Economy Continues to Slide While Tuition Rises

By Jana Martin
jjmartin@smu.edu

The cost of a college education is going up, and Southern Methodist University is not immune to the increasing costs. As students register for fall classes, they will notice an increase in tuition and fees for the upcoming school year.

The cost of tuition and fees at SMU for 2008-2009 was $33,170 and the cost for 2009-2010 is $35,170, an increase of 5.9%.

In the midst of unemployment and lower paychecks, financing an education is becoming more difficult than ever. Figuring out how to pay for a college education can be mind-boggling.

“The loan process is confusing. I had to visit the financial aid office,” said Page Youngblood, an SMU junior. “They were very helpful.”

So where do you start? With so many funding options, it’s difficult to decide which is best for your situation.

There are two types of Federal Stafford loans: subsidized, meaning the government pays the interest while you are in school, and unsubsidized, meaning interest accrues while you are in school.

Other options include: federal PLUS loans, private loans, work-study plans, grants and scholarships. Of course, universities still accept cash, but it’s likely to be the hardest to come up with these days.

According to the Bank of America Student Loan Guide, Federal loans are need-based, private loans require a good credit score and federal PLUS loans, which are for parents, and also require a good credit score.

Credit scores, known as FICO scores, range from 300-850. According to myfico.com, the higher a person’s score is, the better their chances are for getting a student educational loan. Most lenders prefer a score above 720 in order to get the best interest rate, according to the website.

Walker Self, a financial aid advisor at SMU, said the very first thing a student should do is fill out a Free Application For Student Aid (FAFSA). The application can be completed and submitted electronically at fafsa.ed.gov. Students should submit their FAFSA as soon as possible to receive priority processing and funding.

Submitting a FAFSA is required to receive federal grant money. Grants are need-based, limited and awarded on a first-come, first-serve basis.

“Once a student has submitted a FASFA, an Expected Family Contribution or EFC will be generated,” said Self. “At that point, the school will prepare the student’s financial aid package.”

Self said he advises students to first exhaust all federal loan options because they usually have a lower interest rate than private loans, and payments can often be deferred while attending school.

“If you do choose a private loan, be careful,” he said. “There are student loan predators out there. Do your homework on the lender you choose and make sure they are reputable.”

“In this economic climate, I’m seeing fewer families willing to go into debt,” said Self. He advises students not to borrow more money than they really need.

Students should figure out their debt-to-income ratio before borrowing money for school. The way to calculate your ratio is to take your monthly minimum debt payments and divide that amount by your monthly gross income. A ratio of 21% to 35% is considered to be overextended, and 38% or higher is considered dangerous, according to the SallieMae website.

“I’m nervous about student loans,” said Madeleine Linnard, an SMU senior. “But I may have to have them so I can go to graduate school.”

For more information about student educational financing, contact the SMU financial aid office at 214-768-3878.