Here’s Why Getting a Credit Card Can Be a Smart Financial Move in College

July 20, 2015 7:42 am

By Melissa Burns

 

Many young people and their parents are skeptical about credit cards. Even if you’re already out of college, you may hesitate to open a credit card account; according to a recent survey from Bankrate.com, 63 percent of Millennials aged 18 to 29 don’t have any credit cards.

Thanks to the CARD Act of 2009, it’s no longer as easy as it once was for college students to obtain their own credit cards. Now, if you’re under 21, you need an older co-signer or proof of independent income in order to get a credit card in your own name.

But that doesn’t mean that a credit card can’t be a valuable financial tool if you’re a college student. Used responsibly, a credit card can help you begin building your credit history and establish good credit, and that’s important if you hope to succeed after graduation. Just make sure you understand how credit cards work, and how to use them so that they help, rather than harm, your financial future.

Why You Need Good Credit

When you’re in college, it can be hard to anticipate what you’re going to need and want five, 10, or 15 years into the future. If you’re like many young people, you’re probably not looking ahead to the day when you’ll want to take out a loan to buy your first new car, or a mortgage to buy your first home. You may not even believe that you’ll ever have enough money to do those things, or you may feel that you can just as easily put off building your credit history until after graduation.

But the sooner you start building credit, the longer your repayment history will be, and that will boost your credit score. You see, you don’t start out in life with good credit; you start out with no credit at all, and while that’s not as big of an obstacle as having bad credit, it’s still not going to help you much after you graduate. A good credit score can help you get the best interest rates on mortgages and car loans, or help you avoid paying a deposit when you sign up for utilities or get a cell phone.

But that’s not the only reason you need good credit. Many employers take credit history into account when deciding between multiple job candidates. A landlord or leasing agency may look at your credit history when deciding whether or not to rent you that sweet apartment you’ve got your eye on. You’ll even get better insurance rates and have an easier time renting a car or vacation home in the future.

How to Build Credit Using a Credit Card

If you’ve borrowed money to pay for college, your student loan payments will certainly appear on your credit report — after you start making them. In order to start building credit right away, you need a credit card as soon as possible; and remember, the longer your history of using credit responsibly, the better your credit history.

Many issuers offer student credit cards with low interest rates and low to nonexistent fees. To find the best credit card for your needs, use a website like CompareCards.com to find the best credit card for fair credit. Make sure you know the basics of how credit cards work, including:

  • The APR, or Annual Percentage Rate, is the amount of interest you’ll pay for carrying a balance from one month to the next
  • You can avoid paying any interest by paying the balance off in full each month
  • Many cards charge an annual fee which you must pay in order to use the card, but most don’t
  • Rewards programs can be a great way to earn cash back, points toward airline travel, and more

To avoid racking up more debt that you can pay back, never charge more to your credit card than you can afford to pay off each month. Charging more than 30 percent of your total credit limit can hurt your credit, because it suggests to lenders that you’re relying too much on credit to make ends meet. So, even if you must charge a big-ticket item and pay it off over several months, keep it below 30 percent of your maximum limit if you can. Avoid getting cash advances on your credit card; these advances typically come with high interest rates and hard-to-swallow fees, so if you need some extra cash in a hurry, it’s a better idea to ask Mom and Dad, or even borrow it from a friend.

You may be hesitant to get a credit card while you’re still in college, but credit cards can actually be valuable financial tools. Getting a credit card early on, and using it responsibly, can help you build up a longer borrowing history and establish a good credit score — and that will reap benefits for years to come once you’re out in the real world.

Author’s bio:

Melissa Burns graduated from the faculty of Journalism of Iowa State University in 2008. Nowadays she is an entrepreneur and independent journalist. Her sphere of interests includes startups, information technologies and how these ones may be implemented in the sphere of education. You may contact Melissa: burns.melissaa@gmail.com

 

Getting low-income “first-generation” kids into college is hard. Getting them to graduate from college is harder.

July 17, 2015 8:00 am

Robert Pondisco, at Fordham Foundation

Shortly before ten o’clock on a recent warm summer morning, the grand old Apollo Theater on Harlem’s 125th Street filled up with the friends and families of the members of Democracy Prep Charter High School’s third-ever graduating class. The soon-to-be graduates milled about in the lobby, hugging each other and taking selfies in their bright golden robes and mortarboards before filing in, grinning, for their moment of glory.

I got to know each of these sixty-one students in my senior seminar class this year. It was a deeply satisfying year for the school and an extraordinary one for the students, each of Latino and African descent, and nearly all of modest means. Come September, every single one of them will attending colleges, including several institutions that would be the envy of parents and students at the elite private schools just a few blocks south of here. Ashlynn and Chris will be heading to Dartmouth; Hawa turned down Stanford to attend Yale; Tyisha will join the freshman class at Princeton. Other members of Democracy Prep’s Class of 2019 are bound for Emory, Smith, SUNY Albany, Boston College, and Brown, among many others.

Class of 2019 is not a typo. It has become nearly de rigueur for high-performing, “no-excuses” charter schools to add four years to the graduation date for each departing class. It marks the year departing scholars are scheduled to graduate from college, an endearing aspirational quirk and one last dose of high expectations before commencement. But there’s an uncomfortable truth that must be acknowledged even as we celebrate. At present, the odds are still against most low-income kids of color reappearing at another graduation ceremony four years hence. Or ever.

A sobering recent report from the National Center for Education Statistics shows just how long the odds are, even for those with college aspirations. Starting in 2002, researchers began tracking fifteen thousand U.S. high school sophomores from across the socioeconomic spectrum. At that time, roughly 70 percent of those tenth graders planned to go to college. That ranged from a high of 87 percent among students whose parents had the highest level of income and education to 58 percent of those whose parents were the least educated, poorest, and largely unskilled. Among this latter group of students, a mere 14 percent of the total—and only one in four of those who planned to as sophomores—had earned a college degree by 2014.

Many of us have aspirations that exceed our abilities. Thus, the most obvious explanation for this disparity would be that low-income children were unprepared or overconfident, or else lacked what it takes to succeed in college. But the study showed otherwise. Writing in the New York Times, Susan Dynarski, a professor of education, public policy, and economics at the University of Michigan, notes that each student in the study took math and reading tests. Nearly three out of four of the highest-scoring students from the most affluent families completed a college degree as of 2014. But for low-income kids with the same achievement level, the college completion rate was only 41 percent. Even more telling: “A poor teenager with top scores and a rich teenager with mediocre scores are equally likely to graduate with a bachelor’s degree. In both groups, 41 percent receive a degree by their late twenties,” Dynarski observed. The American Enterprise Institute’s Andrew P. Kelly made a similar point in a paper last year for Fordham’s “Education for Upward Mobility” conference.

The report adds cold, hard data to what has long been known among education reformers and the high-achieving charter schools they champion: Getting low-income “first-generation” kids into college is hard. Getting them to graduate from college is harder.

For years, pioneering charter school networks like KIPP, YES Prep, and others won legions of admirers by ensuring that nearly every student they graduated went to college, usually the first in their families to do so. A 2011 report from KIPP itself, however, found that only 33 percent of their earliest cohorts of students had actually earned a college degree. On the one hand, that’s roughly four times higher than the rate for disadvantaged students as a whole. But it was far below KIPP’s own internal goals and a wake-up call for a reform movement that had long campaigned for college as an essential path to upward mobility.

Since then, KIPP and others have become increasingly focused on “college match.” This typically means partnering with colleges like Franklin & Marshall and Spellman College—which tend to feature high graduation rates both overall and for low-income students, generous financial aid, and diverse social environments—to make it more likely for “first-generation” kids to persist and succeed.

Perhaps even more critically, we are learning that maintaining close ties to alumni matters a lot. “Once in college, students submit course selections, financial aid documents, and most importantly, college transcripts to us so that we can academically advise and proactively address any issues that may come up,” says Jane Martínez Dowling, executive director of KIPP NYC Through College. For middle-class and affluent children, this kind of constant monitoring, advising, and problem-solving tends to be baked into their lives, whether through aggressive helicopter parenting or simply having friends and family members who’ve been to college and are neither awed by the process nor intimidated by pitfalls. My now-former students will benefit from this kind of post-graduation counseling—Democracy Prep, like KIPP and many others, keeps close tabs on alumni. So far, nearly nine out of ten remain enrolled—an encouraging figure, albeit from a cohort of fewer than 100 students.

The senior speaker that day, Fordham-bound Briana Mitchell, took justifiable pride in the accomplishment of her classmates, who have already beaten the odds simply by graduating and winning acceptance to college. “Who would have thought that these students are going to some of the top colleges and universities around the world?” she said, to enthusiastic shouts and applause. “Who would have thought that this could happen when all odds were against us?”

Graduation day is a time for celebration and excitement, not for doubts. But there can be no doubt that the hard work is not over for these kids. In many ways, it’s just begun.

Editor’s note: This post originally appeared in a slightly different form at U.S. News & World Report.

Give College Students A Better Deal On Loans

July 16, 2015 8:33 am

from ticas.org

Almost four million federal student loan borrowers are using income-driven repayment (IDR) plans, including Income-Based Repayment (IBR) and Pay As You Earn (PAYE), with more enrolling every day. These plans can help borrowers lower their monthly payments and stay on track, but there are ways they can and should be improved.

The U.S. Department of Education is seeking feedback right now on a new proposed IDR plan, called Revised Pay As You Earn (REPAYE). REPAYE is better than existing plans in some key ways:

  • It would let all federal Direct Loan borrowers cap their monthly payments at 10% of their income, regardless of when they borrowed or their debt-to-income ratio.
  • Many borrowers would have lower monthly payments and a shorter repayment period than in the plans they currently qualify for.
  • It also does more to prevent ballooning loan balances by limiting how interest accrues when borrowers have low income relative to their debt.

But REPAYE could still be better, especially by providing loan forgiveness to all enrolled borrowers after 20 years (instead of 25 years for some borrowers as proposed).

Missed signals: The effect of ACT college-readiness measures on post-secondary decisions

July 15, 2015 8:32 am

PACE's picture

This post is from Andrew Foote (University of California at Davis), Lisa Schulkind (University of North Carolina at Charlotte) and Teny M. Shapiro (Santa Clara University)

In the face of shrinking government budgets and a growing need to train a high-skilled labor force, policymakers have become increasingly interested in cost-effective measures that induce more students to pursue post-secondary education. A great deal of research has been done to understand the barriers of college entry, especially for low-income students. These barriers can be classified into three primary categories: achievement barriers, financial barriers, and information and administrative barriers. Much is known about how educational inputs affect academic achievement for students in all grades. However, policies aimed at reducing achievement barriers are often costly and must occur early and continuously throughout a student’s academic career. Thus, until recently, much of the research in this area has focused on the financial barriers to higher education. Even with the availability of financial resources for higher education, a number of qualified students choose either to not attend college or to attend lower quality schools. These results highlight the existence of non-monetary barriers to entry into higher education, and suggest that targeted policies can help overcome these barriers.

Accordingly, recent research has examined the role of information and administrative barriers in the decision to attend college, and has shown that providing students with information about their higher educational opportunities, even late in their high school careers, can impact their decisions about post-secondary education. Our study examined whether students respond to information provided to them on their ACT score report about their own college readiness. Students who take the ACT receive a score report that shows their score (out of 36) on each of the four subject tests as well as their composite score, which is the rounded average of the four subject scores. If a student scores above a certain threshold (determined by ACT) in a given subject, they are informed on the score report that they are “college ready” in that subject.

Utilizing student-level data from the state of Colorado, where all students are required to take the ACT exam, we applied a statistical method that allowed us to compare students who earn scores very close to the college-readiness cutoffs. By comparing students who score just below each cutoff to those who score just above each cutoff, we were able to examine whether receiving the college readiness information had any effect on college going decisions.

We found that the college-readiness information had no effect on students’ decisions to enroll in any type of college. While recent studies suggest that students’ higher education decisions can be altered with information interventions, we found no such response. This may be due to the particular population we studied (those on the margin of college-readiness rather than high-achieving students) or the fact that the information was not paired with any assistance in undertaking the college application process.

There are a number of explanations for our findings. First, students may already know if they are college-ready, and these signals provide no additional information to the students.  Second, the college-readiness information may not be presented in a clear or salient manner. Although ACT is a reputable source of information and score reports sent directly from ACT are likely to be opened and at least cursorily reviewed, students may not carefully read their score report; since the college-readiness information is not highlighted, it may be missed by many students.  Finally, the signal may come too late for students to make major changes that would allow them to alter their college trajectory.

Since not all information treatments affect post-secondary decisions, policy-makers hoping to improve college attendance rates must carefully design information-based policies. Although information treatments can be inexpensive to implement, this study serves as a warning that it is important to understand which types of information and which methods of delivering it will have the intended effect.

The full study is in Andrew Foote, Lisa Schulkind, Teny M. Shapiro, “Missed signals: The effect of ACT college-readiness measures on post-secondary decisions,” Economics of Education Review, Volume 46, June 2015, Pages 39–51

10 Things You Need to Know about College Dorm Life

July 14, 2015 8:19 am

Jane Hurst

Going away to college is going to be a huge transition in your life, and you are going to be dealing with a lot of changes to your lifestyle. Here are some things you need to know about how to survive your first year of college dorm life.

  1. Not All Dorms are the Same – Before you choose a dorm, it is a good idea to talk to students who live in various dorms to see what they think of their accommodations. For instance, one dorm may be less expensive, but it may also be a party dorm and you will never get any studying done.
  2. You are On Your Own – Your mom and dad aren’t always going to be right there, and there is not going to be anyone in authority to tell you what to do. Now is the time to prove you can handle responsibility. Take control of your study habits, diet, social activities, etc. and create a mix that will ultimately ensure your personal and educational success. Don’t forget to take care of your health. Subscribe to a few useful YouTube health channels, such as CandidaCrusher, Better Health Channel and Healthcare Triage.
  3. Avoid Living with High School Chums – There are plenty of reasons not to live with your high school friends in college. For one, all of that high school drama is never going to go away. Also, you are not giving yourself a chance to be with new people and have new experiences.
  4. Your First Year is a Blur – There will be so much going on during your first year of college that you will be hard-pressed to remember it all by the time the end of the year rolls around. You will also be experiencing a number of emotions, ranging from excitement to sheer terror.
  5. Don’t Discount the Honors Dorms – You may think that all people in the honors dorms do is study, but you would be wrong. Sure, they study a lot, but they also like to have a good time, and you may find that this is the perfect combination of study and fun.
  6. No More Live-In Mom Maid – There is not going to be anyone around to pick up after you. You will be responsible for your own dishes, removing your rotting food from the mini-fridge, and basically doing your share of keeping your dorm room clean.
  7. You will Make Amazing Friends – The friends you meet in the dorm are likely to be lifelong friends. Many former students say that the friends they made in their dorm are still their best friends today.
  8. You must Get to Know Others – You aren’t likely to be accepted as soon as you set foot in the dorm. You need to work at it, and get to know the others who are living there. Take part in RA activities, so you can meet people and socialize.
  9. Your Roommates don’t Have to be Your Besties – Not everyone gets along with their college roommates, and that is okay. After all, if you live together and hang out together, you are probably going to get tired of one another after a while. You can be friendly without actually being best buddies.
  10. Be Prepared to Use the Library – Dorms can be quite noisy, and you are in college to learn first, socialize second. So, plan on spending a lot of time in the library or some other quiet place in order to get your studying done.

Jane Hurst has been working in education for over 5 years as a teacher. She loves sharing her knowledge with students, is fascinated about edtech and loves reading, a lot.

One-third of college students transfer schools before graduation

July 10, 2015 5:22 am

 

By Caralee Adams on July 8, 2015 11:11 AM

High school students in knots about where to go to college can take solace in a new report that shows it’s increasingly common to switch schools if they have a change of heart.

Just over 37 percent of college students transfer schools at least once within six years, according to data from the National Student Clearinghouse Research Center released July 6. The Herndon, Va.-based nonprofit organization analyzed the pathways of 3.6 million first-time students who enrolled in any type of college beginning in 2008. The transfer rate counts students as transfers if they moved to a different institution before receiving a bachelor’s degree within a period of six years.

When students switch, they are often going out of state. The report found that about 1 in 5 students who start at two-year public institutions and nearly 1 in 4 who enrolled first at four-year public institutions transferred across state lines.

About one-quarter of students who started at a community college transferred to a four-year school, but only 1 in 8 transferred after having earned an associate degree or certificate. A 2012 report from the center showed 1 in 5 students transferring from a two-year to four-year institutions were post-degree.

Researchers note that this trend may support the case for “reverse transfer initiatives” currently being pursued in many states that allow the transfer of student credits back to two-year institutions that may be able to award a degree. Among students transferring from a four-year college, community college was the top destination, according to the new data, with 53.7 moving to a two-year community college.

One quarter of all student mobility from four-year institutions to community colleges consisted of “summer swirlers,” who returned to their starting institution in the following fall term. Other research by the center has found this strategy can help boost completion rates at starting four-year institution.

The researchers note that the analysis shows the picture of postsecondary enrollment, transfer, persistence, and completion is complex and broader definitions of both student success and institutional effectiveness should be considered.

“The increased attention to student outcomes and degree attainment at the national and state levels are likely to lead to new accountability measures for postsecondary institutions that will need to go beyond the first-time, full-time cohorts that institutions are used to tracking,” the report said. “Looking at the outcomes of all students—nontraditional students who enroll part-time or switch their enrollment status from full-time to part-time and vice versa as well as transfer-in and transfer-out students—will be beneficial for public policymaking and individual students.”

Education Week

 

 

 

 

Health and Fitness Apps For College Students

July 8, 2015 8:51 am

By Jane Hurst

As a college student, not only do you need to keep your mind active, you also need to keep your body active. When you aren’t in your best physical condition, it can play a huge role in how well you do with your studies. If your body is tired, sluggish, and feeling poorly, chances are your mind is going to be the same. So, you need to find ways to stay in good physical shape so you can get through your classes, exams, etc. without completely draining yourself, both physically and mentally. Here are some online tools that can help.

  • Lose It – Sitting in class all day, and then sitting around studying at night can make it so those extra pounds creep up on you in no time flat. iPhone users can get the Lose It app that will let you track your calories for free. You can also track how many calories you burn while exercising, and there is loads of great information about the nutritional values of many of your favorite name-brand foods.
  • E-Cigs – If you are a smoker, one of the first things you need to do is kick the habit. Unfortunately, this sounds a lot easier than it actually is. One way to quit is to start using e-cigarettes. You can get them with varying levels of nicotine, from zero to full-strength, and they come in a variety of flavors. This is a great way to quit smoking, because if you do feel the urge for a puff, you can vap instead, and do your body much less harm.
  • Fast Food Calorie Counter – You are probably just like every other college student out there, and may tend to eat take-out food more often than you should, because it is so much cheaper than healthy food. This Android app only costs $2, and it has data for 9,000 menu items from 72 of your favorite fast food restaurants, including all of the nutritional information so you can make healthier choices when eating out.
  • Endomondo Sports Tracker – This is a free app for Android users who are into running, walking, and cycling. You can use this app to track distances, altitude, speed, and time, and even have a recorded history of all of your workouts. You can sync this app with Google Maps, and even integrate it with your music playlist.
  • GymGoal ABC – There is a free and a paid version of this tool (just $0.99 for the paid version), and it is great for those of you who like to use the campus gym. You will be able to use this app to calculate body fat, target your heart rate, learn your BMI, and more. There is even a muscle map that lets you focus on the areas you want to work out the most.
  • FitnessBuilder – This app costs $10, but it is worth it because there are so many workouts and fitness routines you can use. Track your workouts, calculate every part of your workout and create a workout that is ideal for your own fitness goals. This is an iPhone app that is recommended for those who are more experienced with working out.
  • Beer Gut Fitness – You are on your own for the first time in your life, and don’t try to fool anyone that you aren’t going to keggers and other drinking parties. But, don’t let drinking get the better of you, and of your health. You can use Beer Gut Fitness for just $0.99 on Android phones to track the calories of all of the alcoholic beverages you consume. The app will let you know if you need to exercise first, or if you have been good with diet and exercise and have earned a few drinks.

Jane Hurst has been working in education for over 5 years as a teacher. She loves sharing her knowledge with students, is fascinated about edtech and loves reading, a lot.

ACT To Replace Its College COMPASS Placement Test

July 6, 2015 9:06 am

Test sending too many into remediation
ACT is phasing out Compass, a popular course placement test that colleges use to determine whether students need to take remedial courses. Recent research has shown that Compass — and similar exams — funnels too many community college students into remediation. (Inside Higher Ed, June 18)

What Do Students Know About College Applications And Finance?

July 5, 2015 3:38 pm


By Rachel Fishman
Today, New America’s Education Policy Program released the second in a series of College Decisions Survey briefs that analyze new survey data about what prospective college students know about the college-going and financing process. Part II: The Application Process focuses on how students go about researching and applying to colleges. It looks at the number and type of schools and programs applied to and the search behaviors of prospective students.

With more than 7,500 colleges and universities in America, students have several options to choose from depending on a variety of factors such as price, location, and programs offered. So how do prospective students go about the process of applying to colleges? According to an online survey of 1,011 U.S. residents ages 16-40, who were largely prospective college students (with the remainder in their first semester of college), a majority of prospective students (60 percent) plan to apply to more than two colleges, and about three-quarters (76 percent) had already started their search. The survey was commissioned by New America and conducted by Harris Poll in October-November of 2014.

Though many prospective and recently-enrolled students had behaviors in common, the process of searching for a college did vary based on age. Adult prospective students were far more likely than their straight-out-of-high-school peers to intend to enroll in online or hybrid programs. In fact, 76 percent of 30-40 year olds planned to enroll in online-only or hybrid programs (which blend online and face-to-face courses), whereas 66 percent of students aged 16-19 planned to attend on-campus only at a traditional ‘brick-and-mortar’ college or university.

It is clear in the college search and application process that older prospective students have different needs than younger students. And since students need to have good information in order to compare colleges and make an informed decision, it’s critical to consider how to meet the different needs of these demographics.

“While higher education operates in an imperfect market full of information asymmetry, policymakers and institutions can do better to make sure students are aware of their options–including providing information about face-to-face, online, and hybrid options,” said Rachel Fishman, senior policy analyst and the report’s author. “Targeting information to different demographics will ensure that they can make a college choice that makes sense for them academically and financially.”

More About the College Decisions Survey

New America commissioned Harris Poll to create and administer the College Decisions Survey. A national online survey was conducted between October 7th and November 3rd, 2014. The sample included 1,011 completed interviews and consisted of U.S. residents ages 16 to 40 who do not have college degrees and plan on enrolling in a two-year or four-year college within the next 12 months (n=747). The survey also included individuals who were in the first semester of their first year at a two-year or four-year college (n=264).

The five College Decisions Survey briefs will be released during the spring and summer of 2015 and will cover topics including:

  • Financial concerns during the postsecondary decision-making process Read the report here
  • The application process for different types of students
  • Students’ familiarity with financial aid
  • Students’ ability to estimate their loan debt and monthly payments
  • The college search process and helpfulness of various common resolutions

New Concepts For College Debt

July 2, 2015 7:36 am

Once seen as the Great Equalizer, the value of higher education in the era of soaring college debt has come into serious question.

In their new book, The Real College Debt Crisis: How Student Borrowing Threatens Financial Well-Being and Erodes the American Dream, authors William Elliott III and Melinda Lewis argue that our current system of financial assistance imposes debt debt on vulnerable students in exchange for the promise of a college degree that may never materialize. Ultimately, the greatest costs are borne by the low-income students who must rely on this system, while students from more affluent families emerge unscathed. As a result, the Great Equalizer is becoming the Great Reinforcer.

Rather than patching the student debt system, The Real College Debt Crisis proposes striving for a college preparation and finance mechanism that helps America live up to her ideals. By shifting from a debt-based model to an assets and investment based model, the authors suggest that our nation can build a system that rewards effort and talent and reduces inequality.

Follow the discussion online using #realcollegedebtcrisis and following @AssetsNAF.