About majors and careers...

Yesterday I participated in some online FAFSA training, and I could've written a FAFSA three-peat (Don't fear the FAFSA and Fill out the FAFSA yet?), but let's take a break from that, shall we?

I've seen a few articles recently highlighting the link between majors and careers and what that might mean for the student's future. (I even wrote a post about it awhile back-- Are you doomed to high unemployment because of your major?) Given the nature of the economy right now (especially for recent graduates) it's easy to see why a central theme here is how that major choice can negatively impact job options.

We're in a serious state of change right now. I didn't graduate from college that long ago (even though it doesn't feel that way), and I have friends who are currently employed in jobs that did not exist back then. Does that mean they picked the wrong major? No! What it means is that they used their education, stayed current, and kept themselves competitive.

They also love what they do.

Here's the thing-- if you don't love what you do, then you won't love doing it. If you pick a major just because it pays well, can you stay interested in it? The beauty of being in high school or college is that you have the freedom to explore all different kinds of careers. If you have access to a career counselor, I would highly, highly suggest you make an appointment and take some quizzes and interest inventories. (If not, this is another area where we consultants are a great resource.) If you have an inkling, take a look around and see who you or your parents might know in that position. Don't be afraid to ask for an informational interview. Many adults are perfectly willing to take the time, but you'll never know if you don't ask. 

Whether you've submitted your applications already, or you're gearing up for it, take some time to think about the things you're interested in or really love to do and how that could be a career choice. College is too expensive to just free-wheel all four years, but you can still discover what you're meant to do. 

Don't fear the FAFSA!

Remember last week when I implored you to fill out the FAFSA? Yes, even if you think you won't qualify. (There's no ceiling for income and besides, it's not the only factor. It's much more complicated than that.) And yes, sooner rather than later. There are a lot of myths and questions out there about the FAFSA and federal aid in general, and understandably so. For a great Q&A series that will probably answer your questions, check out this New York Times blog feature, with Mark Kantrowitz, the founder of FinAid.org. (Here's another FAQ, courtesy of the US Department of Education.)

Still need convincing? Here's 4 reasons:

1. A lot of colleges award aid on a first-come, first-served basis. When it's gone, it's gone.

2. You can use estimated income amounts if you haven't filed your taxes or received paperwork yet. You can always go back and make corrections.

3. You might miss out on state aid deadlines, many of which require the FAFSA.

4. If you don't ask, you'll never know.

So now you're ready! I love making lists, so I'll leave you with one last thing-- a checklist, courtesy of http://www.fsa4counselors.ed.gov/. These are the materials needed to sit down and fill out the FAFSA. Round them up and get to it! 

1. Student's Social Security number 
2. Parents’ Social Security numbers (if providing parent information*) 
3. Student's driver’s license number (if you have one) 
4. Student's Alien Registration Number (if you are not a U.S. citizen) 
5. Student's Federal tax information or tax returns including IRS W-2 information, for you (and spouse, if the student is married, and for parents if providing parent information). If you have not yet filed an income tax return, complete and submit the FAFSA using estimated tax information. (Use income records for the year prior to the academic year for which you are applying: for instance, if you are filling out the 2011–12 FAFSA, you will need 2010 tax information.) 
6. Records of your untaxed income, such as child support received, interest income, and veterans non-education benefits, for students, and for parents if providing parent information. 
7. Information on cash; savings and checking account balances; investments, including real estate but not including the home in which you live; and business and farm assets for the student, and parents if providing parent information. 

*Not sure whether you will need to put your parents’ information on the FAFSA? Check out “Am I Dependent or Independent?” at www.studentaid.ed.gov/pubs or call 1-800-4-FED-AID (1-800-433-3243).

Fill out the FAFSA yet?

Well, it's January 5th. Back to work, back to school, back on the resolution train. The 2012-13 FAFSA is now available and NOW is the time to get to it. Yes, even if you think you won't qualify. The early bird catches the worm, right?

I was catching up on my reading and found 10 tips for filling out the FAFSA, and I couldn't have put these better than myself. Read these, gather your financial information, and make an appointment with yourself to do it. My tip--Don't put it off!

10 tips for getting federal student aid

By Lynn O'Shaughnessy

(MoneyWatch) It's financial aid season, which means millions of families will be grappling with the FAFSA in the next few weeks. Chances are most families are going to make mistakes when completing the Free Application for Federal Student Aid. These mistakes can be costly, and may even keep you from receiving the financial assistance for which you qualify.

Here are 10 tips to help you successfully complete the FAFSA:

1. Don't provide retirement assets
Families can dramatically hurt their chances for financial aid if they include assets from their 401(k) plans, Individual Retirement Accounts, 403(b) and other qualified retirement accounts on the FAFSA. The financial aid form only requires that you share non-retirement assets.

2. Don't include business assets
Parents who have a family-owned and controlled small business do not have to report the company's net worth on the FAFSA if it has fewer than 100 full-time employees.

3. Skipping deadlines
Colleges impose deadlines on families to submit their financial aid forms, and these dates can be much earlier for students applying through early decision and early action options. Find out what the deadlines are, and don't miss them.

4. File early
Although there are essentially no federal deadlines for seeking financial aid, states do impose deadlines for families who hope to qualify for financial aid through their state programs. State deadlines can be as early as February. In some states, aid is given out on a first-come, first-served basis, so it's best to file your FAFSA well ahead of the state deadline.

5. Seek help
Confused? FAFSA staffers can help. You can contact the Federal Student Aid Information Center via online chat, phone or email. Here's where to find the financial aid contact information.

6. List the most current marital status
You need to provide your marital status -- divorced, separated or married -- on the day that the FAFSA is filed. Separated and divorced parents will sometimes enjoy a financial aid advantage.

7. Have the right parent complete the FAFSA
In families of divorce, the parent who has taken care of the child during the majority of the 12 months dating from the day the FAFSA is submitted is considered the custodial parent. This can be especially advantageous in families when one ex-spouse earns significantly less than the other. Ideally, the child would live with the lower-earning parent for at least six months and a day. This parent would complete the FAFSA, and the other parent's income would not be included. If the custodial parent remarries, however, the income from the new spouse would also be included on the FAFSA.

8. Avoid blank answers

If the answer to a question is zero or not applicable, write "0" or "Not Applicable" on the online form. Leaving blank answers can cause miscalculations.

9. Pay attention to graduation rates
When you complete the FAFSA and designate that the application be sent to specific schools, the FAFSA website will provide you with the graduation rates of each school on your list. Try to avoid schools with low graduation rates.

10. Don't inflate your education
Plenty of schools will give applicants brownie points if they are considered first-generation college students. If parents didn't graduate from college, select "high school" as the highest education attainment.

Bottom Line: Following these tips can help you increase your financial aid award, and every dollar counts.

I'm Not the One Going to College

Earlier this week Mark Sklarow, Executive Director of the Independent Educational Consultants Association wrote a blog piece that generated a lot of buzz. It was titled: "Getting Kids Into" Ivy League Colleges: Absolutely NOT the Job of an Independent Educational Consultant.

He was a little fired up because he'd been reading a lot of membership applications that espoused "insider knowledge" and "admission secrets" that would translate into an "advantage" for the student working with the consultant.

Outrageous claims like this get me a little fired up too. Admission to a college is not a prize to be won. Don't forget-- you still have to GO to college once you're admitted. This is why ethical independent educational consultants focus on the student as a whole and help students discover schools where they can be successful.

Think about this scenario-- Let's say Emma is a solid student at a good high school with good standardized test scores. She could get into any number of schools, but a school such as Harvard would be a long shot (and an academic struggle, to boot). Maybe she applies anyway and gets in. Any number of people would question her turning that down.

But this is exactly why admission is not the prize. Emma might flunk out. Or she might struggle to graduate in seven years with poor grades. Is that worth it? Or is worth going to a school where she could graduate with honors, be a leader on campus because she's not struggling academically, and graduate on time? That's the scenario I'd rather see.

If the Ivies were the end-all, be-all, then the thousands of other wonderful colleges out there wouldn't exist.

I'm not yet a member of IECA, but I strive to abide by their Principles of Good Practice. This is why I will never claim to get a student into college. Students get themselves in, IEC's help get everyone through it all.

3 Things to Remember About Your College Application

It's official-- we are in the throes of the holiday season. Between the constant holiday music and piles of decorations everywhere, there's no escaping it. And what do the holidays mean? Stress! Yet somehow it all manages to come together, even if it's at the last minute.

We're also in the the throes of another season, college application season, and that means another stressful deadline lurking behind the holidays--the regular application deadline. Those who applied earlier will actually get an answer soon; what a lovely present that could be. Just like the holiday eventually sorts itself out with some thought and organization, so do the college applications.

There are a three things to remember that I think will help, even if you've already got an application in.

1. Colleges want you
Think about it--do you think a college would exist without you, the student? This isn't meant to be a if-a-tree-falls-in-the-woods-and-no-one's-around kind of question but they need you, they really do. Yes, a lot of it is business driven, with staff to pay and a lot of building upkeep, but the professors are also there to teach YOU. None of it can really exist without students.

2. Admissions officers are people too
Ever see a teacher outside of school, in regular clothes? It's kind of a weird feeling, isn't it? Kind of like they shouldn't be there? Admissions officers seem like that too. Who are these people? Talk to them; you'll find they're quite reasonable. They're looking for the best qualities in each application they comb through.

3. You will go to college
I know sometimes it feels like this isn't true. And I don't doubt how disappointing it will feel if you don't get in to your first choice. But if the list of colleges is a thoughtful one, there's more than one good choice on that list. The common denominator in this whole equation is you. You are the only one who can make your college experience great. Take advantage of the incredible opportunity that's in front of you. If you do that, you'll thrive. And what's stressful about that?

5 Myths About Student Loans

This week I'm going to challenge everything you know about student loans. Well, actually, Mark Kantrowitz is. He's the publisher of FinAid and FastWeb, which are among the best resources out there for financial aid and scholarship information. And they're free. (It's been said before, but it bears repeating, don't ever pay for a scholarship search.) This piece is from the Washington Post's series whose aim is to challenge everything you about a wide range of topics. So here it is--consider yourself challenged. 

From Mark Kantrowitz and the Washington Post

Many of the Occupy Wall Street protesters are struggling to repay student loans and want their debt to go away. An online petition calling for cancellation of all student loans has gathered more than 600,000 signatures over the past 11 weeks. President Obama responded, in part, last month with an improved income-based repayment plan, but most of the protesters and petitioners will not qualify for it. The increased attention on education debt has also brought attention to many misconceptions about how people borrow to pay for school.

1. Forgiving student loan debt would help stimulate the economy.
People who want all student loan debt forgiven argue that getting rid of monthly loan payments would lead to increased consumer spending, thereby providing a quick boost to the struggling U.S. economy. However, only about 40 percent of all outstanding student loan debt is actively being repaid. The remaining borrowers are still in school or otherwise not paying their loans back, so they wouldn’t immediately benefit from forgiveness.

And a “forgiveness stimulus” would have a limited impact. According to my calculations based on data from the Education Department’s Direct Loan Program, annual payments and default collections total about 5.6 percent of these outstanding direct loans. If this proportion is similar for other kinds of education debt, then forgiving the nearly $1 trillion in outstanding student debt would inject at most $56 billion per year. Not a paltry sum, but certainly small compared with more significant stimulus efforts.

2. All education debt is good debt.
Certainly, taking out loans to pay for college is an investment in your future and a key to a better-paying job. So it’s good debt. But too much of a good thing can be bad for you.

Students who graduate with high debt often must abandon certain career aspirations. I’ve spoken to hundreds of borrowers who are behind on their student loans, and they tell me they have delayed major life events, such as buying a car or a home, getting married, having children, or saving for their children’s college education or for retirement. According to a recent survey by Monster Learning, about a third of recent college graduates have to move back in with their parents to save on living expenses.

A good rule of thumb is that students’ total debt at graduation should be less than their expected starting salary — ideally, a lot less. This will allow them to repay their loans in 10 years. Otherwise, they will need to use an alternate repayment plan, which reduces the monthly loan payment by stretching it out over 20, 25 or even 30 years. This means that when their own children start college, some of these people will still be paying off their old loans.

3. If you declare bankruptcy, your student loans go away.
Neither federal nor private student loans can be discharged in a bankruptcy unless the borrower files an “undue hardship” petition — which often involves a very harsh and high standard that was set in a New York state case more than 20 years ago. It requires that the borrower cannot maintain a minimal standard of living while repaying the loans, that the circumstances that prevent repayment will probably persist for most of the life of the loans and that the borrower made a good-faith effort to repay the loans. In the words of one bankruptcy judge, a successful undue hardship petition requires a “certainty of hopelessness.”

According to the Educational Credit Management Corp., a guarantee agency that manages the student loans of federal borrowers with an active bankruptcy filing, about 72,000 federal student loan borrowers filed for bankruptcy in 2008, but only 29 succeeded in obtaining a full or partial discharge of their loans. That’s 0.04 percent. You’re more likely to die of cancer or in a car crash than to have your loans discharged in bankruptcy.

4. Widespread defaults on federal student loans would worsen the government’s deficit.
Some people argue that the student loan “bubble” could be the next to pop. Yet despite the recent increase in default rates to nearly 9 percent, federal education loans remain profitable for the government.

And the government has strong powers to compel repayment on defaulted loans. For example, it can garnish up to 15 percent of take-home pay without a court order for a borrower who is 12 months behind on student loan payments. The government can also intercept federal and state income tax refunds and lottery winnings, and offset up to 15 percent of Social Security disability and retirement benefit payments. Default rates would have to more than triple for the government to lose money on federal education loans.

5. The federal government should get out of the student loan business — the private sector can do it better.
Private loans make up a relatively small percentage of total education debt. Some private loans currently offer lower interest rates than federal education loans — but most of those rates are variable and restricted to borrowers with excellent credit or with a creditworthy co-signer (usually a parent). Interest rates are unusually low now, but the rates on variable loans are likely to start increasing soon.

The federal government, on the other hand, seeks to increase access to a higher education in addition to earning a profit. The federal Stafford loan is available to all students without regard to the borrower’s credit history. The federal PLUS loan requires that borrowers not have an “adverse credit history,” but this is a weaker standard than the ones used by private lenders.

But there’s more the federal government can do. The Consumer Financial Protection Bureau and the Education Department have proposed a plan to standardize financial aid award letters, so that they provide better disclosures of college costs and aid. College is becoming less affordable. Tuition rates at public colleges are growing at above-average rates, and low- and moderate-income students are increasingly being priced out of a higher education. Families need federal and private student loans to help pay for college, but they also need clear, correct and comparable information about college costs and financial aid so they can make informed decisions about affordability, and so students can graduate without crippling loan debt.

Mark Kantrowitz is the publisher of FinAid and Fastweb, financial aid Web tools, and the author of “Secrets to Winning a Scholarship.”

Are you doomed to high unemployment because of your major?

So, what's your major?

When you're a senior in high school everyone asks where you're applying college. The follow-up question inevitably will be about your major. Most people change their major at least once in college. I myself switched from business to psychology. For some, it can be a tough choice to make. There's been a lot in the news recently about whether or not college is a worthwhile investment, especially when you consider just how many recent graduates are struggling to find jobs. Unemployment rates for people aged 20-24 is at 16.5%, 10.9% for those aged 25-29. All higher than the national unemployment rate of 9.0%. Couple that information with the recent news about student debt climbing ever higher and, well...

Feeling any pressure to pick a major that pays well?

A friend emailed me a link to an interactive chart by the Wall Street Journal. Based on 2010 Census data, I can sort by unemployment, popularity, and earnings.

Do the most popular majors pay? Are you doomed to high unemployment because of your major?

Keep reading to see how the most popular majors fared.