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Thanksgiving Traditions

Thankful Traditions

The Kay family photo for Woman’s Day magazine.

Back when my co-host of The Money Millhouse was just a little girl with a big smile, we created memories through holiday traditions.

One of the things I discovered is that not every “savings” can be measured in dollars and cents. One of the things we emphasized in our family is the saving of memories. Our Thankful Tree was featured in a Woman’s Day magazine one year. It took two photographers 8 rolls of film and four hours to get one 3 x 5 photo in the magazine. Joshua was missing for one roll of film and we didn’t notice until we saw him making faces from behind the photographers and we asked, “What are you doing back there?”

The tip we gave is how we’ve stayed in touch with family and friends during this holiday. On November 1st, we made a Thankful Tree on poster board and put it on our wall or front door. The tree was bare because the leaves that we made out of construction paper have not yet been gathered. The leaves have the person’s name on them and say, “Papa is thankful for _________.” But we left the tree bare at the beginning of the season to teach the children how barren our lives are without the giving of thanks.

We made and sent the leaves to friends and family around the world along with a self-addressed envelope. When these envelopes came back, the children got excited as they took turns opening them. At dinner that night, we read the leaf and give thanks along with those who are thankful and put the leaf on our tree. By Thanksgiving Day, we had a tree full of thanks. We carefully saved the leaves in an envelope marked by the year and kept all in our Thanksgiving decoration box. Each year, we read the leaves from past years.

We never know when this year’s leaf might be someone’s last, or which family might have a new leaf on next year’s tree. So we give thanks.  These days, we gather “thankful comments” from facebook, email and twitter, but the point is we are connecting with friends and family in a meaningful way.

This holiday, what are YOU thankful for?  Besides our health and our family, we are thankful for two weddings this year, healthy grandchildren, and the chance to be together during the holidays.

Happy Thanksgiving!

Ellie Kay

 

Service Academies and Military Funded Education

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 I recently spoke at Congresswoman Katie Hill’s (25th Congressional District) Military Academy night.  The audience members were parents and students in high school.   These federal academies are highly competitive and look at the whole person. So it’s not enough to be a brainianc (super smart), they are also looking for students who are exceptional in the area of athletics, community involvement and leadership.  In return for this amazing education valued at $450,000, your student will be required to serve in the military for their “commitment” period. The commitment is a minimum of 5 years of service and can be longer, depending on a number of factors in regards to additional training after graduation.  If you have a “hero at home” who wants to go to a service academy, there are several things to keep in mind.


One of the first places to visit is your service academy’s admissions site:

USAFA – The United States Air Force Academy

USNA – The United States Naval Academy
USMA — The United States Military Academy

USMMA  The Merchant Marine Academy

USCGA    Coast Guard Academy (does not require a congressional nomination)

From Prospect to Appointee:  

  • Prospect: A student who has filled out the initial response form showing interest. This means they are essentially on an admissions mailing list. You can fill this out as early as middle school by going to the academy’s website.
  • Applicant: The individual has filled out a pre-candidate questionnaire and provided initial info on PSAT/SAT/ACT scores, grades and extra-curricular activities. This is usually done NO LATER than the spring of their junior year. This is also the time to contact your congressman and senator in regards to a nomination. In addition, if the student’s parent is qualified for a Presidential nomination, (see nominations and appointments below) then the student can contact the academy directly to pursue this nomination as well.
  • Candidate: To move from applicant to candidate indicates that you have cleared your first competitive hurdle. This step is decided by the Academies admissions staff in the early summer of a student’s Senior year. Not all students will get to this point, but this is when they will be interviewed by the Academy Liaison Officer (or the equivalent). It is from this list that appointments will be offered as early as the fall. For example, one of our sons was offered an USNA appointment by October.
  • Appointee: This means that the candidate has been offered an appointment into the Academy. They can choose to accept it or turn it down, but it means they have not only received an official nomination, but they have also been approved by the Academy’s admissions board and offered an actual appointment.

The Essay

It’s never too early to begin to think about what you would like to write in your admissions application essay. These are very important and should be well thought out before submitting. Be sure to have you liaison officer review it before you submit it or ask an academy graduate to help. It also wouldn’t hurt to have a faculty member from your school review it as well. More eyes on the project can mean a broader perspective, but it still needs to be your own voice, so you will have the final word on the essay.

Memorial Day and #HonorThroughAction

Gold Star Family

Being part of a gold star family is like being part of an honored and exclusive club—but one that no one wants to join. The gold star indicates that a member of that family died while serving their country. We are a three-star blue star family, which means that we currently have three family members serving with sons in the Marines, Air Force and Army. We’ve weathered deployments to Afghanistan and Iraq—praying our way through each day they were there. We never want to add another gold star to our family.

Yes, our family is a gold star family because of my Grandfather, SSGT Walter Rawleigh, a bombardier on a B-24. He was on his 47thmission in Madang, Papua New Guinea. Fully gassed and loaded with bombs, the “Cisco Kid II” had an engine malfunction on take-off and crashed into an encampment of Seabees having breakfast. Ten members of the crew and 165 Seabees suddenly died that day. Obviously, I never knew my grandfather and my dad was a young child when his father perished. I know that my father, Chief Master Sgt Rodger Rawleigh, USAF (Ret) was inspired to serve because of the fact his dad never came back from war.

 

Memorial Day

Memorial Day is about gold star families and should not be confused with Veteran’s Day. The latter is a day which honors all who have served in the United States military. A memorial is a remembrance of those who paid the ultimate sacrifice. It’s not a day to say, “Happy Memorial Day,” even though many Americans have a day off. Many will use that time to picnic and enjoy their families and friends. In fact, the original tradition of this day was to eat a picnic while sitting on the grounds of a cemetery.

This national holiday was first recognized by Congress in 1971 and before that time it was known as Decoration Day, which originated shortly after the Civil war. Besides my Grandfather’s tragic accident, 645,000 Americans have given their lives in defense of our freedoms. What can we do to appropriately honor those who died? I’m glad you asked.

 

The Poppy

 Honoring our fallen with a poppy is a tradition that was inspired by the poem crafted in 1915
entitled, “In Flanders Fields.” It was written by Lt. Col John McCrae after he lost a friend during WWI.  McCrae’s poem inspired Moina Michael, an American professor and volunteer for the American YWCA, to write a response poem, “We Shall Keep the Faith,” vowing to wear a red poppy as a symbol of remembrance.

Michaels campaigned to have the red poppy adopted as a national symbol of remembrance and, with help from Anna Guerin and the 1920 National American Legion Conference, the poppy became the official symbol of remembrance.

But it’s not limited to our country, the poppy is used as a symbol of remembrance all over the world. Along with the American Legion, we encourage people to wear or display a poppy on this weekend to remember those who lost their lives in battle.

 

Virtual Poppy Field

I invite everyone to join the conversation online using #honorthroughaction and share your story. What does Memorial Day mean to you? Who are you honoring? You can visit www.poppyinmemory.com to dedicate a digital poppy to a fallen hero or as a gesture of appreciation for those who have sacrificed all. It only takes minutes to participate and I want to thank USAAwho are sponsoring this initiative and for all their help in Heroes at Home.

Honor the fallen today.

5 Do’s and Don’ts For a Smooth Transition to College or A Service Academy

When my daughter, Bethany was 4 years old, we called her “Bunny” because she hopped from heart to heart. She loved to play with her little girlfriends and one afternoon she spent the entire afternoon with Amanda. She was a little girl who felt life deeply and could go from being on top of the world to the depths of despair in nanoseconds.

When I picked her up from her friend’s she bounced to the car and chatted all the way home. We walked in the door and I asked her how Amanda’s older sister was doing. Suddenly, she began to sob, uncontrollably.

“What’s wrong, Bunny?” I handed her a Kleenex.

“I don’t want to leave you, Mama!” she wailed.

“Why would you think you have to leave?” I was really confused.

She looked at me through her tears, “To go to COLLEGE.”

Apparently Amanda’s older sister was preparing to move to go to college and Bethany couldn’t imagine a day when she would have to leave her Papa and myself to go to school. The good news is that fourteen years later, she was a little bit more prepared when she moved from California to Chicago to go to college. She got a B.A. in Communications, with an emphasis in Electronic Media and was in her element.

Today, Bethany and I host The Money Millhousepodcast and still get just as emotional, on occasion, while putting her college degree to good use. We made a point of preparing Bunny and all the Kay kids for college, long before they went to Freshman orientation. Three of the Kay kids went to service academies, which meant they only had less than a month at home after high school graduation.

Whether you are prepping kids to go to a civilian university or whether they are going a service academy like three of our sons (USMA, USAFA, USNA) here’s some “homework” in the form of five do’s and don’ts to make a smooth move.   

  1. Don’t – Fill up free time with friends at the expense of family. 
  • Friends come and go but family is forever.
  • Only a small percentage of your friends from high school will still be your BFFs throughout college. Less than 2% of boyfriend/girlfriend relationships will last until

    college graduation.

          Do – Tell your mama (and papa) that you love them early and often.

  • Mend fences and build bridges with family members.
  • Expect there to be some pre-separation anxiety on both sides (parents and kids) so give each other a lot of grace.
  • Students, please understand that this is hard on your parents, especially if you are moving away to go to school.
  • Parents, understand that this is hard on your kid because they are about to go do something they’ve never done before. For those going to service academies, it’s going to be big and scary and you won’t be there.
  • Students, take the time to thank your parents, grandparents, friends, educators and coaches.
  1. Don’t – Take a break from physical fitness, especially if attending a Service Academy.
  • My husband, Bob, and our son, Jonathan, went to The Air Force Academy and they used to say that “The Air Force Academy is at an altitude of 7258 feet—far far above Annapolis or West Point.” That’s why physical fitness was important.
  • If you’re going to a service academy, you’re going to take a Physical Fitness Test as soon as you get there.
  • Engage in risky behavior, now is not the time to push the limits legally or physically. Don’t take up space jumping or quad racing because a broken limb could cost an appointee their service academy appointment.

          Do – Continue to workout and make wise choices.

  • Physical fitness is a healthy way to cope with pressure in college.
  • Even if you go on a family vacation or have a lot of things to do.
  • For service academy appointees, run 3 miles 3-4 times a week and then do 50 pushups and 50 sit ups every day.
  1. Don’t – Make this all about you.
  • Parents, don’t create drama before they go or after they’ve gone.
  • Moms, don’t sob and cry and tell them you don’t’ know how you’re going to survive without them. Shedding a few tears is OK, but doing what Oprah calls “the ugly cry” isn’t all right.
  • Parental, sibling or significant other drama is a distraction to the service academy appointee going through basic cadet training or “beast.” Distractions can lead to accidents and accidents can lead to a turn back (meaning they have to go home.)
  • Don’t post a bunch of “poor me-isms” on social media

          Do – Keep it positive. 

  • Right now, service academy portals will have a mailing address for the student. Give this address to friends and family and with your network because cards and letters mean everything during basic training. “Basics” aren’t allowed access to computers, phones or social media.
  • Do send simple cards and letters – no perfume on the cards, no kissy marks on the envelopes, no care packages during beast, and no food. After beast is over, you can send these.
  • Do tell your student funny stories about a younger sibling or the dog.
  • Do send pictures of the dog or pet.
  • Do keep it light and not heavy.Students, do make your social media channels private or have them go dormant.
  • Do clean up these channels because you never know what the cadre will get ahold of and you don’t want to embarrass yourself or become a targ
  1. Don’t –Be Han Solo – you don’t have to do this alone.
  • My husband’s advice to our sons for basic cadet training was. “Keep your mouth shut and help your classmates.”
  • Don’t stand out as the first, the most knowledgeable or the best or worst
  • For parents, don’t go this journey alone, join a parents club or booster club.
  • Remember, parents, sometimes you don’t know what you don’t know.

          Do – Be a team player.

  • Look for ways you can help others get through Beast.
  • The friendships you make in BCT and college will last a lifetime. My husband, Bob and I just had dinner with a classmate of USAFA class of l978.
  • Do take advantage of the sponsor family program, a program that allows local families to “adopt” a cadet or midshipman.Some of these friendships may become like a second family—or at least get you to the airport.
  • Parents, do join a parents clubfor your respective service academy. Your civilian friends don’t get it, other service academy parents do understand the unique situation your family faces.
  1. Don’t – Ever forget the “why” of what this education and your career means.
  • Service Academy Appointees are choosing something hard, something their civilian friends will never understand, but there’s a big “why.” They want to serve their country as officers.
  • During BCT and during your 4 years there, you’ll have to sometimes take life a meal at a time, a day at a time.
  • Parents, don’t forget that being a good parent means you let them fly and you support their choice to serve. You don’t have to like it or feel good about what those choices may include.
  • Parents, DON’T borrow tomorrow’s trouble. While they are there, they are safe, they are not deployed, they are not in harm’s way. Today has enough challenges of its own without borrowing on tomorrow. As long as they are in training, they aren’t in combat. If and when that day happens, you’ll have the strength you need to cope. We know this, having had one son serve in a combat zone in both Afghanistan and Iraq.
  • Appointees, remember your goals in getting through BCT and the academy—to fly, to serve, to go into cyber security or intel, or missles or space. Your goal is much bigger than BCT and that’s why you’ll get through.

Do –  Remember the Legacy

  • You are part of a long line of military service.
  • Think about the parents, siblings, grandparents, aunts or uncles who have ever served. You are part of that legacy.
  • Your legacy keeps American free.
  • Putting on a uniform doesn’t make someone a hero, but those who put on that uniform and serve with integrity first, service before self and excellence in all they do—that’s pretty heroic.
  • There’s another kind of hero as well, the Heroes at Homeand those are the parents, siblings, grandparents and family members of those who serve. America thanks you as well. 

“It starts and ends with character, and it’s a journey, not a destination. Leadership is a gift, and it is given to us by those who follow.”

General David Goldfein

Air Force Chief of Staff

 

 

Bob’s Million Dollar Bargain

As many of you who have read my books already know, I’m a born saver who married a born spender. I was born six weeks early, on Dec 28th, just in time for my parents to get another income tax deduction. Bob was already working, pulling weeds at the age of seven, but his money never saw the inside of his pocket. Over the years, he’s learned to spend less and I’ve learned to spend more and we’ve come to balance.

Bob’s latest venture is saving money on the ultimate remote control airplane! He says that spending 1.3 million per airplane for jets that are destined to get blown up (without him in them) is a “real bargain” for the government. He even mentioned that I made him promise he wouldn’t fly them for free when he went to the job interview four years ago! For the complete three minute news story and to see what my Beloved does in his free time, just go to:
http://www.myfoxphoenix.com/myfox/pages/InsideFox/Detail?contentId=5028894&version=2&locale=EN-US&layoutCode=VSTY&pageId=5.7.1

Happy Flying!

Ellie Kay

“America’s Family Financial Expert” (R)

Valentines Day

Valentines Day.
Bob gave me a sweet card and a Lladro figurine of a “Bride and Groom Couple” which was beautiful. The male was in a top hat, the female had delicate flowers in her hair. And did I mention they were dogs? Yes. Very cute, it made me howl with laughter when I opened it up, especially since, at that very moment, our dogs were jumping on me and wrestling. fun. fun.

Philip mailed me the sweetest card and signed it “I love my mama.” Bob gave Bethany flowers, a CD and a card and Philip gave her the most wonderful “Sisterfriend Valentine” card, too. I gave the little guys chocolate and a $15 Starbucks gift card. Bethany gave Bob Sees candy.

The little boys did the “Oh, crud! I forgot about mama” routine and then Joshua announced,”Uh, when you can go out to eat, Papa and I are going to take you.” While Jonathan said, “And even BEFORE you gave me this card, I was going to say that I would take you out for a Frap for Valentines.” Yeah, right. I told them that this last minute, oh-crud-I-forgot-so-I’ll-just-think-quick-and-make-something-up-and-hope-she-won’t-notice routine was NOT going to cut it. One day, I told them, when they had wives, they were going to have to have some forethought and at LEAST fill out a card that says, “This card entitles you to a free dinner” or something other than what they did. They smiled sheepishly, hugged me and thanked me for the gifts.

Then there’s Daniel. He had the biggest Valentines Day in the family–a day early. Yes, my baby boy got engaged last night! It was really sweet, he asked everyone’s permission ahead of time (Bob and I, her mom, her dad). Then he took her to their favorite place, the Botanical Gardens in FTW, and at sunset, he walked her over to a fence, got down on one knee and proposed. He said he was nervous and didn’t say what he really wanted to say and he kind of fumbled, but he made it through. She started crying and couldn’t stop. The ring he got her was diamonds and emeralds (her birth stone) and one she picked out. It is beautiful–simple and elegant.

Then they went to eat at the Cheesecake Factory and he gave her my book, The New Bride Guide that I had autographed to her already. On the way home from the restaurant they called me and were punch drunk in love. He was gloating at how suave and clever he was and she was just crying for joy. He’s the one who called and he said, “Well, guess who has been engaged for the last couple of hours?” I guessed correctly. Then I asked to speak to her and let HER tell me how he proposed. She started crying again just retelling the story. I welcomed her to the family, told her she would be a great asset and that we loved her already. I told her that I knew she’d take good care of my baby boy and while he would officially be “hers” now, he will ALWAYS be my baby boy.

When Daniel got back on the phone, he said, “Well, mama, your baby boy did it right!” He was oh, so smug and oh, so happy and just plain drunk on love. But before he hung up he said, “But I’ll always love my mama!”

And so it begins…

The Bunny Has Hopped Away

OK, this post is going to be very different–and very personal. If you’ve been reading my blog, you know me to be a “Texas Woman” meaning that (to quote the movie The Rookie) “I don’t need no man around to keep things running.” I’m pretty methodical, talking about finances and giving practical advice.

With the exception of a few chick flicks and the time I broke my foot on a toy vacuum cleaner, the kids have rarely seen me break down and cry. I don’t know if it’s all these years as a fighter pilot’s wife, where I had to remain calm when a jet went down in the squadron (he just had a fire light go off in the cockpit last week.) Or it could be the fact I was raised with the responsibility of an adult. But I’m just not usually a typical girlie girl–at least when it comes to tears. All of that changed this past week.

After I followed all my own advice and got our daughter ready for college (scholarships, books at http://www.campusbooks.com/, dorm room gear at the site to store of http://www.walmart.com/) it was actually time for her to leave home. She’s the first girl I’ve launched.

I’ve been crying a bit since Bethany (aka Bunny) left on her college road trip on Weds morning. As I think about her, I realize that she has only been a joy and delight. Yes, we argued about grades, picking up her room and the occasional ‘tude when her evil twin, Stephanie, showed up. But unlike the arguments I’ve had with some of the guys throughout my life, Bethany was never mean. She was never cruel. She was always a delight.

She’s where she belongs, at Moody in Spokane and then she’ll go to MBI in downtown Chicago–all tuition paid. Bob and I worked ourselves out of a job–preparing her to launch out on her own and follow her unique path in life. She is surrounded by a great group of young women who are very sweet, seem to be thoughtful and others-centric. As a farewell gift, Bunny gave me a beautifully framed photo of her and I at her “farewell” dinner where Bob and I took her to a fave restaurant. It was a really good pic, we are both smiling and happy. She also gave me a tear-wrenching note, thanking me for what I’ve done for her. It is very special.

When our oldest son left for college there was grief at the bittersweet changing of seasons. When our next son left, he was in such a state of readiness to launch out on his own that the greater grief would have been for him to stay. I thot it would be “hardest” to send the first to college and I knew it would be somewhat hard to send off my daughter, but I was surprised by grief. I seem to cry constantly.

I go to the grocery store and start to get Gala apples because they are Bethany’s favorite. Then I realize she’s not home. I start to take out the trash and look around the floor for one of many of Bethany’s pairs of shoes to throw on while I walk outside (she’s notorious about leaving them lying around). But they are all gone. I’m doing stuff at home and realize I need to go check the mail out at the post office and don’t have time, so I think I’ll just ask Bethany to stop and do it while she’s out. But she’s not just out running errands–she’s not here.

She’s only, always been a delight and joy.

Ellie Kay
“America’s Family Financial Expert” (R)
http://www.elliekay.com/

Family Time in Israel

Israel is a great place to raise families? The American mom of the two children on the left made this statement to me. It may sound surprising, but I can see why she says it. As I blogged earlier, statistically, it’s safer here than living in California. But here’s the proof: children as young as five years old walk themselves home from school. They are from good families and have responsible parents–but there’s no need to fear for their safety the way I would as a mom in the US. That was one of the strangest sights in downtown Jerusalem and other parts of the country. I love America and have no plans to move to Jerusalem, but I do have to acknowledge the startling contrast in other cultures.

The photo on the right is me at Mt. Carmel, where Elijah battled the prophets of Ba’al and God allowed him to win the victory. The guide reminded us that according to the story, Queen Jezebel got so angry that she swore she’d take his life. Then he ran and got so discouraged that he sat by a Juniper tree and wanted to die. This is a good lesson to remember that when we battle our own “Jezebels” we don’t have to live a defeated life.

We’ve also seen the western wall, garden of Gethsemane, Via Delarosa, the Temple Mount, the Dome of the Rock, Golgotha, the (empty) tomb, and dozens of other sites. The tour was put on for us by the Ministry of Tourism and they kept us (a group of journalists) busy 10 to 14 hours a day–we got the most out of our time away from home.

This whirlwind trip is about at an end and our small group was able to do twice as much in 1/2 the time. But after vising 50 sites, the photo on the left was the highlight of my trip, getting to see a precocious pilot and a pretty princess having fun in a restaurant. Their dad runs a great tour group site that will work with larger groups as well as families to help make this dream trip affordable.

So instead of planning a trip to Disneyland, consider visiting the center of three major world religions. It’s a trip that will forever impact your life!

Ellie Kay
America’s Family Financial Expert

Buying a Home: It’s Easy to SAVE BIG on Closing Costs

I remember when we sold our home in New Mexico and relocated to California!

We learned to save a lot more on closing costs than we ever thought possible.

If you are considering buying a home, shop carefully for lenders and be sure that you negotiate, negotiate, negotiate with the LENDER as well as the SELLER. When discussing closing costs and fees, make sure that you don’t over pay. Here are some key “dos” and “don’ts” to keep in mind when negotiating fees and costs with your lender:

Do Ask for a Good Faith Estimate — Within three days of applying for a mortgage loan, lenders are required to give you a good faith estimate (GFE) on costs. Look at GFE sections 800 and 1100 for the following fees and be prepared to haggle lightly for reductions.

Don’t Pay for Inflated Credit-Report and Courier Fees – Some lenders are charging up to $65 for pulling your credit report. That is unusually high, considering the fact that credit reporting bureaus only charge $6 to $18 per report. Using the same tactics, some lenders charge courier fees for shipping your closing documents for as much as $100, while the majority of overnight express services only charge $22. Tell your lender, up front, that you refuse to pay any more than the going rate for these services.

Don’t Pay for Document Prep and Administration Fees – The origination fee should include these services, so don’t pay them! Ask your lender to waive these fees.

Don’t Pay for Yield Spread Premiums – Lenders increase your interest rate slightly to include origination and other fees so you don’t have to pay them out-of-pocket at closing but some lenders and mortgage brokers are double dipping—by charging both the fees and the higher interest rate. If they advertise “pay no closing costs” then this is what they really mean. Ask your broker directly if a firm charges you a yield spread premium. If so, you shouldn’t pay any additional fees.

Don’t Pay for Padded Title Insurance Fees – When you are shopping for lenders, look for all the above, plus look out for those who don’t tack on a lot of extra charges for services such as title search and document preparation. Theses can add hundreds of dollars to your closing costs and they really should be included in the price of title insurance, which depending on where you live, can be as high as $6,000.

Do Ask for your HUD-1 A Day Early – Federal law requires lenders to give mortgage applicants a copy of their settlement form at least one day before closing, but many won’t give it unless you ask for it. Compare the HUD-1 with your GFE (good faith estimate) and bring any errors to your lender’s attention.

Ellie Kay
America’s Family Financial Expert (R)
www.elliekay.com

College Grads Avoid Debt Trap

Son, Daniel graduates from college in this happy snap and it’s that time of year when proud parents of the class of 2010 gather to watch their children graduate from college. I was recently talking about this topic on ABC NEWS, Good Money where you can watch the clip.

After the hats are tossed, tears are wiped away and the celebratory cake is gone—the graduates will begin their new lives in the real world. But this year’s graduating class faces a wretched job market where there may be as many as five candidates for every job. Consequently, one of the most daunting tasks becomes the challenge of not falling behind on student loans. While challenging times can build moral fiber, you don’t want to build character by getting involved in the debt trap.

Q. First of all, what are some of the consequences that graduates face by getting behind on student loans?

Ellie: As a mom of kids in college as well as a recent graduate, I know personally, how difficult the job market is and what a challenge these graduates face. First of all there will be interest charged for late payments as well as fees that will inflate the amount they owe—and chances are good that they owe too much as it is! If you default, the government could garnish your wages and withhold your tax refund. Not to mention a huge hit on your FICO score, when you’re just starting out and trying to build a good score that will help get lower interest rates on a car or a house. This isn’t a good way to start your post-graduate life!

Q. But you say there is good news and that these dire consequences are avoidable, as least as far as federal student loans are concerned. The key is to understand your options and take action before you fall behind on payments. The first tip you list is to understand your grace period, when do students have to start paying back these loans and how do grace periods vary?

ELLIE: Borrowers typically have a few months after graduation before they are required to start repaying their federal student loans. For most federal student loans, the grace period is only six months. Most loans have up to ten years to repay. It’s important that you contact your loan provider and find out when the statements begin—especially if you haven’t received notification yet.

Q. What if the graduate has trouble finding work or they find an entry level job that typically doesn’t offer much in the way of compensation? Is there recourse for the amount they are required to pay for their loans?

ELLIE: That’s an excellent point and it brings us to our second tip, they need to find out whether they qualify for the income-based repayment program. Under this program, your loan payment could be reduced, based on the amount of discretionary income you have available. In most cases your loan payments won’t exceed 10% of your total income. After 25 years, anything you still owe on the loan will be forgiven.

Q. Is this income based repayment program an automatic enrollment or does the graduate need to apply for it?

ELLIE: You definitely need to apply for it by contacting the company that is servicing your student loan. If you’ve moved a time or two and your loan papers have not been forwarded to you and you are not sure who services your student loan, then you can go to the database of the National Student Loan Data System.

Q. Is there some paperwork you need to compile before you apply for the income based repayment program?

ELLIE: Yes, it’s important to have this paperwork on hand in order to streamline the process because you do want to get this filed as soon as possible—especially if you’re in danger of being late on loans and you have a genuine financial hardship due to your current income levels. You’ll need to authorize the IRS to provide last year’s tax return to the Department of Education. If you feel that your tax return doesn’t reflect your current situation, there’s a form you can use to show how your situation has changed. Get info on these forms and criteria, as well as links to major student loan servicers at the Project on Student Debt.

Q. We’ve looked at income based repayment, but what about those who need a quick, temporary fix? Maybe they have to take an unpaid internment at first or they may have a job that will become available in six months. Are there options such as deferment or forbearance available to this class of graduates?

ELLIE: If you are unemployed, still in school or experiencing economic hardship, you can apply to have payments on your federal student loans deferred for up to three years. If you have subsidized Stafford loans, which are provided to students who demonstrate financial need, the government will pay the interest on the loans during deferment. Interest on unsubsidized Stafford loans will accrue during deferment. If you don’t qualify for deferment, then you still might be eligible for forbearance, which allows you to put off payments for up to three years. It’s harder to qualify for deferment than it is for forbearance because in forbearance you will still have to pay interest that accrues.

Q. Does it take a long time for the paperwork to go through for these kinds of programs we’ve discussed: income based repayment, deferment and forbearance? Couldn’t a graduate find themselves in default by the time the paperwork is processed?

ELLIE: It’s important that you continue to make full payments until you’re notified otherwise. It takes longer for income based repayments and doesn’t take as long for deferment and forbearance because the latter two are temporary relief from loan payments. Whereas income based repayments could be longer term, depending upon how long you are in that job, making that salary. It’s important to look at forbearance and deferment as short term fixes and not long term—that’s why it’s really important to file for these right away, while you’re looking for a job. But if it looks like your payment problems will last longer than a few months, you definitely need to look at income-based repayment.

Q. Some graduates have huge student loans, in some cases, they have more than $30,000 in principal and interest. It is especially difficult for these grads to face this mountain of student loan debt. Can they extend the payment term in order to get through the first few years?

ELLIE: If you are a borrower who owes more than 30K , most lenders will allow you to extend the term beyond the standard 10 years, thus reducing monthly payments. The amount of interest you pay will increase, though, particularly if you extend payment over the maximum term of 25 years. And who wants to spend the next 30 years paying off a student loan? So I would only recommend this option as a last resort. Try to pay it within the standard 10 year term so that you can avoid thousands of more dollars in interest.

Q. Finally, we’ve discussed federal student loans, but a lot of viewers may hold private student loans that they have to repay. What are their options?

ELLIE: Well, the outlook is not as sunny for those who have private loans. They have fewer options. Private education lenders don’t participate in the income-based repayment program and they’re not required to allow you to defer payments, even if you’re out of work. If you’re having trouble with your private loans, read your loan agreement. It may require that the lender grant you forbearance under certain conditions. Even if your contract doesn’t include an economic hardship provision, your lender may be willing to provide relief. Some lenders have become more flexible in this post-great recession environment. You could ask for interest only payments or even to change the terms of the loan. For more information, go to Student Loan Borrower Assistance

Ellie Kay
America’s Family Financial Expert (R)
http://www.elliekay.com/

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