Paying for College Gets More Challenging For Families

Student Loan Girl — Thu, 23 Oct 2008 00:42:00 GMT

Paying for college definitely isn’t getting any easier.

“It just seems like it’s really hard, because it is,” says Diana Jacobs, a mother of twin, college seniors, whose husband recently lost his job, forcing the family to go from borrowing modestly to maxing out their student loan amounts (“In Downturn Families Strain to Pay Tuition,” The New York Times, Oct. 16, 2008).

To meet her sons’ college expenses this year, Jacobs pressured the twins’ schools to increase their financial aid offers — each school offered $3,000 more in aid. And for the first time, Jacobs told her sons that she wouldn’t be able to assume their student loan debt, leaving the twins to take out their college loans in their own names.

“We all came to that consensus, but I hate it,” Jacobs said. “I hate for them to come out of school with $20,000 in student loans.”

The Jacobs family is not alone. The current economic conditions have made it even more difficult for families to afford the continually rising cost of college: unemployment is rampant, the cost of living is increasing, and home values are declining, making it more difficult for families to get home equity loans to help fund college expenses.

Slow Economy Causing Widespread Financial Challenges

Economic times have become so challenging that a recent survey of nearly 3,000 parents found that 62 percent of families plan to use student loans to help pay for college expenses this year, up from 53 percent just a year ago, according to Fidelity Investments’ College Savings Indicator.

The survey also revealed that parents may meet only 21 percent of the total cost of their children’s college education this year, down from 24 percent last year.

Families’ financial challenges have led to a 10-percent increase in financial aid applications this year. Aid administrators are concerned that this increased demand for federal financial aid — from 12.3 million applications last year to 13.5 million this year — may be too much for the government and schools to handle, now that more than 100 private, third-party lenders, citing reduced profit margins and increased difficulty finding investors, have left the federal student loan program.

Making the federal financial aid problem worse, states are facing widespread budget shortages and cutting back on the financial aid funding they give to colleges and universities, and schools’ own financial aid funds are dwindling due to disappointing returns on their endowments.

The economic downturn has also forced private student loan lenders who offer credit-based private student loans, which help families fill the gap between federal financial aid and the total cost of attendance, to rapidly adapt to changes in the credit markets. In recent months, these lenders, to avoid having borrowers default on their loans, have tightened their credit criteria, causing students who had previously borrowed on their own to need cosigners this year.

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Malls and Retail Stores a No-Go for Depressed Shoppers

Student Loan Girl — Sat, 16 Feb 2008 06:33:00 GMT

Signs of depression:

Loss of appetite
Loss of interest in daily activities
Loss of energy
Hopelessness
Self-loathing

Recommendations for treatment:

Don’t go shopping.

Primed for Sadness, People Spend More

A recent research experiment shows that people who exhibit signs of depression tend to be more willing to cough up the dough, according to a TIME Magazine article by Barbara Kiviat (“Depressed? Don’t Go to the Mall,” Feb. 8, 2008).

Researchers from Carnegie Mellon University, Harvard, Stanford, and the University of Pittsburgh split up their experiment participants into two groups: one that watched a sad video clip involving the death of a boy’s mentor and one that watched an emotionally-neutral video clip about the Great Barrier Reef.

The two groups were then asked how much of the $10 they were getting paid for the experiment they would be willing to pay for a water bottle. Participants in the sad video group were willing to spend about four times more than those in the Great Barrier Reef video group ($2 on average, compared to 50 cents).

Researchers say the results from their experiment indicate that people who are unhappy tend to overcompensate by buying new things.

“Feeling blue causes people to have a devalued sense of self, so spending more money on a new object — which people may identify, in a way, as an extension of themselves — starts to undo that deflation,” Kiviat writes.

This “emotional hunger,” as the researchers call it, may also contribute to other acquisitive behaviors, like looking for a new relationship or trading big on the stock market.

Shift Gears and Step Outside Yourself

The study’s findings, the researchers say, hinge on self-focus: When researchers looked at how much the participants were dwelling on themselves, they found that those who were sad but not self-focused didn’t spend as much.

Cynthia Cryder, a Carnegie Mellon doctoral candidate and co-author of the study, says that spending is a common way for people to try to breathe value into their lives, but that there are alternatives for cheering yourself up besides doling out cash.

“If you’re sad, maybe you should seek out something other than shopping. A new book to read, a new friendship. Something that’s novel and attractive to fill the need you’re seeking to fill,” Cryder told TIME.

Or, she added, break the cycle of self-focus by shifting your mindset outward and thinking about other people.

“You could try to think about others by rehearsing a series of sentences that involve others as the subject,” she said.

Or try calling a friend, Kiviat offers, “and instead of suggesting a trip to the mall, ask how her day is.”

5 Ways to Get Happy Without Spending

Next time you come down with a case of the blues, instead of throwing the credit cards in your wallet and speeding off to the mall, try some of these activities instead, that cost nothing and feel great.

Go for a walk. Sometimes just getting some fresh air and experiencing a natural environment can boost your mood. And exercise produces endorphins, which serve as natural uppers. Plan your route to go through your neighborhood or a nearby park to reduce your chances of coming across a spending opportunity.

Volunteer. As Cryder points out, shifting your thoughts from yourself to someone else can do wonders for your mood and self-esteem. Instead of buying another pair of shoes you don’t need, more downloads for your iPod, or the latest Xbox game, donate your time to someone really in need.

Get rid of clutter. Sifting through old belongings you’ve outgrown or no longer need can help you appreciate all the things you have in your life. You might even discover items you forgot you had, turning a tedious task into a home shopping spree.

Trade with friends. Gather up a group of friends and swap your give-away clothing, CDs, or anything else. You’re killing three birds with one stone: socializing, shopping, and saving.

Plant a garden. Taking responsibility for something living can feel extremely rewarding and uplifting. Gardening not only provides you with a daily activity to keep your hands — and mind — busy, but it’s good for you. The American Horticultural Therapy Association says gardens have healing capabilities, improving health and well-being.

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Student Loan Blog : depression

Paying for College Gets More Challenging For Families

Malls and Retail Stores a No-Go for Depressed Shoppers