Table of Contents
President's Profile
Announcements
From the Editor
Financial Aid Awareness Committee Report
CAFAA Reserve Fund
On Point, a Look Back on Rick Lee's CAFAA Presidency
TSJC Offers At-risk Students New Opportunities to Succeed
Candidates for the 2003/2004 Elections
Words from out Friends and Sponsors
Disclaimer:
The Colorado Association of Financial Aid Administrators (CAFAA), the Board of Directors and the Executive Committee are not responsible for the accuracy of any information contained in this newsletter as an authority, but rather its use as a guide. Further, the opinions expressed by the contributors are the opinions of the authors themselves and do not necessarily represent the official opinion of CAFAA, the Board of Directors or the Executive Committee.
Article Policy:
Articles may be submitted by any person, company, or organization for consideration by the CAFAA Crier staff and are subject to approval prior to printing the newsletter. The editor reserves the right to reject or edit the content of any article or information submitted. Articles are intended to be informational and for the benefit of CAFAA members and not for company promotion or advertising. Articles should be in 12 point Times New Roman.
Editor: Greg Thomason, Colorado Student Loan Program
Co-Editor: Cyndeth Allison, University of Colorado at Denver
E-mail your articles and advertisements to GThomason@cslp.org or send disk to:
Greg Thomason, CAFAA Crier Editor
999 18th St, Suite 425
Denver, CO 80202
President's Profile
by Rick Lee, Pikes Peak Community College
Ah! Fall is here. My last "President's Profile!" Tempus Fugit
At this time of the year prior Executive Committees, Board of Directors and Committee Chairs would look back over the last 11 months with a sense of satisfaction in their accomplishments knowing that in early October they would step down, somewhat, as a new group of freshly elected or appointed members would come forward with energy and a sense of wonderment for what was ahead.
Your leadership for this current year, always being willing to accept a challenge and having no fear of any issue big or small, have made a few changes to our P&P's and the By-Laws during this past year. One of those changes will delay their departure, officially, until 12/31/03. My intent at this writing is to have the revised documents posted to our Web page prior to our October 24th Business Meeting for your review. We viewed these changes as "housekeeping" or clarification rewrites only that were intended to provide consistency between the P&P's and the By-Laws. We trust that you will agree with our implemented suggestions after having read them.
In short, we have attempted to tie individual position duties and responsibilities to the calendar year and therefore to the actual budget and tax year. Our goal is to cleanly close the books, with all entries finalized, and the corresponding responsibility for the association, for the outgoing leadership team on December 31st. Newly created budgets, as approved by the new Board of Directors prior to January 1, will be in place with accurate financial statements that should not need adjusting. Ruben Guerrero has really labored long to produce these revised documents. Thank you Ruben! We are very glad that you chose to stay involved with CAFAA.
I sincerely thank each of you for the support that you have shown, as professionals, for the current year Executive Committee, Board of Directors and for the Chairs of the various committees that represent you - the membership. They have been a great group of committed professionals to work with this year! The following quote by Joseph A. Raelin sums up my experience with them as they have risen to the challenges faced this year:
"Of all the motivators of performance for professionals, job challenge stands at the top of the list, precisely because of its association with professionalism itself."
As always - thanks for reading the Crier and thank you for making a difference. Remember - you are the chosen ones!
Rick Lee
President
Announcements
by Cyndeth Allison
I just knew it! In the world of academics, fall is the time of greatest transition. There is a lot to report:
CU-Colorado Springs has quite a few staffing changes, according to Director Lee Ingalls Noble. Two Staff have retired - Doug Nelson, Counseling Coodinator, and Patricia Green, Scholarship Coordinator. Two have been promoted - Margie Smith to Counseling Coordinator and Jennifer Taylor to Scholarship Coordinator. And there are two newbie Financial Aid Counselors - Brooke Koenig and Melissa Neff.
Michael Sanderson has joined the Enrollment Services Office at Pikes Peak Community College as their new Financial Aid Advisor, according to Assistant Director Sherri McCullough. Mike was a loan officer at Air Academy Credit Union prior to assuming his new position with PPCC. He is a Colorado State University alumnus.
Musical Chairs Department:
Judy Ransom, who has been Assistant Vice President of Marketing for Colorado and Montana at ASAP/Union Bank and Trust for the past four years, is now at CollegeInvest as Senior Marketing Manager for the Colorado region.
Jennifer Helgeson has also joined CollegeInvest, as Outreach Coordinator. She will be responsible for developing programs to help high school students prepare financially before they reach college. Prior to joining CollegeInvest, Jennifer was a financial aid counselor at the Metropolitan State College of Denver.
Jeff Gregory has graciously accepted a temp position at Metropolitan State College of Denver, to help out while they conduct the search for Jennifer’s replacement, according to Cindy Hejl, Director. She pronounces them ‘swamped’, a feeling I’m sure most of us share this fall.
Tisha Corbett has rejoined the Community College of Denver as Director of Enrollment Services and Admissions.
Other Events:
Wedding Bells chimed this summer for two of our members. CU-Denver’s Gloria Shelden became Gloria Bailey on July 26 and Brock Coffman at Key Bank was married to Debbie on Aug 23rd in Pine, Colorado.
Karon Johnson reports that CU-Boulder is fairly quiet for a party school - at least for staff. Rob Drybread has joined the staff as a counselor, responsible for supervising the 20 front- line student workers. Narinton McKinley had a baby girl, Zoe, in April. Mom returned to work part-time in August. And, the OFA softball team, Pell's Angels, won the University Softball Championship this August with captain and new counselor, Rob Drybread at the helm. Go Pell’s Angels!
Sadly, Conrad Chavez, Fort Lewis College, had a "cardiac episode" in the office on Monday, July 21st and underwent quadruple bypass surgery. Rick Willis reports, “He is showing signs of boredom and interest in the start of school year activities in our office. We still don't know when/if he plans to return but he is making good progress and the operation was deemed a success.”
Not to be outdone by all the staff changes at other schools, Roger Koester sent in the following chronology at Colorado School of Mines: April - birth of Mark Cirillo to Dixie Cirillo, Assistant Director. . . May 30 -- Carolyn Giarratano retired after 16 years. . .
June -- Peg Mason announced as new RMASFAA President-Elect. . . July -- appointment of Christy Jensen (formerly Assistant Director) as Associate Director. . . August -- Misti Ruthven promoted from Technical Administrator to Assistant Director. . . August -- appointment of Dixie Cirillo as Senior Woman Administrator for the Athletics Department (in addition to Assistant Director of Financial Aid). . . August -- Michelle Wareham hired as work-study technical specialist and general factotum.
Roger says, and I think we’d all agree, “Not much happening !!!! Our new catchphrase is ‘We're in transition....’”
by Greg Thomason, Colorado Student Loan Program
Asking the Question
A recent article headline asked (shouted), “Will your job move to India?” With a hook as big as all of Colorado, I had to find out. The short answer for anyone who works in a service-related job that requires face-to-face contact with customers is, “Probably not.” That doesn’t preclude the U.S. Department of Labor (DOL) and Forester Research, Inc. from projecting that 3.3 million high-end technology and service jobs are likely to “move” by 2015 overseas where wages are as much as 50% below what is paid in the U.S. The list of careers that are susceptible to “less expensive foreign venues” is diverse, starting with architecture and ending with sales. Office work is the most vulnerable profession listed among the nine categories cited by DOL and Forester Research, followed by computer, management, and business jobs. I began to juxtapose this information with some other headlines (and related text) that I’ve recently read. Here’s what I came up with: Expected Record Enrollments Continue at Elementary and Secondary Schools, Colleges, and Universities, This Fall – “For the seventh consecutive year, record numbers of students are expected to enroll in public and private elementary and secondary schools this fall, and college enrollment will break the previous year’s record for the fifth year in a row.” Kindergarten Can Wait – “Administrators said parents have told them that by waiting another year, their children will always be among the oldest in their class all the way through high school, getting higher grades and higher test scores than their younger peers. That edge, parents say, will make them more attractive to the elite colleges.” New Reports Show Loans Accounted for three-quarters of Federal Student Aid in 2001-2002; Pell Grant Purchasing Power Declines – “Two newly released reports from the American Council on Education (ACE) illustrate rapid growth in the federal student loan programs and the critical importance of the Pell Grant program, the nation’s largest single source of need-based grant assistance.” Here is my take on how all of these seemingly disparate news items could affect the financial aid industry of the future: Of course none of these predictions are reliable since, as we all know, the only event that is ever constant is change. Speaking of change… in this issue of the Crier you will find President Rick Lee's column, titled: “My last President’s Profile!” In this presidential message, Rick has compiled a list of changes affecting CAFAA policies and procedures, as well as by-laws that the current leadership has successfully dealt with over the past year. (Someone needs to ask the question: Rick, why did you elect to place an exclamation mark in the title of your last profile?) President-elect, Marty Somero has provided the list of nominees (last revised on 10-1-03) seeking selection to the available Executive Committee or Board positions for the upcoming year. Remember: vote early, and vote often. When do the Financial Aid Awareness Committee members get to sleep? Judy Ransom has again presented an extensive account of the events and activities that the committee members are involved in. This is a tireless group of committed financial aid professionals! Good job Judy, and thanks from everyone in CAFAA for keeping the outreach efforts so visible around the State. You can read about another outreach program in this issue of the Crier, launched last year at Trinidad State Junior College. College President Dr. Frank Armijo has made the success of under achieving students a part of the school’s fundamental mission. You will also find a list of CAFAA's own scholars, courtesy of James Broscheit and the ad hoc scholarship committee. And finally, we couldn’t negotiate a fair or affordable price for the copyright to pictures of Joe Millionaire, so instead we’ve put together a photo page of pictures that we could afford. Don’t miss in this issue of the Crier the pictorial tribute to the hard work and leadership we have all benefitted from during Rick Lee’s presidency. As always, thanks for reading the Crier.
Greg
Financial Aid Awareness Committee - Fall Update
by Judy Ransom, CollegeInvest
The FA Awareness group is starting to receive requests for financial aid presentations at local high schools. The usual suspects have already contacted us to schedule multiple school presentations. Among the upcoming events, South Jeffco's financial aid night will be back again, this year at Dakota Ridge High School during the early part of December. Also back on the docket are visits to D'Evelyn, Mullen, Kennedy and West high schools. With our participation in Colorado Council's High School Counselor Training workshops we are expecting more requests from around the state. With the assistance of Jim Contreras (Arapahoe Community College), Ellie Miller (University of Colorado/Denver), Amy Turner, Katie Kramer and Jenney Kenney (Boettcher Foundation) the Financial aid presentation on CD was updated and are being distributed to high school counselors at the high school counselor training workshops. CAFAA, Boettcher Foundation and ASAP/Union Bank and Trust sponsored the production of 1,000 CDs. Any CDs not distributed to counselors will be available to CAFAA and CESDA members. With the assistance of CESDA and CCHSCR, we have reprinted the "Road to Success" general financial aid brochure. These brochures are available to CAFAA and CESDA members, and to High School counselors for use during financial aid presentations. The Denver Post and rocky Mountain News are sponsoring a job fair in October at the Pepsi Center. Ann King, with Channel 9 News, has asked us to participate. A table, with CAFAA materials, is planned for this event. Thanks to Jennifer Helgeson (CollegeInvest) Cindy Vadeboncueur (Red Rocks Community College) and Mary Ann Hunter (US Bank) for volunteering to attend to the table. Ann King has also asked the Financial Aid Awareness Committee to again prepare to work the phones during the Channel 9/CAFAA Financial Aid Call-in Nights. The tentative schedule is for these events to take place in late January or early February 2004. Thanks to all of the committee members who have participated in the past year, and to those who have volunteered for the upcoming year:
- Jim Contreras - Arapahoe Community College
- Aimee Rogers - UNC
- Jennifer Helgeson - CollegeInvest
- Mary Ann Hunter - US Bank
- Thad Spaulding - CU Boulder
- Cindy Vadeboncueur - Red Rocks Community College
- Linda Crook - Red Rocks Community College
- Peggy Hill - Colorado Student Loan Program
CAFAA Reserve Fund
by James Broscheit, University of Colorado, Boulder
As a past member of the Professional Development Committee and current Vice President, I have spent time with the development of the policy and surrounding issues related to the Reserve Fund. I am pleased to announce that discussion has turned into action and that good things do come to those who wait.
CAFAA P&P stipulates that the Board of Directors to annually expend excess funds if available. One method of expending these funds was the development of a Reserve Fund Scholarship. Over this past year, it was determined that such funds did exist and the formation of the Ad Hoc committee convened and has made two scholarship awards. The committee consists of the chairs from Professional Development, Diversity and Financial Aid Awareness.
The first scholarship is to the 2002 Post Secondary Professional of the Year, Debbie Frazier. The scholarship is for attendance at the 2003 RMASFAA Annual Conference. The award covers standard room/board, registration and a transportation stipend.
The second scholarship is for the 2002 Tom Monohan Rookie of the Year, Thad Spaulding. The scholarship is for attendance at the 2004 RMASFAA Summer Institute. The award covers shared room/board and registration and can be used for either the Neophyte or Intervanced Tracks.
Additional scholarships will be offered for the 2003 Tom Monohan Rookie of the Year and to the 2003 Post Secondary Professional of the Year. The Tom Monohan Rookie of the Year will receive a similar scholarship to the 2004 RMASFAA Summer Institute while the Post Secondary Professional of the Year will receive an offer for the 2004 CAFAA Conference or the 2004 RMASFAA Conference.
The scholarships are non-transferable and if not accepted, return to the Ad Hoc committee for further consideration. Both Debbie and Thad have accepted their scholarships and are planning on attending the respective trainings.
The discussion of reserve funds has been discussed at length over the past several years and we are pleased to have reached a what we think is a positive outcome that will return the benefit of the dollars back to the membership.
On-point, a Look Back on Rick Lee's CAFAA Presidency
Over the past year CAFAA’s board, committee chairs, and general membership have benefitted from the conscientious leadership provided by President Rick Lee. His “Profiles” in the Crier have been thoughtful and motivational.
The following excerpts from each of Rick’s past-four Profiles, are matched with archived pictures to depict his involvement in CAFAA over the years.
Winter 2002 - "Philosophy 101"
“Everyday, you and I, individually and corporately as an association, choose to participate in this profession. I doubt that any of us do it for the fame, money and pure glamour! 'The primary goal of the Financial Aid Professional is to help students achieve their educational potential by providing appropriate financial resources' is a statement taken from The Task Force on Standards of Excellence and adopted by the NASFAA Board of Directors, April 1999. Keeping that statement as a focus, we, as a profession, must continue to believe that a well-educated citizenry will provide for the greatest ultimate benefit to our society.”
Fall 2003 -- "Can it get any better?"
“We are the rare individuals who possess the ability to utilize both the left and the right sides of our brains, in full synchronization, to counsel students with empathy while running calculations in our heads. Our task is to find adequate funding, even in times of shrinking resources, to make the dream of education a reality for those that cross our thresholds. Yes, we are magicians.”
Summer 2003 -- "Since the last Crier"
“With our enrollments growing, staff reductions being made, declining resources for our institutions and our students is it any wonder that those of us in this high “service” area of higher education are feeling stress? I have heard too many stories about our peers who have had stress tests, EKG’s, etc. Today, as I sit in my doctor’s office awaiting the results of my EKG and blood work, I cannot help but ask “Is this job worth it?” Yes is always my immediate answer. I could have been a stockbroker instead of a financial aid professional. Now that would really be depressing!”
Fall 2003 -- "Tempus Fugit"
(pictures circa 1990)
Photo courtesy of the CAFAA Archive
“I sincerely thank each of you for the support that you have shown, as professionals, for the current year Executive Committee, Board of Directors and for the Chairs of the various committees that represent you – the membership. They have been a great group of committed professionals to work with this year! The following quote by Joseph A. Raelin sums up my experience with them as they have risen to the challenges faced this year:
‘Of all the motivators of performance for professionals, job challenge stands at the top of the list, precisely because of its association with professionalism itself.’”
Trinidad State Junior College Offers At-risk Students
New Opportunities to Succeed
by Greg Thomason, Colorado Student Loan Program
Student dorms at Trinidad State Junior College are housing 10-15% more students this fall thanks in part to a new recruiting program that is designed to provide at-risk students with the academic and financial aid tools necessary to attend and succeed at this postsecondary education institution.
The program is the result of Dr. Frank Armijo’s vision for Trinidad State Junior College. As College President at TSJC, he is committed to finding ways to help high school students from across the State of Colorado, with below average academic transcripts, develop the self-confidence to succeed. The assortment of liberal arts and transfer degree programs, and mix of technical and vocational certificate programs offered at TSJC are well suited to serving the needs of those students qualified for the program.
Financial Aid Director Gary Fresquez says the program was first entertained a little more than one year ago. Dr. Armijo’s outlined plan launched a collaborative effort among department directors at Trinidad to find ways to design a program that would allow students who might not otherwise envision going to college, the necessary support systems to do so.
Fresquez says that there are normally three barriers that can keep at-risk students from even considering attending a two- or four-year college, they are: “economics, poor academic standing, and the lack of a family role model with prior higher education experience.”
Trinidad State Junior College has put in place programs to eliminate the first two of these barriers. Students who enroll through this program are provided the standard financial aid package available to all TSJC students. This consists of Pell Grants, work-study, Colorado need-based grants, and financial aid loans, if necessary. In addition, Fresquez says, the college has implemented a dorm scholarship, using institutional funds, that covers all related housing costs, except food. The College also recently received grant funds to help individuals with GED accreditation attend college. Administrators at TSJC have been working on establishing an alumni trust fund, the first of its kind at the College, to help provide further tuition assistance to students.
To compensate for the sub-standard academic preparation that most of the students bring to the program, Fresquez says the College offers students supplemental tutoring and writing labs at no additional expense. These services provide everyone who enrolls in the program with the ability to acquire the necessary skills to succeed in an academic environment.
Over coming the third barrier entails a more personal approach. TSJC understands how important family support means to the process and subsequent success of the student. As such, parent involvement is solicited, with the understanding that the parent may or may not have the requisite awareness relevant to higher education. College personnel will contact the family and make arrangements to assist with the ‘bureaucratic’ processes inherent to higher education. “Something as simple as completing the FAFSA, can be daunting to these students and their families”, comments Fresquez. The institution’s willingness to offer this personal service may help many students overcome one more barrier.
Recruitment for the first class of students was coordinated with assistance from high school counselors from around the State and cooperation from the Daniels Fund, a non-profit institution set up by benefactor Bill Daniels to help create, “A world where every individual has an equal opportunity to live a healthy, productive life.”
Beginning this fall, the college has also begun to recruit students by attending high school day/night programs. The hard work of recruiting qualified students has already paid off, Fresquez says. “We received a good group of students this fall,” from high schools in Colorado Springs, Denver, and Pueblo. Next year, he says, he expects the demographic profile of the incoming class to include students from more of the rural communities in the State. He notes, “We are a good fit for students, no matter whether they are from rural or city communities.”
Candidates for the 2003/2004 Elections
As of 10/2/03 the individuals listed below have place their names in consideration for candidacy for the CAFAA Board of Directors. This may or may not be the final slate of candidates. Still, all of these people deserve our thanks and support for their willingness to serve CAFAA. My sincere appreciation goes out to these wonderful folks. Even in these toughest of economic times, where we are all already at our own personal limits, these exceptional individuals have expressed a willingness to do even more for the good of the organization. Let's all thank them as we come across them in our daily lives.
Marty
President-Elect
James Broscheit
Asst Director of Fiscal Operations
University of Colorado at Boulder
Audrey Osswald
Director Financial Aid
Pueblo Community College
Vice-President
David Aker
Financial Aid Advisor
University of Colorado at Denver
John Gudvangen
Associate Director of Financial Aid
Colorado College
Secretary
Elaine Redwine
Director of Financial Aid
Front Range Community College
Tina Snow
Regional (southwest) Director of Financial Aid
Westwood College of Technology
Treasurer-Elect
Beverly Alles
Student Financial Service Specialist
Colorado State University
Cynthia Vadeboncouer
Financial Aid Counselor
Red Rocks Community College
4-Year Public
Ofelia Morales
Director, Student Financial Services
Colorado State University-Pueblo
Aimee Rogers
Financial Aid Counselor
University of Northern Colorado
2-Year School
Jennifer Presuhn
Financial Aid Advisor
Pikes Peak Community College
Linda Crook
Director of Financial Aid
Red Rocks Community
College Proprietary
Julia Alexander
Financial Aid Director
Rocky Mountain College of Art & Design
Pat Hollenbeck
Director of Financial Aid
Colorado Technical University
Service Sector
MaryAnne Hunter
Marketing Manager
U.S. Bank
Deb Erickson
Account Manager
Citibank The Student Loan Corporation
4-Year Private
Dana Studt
Loan Officer
Naropa University
Vocational-Technical
Tony Bowling
Financial Aid
Delta Montrose Area Voc Tech Center
Words From Our Sponsors and Friends
Six Key Things to Remind Borrowers as they Consider Consolidation
Submitted by Michael Henderson, National Account Representative TG, (800) 252-9743 ext. 2883 or michael.henderson@tgslc.org
Loan consolidation is a popular topic. With interest rates falling again, you may find more and more borrowers contacting your office seeking assistance or additional information on consolidation options.
Here is a quick review of issues to keep in mind if you find yourself assisting borrowers who want to know more about consolidating their student loans.
Here are some of the features borrowers are finding attractive about consolidation:
Consolidation can simplify a borrower's life.
If a borrower consolidates all of his or her student loans, he or she only has to make one monthly payment to one lender. This means that there is less paperwork, and less hassle.
What is the downside? While a borrower may find this arrangement to be more convenient, he or she may be giving up some benefits that some of his or her loans currently provide, like deferment eligibility or loan forgiveness options. In addition, if the borrower has recently graduated, and decides to consolidate, the borrower may have to give up all or part of his or her grace period to do so.
Consolidation can lower a borrower's monthly payments.
Depending on a borrower's total loan debt, he or she may be eligible for a longer repayment term of up to 30 years. Paying the same debt over a longer time means the borrower will be making lower monthly payments.
What's the downside? By stretching his or her debt over a longer time, a borrower will be paying more interest over the life of his or her loan. So the borrower will actually wind up paying more for the loan in the long run. The best strategy, if a borrower can afford it, is to consolidate his or her loans but continue to make the same monthly payment as before consolidation. This will allow the borrower to pay off the loan more quickly and save more interest.
Consolidation can lock in the lowest interest rates in the history of the FFELP.
This is obviously a very attractive benefit to consolidation at this time, but is there a down side? Consolidation is usually a one-time process. If a borrower consolidates now, and the interest rates drop even lower in the future, he or she will not be able to re-consolidate to get the lower rate.
Here are some of the aspects of consolidation that are raising concerns with borrowers:
Consolidation has attracted unfamiliar players into the arena.
New consolidation companies seem to be popping up overnight. Many provide good service, but some may not be able to provide the service a borrower needs or wants. As we all know from our experience in the financial aid industry, is always a good practice to know a lender and its reputation.
To help a borrower avoid problems, you may want to encourage him or her to check with the borrower's current lender(s) about whether they offer loan consolidation. Perhaps you could share your own office's experiences on the subject, or suggest that a borrower speak with other borrowers to gather references. Or you could offer your students your list of preferred lenders as a starting point - these are obviously reputable banks and servicers that have tried-and-true experience working with education loans. This list can help the borrower do his or her homework and find the best lender to suit his or her needs.
Some consolidators may try to get borrowers to consolidate ALL of their debt - including credit card debt and any private loans they may have.
Most borrowers are totally unaware that these types of consolidation loans are private loans that generally do not have the same benefits as the Federal Consolidation loan.
Borrowers should be aware that if they consolidate other types of loans or debts with their student loans, they risk raising - substantially - the overall interest on the loan and they may lose some of the deferment eligibility or loan forgiveness options that federal education loans carry.
Some borrowers may be tempted to extend their repayment up to the maximum 30-year repayment term (depending on their total education loan debt). This means they may pay more interest over the life of the loan.
Borrowers should be advised that they don't have to accept the maximum repayment term just because the lender offers it. Borrowers should also be told that if they do set up a longer repayment schedule, that there is no penalty for making extra payments on their student loans, or for applying those extra payments to principal only. The optimal situation, of course, is for the borrower to maintain a shorter (10-year) repayment term, and he or she will pay much less on the loan in the long run.
Loan-Consolidation Considerations
Submitted by Kathy Bixby, USA Funds® Services, 866-497-8723 ext. 3259 or kbixby@usafunds.org
The new, record-low interest rates, effective July 1 on Federal Stafford and Federal PLUS loans, should prompt nearly every eligible borrower to investigate loan consolidation as a means to lock in these low rates for the remainder of their repayment term. Although loan consolidation may benefit many borrowers, they should understand the following ramifications before they submit their consolidation-loan applications:
Do you really want to be paying off your student loans when your children are in college?
Loan consolidation permits a borrower to extend the repayment term up to 30 years, depending on the total outstanding balance of the borrower’s education loans. For borrowers who cannot afford their monthly student-loan payments, this extended-repayment term can reduce their monthly installments. On the other hand, borrowers who have high balances and want to “refinance” their loans to take advantage of historically low rates could end up making consolidation-loan payments while they’re paying for their children’s college costs.
Lower interest rates don’t necessarily mean lower total interest costs.
Borrowers who consolidate to lock in a low interest rate and repay their loans over the extended period permitted by loan consolidation are likely to negate the benefits of the low rate. For example, a borrower who repays a $25,000 consolidation loan at 3.5 percent over a 20-year term pays approximately the same amount of interest as a borrower who repays $25,000 in unconsolidated Stafford loans over 10 years at a constant rate of 7 percent.
Balance affordable monthly payments against the shortest-possible repayment term.
Many loan-consolidation promotions tout the benefits of reducing a borrower’s student-loan payments by as much as 55 percent. This payment reduction can be a benefit for some borrowers. Borrowers who consolidate primarily to lock in low interest rates, however, should select the repayment term that produces an affordable monthly payment and repays the loan in the shortest-possible period.
Borrowers can lose some benefits when consolidating Perkins loans.
Although federal law permits the consolidation of Federal Perkins loans, borrowers should be aware of some disadvantages. By consolidating, Perkins-loan borrowers give up the interest-subsidy benefit they receive if they qualify for deferment of their payments. In addition, Perkins borrowers may lose some loan-cancellation and deferment options by consolidating.
In-grace consolidation may be beneficial if you don’t mind giving up the rest of your grace period.
Borrowers who are in the six-month, post-school grace period and consolidate Stafford loans issued since July 1, 1995, can obtain a slightly lower consolidation-loan interest rate than if they wait until their loans are in repayment. These borrowers should understand, however, that by consolidating they give up the remainder of their grace period.
Loan consolidation is probably not a good idea for borrowers in the last year of repayment.
Stafford-loan borrowers who are in the final year of their repayment term automatically receive the new, lower Stafford-loan rates effective July 1 through June 30, 2004. By consolidating, these borrowers are likely to receive a higher interest rate because the formula for calculating consolidation rates rounds the rate up to the nearest one-eighth of 1 percent.
Borrowers should consider additional issues regarding loan consolidation.
Borrowers should ask if the lender offers consolidation-loan borrower benefits to further reduce interest costs. Borrowers should understand which organization will service their consolidation loan, where they will make payments and what level of customer assistance they can expect from the servicing entity. Borrowers also should find out if the lender offers an online-application process and how long it takes to process the application. In addition, borrowers should explore the level of loan-consolidation counseling they receive from the lender/servicer.
NASFAA Recognizes Distinguished Leaders at the Association's Annual Meeting in Salt Lake City
Washington, D.C. - At its annual conference last month in Salt Lake City, the National Association of Student Financial Aid Administrators (NASFAA) presented its highest honors.
RICHARD TOMBAUGH was presented with a Lifetime Achievement Award, the highest award NASFAA can bestow on one of its Members. Tombaugh served as the first executive director of the NASFAA Washington office from 1970-1975. An expert on the principles and mechanics of every phase of the student aid process, his representation of NASFAA before the Congress and with the U.S. Department of Education proved of great value to the profession. A colleague observed that Tombaugh's greatest contribution during NASFAA's early years was helping to build and operate the fledgling Association. Without his efforts, it is doubtful that NASFAA would have survived its humble beginnings.
KENNETH WOOTEN also was honored with a Lifetime Achievement Award. Wooten gained national prominence among college aid professionals in 1969, when he served as the president and one of six founders of NASFAA. For 31 years, Wooten served the University of Mississippi diligently as a counselor, director of placement and financial aid, and finally as registrar and dean of admissions until his February 1991 retirement. He also served as a consultant for the U.S. Department of Education, the U.S. Justice Department, and several Mississippi junior colleges. His vision helped create some of the Association's most enduring products and services, including the NASFAA Newsletter.
CHARLES W. BRUCE received the Distinguished Service Award for outstanding achievements in furthering NASFAA's goals. Bruce served as NASFAA's national chair from July 1, 2002 to June 30, 2003. His thoughtful and deliberative leadership coupled with his commitment to "opening doors of educational opportunity" helped the Association formulate a balanced and rational set of public policy positions for the upcoming Reauthorization of the Higher Education Act.
JACQUELINE KING, director of the American Council on Education's Center for Policy Analysis, was awarded the Robert P. Huff Golden Quill Award for her outstanding contributions to the body of literature on student financial aid. Of particular importance are Kings' two recent publications: Crucial Choices: How Students' Financial Decisions Affect Their Academic Success and 2000 Status Report on the Pell Grant Program. She also edited the book Financing a College Education: How It Works, How It's Changing. King has contributed greatly to NASFAA's research activities, including writing for the Journal of Student Financial Aid and Student Aid Transcript magazine.
The following six individuals received NASFAA's State and Regional Leadership Award for their outstanding contributions at the state and regional levels.
MICHAEL BENNETT, director of financial aid at Brookdale Community College in New Jersey, Eastern Association of Student Financial Aid Administrators (EASFAA)
ADDALOU DAVIS, director of financial aid at the University of the Pacific, McGeorge School of Law, in California, Western Association of Student Financial Aid Administrators (WASFAA)
PAM FOWLER, director of financial aid at the University of Michigan, Midwestern Association of Student Financial Aid Administrators (MASFAA)
CAROL MOWBRAY, director of student financial aid and support services at Northern Virginia Community College, Southern Association of Student Financial Aid Administrators (SASFAA)
MARY SUE RIX, director of financial aid at Centenary College of Louisiana, Southwestern Association of Student Financial Aid Administrators (SWASFAA)
SUE WEINREIS, assistant director of financial aid at Montana State University -Billings, Rocky Mountain Association of Student Financial Aid Administrators (RMASFAA)
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 10,000 financial aid professionals at nearly 3,000 colleges, universities, and career schools across the country. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. Each year, Members help more than 8 million students receive funding for postsecondary education.