets a decade later.

With the second child, easy choices came along and all seemed to go well.

Our regrets/mistakes for child number two are totally different, but are no less real-and it wasn’t obvious for several years.

If you are looking at schools and planning this area of life, you have my empathy.  It may take only a decade or two to understand the decisions you are making now.

Good luck.  You’ll need it.

FDL BSN is a frequent guest poster. She is a public health nurse, and serial entrepreneur.

Dr Dean’s thoughts:

Cognitive traps and biases-”What the hell?”  My take on the research is: If we want our kids to go where we went to school or where we think society thinks is best-the kids success will be unlikely.

Kids shouldn’t be expected to make $100+ K decisions as a 17-18yr old with teenage hormones and teenage world views-they need guidance.

But grownup guidance, not “I didn’t get to live my dream, so I will live my dream through my child” guidance…

Reader questions:

Did you “help” your children make a mistake in what school, what major,  or amount spent on education?  Spit it out, shout it to the rooftops-you’ll feel better.  You still may owe $100k but you’ll feel better….

D.D.

{Photo credit: Cushman Library, Texas A&M c.c.}

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Hyster Drivers…. What the hell is a hyster anyway, and how do you drive one?

Color Techs, Assembly Techs, Lab Techs….These are a few  common job descriptions filled in by patients for themselves or their spouse 25 years ago when I first started my medical practice.

Our region had several factories making light fixtures, carpet, carpet backing, windows, and television tubes.  These factories employed thousands of people.  Now only one of those factories is still alive, a division of Shaw Inc., employing a couple hundred folks. And our community is happy to have ‘em.

Hyster....Looking for driver!

A recent article in Smart Money describes the challenges facing the over 50 crowd going back to school.  The article asks the question: is it worth it?

My question would be, for those unemployed folks over 50, “What else are you going to do?”

Many of the folks working locally in those jobs I described have no hope of finding similar work.  Even if there were new factories with openings, the chance that their skill set would match the needs of new technologies is doubtful.

What can those folks do to find gainful employment and more importantly, a fulfilling life?  Losing a job is a body blow to your self-esteem.

Being long-term unemployed is like throwing gas a bonfire.   Even with generous unemployment benefits lasting a couple of years, that money will run out!

Many this age have raised their families, but they aren’t ready to be put out to pasture and can’t afford to not work at all.

What should you or your family member do to increase the chance of second career success?

Second Career Advice:

• Find your passion.  Check out the local college’s career center. Take those tests that judge your interests and skill set.
• Get a fix on the pay and benefits of that career. Can you find a job locally? If not, are you prepared to move? Can you sell your home or are you upside down?  Becoming the world’s best jet engine mechanic would result in lifetime unemployment, in our part of the world.  Boeing may get run out of South Carolina and drop in here instead, but…
• Make sure you plan your spending for your new degree. How much will it cost? What will it take to pay the money back?  Getting a $75,000 degree in social work so you can make $25,000/year at a local non-profit may not be smart…
• Can you work part-time to pay for your degree over time?
• Make sure you check out all the back to school grants for displaced workers.
• How much work life does your body have left?  If you’re 62 and are looking at 6 years to get your degree, do you have work life left that would allow you to get your monies worth?
• Can you open a business yourself that you would enjoy without any additional training?  The lawn service business, home or office cleaning businesses or tutoring services can all be financially sustaining and allow freedom not possible working in a factory.  Going back to school just doesn’t suit some folks.
• Don’t spend years getting a degree in something cause there are “jobs available” in that field.  You may HATE it.  Make sure you do volunteer work in that area-see if it fits….  You can work as an orderly or aid in a hospital before going to nursing school.  You can work as a gopher in a auto repair shop before getting that 2 year mechanics certificate.   Unlike a 20 year old who has his life in front of him if he makes a career mistake, you may not have that luxury to go find yourself a second or third time!

I know many successful folks in the medical field who were once Hyster Drivers or Line Techs. They have found a career they love and financial security.

Everyone of them had to face fears and their insecurities when making those  tough decisions.  Going back to school with the teens and twenty-somethings is tough!

But YOU can do it.  All you gotta have is enough “want to…”

I wonder if I could find a Hyster to drive, they look kinda fun!

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The government makes a profit on defaulted student loans.

The government makes a profit on defaulted student loans.

The government makes a profit on defaulted student loans.

I repeated that three times, cause that’s how many times I read this line.

{ According to White House budget figures for fiscal 2011 ending in September, the federal government expects gross recovery of between $1.10 and $1.22 for every dollar of defaulted student loans}

So says this article on student loans by Melissa Korn in the WSJ.

It took me a moment to realize the government was making a profit on DEFAULTED student loans.

Bad Debts

I know my recovery rate on bad debts is about 10 cents on the dollar-if that?  I wanted to call my up-front office  folks, and the local collection agency we use and say, “what’s the problem?”

But you soon realize the power and outreach potential of the federal government.

Collection options of the federal government:

• Ban you from further student loans
• Take money from your tax refund
• Charges interest and late fees and collects!
• Garnishee your wages
• Take part of your social security, or disability payments.
• Student Loan Debt is rarely bankrupt-able.

You can run, but can’t hide from the long/strong arm of the federal government.

Federal Government Loan Collections

Do I blame the feds for trying to get back money loaned in good faith?  No of course not.

I just wonder why it is ok for the federal government to collect money that way, and us private citizens who are owed money for a service can’t do the same.

I have forgiven so many debts in my 25 years of practice, it makes my accountant’s head spin.  But there are times when folks that can pay, just decide they would rather buy a truck instead. That is aggravating…

Student Loan Debt

Will they be happy when the loan is due? (by daveynin c.c.)

I get so many questions about where to get money for nursing school.  My replies don’t make many people happy.  Cause the best way to pay for school is to work and save the money or get a scholarship.

Student loan debt is forever, and has caused enormous heartache for many young families trying to get by, while paying back their college debt.

If you are prudent with your borrowing and can get your education repaid in a reasonable time frame, without going hungry, fine.

But don’t think the Feds are going play nice when you don’t pay them their money!

Nurse Student Loan Payback Help

For those of you struggling now, remember the NELRP federal repayment program is taking applications for a few more weeks.  See this post about the details and application for the NELRP Nurses Repayments!

Comments?

Nursing Education Loan Repayment Program, or NELRP, is a US government sponsored loan repayment program.

They have opened up the application process for 2011 funds till February 8th.

This program is to assist nurses that have significant student loans IN NURSING and work in an area of need as determined by the loan repayment criteria.

Because the amount of the loans available per year are always over subscribed, criteria have been set to determine eligibility.

The NELRP- RN Student Loan Forgiveness eligibility requirements:

1. Be a U.S. citizen (either U.S. born or naturalized), U.S. National, or Lawful Permanent Resident;
2. Have received a diploma, an associate degree, a bachelor’s degree, a master’s degree, or a doctoral degree in nursing (see Definitions);
3. Be employed as a full-time RN, defined as at least 32 hours per week, at a public or private nonprofit Critical Shortage Facility;

-OR-

Be employed as a full-time nurse faculty member at a public or private nonprofit school of nursing (see Definitions);

1. Have outstanding qualifying educational loans leading to a degree or diploma in nursing;
2. Have completed the nursing education program for which the loan balance applies; and
3. Have a current, full, permanent, unencumbered, unrestricted license to practice as an RN in the State in which they intend to practice or is authorized to practice in that State pursuant to the Nurse Licensure Compact (see the Nurse Licensure Compact State listing).

From the NELRP Website:

Funding Preference

How does the NELRP determine which nurses will receive loan repayment?

Historically, the number of qualified applicants has exceeded available NELRP funding.  Consequently, the program uses funding preferences to determine the sequential order in which qualified applicants are considered for an award.  As provided in section 846(e) of the Public Health Service Act, as amended, a funding preference will be given to applicants with the greatest financial need, defined as those qualified applicants whose total qualifying educational loans are 40 percent or greater than their base annual salary.  A funding preference will also be given to nurses working in the types of facilities that have the most severe nursing shortage and to nurse faculty.

Applicants will be grouped into one of the preference levels described below based on their debt to salary ratio and type of service site.  The debt to salary ratio is the dollar amount of the applicant’s total outstanding qualifying educational loans divided by his or her base annual salary.  Awards will be made to applicants, starting with the first preference category described below, in order of decreasing financial need until funds are expended.

Example #1:  Amanda received a bachelor’s degree in nursing in May 2009.  Her current outstanding qualifying educational loan debt totals $26,683.57.  Amanda works as an RN at the Maryland Department of Health and Mental Hygiene and her base annual salary is $51,001.
Since Amanda is working at a Public Health Department service site and her debt to salary ratio is 52.320 percent, she will receive a ranking in the First Funding Preference.

Example #2: Tom attended the Frederick Community College taking only nursing prerequisite courses and then transferred to the University of Maryland where he received a bachelor’s degree of nursing in May 2009.  His current outstanding qualifying educational loan debt totals $17,465.04.  Tom works as an RN at the Veterans Administration Hospital and his base annual salary is $46,238.40.

Since Tom is working at a Federal Hospital service site and his debt to salary ratio is 37.772 percent, he will receive a ranking in the Sixth Funding Preference.

The above info is from the NELRP website for accuracy!

If you think you qualify, make sure you fill out your application before February 8th!

And if you are successful, please let us know!!!!

Good Luck!

Graduation is near.  High school seniors are  excited about moving on with their lives.  They and their families are looking forward to a new horizon-the options are unlimited.

In my case, I knew I wanted to be a Doc from my early grammar school years.  Don’t know why, no medical people in my family.

Now my idea of rebellion back in the mid-seventies was to change my major to psychology/pre-law for one year.  I took a few social science courses and realized, I liked “real science” much better than the touchy-feely stuff…..So back I went to my Biology major/Chem minor/pre-med track.

Keep in mind, I was young then-started medical school at age 19, so I really didn’t know what I was getting into.  First day in Anatomy-(cadaver intro)-the smell comes back to me just thinking about it.

The point I  promise I am getting to, is as a high school senior, you are really  pretty stupid, when it comes to life.  And here we are, encouraging these kids to  borrow money. They will then have to pay back it all back, with a lot of interest.  A debt that may be hanging over them ’till forever, and ever, AMEN!!!!

While I give information about where  and how to receive assistance to go to nursing, or any other school, I discourage use of borrowed funds-if at all possible.  If you can get through college without a student loan, you will be  far, far  ahead in life.

So you are ready to expand your education horizon, let’s review  the steps:

Step One -Admission process:

To start college, you must get admitted-by now this process should be well underway.

For an overview of what is going on now in school admission offices, this article in the Wall Street Journal has several great tips, and an interview with an admissions director at Penn State.

Step Two-Paying for School:

This list of links is of a general nature (not just nursing students), and where all students need to start.  Filling out the dreaded FAFSA application.  This is the road that all schools use to start the financial aid/scholarship/grant/student loan process.  So do it quickly if you haven’t yet started…

• FAFSA application and information: http://www.fafsa.ed.gov
• Federal student aid grant information: http://www.fsa4counselors.ed.gov/clcf/grants.html
• Federal student aid on the web: http://studentaid.ed.gov

Seth Godin, has written recently about the train wreck that is occurring in our higher education system.  With students receiving mediocre educations, but huge debt burdens.   I think  the schools who figure out how to provide a quality education, with less money will be the winners of the future.

Nursing financial Aid/grants loans:

Now the following sites are focused on programs for nurses to get aid/grants/loans for school:

• This site from the federal government Health and Human Services department is laden with links to federal grant programs for nurses, both undergrad. and graduate level options and programs.
• Nursing School Financial Aid Guide, published by  an online consortium of schools, such as Phoenix is a great place to get a lot of info in one place.
• And the American Association of Colleges of Nursing has a great list of available scholarships.  Deadlines for this years applicants are fast approaching-if you miss them, start earlier with your search next year.

Step 3: For those finished with school, paying it all back. *If you are still in school, read this-to be prepared for the future!!!!

The Millionaire Nurse Blog’s Nursing School Posts:

Nurses and Nursing Students:

Don’t Forget My Survey and Your Chance to win $150 Amazon gift card and other great prizes-for details check out this post HERE:

To take the survey now, click HERE!

I will be pulling the survey soon, so don’t put it off, and miss your chance to win!

That is way above my pay grade.  And for me to understand it, it would have to make common sense-also unheard of in Washington lately-regardless of your political affiliation.

The Wall Street Journal had this article about the school loans and the Health care law today.

Student Loan Changes in the New Health Care Bill:

• The money for guaranteed school loans will, as of this fall, be from the Federal Department of Education-no more shopping around at different banks.
• The maximum amount of repayment/year will  gradually decrease from 15 % of income to 10%,over the next 4 years. (Already true for nurses working for non-profit hospitals and clinics.)
• The amount of money available for Pell Grants-(which don’t have to be repaid) will go up-although applications are up 20% this year due to the economy.  So apply quickly if you or your parents income levels qualify -(usually less than $50k/yr-but is based on family size.)
• Provisions for debt management education, for low income recipients, was made to the tune of $750 million……
• Private loans may still be available between you and your bank-but they will not be guaranteed by the feds.-so good credit will be required-especially in this economic environment.
• A decrease in annual interest rate of 7.9% under the direct program, compared with 8.5% under the old program.

Finaid, a student loan website,has  good information about the status of student loans of all types, so check it out if you have questions.

Student Loan recommendations from me:

• Try to get by without borrowing money-see previous posts about this here.
• If you do borrow money, limit your total borrowing to less than your first years expected salary-to make sure you can pay it back in a reasonable amount of time. (Before retirement would be good.)
• See if you qualify for student loan repayment programs, for nurses by the NELRP.

If you have questions or comments, let me hear from you.  Hit the comment button….

Last year the government began a new program called Income Based Repayment-to assist those whose student loan repayment plans were taking up so much of their income each month-that they couldn’t afford them.

I have identified a few helpful links to assist you in determining if you are eligible.

I have been told by several readers that my investing blog posts are difficult to understand-(even though I try hard to make them easy/simple)  Not your fault, I just need to get better at   ‘splaining.

But the student loan world is so complex, dark, and difficult-that I keep thinking Darth Vader is going to come at me with his light saber!!!!  For you young people, who don’t remember Star Wars-Let’s see……-maybe the villain from Twilight-”James”…..(yes, I had to google that, no I haven’t seen the movie, or read the books…..)

So anyway-the student loan universe is difficult to maneuver through-because there are so many different programs, options, acronyms-oh my!

But in short, the Income Based Repayment calculator is available to help you determine if you qualify for this plan.

The second part is that if you do qualify for Income Based Repayment, then you may also qualify for loan forgiveness after ten years of paying back your loan-if you work for the government, or certain 503-C based organizations.   Public health nurses would certainly fit here, along with school nurses-again if you meet the income guidelines.  So any money remaining after 10 years on the program are forgiven….

Again check this resource developed by the Feds, to help determine whether you may qualify-remember even if you work for a loan forgiveness eligible job, if you haven’t  been placed on the IBR (income based repayment) program-you are out of luck.

This link will help to direct you to the bank, Sallie Mae or whichever place you got your loan’s website for info…..

Student loan patter:

Student loans are worth the investment.  Everyone should go to college, even if you have to borrow to go.   You will earn a lot more money  with a college degree, and it will be no problem to pay back.

These are just a couple of the lies, or at best,  misleading statements about student loans.

In this article, in the “Wall Street Journal”,  Mary Pilon reports the case of a student loan, that had ballooned to $555,000.  Yes, that is a cool 1/2 million plus.

The loan belongs to a family doc, so what’s the big deal, they are all rich aren’t they??

Well the average salary for a family practitioner is $145,000 bucks a year-great salary, way above the national average.

However, with a loan that size, with interest accruing, even if half her salary went to pay back the loan, it would take more than 10 years to pay that back.  So great salary ain’t so great if half of it goes to pay back your student loan.

Borrowing for college:

Do I think it is evil to borrow money to go to college.  No, of course n0t.  Do I think it can be stupid to borrow $100,000 to pay for tuition, room, board, and beer, for a degree that pays on average 40, or 50 grand a year or less-yes!

So, before  following the herd and borrowing a pile of money to go to school.  Check out ways to decrease your burden:

• Go to a less expensive school.
• Go to school part-time.
• Drive a clunker, and use car payment money to pay for food, or books.
• Join the service, and let them pay for your education.
• Get your employer to help pay the bill.
• Work your butt off finding scholarships and aid.

The good news is that you can get an associates  (which usually takes 3 years)  RN degree at a public institution for very little investment.  Even a four year BSN at a public school is a bargain, but you can make it great by limiting your borrowing.

So before you call Aunt Sallie Mae to borrow a hunk of cash, think about it.  Make sure there is not a better way.

NELRP

And if you do borrow, there are ways to help pay back the money-see this post about one of the federal loan repayment programs -(NELRP)-  for working in an under-served hospital or clinic-as a nurse.

Reader comments:

What say you? Did you borrow money for a degree and now you’re having trouble paying back the money?  Did you waste money during your education on fun and games?

Student loan forgiveness for nurses, from the feds, is available for 2010.  The deadline for funding in this years program is March 4th.  So if you know any nurses who may need this assistance, please send them a link to this post.

Loan forgiveness programs have been around for years.  I took advantage of a state program, similar to this, years ago-practicing 5 years in a rural community, for loan payback-They got their money’s worth-as I never left!!!!

The Nursing Education Loan Repayment Program or NELRP, as it is know by acronym loving bureaucrats, is a loan repayment program funded by the federal government to help with nursing shortage in under-served areas.

An overview of the program can be found here at the Federal Governments Health and Humans services site. A few points about the program:

• You receive 30%/year of your eligible loan forgiveness for the first two years of service.
• If you agree to serve an additional year, they will pay another 25% of your loan off-so if you serve three years, they will have paid 85% of your loans for you.
• You have to work for what is known as a Critical Shortage Facility-these are public non-profit institutions that meet certain criteria.  They have to serve a population that is high in medicaid/medicare, critical access,  or indigent population.
• The money you receive is wired to your account, and then has to be used for loan repayment.
• Many types of student loans, such as Stafford, and private loans qualify.  Student loans for parents, do not qualify.

Cautions if you decide to apply:

• If you hate nursing, and quit, the money with interest will have to be paid back within 3 years.
• The money is considered income, so you will definitely need to be prepared for a higher tax bill-don’t wait to April 15th and realize your taxes are double what you thought.
• If you transfer or move to another eligible facility, that is not a problem, but must be approved-IN ADVANCE!

A pdf file, with application and frequently asked questions, is located here. Like most government programs the application appears complicated.  So make sure you start your application process well in advance of the March 4th deadline.

You may want to talk to your nursing school, your student loan holder, and your potential place of employment to get additional information. Now if anyone has taken advantage of this program, please leave us a comment with your opinion about the program.

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The value of additional education is rarely challenged.  Most studies show an increase in average salary and lifetime pay for those getting a college degree or finishing a technical program.  However, getting out of school, with an above average paying job, like nurses, with a college loan debt of $100,000-would that be smart?  Of course not.  It will take years of struggle to pay those loans back, with enormous stress along the way.

So what do Millionaire Nurses do when faced with this sort of situation?

• Check out all scholarship opportunities.  These can include hospitals that will pay for school for a work obligation, financial needs type scholarships, military scholarships, and good student scholarships.
• Work and school part-time. Pay for school as you go along.  Many folks have worked nights, and finished their education during the day-how is that for dedication.
• Take a year or two off from school, work, live on nothing, saving up, then going back to school.

All of these options take sacrifice and dedication. But isn’t that what being a nurse is all about. 

I want nurses to excel in their personal finances and begin building wealth as soon as possible.  That cannot happen unless you get out of debt as quickly as possible and learn to begin saving, investing, and growing your net worth.  So student loans are not always a blessing.  But with smart planning you can minimize your student loan debt and make progress towards your goal.

Let me know your thoughts and student loan stories-successes and horror stories alike.  And for a copy of my free e-book, “Emergency Money Resucitation” go to my website.  Signing up will also provide you  with a free mini-course on managing your personal finances.