3 Surprising Reasons to Attend Community College First

Here's why students should seriously consider spending the first two years of their undergraduate career in community college.

Community colleges are rarely perceived as having the same level of prestige as many four-year universities. Unfortunately, that can lead eager new students to pass them up despite their many benefits.

What are those benefits, exactly? Few people would be shocked to hear community colleges are less expensive than four-year universities. But you might be surprised at how much a student can really save.

The advantages don’t end there. Money is only part of the picture. Read on to find out why students should seriously consider spending the first two years of their undergraduate career in community college.

1. Average Savings of $11,377

The question of whether college is worth it is a big one these days. Considering that the average 2016 grad who took out loans for school walked away with $37,172 in debt, some young adults might be unsure whether they should attend college at all. (You can read more about the dangers of certain student loans here.)

However, the amount a student has to spend (or borrow) to complete a four-year degree is slashed when the first two years are completed at a community college.

A recent Student Loan Hero study on the cost of a college credit found that, on average, a college credit from a community college is 60% cheaper than one at a four-year public university. This translates to an average savings of $11,377 for a student who earns their first 60 credits at a two-year public school before transferring to an in-state public university. (If this sounds like your plan, be sure to read this guide to federal student loans.)

2. Make Up for Mediocre Grades

Not all teens have the ability or the attitude to do well in high school. Because academic success is largely determined by grades, students who earn poor grades have little chance of getting into a decent college.

There aren’t any do-overs — that is, unless they enroll in community college. “I was a smart kid, but I hated high school, so I didn’t do well. As I look back, I also wasn’t mature enough at the time to have succeeded at a four-year school,” said Roberto Santiago, a community college professor at Ohlone College in Freemont, California.

“Going to community college allowed me to grow into growing up,” Santiago said. “I became an ‘A’ student, was on the Dean’s List and eventually graduated cum laude. I also started to enjoy school. I enjoyed it so much I’m now writing my dissertation and expect to have a Ph.D. within a year.”

Not every high school graduate is ready to take on the demands of a four-year university. Some students need additional support in certain subjects. Others require more time to grow up. Community college allows fresh high school grads to work toward earning their degrees while providing some breathing room during the transition.

3. Flexibility

It’s not a stretch to assume that the typical 18-year-old doesn’t exactly have their life figured out. Even if they do, the plan is likely to change several times. Unfortunately, many four-year programs require students to enroll full time, even if they haven’t chosen a major.

Not all students are prepared to hit the ground running when it comes to pursuing their degrees. Alissa Carpenter, a career discovery and personal development coach who owns the business Everything’s Not OK and That’s OK, explained that it can be a “hard pill to swallow” if a student isn’t sure what they want to do and has to spend thousands of dollars to figure it out.

“Community colleges give you the opportunity to take courses at your own pace,” Carpenter said. “This affords the student flexibility to have a job, decrease course loads and explore potential majors without the pressure and potential financial burden.”

Santiago echoed this sentiment. “The flexible schedule allowed me to work full time and attend school around my work schedule. I was also able to take a reduced course load with no penalties,” he said. “Without that flexibility, I would never have been able to succeed.”

There are a lot of good reasons to start off at a community college, regardless of a student’s situation. Even those who aced their Advanced Placement courses and have clear visions for their careers can stand to reap the financial benefits. By saving money in the first two years, students can accumulate less debt, pay off student loans faster and live their lives with less of a financial burden.

“I believe strongly in the community college mission,” said Santiago. “There are a lot of smart kids who, like me, had poor grades, or a poor attitude, or don’t have the money for a four-year school right after high school. Community college allows these kids to start exploring college at whatever pace they can manage. It can take more time, but it can be a boon for a great many students.”

Image: jhorrocks

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The Brainless No-Brainer Fix to the Student Loan Problem


You know what they say about opinions, right? Well, the same can be said about so-called no-brainer fixes to the student loan problem, as a recent Bloomberg.com article illustrates.

This particular “fix” has to do with the 57% of federal student loan borrowers who were drop-kicked out of the government’s various income-based repayment (IBR) plans in 2015 because they failed to file their income-verification paperwork on time.

According to the Obama Administration and the departments of Treasury and Education (and that post on Bloomberg.com), the process needs streamlining. How? By permitting borrowers to authorize the Internal Revenue Service to share their tax return data with the private-sector companies that administer their government-backed student loans.

Hang on…

Aren’t we talking about the same administrators that the government had called out for loan-servicing malfeasance?


And what about requalification as a concept? Why is there even such a thing when loan restructures—which is what we’re talking about here because interest rates and principal balances remain unchanged—are typically a once-and-done affair?

Yes, I know that income-based repayment is income specific. But if we are to take the ED at its word when it says that IBR is the key to achieving a “zero default rate among student loan borrowers,” and if this type of relief plan accomplishes this by extending repayment terms to as long as 20 years’ time — twice the duration of the standard student loan agreement — wouldn’t doubling the remaining term of any student loan yield the same result?

According to the Federal Reserve Bank of New York’s August 2016 report on consumer credit, 11.1% of all student loans are 90 or more days past due. Well, since roughly half of all these loans are actually in repayment (the balance is deferred because the borrowers are still in school), that means that more than 20% of the loans that are “live” are, technically speaking, in default.

Technically, because that’s the way all of the lenders I know treat all other consumer and commercial financings that are three or more payments in arrears.

Add to that, the loans that are between 30 and 90 days past due — because these may well portend future defaults — along with those that are being temporarily accommodated with forbearances (not to mention the loans that have already been granted conditional relief under the various income-based plans) and it’s not hard to see how nearly half of all loans that are currently in repayment are distressed.

A portfolio that is so clearly troubled is one that was improperly structured at the outset. So, if you’re seeking a true no-brainer fix, refinance the whole damn thing.

And not at the rates that are currently being charged, either.

The reason that the government has been reporting multi-billion dollar profits in this sector is because the feds are, in effect, lending long and borrowing short. Back in 2013, Congress devised a plan that charges students for borrowing 10-year money at rates that are roughly commensurate with that duration, only to have the Treasury turn around and fund the ED’s program with significantly less expensive short-term debt.

That the profits from this scheme offset the federal deficit is of course a happy coincidence. And that the government runs the risk of bankrupting its existing portfolio of reduced-rate loans if (and when) short-term rates rise to the point of exceeding those that are implicit within the underlying agreements is also beside the point. Right?


Just as Congress should acknowledge what is painfully obvious about the tenuous condition of these debts and move to refinance all government-backed student loans, so too should it devise an appropriate rate to charge.

It can start by acting like it knows what it’s doing.

Interest rates are built from the ground up. The first building block is the lender’s raw cost of borrowing, which, if we’re talking about 20-year loan terms, is the 10-year Treasury note (lenders use the so-called half-life rate for term loans). Add to that the interest rate equivalents of the costs of originating and servicing these contracts, along with a reasonable estimate for losses.

Here’s how the numbers shake out.

At the time of this writing, the 10-year Treasury note yielded 1.8%. Also at the time of this writing, the ED is charging slightly more than a 1% upfront fee for originating undergraduate student loans (a 0.1% interest rate add-on), and loan servicers are typically paid 1% for administering contracts of this type (another 0.1% interest rate add-on). As for the losses, let’s say that the government is wrong about zero defaults and put that number at 10%—higher than for any other form of consumer debt. The interest rate equivalent of that is 1.0%. Add up the pieces and you get 3.0%.

Wait a minute…

That means that the 3.76% rate that Congress concocted for the ED to charge at this time for its 10-year Federal Direct loans is overpriced by a whopping 25%. And that’s without taking into effect the fact that the pricing basis for 10-year loans should have been the 5-year Treasury note, which costs about a half a point less than the 10-year instrument.

All the more reason to reject this no-brainer fix and do what truly needs to be done: Permanently modify the contracts that are currently in place and adjust the existing program’s terms to match.

And one more thing.

Let’s not punish the roughly 50% of borrowers who are not having difficulty making their payments by forcing them to incur higher aggregate interest costs over the newly extended term. Instead, pave the way for them to continue paying what they’ve been paying by mandating that loan servicers automatically credit all supplemental remittances against principal (when no other payment-related obligations such as late fees are outstanding), rather than against future payments as is often the case.

Just because a borrower may neglect to specify his intent, or fail to realize that paying ahead on a loan is akin to remitting interest that has yet to be earned, shouldn’t mean that the lender or its subcontracted loan administrator is entitled to selfish advantage.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: Jacob Ammentorp Lund

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The Teen Who Got Into All 8 Ivy League Schools

Ivy League schools

The Ivy universities are notoriously challenging to get accepted to, but a New York student took it one step further and did the nearly impossible: she got into all eight.

August Uwamanzu-Nna from Long Island, New York was accepted to the eight Ivy League schools, as well as her four backups — New York University, Johns Hopkins University, Rensselaer Polytechnic Institute and the Massachusetts Institute of Technology.

“I’m still quite unsure what school I’m going to attend, but I know attending any of them would be such a great honor,” Uwamanzu-Nna told News 12 Long Island.

The 17-year-old valedictorian has a weighted 101.6 GPA and credits her success to family and teachers.

“The teachers make sure our potential is met and that we have done everything in our abilities to achieve success,” she said.

She currently attends Elmont Memorial High school in Long Island, which had another student, Harold Ekeh, also accepted to all the Ivy’s last year and ultimately opted for Yale University. Uwamanzu-Nna plans to visit each of the schools this month to see which one she’ll say “yes” to by the May 1 commitment deadline.

Ivy League schools don’t offer merit scholarships but use factors like family income, assets and size to determine each student’s need for financial assistance. There are other colleges who charge more in yearly tuition than Ivy League schools, but tuition is still pretty expensive. The priciest choice at the moment is Columbia University with $51,008 and the cheapest is Princeton at $43,450 (in terms of total tuition and fees for a year).

No matter which school students decide to attend, cost is certainly an important factor. More than 43 million Americans have student loan debt, many of whom carry debt loads that will take years to pay off. While student loans can do good things for your credit scores, they can also have a major negative impact on grads’ credit if they miss payments or default. You can see how your student loans are impacting your credit scores for free on Credit.com.

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I Can’t Afford to Go to My Dream School & I’m Freaking Out


Figuring out where to go to college is a very long process, and this is the home stretch. But for many students trying to decide where to go to school in the fall, this time of year is also the worst part. The journey that started out with so many exciting (albeit stressful) unknowns is coming down to a few hard, cold facts: where you’ve been accepted, how much money the school is giving you and how much money you’re going to have to spend to go there.

There’s no more wondering if or hoping you’ll get more scholarships, grants or generous aid packages. There’s just a lot of math with big numbers and the possibility that you’ll be in a lot of debt by the end of all this. As the financial aid award letters started arriving at her home a few weeks ago, one high school senior started to worry she’d end up in much more debt than she originally thought.

Delilah, a 17-year-old from Maryland who asked we not use her last name because she’s still waiting to hear from some schools, didn’t get any financial aid other than unsubsidized federal student loans from the first two schools that sent her letters. Still waiting to hear from her dream school — $64,000-a-year Oberlin College — she started to worry there was no way she’d be able to afford the schools she loved. In matter of days, the excitement she’d felt for months about going to college evaporated.

“I’m more nervous now,” she said. “I don’t know what’s a large amount of student loans. … How much is the debt going to screw up my financial life?”

As happens to so many students and their families, Delilah’s Expected Family Contribution (determined by information filled out on the Free Application for Federal Student Aid, aka the FAFSA) is much higher than what her parents told her they’d pay for college. Her EFC is $60,000 for the next academic year (it’s determined on a yearly basis). Her parents said they’d give her $10,000 a year.

“It’s kind of catching them off guard,” Delilah said. She’s the oldest child in her family, and her dad worked through college to pay for it. “They thought it was totally reasonable to have me pay my way through college.”

Now that her potential schools are sending her financial aid award letters, she and her parents see she may need a significant amount of federal student loans to pay for school. She has some scholarships and merit awards, and she can get varying amounts of college credit through her AP scores and some community college classes she’s taking, but this, combined with the federal student loans and her parents’ contribution won’t cover everything, it seems.

On top of all that, Delilah wants to study history and doesn’t expect to have a lucrative career. She’s struggling to grasp what’s an acceptable amount of student loan debt, but it’s hard for her to process working with such massive sums of money.

“I feel like right now I wouldn’t want to take on more than $40,000 or $50,000 [in debt] but I’m not used to dealing with this much money, ” she said. “I know people who think that $150,000 of student loan debt is the total norm.”

It’s not. The average student loan borrower from the class of 2015 owes about $35,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors — though those six-figure debt loads aren’t unheard of, even for undergraduates.

This is Delilah’s biggest financial decision so far, and she has to make it soon. For months she’s had her heart set on Oberlin, but with a month left before she has to commit, she’s trying to figure out how to love other schools.

“I don’t want to come down to going to a school I don’t like, but finances are the biggest thing right now,” she said. With AP credits and lower tuition, the in-state school she applied to, St. Mary’s College of Maryland, could end up being significantly cheaper than her first-choice Oberlin. Still, Oberlin is her favorite. She has a lot to think about and little time to make a decision. “It really frustrates me. I think the price of college is just ridiculous — it blows my mind.”

We’re going to check in with Delilah in the coming weeks as she finalizes where — and how much she’ll pay — to go to college. (You can see how your student loan debt may be affecting your credit scores by viewing your free credit report summary, updated each month, on Credit.com.)

More on Student Loans:

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