Category Archives: college aid

3 Tips For Parents Looking To Avoid The Golden Handcuffs of Student Debt

I grew up with a friend who is now a doctor at a prestigious hospital back home in California. “Tony”, always intended to become a doctor, and worked hard to get there. However, he assumed so much debt in Medical School, a huge part of his budget is dominated by paying them back. Don’t get me wrong, he makes good money now. He is one of the top in his field. However,the golden handcuffs of student debt when we recently talked, he mentioned how much he wanted to quit. A man of deep faith, Tony wanted to spend 3 years with Doctors without Borders doing “good works”. However, paying back his student loans has become his all-consuming goal and he can’t leave the hospital until the loans are paid off.

Welcome to what I call the modern “Golden Handcuffs”

What Are The Golden Handcuffs

Seriously Think Before You Borrow!
Avoid the golden handcuffs by not borrowing

In the business world, the term “Golden Handcuffs” refer to certain financial incentives that companies use to keep employees tied to their jobs. An example would be a vesting schedule, which allows the employee to own shares, but not be able to sell them unless they are still employed with a company past a certain date. Often this is 1 to 5 years. However, a new form a golden handcuffs have arisen in the student loan debt that is assumed every year.

Let say  you are lucky enough to get a decent job straight away after college. Let also suppose that you have the average student loan debt profile of $29,400.  Your payment, based on the average salary of exiting graduates is around $320 bucks. That is around 10% of your monthly salary. However, for those students sporting a graduate degree who have racked up $100K or more, it is much worse. Medical school graduates have an average of $169K in debt student debt. At that level, with both undergraduate and Medical school debt is crippling and hard to managegraduate debt, the average payments each month are around $2160. Thankfully, doctors get hired. Lawyers have it much worse, as so many are not even getting hired after graduation! If you are lucky enough to get hired, the pay will tie you to your job just to pay back the  loans.  This is what has happened to Tony.

Randal S. Olsen, a Ph.D. student at MSU decided to ask the questions, “Could you actually work your way through college“.  you can't work your way through college anymoreRandal examined the trend of tuition at MSU and the rate of minimum wage pay in the US. He found (as many of us in college finance expected) that the likelihood of an average person working 35+ hours per week for minimum wage and being able to pay for the cost of attending MSU was nil. The inflation in the cost of college, coupled with the average spending power of a minimum wage worker, has made debt a part of the college experience.

How to Avoid The Golden Handcuffs

Avoiding the golden handcuffs of student debt requires the parents of college-bound teens to take charge of the college financing effort and be proactive on every front possible.

1) Find The Money Before Students Start College Classes

Search locallyAs I have said many times, the sordid love affair of matching a student and a school requires an approach that emphasizes the balance of college fit, with affordability, and aid. The college your student attends must be the one that wants them the most. The way a school shows their love of your student, is via the Merit Aid offered on the financial aid offer letter. The more aid offered from the school itself, the more they want to invest in your child’s success. Take the time to look at sites like and how looking at the net price calculators side by side will offer a realistic view of college expenses.

Working hard during the high school years towards earning solid grades, and earning higher SAT/ACT scores makes a difference, When coupled with searching for the gem colleges that will offer the best aid can help avoid student-loan debt in the long run as many merit aid awards are multi-year.  And when offered, being willing to appeal the financial aid award offered, and/or have your child’s EFC reconsidered will make a difference in the cost your family will pay out-of-pocket

2) Be Proactive & Fight For Additional Financial Aid During The College Years

Finding the aid you need by searching for scholarships everywhere!It’s not enough to get a good package during the first year of school and stop there. Being proactive every year is a must for cost conscious parents. Having your EFC reevaluated each year may make a difference. In addition, using EFC reduction strategies can make a difference in the aid offered.  If a job loss in the family occurs, or your family business takes a financial hit, contact your financial aid office immediately. Beyond that, the hunt for scholarships and grants must never end. In fact, there are many scholarships that are not only multi-year, but only qualify for only after you have attended school for a semester.  So a relentless pursuit of outside aid, coupled with already awarded  merit and federal aid can make a difference between student debt and a debt-free degree.

3) Keeping An Eye On Cost Drivers

Most consider college costs fixed and non-negotiable. I’m here save_moneyto tell you that college costs can be lowered if you use the right strategies.  Everything from the meal plan your child chooses, to how often they come home to visit are factors that are controllable.

Living off campus with roommates, and sharing bills can keep living expenses lower. Letting Junior know they can’t drive home to visit every weekend can cut travel costs. Utilizing community colleges during the summer to cut the total cost of a degree can make a huge difference in tuition costs.  Also, taking summer courses is key to the strategy of getting a degree in 3 years, not 4. If you think about it, by reducing the cost of a college education by a year shaves off an entire years living expenses and added fees.

A great tool many students fail to use, is the Federal Work Study award included in their aid package. While a job doesn’t seem like aid, it actually is a great opportunity for your student to build job experience while earning on campus. In addition, the funds earned are not counted against your student in later years in the financial aid calculation. Finally, buying or renting books online can also save nearly $1500 over the average college students term over buying them in the college store.

 Never Put On Cuffs You Don’t Have To Wear

Avoiding student debt while in college is a matter of finding and securing financial aid from every source you can find, coupled with a relentless eye for reducing costs. But this will only work when you and your student work as a team to constantly seek aid, while controlling expenses. As the parent of a college-bound teen, it’s up to you to take charge and get your student on board to the realities of heavy student debt and how to avoid it. It may mean the difference between putting on the golden handcuffs of student loan debt, & financial freedom for your student after graduation.


How To Appeal Your Expected Family Contribution (EFC), Cost of Attendance (COA) and Satisfactory Academic Progress (SAP) Suspension

How did you resolve the problem you had that led to your Satisfactory Academic Progress Suspension

Listen to the episode: [audio]
On this March 12, 2014 episode we discuss the importance of the filing the Free Application for Federal Student Aid, or FAFSA ASAP with Andrew Viscariello of Black Hawk College. In addition, we are discussing three appeal types when it comes to you or your students financial aid.

Guided by we talk with Mary Lawson, Associate Director of Financial Aid at Western Illinois University (@WIUNews) , First we cover the Estimated Cost of Attendance, or ECA/COA appeals, and how to appeal that if you feel the cost profile is too low.  Next, she discusses how to appeal your initial Expected Family Contribution number, or EFC and your Financial Aid Award Letter, if it does not reflect your current financial circumstances.

Next, we talk to Angeles Fuentes of California State University, Monterey Bay, about Satisfactory Academic Progress, or SAP Appeals and how most financial aid office’s deal with those appeals.

Continue reading How To Appeal Your Expected Family Contribution (EFC), Cost of Attendance (COA) and Satisfactory Academic Progress (SAP) Suspension

How To Save Money While In College: Advice From Students

Saving For College

Listen to the episode: [audio]
On this March 6, 2014 episode we interview students on the ground about what they do to control costs while in school. We also discuss the declining number of students attending their first pick college, and why a private not-for-profit college may be cheaper than a state school. And don’t forget our scholarship of the week, the McDonalds Scholarships for High School Seniors.

Download The Episode: Ep14-10 March 6,, 2014

Coding Schools From a Students Perspective: J’s Coding Adventure at

J Terrell AllenIt’s February 26th,  2014 episode we interview J Terrell Allen (@jterrell), a student of (@TryBloc) about their particular teaching style, and his learning experiences at their DevSchool. In addition we discuss the Big Ten Ponzi Scheme article I wrote at my blog Git. Life. Commit..

Listen to the episode: [audio]

Download The Episode: Ep14-09 February 26th, 2014

How To Pick A Coding School: The Starter League & Learning In Person

The Starter League

[audio] <-Listen to the episode

On this February 19th,  2014 episode we interview Vincent Cabansag of The Starter League (@VCabansag) about their particular teaching style at their DevSchool, and how his time as a student there led to him eventually working there. In addition we listen to three students discuss how they approach paying for college in different ways.

Download The Episode: Ep14-08 February 19th, 2014

Scholarships for New Educational Methods: & The New Relic Scholarship

Bloc.ioOn this February 12th,  2014 episode we interview Prasid Pathak (@Prasid) and David Paola (@dpaola2) about (@TryBloc), the difference between Mentorship and Dev-Boot Camps, and the New Relic Scholarship.  Our scholarship of the week is The Margarian Scholarship.

Listen to the episode: [audio]

Download The Episode: Ep14-07 February 12th, 2014

The 2014 Margarian Scholarship: A Scholarship For All Majors

2014 Margarian Scholarship
The 2014 Margarian Scholarship

Big ups to (@Cappex) for putting me on to this scholarship.  If you haven’t been to the site yet, check it our. The 2014 Margarian Scholarship is a scholarship everyone has time to apply for. Its broad based and is for all grade levels from High School to graduate school. 

A few tips on this one based on the application:

  1. Be concise: You have between 100-300 words for a response to each question. Given the number of apps they may get, you need to keeps your words economical.
  2. Don’t be Shy: This one is looking for pride; pride of self, pride of background, pride of accomplishment. This is not time to be a shy-guy/gal and stick to the sidelines. You need to push yourself out there as the best candidate because YOU ARE, not because YOU WILL BE! The law firm that offers this was founded by a man who didn’t start out speaking english well and had to pull himself up by his bootstraps. He is looking for people like himself when it comes to tenacity. 
  3. Dont depend on your ethnicity or poverty to get you the win: This one could care less if you are white, black, hispanic, or laotian. It cares about the level of pride you exhibit and your determination. While finances may have some impact, it is not the end all be all. You still have to present yourself the correct way.

This scholarship is a perfect example of a general scholarship where the competition will be broad and undefined. Keep in mind a solid and carefully thought out strategy will make all the difference when you apply.  No matter what, good luck!