College Planning 101

Dear Parent(s),The month of June is especially known for:

1.High school graduations

2.First day of summer

3.Weddings

4.Vacations

In addition, high school seniors have already accepted their financial aid awards, answered their roommate preference surveys, submitted housing and health forms, and taken whatever subject placement tests their college requires. They should also have submitted a copy of their final transcripts. If the student is a D1 or D2 athlete, the NCAA also needs a copy of their final high school transcript. And if they are on any waitlists, it's a good idea to send a final transcript to those schools as well. While there's no guarantee that submitting a final transcript will boost their chances, it doesn't hurt to try

Shred The Debit Card

This August, and for the nine months or so after, your new college student is going to need money for books, supplies, personal expenses and the like. These are known as indirect expenses.

Lots of parents give their students debit cards to pay for these items. But, if you want to do something that will also serve as an amazing college graduation gift that won't cost you a nickel, try this: give them a credit card. Here's why: debit cards don't build credit, which is crucial for their financial future.

Apply for one in their name. Since they have no credit yet, you will have to guarantee the card, but also be sure to place a spending limit on it.

There are huge benefits to getting them a credit card:

1. Credit cards are a great way to protect yourself and your student from fraud, abuse, and unauthorized purchases.

2. The bill comes to you, so you're responsible for the bill. You will also know have an itemized list of what and where they are spending money on, especially anything inappropriate.

3. Whatever you budget for them to spend each month for books, supplies, travel, and personal expenses, that's all they can spend.

4. Every time you pay the bill, it will positively affect your student's credit history. Now here's the payoff: when they graduate, they should have a credit score around 800

5. The gift of credit is a tremendous asset to give your son or daughter for graduation.

6. They don't even have to keep a balance on their card. The best thing is to pay it off every month, and that's good enough to maintain a good credit score.

7. If in the future they want to rent an apartment, buy a house or condo, or buy or lease a car, they can do so without needing you to co-sign for them!

Whose Job Is It Anyway?

If you haven't had a chance to visit colleges, this would be the time to do that. Late Summer and early Fall will have students on campus, and it will be easier to get a feel for the campus.

If traveling to colleges is impractical, online campus tours can be of great help. Colleges have narrated videos that try and replicate the experience. Think Jurassic Park without the man-eating dinosaurs!

Regarding standardized testing, students who can take the tests should, and even if the college is test optional, competitive students will want to submit scores so they have an edge over those who have not. Keep in mind that many merit scholarships are still linked to these tests. But, don't send them to the colleges if the scores aren't great.

Proof that test scores are important is in the pudding. To cite one example, 71% of students admitted to the University of Pennsylvania submitted scores.

What's Up With Student and Parent Loans

I'm often asked if students should take on some debt to help finance their college education. The parents who ask me feel that their student should have some "skin the game".

Running the numbers, those graduating in four years carry an average debt of $29,000. In today's dollars, that isn't very much. I can't imagine a college graduate can't earn enough money to pay back 29k in ten years, which is the standard repayment plan.

The student loan interest rates for the coming year are slightly below last year's rates. There are good and bad aspects to loans. One of the bad ones is the way they figure the interest rate.

Each May, the US Treasury auctions off new 10-Year Treasury Notes. This year's 10-Year Treasury yield is 4.342%.

Here's where it gets ugly: an Add-On fee of 2.05% is a permanent part of the student loan interest rate, which is now 6.39%. Parent Loans to Undergraduate Students (PLUS) have the same 10-Year Treasury yield but the Add-On fee of 4.6% makes the new rate at 8.94%.

PLUS loans can be a good option, but consider other options first before diving in. The repayment plans that exist today may not be in place next year.

I am frequently asked what is happening with the Department of Education and Federal Student Aid. Until the new budget is passed, I can only say, "I don't know. But as soon as I do, I'll tell you."

When is a 4.0 GPA really a 3.5 GPA?

The answer is when a student takes Honors or Advanced Placement classes, their high school gives more "weight" to these grades. A weighted GPA is the grade point average rating that considers both the difficulty level of a course, and the student's grade in that course. It can be anywhere between a 4.01 and 5.0.

However, colleges take those weighted GPAs and "unweight" them. They do this to be fair to those who put in the extra effort.

So, a student taking these higher-level classes might have a 4.49 GPA, but unweighted it might really be a 3.95. A student who took non-Honors classes and had a regular 4.0, would have their GPA reduced by as much as half a point or more.

I bring this up, because if you've never heard the phrase, "good grades equal money", you need to know what you can expect a college to do when it comes time to offer merit aid. The higher your student's unweighted GPA, the less expensive their college education could be and can even make up for less-than-stellar test scores.

If your student has finished their 9th or 10th grade year, encourage them to take the most challenging courses available. If they don't do well, they can always withdraw.

When is a 4.0 GPA really a 3.5 GPA?

If you have a student looking at the most competitive brandname colleges, you should be aware that colleges look at the profile of not only the student but also of the high school they attend. Admissions will know if your student took the most challenging courses available to them by seeing the number offered by their high school.

For example, if a student's high school offers 30 Advanced Placement classes and the student takes only two of them, they will most certainly be counted out. A student taking five APs at a high school offering eight will have an edge (assuming the student scored a four or better on the AP exam).

Have a great summer!

BOB CHITRATHORN