Students face different pressures and tasks in the summer than they do during the school year. While it may seem easy to just take the summer off from college planning, now is the time to get a jump start on the next school year.
For new college freshman and returning college students, planning on how to pay for the upcoming year begins now. Students, unfortunately, can expect to pay more for federal student loans for the 2017-2018 school year. The rate on new undergraduate Stafford loans, one of the most popular student loans, will rise to 4.45 percent, up from 3.76 percent this year. Rates for graduate student Stafford loans will increase to 6 percent, up from 5.31 percent. Rates on PLUS loans, available to parents, as well as graduate students, will rise to 7 percent, up from 6.31 percent. The increase goes into effect July 1.
In addition to the increase in the interest rates, the loan fees also will go up — from 1.068 percent to 1.069 percent for student loans and from 4.272 percent to 4.276 percent for the Parent Plus loans. The loan fee is taken off prior to being disbursed to the college. Freshman can borrow $5,500, sophomores can borrow $6,500, juniors and seniors can borrow $7,500.
But you can’t rush out and borrow money for next year prior to the rate increase. Tthe rates on existing loans will not change — unless a student has an older loan that may have a variable rate.
The rates apply to loans made by the federal government.
Loans made by private lenders and banks may carry different interest rates, and usually the rates are variable, meaning they can change over the life of the loan. Typically, they will rise as market rates rise. Private loans are not subject to the same borrowing caps that apply to federal loans, but they also lack important consumer protections, like the ability to apply for flexible repayment plans or defer payments if you hit a financial rough patch.
Students should go to their college financial aid award and accept the aid they plan to use for the upcoming school year.
If they plan to take out a Stafford loan, they will then go to www.studentloans.gov — where they will complete entrance counseling, financial awareness counseling and then they will complete the master promissory note. Be wary of borrowing more than is absolutely necessary. A great rule of thumb is to limit the total amount borrowed to the expected early career salary. The federal Bureau of Labor Statistics reports that the average salary for those in their early 20s with bachelor’s degrees is $33,500 for men and $26,800 for women.
For new high school seniors, this summer is a great time to get ready for college applications.
Most applications aren’t available yet, but students can begin to gather the information they will need to complete the applications. The Common Application, which is used by more than 600 colleges and universities, will be available Aug. 1. Seniors can begin working on their essays now — the 2017-2018 essay prompts are available at www.commonapp.org. In addition, seniors should be determining who they want to ask for letters of recommendation.
Seniors also can use the summer to gain volunteer hours, work experience, job shadowing and perhaps study to retake the SAT, which is being offered in August, or the ACT, which is being offered in September. The results from the tests will be back in plenty of time to send off to colleges and to include with scholarship applications.
Juniors can begin to plan out their school year to make sure they get their campus visits scheduled. More and more colleges are tracking the level of interest a student has for their school — which means an actual visit is becoming more important. A campus tour also helps a student determine if the school is a right fit for them and their educational needs. Take advantage of sitting in on a class or meeting with a department head.
While many juniors overlook the PSAT that they will be taking in the fall, it is the test that is used to determine eligibility for the National Merit Scholarship. There are many free study tools available through Khan Academy at www.collegeboard.org.
Students of all ages should spend some time this summer visiting the many free scholarship search websites — more than $50 billion is awarded in scholarships nationwide each year.
Taking a little time this summer will help students of all ages be better prepared for college, and there will still be time to enjoy summer in Northern Michigan.
Vicki L. Beam is a college planner and owner of Michigan College Planning located in Traverse City. She encourages questions and comments about future columns. Contact Michigan College Planning at (231) 947-0203, by email at firstname.lastname@example.org and at www.michigancollegeplanning.com.