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Caroline

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When faced with the choice to go far away to school, or stick closer to home, which would you choose?

My stepdaughter was recently faced with this question when she got into two different grad schools. One school was two states away, the other, here in Iowa. 

It can be a tough call — on the one hand, moving away is an adventure, a chance to spread your wings and experience new things. On the other hand, sometimes staying closer to home is more practical from a financial standpoint , and there's something to be said for being near family and friends.

It can be an emotional decision, but try not to make it based solely on emotions. Sit down with a clear head and write a pro and con list for each school. Consider some of the following questions when making your lists.

For the far-away school:

• Have you ever visited the school/city/state? Did you like it?
• Does the school offer the academic and social atmosphere you're looking for?
• Do you know anyone nearby who could help in an emergency?
• How often will you want to return home, and what will the cost of transportation be?

For the nearby school:

• Have you had the opportunity to visit/live in new place before? Do you foresee having the chance to do so in the future?

• Does the school offer the academic and social atmosphere you're looking for?
• Would you be tempted to spend most of your time back in your hometown, or with your old friends? Or would you make an effort to branch out and meet new people? 

Ultimately my stepdaughter weighed her options carefully, and chose the school close to home. She was impressed with the program and the campus at the school she chose. And she's excited about the prospect of being near her friends and family. (So are we!)

Have you had to make a similar choice? What influenced your decision the most?

Kathy

I’ll admit, I’ve got budgeting on the brain. Maybe it’s because it’s relatively early in the New Year, and I have the chance to start fresh with a clean slate. Maybe it’s because my student loans have recently gone into repayment. Maybe it’s because I have an extreme Type A personality  and I really can’t help myself.

Whatever the cause, the budget bug has bit me big time!

My group of friends is pretty much comprised of current and recent graduate students, and we are all-too-conscious of the need to save money where we can. So a few of us have recently adopted a challenging and budget-friendly New Year’s Resolution: find fun activities for the group to enjoy without spending more than $10 per person.

Let me tell you, living in the San Francisco Bay Area, that’s not an easy endeavor. We’ve pretty much eliminated every sit-down restaurant, museum  and high profile tourist activity  out there.

This is where some creative thinking comes in, and the fun begins! For example, did you know that many museums offer days where admission is free or the price greatly reduced? Or what about that hidden gold mine, the student ID? Many places of business offer great discounts for students, which may put previously out-of-reach ideas back into compliance with the resolution. The possibilities are endless!

I’m excited about the ideas we’ve come up with, but I’d love to get your input! How can you keep to a budget and still have a good time?

Barbara

Caroline has already gone over some details of the FAFSA for beginners, but what about those of you who filed a FAFSA (Free Application For Federal Student Aid)  last year?

You need to complete a FAFSA every year you're in school, even if your financial situation hasn't changed. Don't worry — renewing your FAFSA takes much less time than the initial application.

The Department of Education will send you a Renewal Application or a reminder of your PIN (Personal Identification Number) to apply online, and you may also get a reminder from your school. However, you don't have to wait for either notification to apply. If you need a reminder of your PIN, just head to the PIN Website. 

And while it's best to file your taxes early to have the correct information, you don't have to wait. Use December pay stubs to estimate income for the year. You'll have the opportunity to correct your application if needed. Plus, applying earlier ensures you meet your deadlines  (some aid is first come, first served).

If your situation has changed — like a dramatic shift in your income, a divorce, or a parent's job loss — you may want to talk with your financial aid office about how it could affect your financial aid award. They'll be able to walk you through what may be different this year.

Once you've applied for federal aid, keep on applying. Seek free money like scholarships and grants.  Even though you may receive enough financial aid to cover your costs, you don't have to accept everything you are offered. Some aid, like unsubsidized Federal Stafford Loans, will need to be repaid with interest — so the more funding you find that doesn't have to be repaid, the better!

Staci

Happy 2009! Have you made any New Year's resolutions? 

I'm not a particularly successful resolution-keeper. Last year, I vowed to eat healthier, and for six weeks it was nothing but oatmeal for breakfast, salads for lunch, and Lean Cuisine®  for dinner. By the time Valentine's Day rolled around, I felt so deprived that I consumed a two-pound box of See's Candies®  in one sitting.

All bets — and subsequently, all resolutions — were off.

Looking back on it, I know my resolution was too general — not to mention highly unrealistic! I'm guessing that many resolution-makers find themselves in similar situations.

Depending on what stage you are in your student life — soon-to-be-student, current student, recent graduate — here are a couple of specific, achievable New Year's resolutions you could adopt in 2009:

1. Apply for at least one scholarship. Remember, free money for college means less money you'll have to borrow, and plenty of scholarships are out there for those willing to do a little work. Find one that's right for you by checking with your high school guidance counselor, your college financial aid office, your employer (or your parents' employer), or a scholarship search.

2. Before you apply, read the fine print. Know exactly what you're getting into before you sign a credit card application or a student loan promissory note, because your signature indicates that you agree to the terms and conditions. Pay attention to interest rates, fees, grace periods, and repayment periods. If you don't understand anything, ask — before you sign.

3. Make an extra student loan payment. Student loans don't have prepayment penalties. At least once this year, scrounge up enough cash to throw an extra $50 at one of your student loans, preferably the one with the highest interest rate. Just be sure to communicate with your lender and let them know exactly which loan you want the extra payment applied to.

My one resolution for 2009? Not to eat an entire box of See's Candies in one sitting. Sounds pretty doable, right?

Staci

Last week I was talking with a friend of mine who is still paying off his student loans from graduate school. Like he does with his car loan and his mortgage, he pays more than the minimum amount. The extra money goes toward the principal (the balance owed on the loan), which means he pays the loan off faster and with less interest . If this is something you can afford, I highly recommend it, especially since student loans don't have a prepayment penalty .

However, my friend's student loan servicer was recently purchased by another company, and now he's dealing with a different billing system.

Before, he used a loan coupon book  and mailed in his more-than-the-minimum payment every month. When he called the new company to ask about payment options, the representative looked at his account and said, "You're paid ahead through April, so you don't have to make any payments until then."

Then he asked for a bill, and the representative explained that he wouldn't be receiving one until his next payment was due — in April.

To be fair, I suppose most student loan companies aren't used to their customers inquiring about paying more and paying in advance!

What I recommended to my friend is that he set up a recurring automatic payment for his student loan through his checking account.

When he balked, I told him to think of automatic payments as an "electronic coupon book."  That way, he won't have to rely on receiving a bill — he can just take matters into his own hands. Plus, he'll be saving paper and stamps!

What works best for you to stay ahead — or at least on top of — your student loan payments?

Caroline

It's hard to avoid all the bad economic news  these days. College students, I wouldn't blame you if you're nervous about leaving the safe confines of campus. The real world isn't looking too inviting these days.

So with a rough economy, are you considering grad school as — and forgive me as I pull from the headlines here — a bailout plan?

I found a great story  on NPR on this very topic. It pretty much confirms my opinion on the subject: Going to grad school just to ride out the bad economy or because you don't know for sure what you want to do is not such a good idea.

However, if you do know what you want to be when you grow up, and grad school is a means to get there, then certainly, go.

I know it often feels like the smarter choice to stay in school rather than graduate with a bachelor's degree , only to find yourself still working at a coffee shop or taking some other job that doesn't require a $75,000 education.

But the truth is, if grad school is just a chance to bide your time and figure out your goals, then you're better off getting a job — any job — than taking on more debt.

What do you think? Is the state of the economy impacting your choices as you prepare to graduate from college?

Caroline

When you're choosing a roommate, there's a lot to think about — especially if you'll be living off-campus, where you have many more responsibilities than you do with on-campus housing.

One of the things to consider seriously is whether your financial lifestyles match.

What does that mean? Let's see...remember the early episode of Friends  where Monica, Ross and Chandler all had money to do things, and Joey, Rachel and Phoebe didn't? Well, it created a rift — similar to what can happen with roommates who aren't on the same page financially.

Here a few things to think about before you sign a lease with a new roomie:

• Do you agree about how much rent you can afford? This is basic, but you shouldn't even be apartment-hunting  with someone who's looking at housing that's out of your league. Let him find another roommate and you can use the pool and gym at their apartment complex when you visit.

• What about utilities? Remember, utilities go beyond water, lights and heat. What type of Internet service do you want to get? Will you be investing in cable or satellite television? Do you "need" TiVo^®?  Don't assume you both agree about what's necessary.

• How will you furnish the place? Are you both okay with mismatched hand-me-downs, or does one of you want to furnish the place from scratch? Can you afford whatever your future roomie is proposing?

• How about the day-to-day stuff? Make sure you discuss your approach to buying food and other household stuff. Don't wait until she eats your favorite organic pasta sauce to have this discussion. Make sure you agree about what to share the cost of, and what is "hands off." Find a fair way to split the community items. Otherwise you might always be the one buying the paper towels and dishwasher soap.

If you've already been through a financial mismatch with a roommate, got any stories to share?

Staci

Student LoanDown readers, I’m pleased to share another question and answer series with you from Ask the Expert:

I am starting graduate school in the Srping of 2008 and going full time. My intended graduation date is May, 2009. I applied for financial aid. I am awaiting my award package.

The maximum amount of federal stafford loans (subsidized and unsubsidized) for grad students is about $18,000 per academic year. So my question is, will I get $18,000 starting this spring (2007-2008 school year), and another $18,000 starting in the fall (2008-2009) school year? Or will I get screwed and only get half ($9,000) for the spring, and then like the whole amount for the next school year ($18,000) in the fall???

It is pretty important because I have to take summer classes also, so my average cost per academic year is about $23,000, which is more than the aid I will receive. So depending on the timing of their disbursements, upfront for each academic year, or they split it in half, makes a big difference to the kind of leverage I can have with that money and determine wether I can move out, have some breathing room, etc.

Hmmm, a bit of a quandary. What do you do when the cost of your graduate school education and the amount of financial aid don’t add up? Fortunately for this reader, the math had changed slightly:

Generally, school certified student loans are disbursed in multiple installments throughout the academic year—not just in one lump sum. So you should receive separate disbursements for the spring semester of 2008, the fall semester of 2008, and the spring semester of 2009. Check with your school's financial aid office to be sure. Your school also might have a special financial aid application process for summer classes, so I'd recommend you ask about that now.

The good news is that the maximum annual Federal Stafford Loan limit for graduate students has increased a bit—to $20,500. That will give you some breathing room!

There was also a change to the Federal PLUS Loan program last year that extended eligibility to graduate students. You can apply for this loan after you've applied for your Federal Stafford Loan if you still need additional funding. There's no annual maximum, so you can borrow up to the cost of education (tuition, rent, books, etc.) minus other financial aid you've received. This loan has a fixed interest rate and after the Federal Stafford Loan, it's one of the most affordable loan options available. If this loan isn't included in your award package, ask your financial aid office if it's an option for you.

One last bit of advice: Borrow only what you really need, because you have to pay it back—with interest.

Got a question for us? We’ve probably got an answer (or can find one), so don’t be shy!

Staci

Looking for more guidance on preparing to pay and actually paying for college, as well as general personal finance information on a variety of subjects? (If you're reading this blog, I'm guessing that you're interested in these topics!)

There's a great new book out by wealth manager Russell Bailyn  called Navigating the Financial Blogosphere , which has two chapters on paying for college — one on saving for education (Chapter 13) and one on borrowing for education (Chapter 12) — in a section called "Building Wealth Requires Planning."

The content is very objective and provides several different online resources to find more information. I especially like that the chapters are short and conversational. In fact, one of the reviewers on amazon.com  calls it "a personal finance blog disguised as a book."

Of course, I should mention that the Student LoanDown blog is even mentioned on page 96, which is how I found about the book in the first place!

Barbara

For a number of my friends, formal education didn't stop at our undergraduate commencement. Many are now taking graduate level classes towards a master's degree. Some are taking classes on top of a full-time job, some are working part-time and some aren't working at all.

I'm always interested to see which of those options grad students choose. What are you, your friends or your family doing?

Each option has its perks and pitfalls. There's not a singular best option for all graduate students – it depends on the individual situation. The choice can be based on a number of variables, like what kind of program the student is in, the need for a steady income, or how much money the student wants to borrow. Caroline addressed the financing piece in an earlier post back in May.

Here are a couple things to consider:

Tuition assistance: For those students who choose to work full-time, many employers offer a tuition reimbursement program  so employees can continue their education part-time while they are working.

Grants and assistantships: Sometimes instead of working part-time outside of school, graduate students can get financial assistance through assistantships  in their own department. Usually students must be attending full-time to qualify for a GA position.

Attending school part time : Even if your employer doesn't offer tuition assistance, having the income and benefits from a job may give you the ability to take a class here and there, working slowly toward an advanced degree.

Working part time: Working part time while attending school full-time may mean borrowing less money through student loans, which could save you money in the long run.

Workload: For many programs, there really isn't an option to work. With heavy loads of homework, some graduate students just need to focus on their studies.

Are there any graduate students or former graduate students out there with advice for those facing the work conundrum?