May 2023 Newsletter

This Month's Highlights:

• National Decision Day
• Let's Talk About Loans
• The Importance of Mentors
• The Transformation: Teenager to Adult
• Financial Aid Insider: Extras

Dear Parent(s),

May is the fifth month in the Gregorian calendar and has 31 days. May is a Spring month in the northern half of the world, and a Fall month in the southern half. It is likely named after?Maia, the goddess of growth. May's birth flower is the Lily of the Valley.

?????Many countries in Europe and North America celebrate May Day on May 1st with dances around a maypole, a high wooden pole adorned with colors and flowers.

May 1st is National Decision Day

At most colleges, student applicants must commit to a college by May 1st. Students miss Decision Day for various reasons, such as parents asking the college for an additional week or so to figure out how they can afford that college.

Other reasons to ask for more time would be a family emergency, a natural disaster, or some other event that might have made the deadline impossible for your student to meet.

Sometimes, the college will be flexible when there's a legitimate reason and grant an extension. However, colleges are usually strict about College Decision Day deadlines. For the most part, deadlines are final.

Is Debt The Way To Go?

Once the award package has been accepted, and you know what you're on the hook for, the reality of how you will pay can't be avoided. Obviously, if you have been saving in a 529 College Savings Plan, you'll want to use some of that. There's also paying out of other savings, and what you can use from current income, and maybe grandparents will want to contribute.

If the above isn't sufficient, then there is the other option of borrowing money. Aside from student loans, you may not be aware of the PLUS loan. The?Parent Loan for Undergraduate Students?is a federal direct loan parents can take out to cover the cost of the college -- less any free money the student receives from the college and/or the federal and state grants.

I am not advocating taking on debt. However, it may be the only way some families can meet the cost of college. If borrowing is something you are considering, there are advantages that federal loans have over private ones. Here are a handful:

• Fixed rates over the life of the loans
• Many different repayment options, including loan forgiveness
• Defer payments during college or after without hurting credit scores
• Can consolidate without additional fees
• The loan is canceled upon the permanent disability of the borrower or the student
• The loan is canceled upon death of the borrower or the student

Students who qualify for a Federal Direct?Subsidized?Loan should consider taking it, because no interest will be charged for the four years (or five or six) the student is in college. When the loan does go into repayment, the interest rate is fixed for the life of the loan.

At this writing, I predict the interest rate for the Direct PLUS Loans for Parents of Dependent Undergraduate Students to be approximately 8% for the 2023-2024 year. The origination fee, which varies a bit is high, around 4.6%.

But considering the protections, flexibility, and potential forgiveness of the PLUS it still may be preferable compared with private loans.

There are novel repayment options that can put parents in the same position to qualify for loan forgiveness, which may include?Public Service Loan Forgiveness.

Mentors Contribute To A Successful College Experience

Now that the choice of college has been made, there are some expectations that I'd like you to consider.

One of the top determinants of scholastic success in college is students having a mentor. The likelihood of finding a mentor who is a full professor is going to be easier at a smaller institution than a larger one.

Mentors can be found at larger universities as well. But depending on the size of the college, mentorship opportunities may be incredibly hard to form. This is because professors at large universities are more interested in research than actual teaching. In fact, most professors have never learned how to teach. And larger institutions rely on graduate teaching assistants, who for the most part regard their teaching duties as interfering with their advanced degree programs.

Why is a mentor so important?

A mentoring relationship helps students grow, both personally and professionally. Positive mentors are natural role models. They help shape behaviors, work ethic, and social persona in a positive way. They provide professional guidance, and help identify the work toward professional goals. Often, they can connect the student to others in their chosen field, giving them a professional leg up after graduation.

In the collegiate setting, mentors provide insights into college culture, and help students navigate issues of time and stress management. A good mentor will also be there simply to listen when your student needs someone to talk to. And they can always benefit from hearing about the lived experience of someone who has been in their position before.

I can't stress the importance of your student getting to know the staff at the college's career center. The sooner they get involved, the greater the possibilities, and the more they can get out of their college experiences. As they begin to understand what they want out of life, students can identify potential internships, fellowships, alumni connections, and other opportunities.

The Transformation: Teenager to Young Adult

In discussions with parents, we sometimes talk about how the student has grown from the person they were when they left for college to the person they've become by the time senior year rolls around.

Parents tell me of the confidence and independence their student has developed since high school. Maybe you remember when your youngster exclaimed, "I can do it myself!" As a 21-year-old, those words may now be unspoken, and parents are better to wait to be asked for help than to offer it. Parents need to give the gift of letting them become the independent adult you raised them to be.

Enjoy the person you raised to be themselves. After all, they can't be a mirror image of their parents. And even if they could be, would you really want that for them? For yourselves?

There's one last thing: Deciding on a monthly budget. Many college aid award letters provide for a list of expenses that you will not be billed for. These include books and study materials, personal expenses and of course, your student will want, on occasion, to come home. So, you'll need to set aside money for that. If the award package didn't include any of those "indirect expenses", either look them up on the college's tuition and fees web page, or contact their financial aid office.

Until next month...

Michael Korch

P.S.?If you find this newsletter helpful, please share it with other parents like yourself!

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