Students from all over the world come to America to study at top universities. Unfortunately, these top schools come at the expense of top dollars for tuition. According to the statistics of the Graduate Business School of Stanford, a typical international student was graduating with $80,000 of debt. Many students desire to go back with their knowledge and education to make a difference in their home countries. Yet, the high amounts of student debt is holding back many from making an immediate impact.

I’m glad to see Stanford is offering a loan forgiveness plan for international students that have a true desire to apply their education back in their home country. Students can qualify for up to $7,500 of loan forgiveness each year. Although I’d love to see this amount go up, it is definitely a step in the right direction for Stanford.

Many international students will become the future leaders of tomorrow. I’d love to see more universities provide top-notch education at a reasonable price. Instead of being shackled by debt for years and years, these graduates can begin immediately making a difference.

Yesterday I shared a travel story about fast food and how my mindset was changed by an experience in Central China. Today I’m sharing another experience that also took place in Central China.

Story 2: Education

California, my home state, falls in the bottom of the pack in terms of education (47 out of 50). Yet despite all the gripes about how our public education system is inadequate, compared to the rest of the world as a whole, America is still way ahead.

My travels in China have given me a greater appreciation for what our tax dollars offer us here in the States. The majority of China consists of ethnic Han Chinese, but there are also millions of minority peoples. I’ve had opportunities to travel in Tibetan areas where I’ve visited minority schools and have seen the poor and meager conditions they face. Like other minority schools, Tibetan schools face financial difficulties. They struggle to receive educational helps and subsidies that comparable Han Chinese schools usually receive from the government. What this translates to for the students is a lack of teaching materials and proper facilities and a lack of qualified teachers.

One particularly poor Tibetan county I visited held special school sessions for children from nomad families that couldn’t afford tuition costs for primary school. The teachers of these schools would offer free education for a few weeks in the summer for these children.

What insights have I gained from these trips into Tibetan villages? I agree that education programs and school conditions might be horrible in some place in the U.S. such as the inner-cities, but compared to the rest of the world, we ought to still count our blessings.  There are plenty of education resources here in the West that can help benefit developing countries.

Jesus teaches us in Luke 12:48b “From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked.” For those of us who have benefited from a good education, such as university, do indeed have a greater responsibility.

As a follower of Christ who seeks to be a good steward, what is the implication of this greater responsibility? Maybe our college education and higher paying jobs is a means to provide others with similar educational opportunities. Practically, we can sponsor the education of one child through organizations such as World Vision, or we can sponsor programs that supply developing countries with books and teaching supplies. (Books for Africa, Book Aid, Room to Read).  One way or another, it would be awesome to see resources shared with those who need it the most.

This week I’m looking at the issue of missions and student debt. A 2004 issue of Missions Frontier devoted a full issue on the topic, and I hope to glean some helpful advice from the various articles.

Today we look at the last article on this issue of missions and student debt. “A New Paradigm For Education Without Debt“, is written by Rebecca Lewis.

Lewis begins the article by exploring the motivation behind student debt. She quotes Suze Orman from the book “The 9 Steps to Financial Freedom” and reasons that parents are often not honest and upfront about how much contribution they can offer to their children. Instead Lewis recommends implementing an early and realistic budget for college.

“How much better to sit down with your family and calculate in advance how much the student can earn, how much the parents can realistically contribute (without going into debt or cheating the other children), and to set the goal of graduation without loans.”

Although some may disagree, Lewis also recommends taking a hard look at Ivy League school and other universities with status to decide whether the additional cost for “name brand” is worth it.

“It’s a myth that students get a significantly better education and greater earning power from “high status” schools.”

Often times, advantages such as job experience or internships can give you a similar edge out on the job market. Work experience may also help the student realize their career interests at an earlier age.

Another suggestion that Lewis gives that some may disagree with is this: reconsider the college degree. Although studies show a higher earning potential, a college degree does not guarantee you a career job. Not everyone is meant to attend a traditional four-year program.

Yet for the thousands that do attend university each year, what is the best solution? Lewis gives an answer and some pointers. “By far the best option is to avoid debt in the first place by reducing the cost of getting the degree.” Early planning and family discussion is the key to any plan.

Lewis suggests a few methods to reduce the cost of education. One method is to reduce the course units needed at the four-year university. Whether through Advance Placement courses in high school, or transferable courses taken at a community college can greatly reduce the cost of full tuition.

Another method is to consider low-costing universities that are comparable to other universities with similar degree programs. There are in fact universities that offer significantly discounted tuition rates, or even programs that are free.

Some universities Lewis names are: Bethany School of Missions in Minneapolis, Central Christian College of the Bible, Prairie Bible Institute, and Thomas Edison State College.

There are schools that may also offer unique opportunities such as offering credit for missions trips and overseas experiences; “Organizations like Global Learning Strategies are willing to guide students through the process of getting their bachelor’s degrees for less than $10,000 for all educational costs, while earning credit for mission trips and other unusual apprenticeships.”

As more choice opportunities like these emerge, Lewis encourages both parents and students to fully explore their options. “Mission agencies, churches, and parents should take advantage of such new freedoms in higher education to encourage students to obtain relevant training for missionary service while simultaneously.”

I wholeheartedly agree with Lewis and would even recommend including overseas experiences in any college experiences. Instead of a regular summer vacation, why not a unique cross-cultural experience in a distant land all the while accruing university credits.

This week I’m looking at the issue of missions and student debt. A 2004 issue of Missions Frontier devoted a full issue on the topic, and I hope to glean some helpful advice from the various articles.

Today we look at the article, “Release The Indentured Generation!” It’s written by Linda Dorr, who has served at the U.S. Center for World Missions for a number of years. She addresses the issue of student debts among college grads in this generation.

Only 46% of college students graduated with and financial debt ten years ago. The percentage is closer to 70% now. This comes as no shock considering that tuition fees have risen dramatically in recent years. Median income for most families have not been able to keep up. On top of this federal aid in the form of grants have steadily decreased over the years.

Federal and private student loans have become all to common to compensate for the changing times. According to Dorr’s study, 23% of students have accumulated an upwards of $40,000 in debt after four years in college.

“Such levels of debt constitute a form of indentured servitude for today’s student generation. For ten or more years after graduation, much of the family budget must be spent on debt repayment.”

There are options to consolidate loans and lock in low interest rates. But if you choose a longer repayment period, you might still be paying off your student loans by the time your own children are entering college.

The issue of student debt has also begun to influence the area of career choices. “A 2003 study released by Collegiate Funding Services found that more than 30% of college graduates said they had to take a job other than the one they really wanted in order to pay off their loans. This trend has disproportionately impacted the public-service sector (social service, public-service law, teaching, religious service) because of the traditionally lower-paid jobs in this sector. Those recent graduates who do enter public service often find that their student debt well exceeds their annual salaries.”

Missions agencies have tried to address this issue by allowing potential missionaries to allocate a portion of their fund raising to student debt. For example, “Wycliffe Bible Translators allows up to $24,000 in individual student debt or $36,000 in total family student debt.”

Although most missions organizations encourage beginning missionary service earlier in life than later, raising enough financial support could prove to be difficult if one has significant student debt.

So what’s a college grad to do? Dorr gives a few helpful suggestions.

First, make every effort to pay off all the debt in three years. “This could mean tremendous sacrifice for a few years, but wonderful freedom thereafter – freedom to follow their desired careers, and freedom to support missionaries wholeheartedly and open-handedly.” After I graduated, I committed to paying off my student loans in three years. Actually since my original timeline didn’t include saving for a wedding, my plan has been spread out to a little over four years.
Second, if you haven’t accumulated debt yet, make every effort to avoid it. Apply for scholarships and get those FAFSA applications turned in early.

Finally, Dorr comments on how the education system also needs revamping. Some schools such as Rice University have already begun to cap student debt. Hopefully other universities will follow suit. Until then, wise financial planning and budgeting will help ease the burden of student debt.

This week I’m looking at the issue of missions and student debt. A 2004 issue of Missions Frontier devoted a full issue on the topic, and I hope to glean some helpful advice from the various articles.

Today we look at the article, “Student Debt: A Hurdle Too High for ‘Impact’ Missionaries”. It’s written by Ben Sells, a Senior VP for a student training organization.

Sells begins his article with the reality that too many students are graduating with high amounts of student debt. The debt is putting them on the “sidelines” for world missions because of high monthly payments that can’t be paid on a missionary salary alone. To Sells, this trend is very worrisome because the unique giftings and talents of college grads aren’t being realized if hindered by student debt. He states three specific gifts that young adults have to offer:

1. Younger missionaries are bolder. They seem more willing to take risks, doing whatever it takes to share the gospel.
2. Younger missionaries are teachable. They seem more “trainable,” quickly applying what works in church planting.
3. Younger missionaries are linguists. They seem more efficient and effective in learning language and culture.

The impact that college grads can have is being hindered by student indebtedness. So what can students and parents do? Sells offers three tips in this area.

1. Start earlier on your college career by taking Advanced Placement classes that will gain you college credit. The less classes you are required to take, the sooner you can graduate.
3. Begin your college career at a community college. Many lower division course credits can be transferred to four-year university. Taking a portion of your classes at a community college can significantly reduce your tuition expenses.
4. Ask for more grants. Find out all you can for the various scholarships and grants you may qualify for.

Sells also addresses the potential helps the Christian community can also offer:
1. Churches and Missions organizations should work intimately with students to tackle these issues early on.
2. Churches and organizations provide sponsorship programs where students will receive financial help in return for different missions commitments. This is similar to how the government offers subsidies to public school teachers who are taking classes for credentials.
3. Addressing the issue of student debt is only one aspect of preparing young people for ministry. Churches and organizations should help to train in develop students in a holistic manner.

I agree with much of what Sells has to say in this article. I wish that I had these sort of helps during my college years. I regret taking out some of my student loans when it might have been unnecessary. I could have “survived” financially with a few thousand less each year. Ideally developing a budget early on in my college career would have given me a better picture of how much money I need to borrow. Now I know that having a clearer financial picture and teaching basic finances would greatly be beneficial to students in this generation.

I have seen it suggested before that in order to maximize financial aid eligibility through FAFSA, grandparents should save in a 529 plan instead of parents. Why? As I mentioned yesterday, the assets of parents are factored in to the total expected family contribution of a student. A student would receive more financial aid if a large 529 college savings plan was held by the grandparents instead of the parents. So it has been suggested that parents who want to open a 529 plan should have the grandparents be the account owners instead of the them.

I understood this logic, but I still had questions about what happens during distribution. I saw a potential problem. Either the money given by the grandparents would be considered as yearly income to the student (we want to minimize this) or if the grandparents pay for college expenses directly the financial aid becomes reduced dollar for dollar (this is even worse).

The laws are vague about whether the distribution of money to the student would actually be considered income that needs to be reported on the FAFSA. Here are two articles that discuss this in more detail:
Rules unclear for grandparents’ 529 plan
Section 529 college savings plan loophole

It is ultimately possible that the laws change and become more clearly defined. I believe in the end that it might be easier for parents to open their own 529 plans instead of trying to shelter them through the grandparents. Starting early and saving for college expenses is what is ultimately important.

I found this great article over at The American Institute of Certified Public Accountants. It gives straight-forward examples of how “Expected Family Contribution” is calculated when trying to qualify for student loans and grants.

Financial Need = the Cost of Attendance - the Expected Family Contribution.

The formula that governs the “Expected Family Contribution” was developed by congress:

• 50% of student’s income
• 35% of student’s assets
• 22-47% of parents’ income
• 5.6% of parents’ assets

Take a look at this article to see how this might be calculated for a typical family.

I just read this article in Kiplinger Magazine about a student at the University of Virgina who finished his bachelor’s degree in one year. Wow, how did he finish in just twelve months? By taking many advanced placement courses during high school he was able to come in carrying 60 units of credit. He only needed 63 more units to graduate with a double major in physics and math. He then took 18 classes in two semesters to finish the rest.

Why does this story appeal to me? While I don’t think taking 9 classes a semester is advisable for anyone, entering into college with advance placement credits is very strategic in reducing tuition expenses. The reason is because many AP courses taken during high school will give you a semester head-start or even a year head start on your degree. My AP credits in math, physics, language definitely saved me a few thousand dollars in reducing the number of classes I needed to take in college. It could have been even more if I took AP english and history.

While the goal of college is not to complete a degree as quickly as possible, we all know that students every year are graduating with more and more student loan debt.  Finding ways to reduce college expenses is definitely crucial.

Looking for ideas to make the most of your free time during the winter holiday? Well instead of turning on the tube after a big Christmas dinner, surf the web and increase your knowledge. There are thousands or great online resources that can help educate you about personal finance, investing, budgeting, and managing your money. If you have time to spare this Christmas break why not commit to learning something new you can use in 2007. Maybe you’ve always wondered how asset allocation works. Or maybe how to open a College Savings 529 plan. Even perusing the many informative and practical personal finance blogs could prove to be invaluable for your personal finance decisions in 2007.

If you have free time, here are some great online resources:
- Wikipedia
- MSN Money
- Fund Advice
- Fatwallet Finance
- College Savings
- Kiplinger