Tagged: law

“Fixed- Variable” And Other Student Loan Oxymorons

The recent Bipartisan Student Loan Certainty Act of 2013 sped its way through Congress and the President’s desk on its way to significantly changing the federal student loan landscape. Let’s take a looks at it and see what are the upsides and what are the downsides….

First I need to say up front that anytime I see the words “bipartisan” anything I have to believe it’s a good thing. So let’s acknowledge that this really was a good faith effort on the part of Congress to address the student loan crisis. How effective their solution will be in providing real term debt relief may be difficult to assess in the immediate.

The major change of this act was to move the present federal loan system from one where Congress established interest rates to a system where interest rates are linked to the financial markets. Every academic year a new interest rate would be established for both Direct Unsubsidized Loans and Graduate Plus Loans. The rate would be based on the high yield of the 10 year Treasury Note (T-bills) prior to June 1 plus additional add-ons of 3.6% for the Direct Unsubsidized Loan and 4.6% for the Grad Plus Loan. So for academic year 13-14 we are looking at a 5.41% interest rate on the Direct Unsubsidized Loan (previously 6.8%) and a 6.41% interest rate on the Grad Plus loan (previously 7.9%).

The most common question asked of any loan regarding interest is … is this a fixed or variable rate? And the great answer regarding these new student loan is that it’s termed a “fixed-variable” rate. (Seriously that’s a better oxymoron than “jumbo shrimp”). What it means is that while the interest rates will change and be re-established every academic year depending on the T-bill and market, once that interest rate is established it will be locked in for the life of the loan through both your in-school enrollment and your full repayment. What that translates to is that you could end up finishing YLS with six different loans (a Direct Unsubsidized and Grad Plus per year for three years) all with different interest rates. That could make loan repayment just a little challenging but also may afford you a good opportunity to pay off your loans strategically using a “debt stacking” model (i.e. pay off the highest interest rate loans first).

It may also make accepting your aid award each year difficult, as you would not have confirmation of what your loan interest rates would be for the forthcoming academic year until after June 1 annually. It would put you on a very tight timeframe to decide if you would then take the loans at that rate or perhaps look at private loan alternatives and get it all sorted out by the time the August 1 bills are due.

Probably the biggest unknown out there is how high can the interest rates rise and ,depending again on the health of the market, how fast would it get there. As a safeguard, Congress did build “maximum” rates into the “fixed-variable” plan… for Direct Unsubsidized it’s a 9.5% rate and for the Grad PLUS it’s 10.5%. The reality is that if the economy improves these rates could increase quickly (some experts are even predicting that as earlier as 2015 we could already exceed the existing 6.8% on the Direct Unsubsidized loan.). Though the Congressional Budget Office predicts we would not reach the maximum interest rates within the next ten years. We all want fast economic recovery but we may be developing a culture of current students who need it to happen at a slightly slower pace until they graduate.

So why did Congress take this approach in addressing the student loan crisis? According to the bill’s proponents the measure was a “victory” for taxpayer who won’t be forced to subsidize student loan rates arbitrarily set by politicians. In addition the bill is estimated to reduce the deficit by $715 million over the next decade. Graduate and Professional students, the often ignored in the student loan debate, probably also want to applaud the fact that the bill actually addresses their loans.

Critics of the bill (including many student and consumer groups) are worried that the maximum caps are still far too high and should have been set lower to protect future borrowers – i.e. are we offering an immediate interest rate reduction to today’s current college student but on the backs of our current middle schoolers.

And the other question behind all this is… is how permanent is this solution? Would this all change (again) when Congress takes its rewrite of the Higher Education Act this Fall? Stay tuned.

Life Does Not Have To Involve Living Off Ramen- How YLS Students Save Money

Part of my ritual for another school year is a blog entry targeted to our new 1Ls basically focused on “living on the cheap” in New Haven. I could certainly give you my own ideas (like if you shop at IKEA check out their “As Is”… department first where not only can you save money but your furniture will already be put together for you – okay that’s equally a budget tip and equally “I am just lazy” tip). But this year I decided to change it up a little and go to the actual source… real YLS students who have learned (in some cases the hard way) how to save, sacrifice and manage on a student budget. I put out a call in early summer to our rising 2ls and 3Ls asking them to share with our incoming students their money management strategies and was amazed at their resourceful responses:

Most of the students agreed that the most challenging part of the student budget centered on housing/rent, transportation, food and books. That being said here are their creative solutions (with a disclaimer that the Financial Aid Office is not endorsing any strategies or vendors … we are simply stating that this is what students do…):

“Pay your rent for the entire semester ahead of time so that you don’t have to think about it. It really reduces the stress surrounding finances to have the biggest expense taken care of.”

“The hardest part of budgeting is paying your January rent, since the second semester doesn’t start until after winter break, you don’t get the second round of loans until late January. At the start of the semester, set aside all the cash you’ll need for rent into a savings account (or wherever) and then budget with the rest. A lot of us 1L year didn’t do this and had to scramble in January to make ends meet. “

“If you do not have a roommate, split utilities like internet with neighbors.”

“You can make small adjustments to your food budget, but let’s not ignore the elephant in the room: Don’t live in expensive downtown high-rise apartment buildings just because it’s easy or because everyone else seems to be doing it. You’ll have plenty of time to live in your own private mediocre high-rise apartment once you’re practicing law. Instead, find a room in a cute house in East Rock, Wooster Square, the Mansfield Street area, etc. You’ll save $400-600/month. If you do that, you’ll never have to worry about your food budget. Don’t be afraid to explore New Haven’s “outer” neighborhoods!”

“My advice is simple (for single people): live in East Rock with roommates. Rent is my biggest expense by far – by keeping my rent low, I’ve found living on the budget is really a piece of cake. “

“Get on a bike and go buy groceries. Homemade meals are the golden path to saving a ton of money. It can be hard to get around in New Haven, so a bike can be a great option to get exercise, bask in the sun, and buy the stuff you need. “

“Being in a long-distance relationship can really strain your budget, but planning ahead can help. If your significant other is an Amtrak ride away, buy a Student Advantage card to get discounted train travel. And book those tickets well in advance, even if you aren’t sure that you can actually travel on that day. Fares are much lower two months out and it’s easy to cancel or modify reservations – there’s no fee and you can use the credit towards a later trip.”
“Book your Amtrak or Mega Bus tickets in advance. Prices go way up closer to the date you’re traveling.”

“The key to saving money for me has been signing up for frequent flyer miles and credit cards that give me rewards so I can spend less on transportation to the west coast.”

“Sending my car back home was the best financial decision I could have made. With parking and upkeep expenses I was barely getting by, but without a car I’m able to live within my means. I just get my heavy groceries delivered through Peapod and buy fresh items from the co-op.”

“Shop at Savers!!!! Savers has furniture, home supplies & appliances and pretty awesome clothes. There are some real treasures there. “

“Connect with current or, ideally, recently graduated students to see if they can get some furniture. Alternatively, Craigslist is a great resource.”

“Carpool with a few other students every 3-4 weeks to Costco or Trader Joes in Milford and stock up on essentials.”

“If you shop online, use Ebates.com–you get cash back for most major retailers. It adds up!”

“Make food that freezes well and divide it into individual portions (and freeze it) so that you don’t have to resort to takeout when life gets hectic. “

“It’s surprising how much money you can waste on small expenses like study snacks during the day. To save money, stock your locker with snacks you’ve bought in bulk.”

“Attend events at YLS. Great way to get tasty free food and learn something new.”

“Make your own lunch or buy food from food carts… cook for yourself as much as you can. The dining hall has a microwave, plates, utensils, napkins, basic condiments. There’s even a fridge on the other side of the building. You can really cut costs by bringing your own lunch to school or attending almost-daily free lunch events.”

“I try to pack lunch at least three times a week. And I almost always cook dinner for myself. Buying meals out is one of the most efficient ways to deplete your funds. Plus cooking will impress potential dating partners. “

“I try to buy liquor at the big store next to Trader Joe’s. I get someone with a Costco card to take me shopping there. Don’t eat out! Save it for special occasions. Pack a lunch from home or go to an event with free lunch.”

“Don’t buy books until you’ve had a couple weeks in your classes. There may be some classes for which it’s more sensible to use the copy the library has on reserve. This is particularly for professors who give a lot of reading outside of the textbook. If students are anything like me and can’t help highlighting, underlining, and taking notes in the text while reading, scanning and printing the pages you need really works. At the most, you’ll spend $60-$70 on printing per class over the entire semester. That probably amounts to a third of what you’d pay for buying the book.”

“If you HAVE to buy the book, make sure to check the Initiative’s book fair at the beginning of the semester, in addition to the ongoing Google doc that YLS students maintain to sell books (2012-13 version available here).”

“You might be tempted to pay more for your books and for shipping so that you can have them for the first day of class. But don’t do it, shop around and find less expensive options. “

“Books are a major expense and there are a lot of other ways to get the readings (friends, copies from the library). My year, someone from our small group got the books from the library and scanned all the readings for the first week and sent them to the group. That way, if the less expensive book didn’t ship for a week or two, we were still all covered.”

“You can also rent books from the book store for a lot less than buying them (though you can’t write/highlight in them). So keep that option in mind.”

“Do your best to estimate your utility bills and other bills related to living so that you can get a better idea of how much spending money you’ll have once ALL of your bills are paid for the semester. Divide the excess into weeks –this is the MAX that you can spend each week. Putting the money into a separate account will reduce confusion about how much money is available to go out with friends, shop, etc. “

“I think it’s helpful to make an actual budget in Excel at the beginning of every semester. Then at the end of each semester go back and see how well you stuck to your plan and revise for the next semester as necessary.”

“I set up a monthly budget in August and update it periodically to keep track of my expenses. I usually overestimate (within reason) all budget line items so I have a cushion at the end of the semester.

“I also use mint.com, a budgeting app. It lets you set monthly budgets and makes it super easy to keep track of spending.”

My thanks to all the 2Ls and 3Ls who contributed their suggestions and their first hand experiences living on a “fixed income”. Keep in mind that the Financial Aid Office has budgeting tools available to help you. In addition we will be kicking off our Financial Literacy Lunch Workshop series this year with a workshop on budgeting and credit on September 25 which includes one of those “valuable” free lunch opportunities.

Tonight’s Top Ten Category … Things You Need to Know About Using Your Financial Aid …

Note- this post has been updated since its original publication in May 2013
Okay, I couldn’t resist adding one more to the myriad of over used Top Ten Lists out there (David Letterman what have you wrought in our society!!). But this is a pretty important one to at least take a look at because it’s all about what you need to do to insure your financial aid actually materializes to pay your tuition bill and actually is accessible for you to pay your own bills. So… (drumroll….)

#10 – You will not receive a bill – it’s true..…not in the sense of a bill mailed or emailed to you directly. What you will get is an email that a July 1 billing (due August 1) for charges for the Fall  term is available for you to review on the Student Information System (SIS).

#9 – You may not need to actually pay the bill – if you have accepted enough financial aid between loans and scholarship funds to fully cover the Fall term (i.e. that’s 50% of your total aid for the year) your financial aid will appear on the July 1 billing statement as anticipated aid. Provided you have enough accepted financial aid to cover the bill, you will not need to make any payments on the due date of August 1. However, the only way that your financial aid appears on your bill is if you have completed the financial aid process by submitting all required tax returns and the Notification and Confirmation form.

#8 – You may need to actually pay the bill – if you have declined financial aid, intend to pay on your own or have not accepted enough financial aid to cover the Fall term bill you will owe a balance that must be paid by August 1st .

#7 – There are consequences (bad things) if you do not pay the bill in full by the deadline… including late fees added to your account and holds (including a registration hold if the bill is not paid by the time you get to YLS which will prohibit you from registering with your class and getting your course schedule).

#6 – Your loans are not really loans yet…there are steps that need to happen in the summer to actually “set up” your loans. You will get an email from Student Financial Services mid-summer (usually mid to late July) instructing you to complete loan paperwork electronically on the SIS system including a promissory note, truth-in-lending statements (TILAs), Title IV authorizations and an entrance counseling session (which are not counseling sessions at all but an online information survey). Documents will differ depending on what type of loan(s) you have and you will also need to complete separate promissory notes for each loan (including both the federal Direct Unsubsidized and Graduate Plus loans).

#5 – The Asset Verification Form is the final piece of the financial aid puzzle – this form must be completed within the window of after July 1st and by August 1st (no earlier and no later) allowing us to substantiate the estimate you made on Need Access for your total assets (and upon which we based the asset contribution in your aid award). Depending on the balances reported on this Verification form aid awards will be adjusted (both increases and decreases). Find this form in your Admissions Binder or on our website. Failure to submit by the deadline will put a hold on all financial aid funds.

#4 – Financial aid (loans and scholarship) disburse three days prior to the start of the term – with no exception. That’s in keeping with federal regulations and there is no getting around that. What that means is there is no “early” disbursal of aid for any financial reasons or hardships. So you will have to come prepared to pay for critical things you need (shelter, food, etc.) with your own funds from the time you move to New Haven through orientation.

#3 – Refunds on Financial Aid need to be requested in order to disburse. Refunds are the technical term for financial aid funds you have accepted for the sake of your own living expenses. Refunds are generated when all the Yale direct charges are paid and there are still excess funds on your account. However, in order to gain access to these funds you must “request a refund” on the SIS system. And you need to do this each semester or anytime you want a refund (i.e. those funds are not going to come to you automatically just because they are yours). And the earliest you are going to receive a refund is the first day of term. But again because there is no set or guaranteed date for the refund (albeit per federal regulations schools have 18 days from start of the term to issue and Yale does an extraordinary job of getting refunds to students in a timely manner) make the necessary allowances in your cash flow to survive.

#2 – There are things you can do to expedite the refund. First, sign up for automatic deposit so that the refund is deposited directly into your own bank account and you are not waiting for a paper check to be issued. Instructions on this process can be found on the Student Financial Services website . Second, request the refund a couple of days before the first day of term so that as soon as the excess funds are generated the refund process will already be in process.

#1 – Reach out to the Financial Aid Office for questions and help. As as you have just read a lot of fairly complex things need to happen on a certain timeframe, in a certain order over the next few months to ensure that you actually have funds in hand come the first days of classes. Don’t let a missed step leave you without the money you need. (Try as some have you can’t survive by living off the free candy that the Financial Aid Office always has available in our candy dish). So call us, email us or come visit us anytime if something in the process needs to be clarified.

The Price of Solitude … the cost of living with or without a roommate

I know that this is the time of the year when our new admits are scrambling to find housing and put deposits down before someone else snatches up a good apartment. Lots of pressure to insure that you have a place to actually “land” when you get here in August.

And not wanting to add any additional pressure onto those tough, timely choices but…. thought it would be worth just throwing out a few numbers which show why we advocate that students give serious cost consideration to finding roommates. Yes, I know that the thought of sharing space with someone you barely know at this stage of your life probably just makes you groan. Are they going to “mistakenly” eat your peanut butter… probably yes? Are they going to play some unbearable (you fill in the genre) music night and day … most likely. And are they going to have a whole warren of dust bunnies living under their bad? Absolutely. They will invariably do things to annoy you and impede your independence.

But what they will also do is save you considerable money in your student budget. Here’s why we know that… as some of you may have read on the blog post “The Means to Live Within Your Means” we do an annual costs of living survey among current students to assess if the number we use for “living expenses” in the student budget is accurate (which it is). What that survey also shows us is the overall cost differential between living alone, living with one roommate and living with two or more roommates.

COL Roommate Chart

Using the example of the cost differential of single to one roommate.. that’s $203 per month or $1,827 per academic year or $5,481 over a 3 year JD degree. So let’s say that you chose to live alone and let’s suppose that you then have to borrow ( in a Grad Plus loan) the additional funds of the cost differential in loans in order to make up for that extra expense of living alone. That $5,481 extra you borrowed over your 3 year enrollment translates to $7,946 on a 10 year loan repayment and $12,582 on a 25 year loan repayment. (And that is not factoring in the interest that is building on the borrowed amount while you are enrolled). So you just spent at a minimum $7,946 to live without a roommate. Is it worth it?

You are going to hear two things ad nauseum from me during your enrollment. First, you have a limited amount of money to live on in your student budget. Basically you are on a fixed income (and you didn’t even have to wait till social security). You can live adequately on our student budget provided you make some fiscally sound life choices. Second, any opportunities that you have to mimimize your borrowing saves you considerable funds in the future. Sacrifice a little now for long term financial gain. And choosing whether to live alone or with a roommate is one of the first choices you make that will impact both budgeting and borrowing.

Apples to Apples (or at least Granny Smith to Macintosh): Comparing Aid Award Letters

Note this blog was updated from its original April 2013 publication.

This is the season when our office gets a lot of requests to match aid awards from other Law Schools. But as a need-based institution we can only review or change an aid award if there is a change in financial circumstances which affects need. The existence of an alternative scholarship does not affect need or allow the leveraging of additional YLS funds.

What we will do when you reach out to us with this request is two things. First, we will do a re-review of your Need Access and FAFSA applications to ensure that we have understood your financial situation correctly. We recognize the fact that the data on those forms often does not tell the full story of an applicant (or their parents) and as such it’s helpful to dig a little deeper into what has been reported. Sometime the student has miscalculated what assets they will have available as of September 1st (which is the key number we use in calculating the asset contribution – not the data that reflects the assets you had at the time you completed the application). Or sometimes we will note that the student or parent had a one-time influx of income which is not representative of what their annual income truly is. Again, adjustments to the aid award can be made if we determine that the financial need data should be revised.

Second, we will talk with you about how to look at our aid award in the context of other awards you may have received. We are big believers in the “look before you buy” philosophy. Often we share the following points in how to effectively compare aid awards:

— As previously stated, it’s not possible to do a direct (my apples to apples analogy) comparison of “merit” based awards vs. need based awards because they simply are not done on the same principles.

— With merit-based awards that support tuition only, you want to be conscious, therefore, of how you will then fund your living expenses (and what realistically are those living expenses). If you are borrowing loans to support your personal expenses and living in a high cost city this could be substantial loan debt. Which then leads to the question: is this loan debt borrowed for living costs covered under the institution’s LRAP (Loan Repayment Assistance Program)? Which in turn leads to the larger question of comparing that LRAP to other LRAPs available.

— LRAPS in general have to factor into any aid award comparison as a “back end” scholarship. It’s not just about what you are getting in the initial aid award to fund those three (short) years of law school, it’s also about what support you will receive to assist in the long term repayment of the debt.

— How was the aid award made? At YLS we make it a point to show on the aid award letter the entire progressive calculation: Budget minus Contribution (Student, Parent, Spouse) = Need. Need is first met by unit loan and then by Institutional Scholarship. You can see exactly how we are arriving at bottom line numbers. It’s all very transparent and equitably applied to all students. If you are going to do a direct comparison of aid awards you will need to understand exactly how each element of the award was calculated by each institution.

— The cost of living differential is critical. Many people focus on the tuition and fees in looking at their student budgets. But let’s talk about the importance of the cost of living allotment. The reality is that the cost of living allotment is the only part of the student budget which you can control (you can’t change tuition, fees or health costs or anything else that will be billed from the school) but you can live on less (and more ) that what is budgeted for living. So it’s important to understand how exactly each school calculates the cost of living and if it’s a realistic number. In the case of YLS we conduct a Cost of Living survey annually with all our JD students to assess how much they are actually paying for rent, utilities, internet, phone, food etc. This year (2014-2015) the average monthly cost for all living expenses was $1,631 which at a nine month academic year was an average of $14,679. And we presently budget $17,000 in our 15-16 academic year student budget so we provide a buffer for other expenses. Bottom line — we are pretty confident that the cost of living allotment is accurate and is going to allow you to make out okay here in New Haven.

— Another related issue is evaluating if increased scholarship support is only supporting a higher cost of living. For example, say you received $3,000 more in scholarship support from another institution than YLS but in looking at their Cost of Living allotment in their budget (assuming their budget includes that breakdown) you see that it costs $3,000 more to live there than the YLS New Haven allotment. You really haven’t gained anything in that extra $3,000 because it’s just going to pay for a cost of living differential.

We recognize that deciphering multiple aid awards (all usually looking different, calculated different etc.) is a challenge. We are always willing to talk about how YLS calculates our award.

“Delicious” Money Saving Tips And Tricks From One YLS Student

Inspiration for the blog comes in many forms. Take my change meeting with 2L Christina Coutu this past week who happened to see me with a container of my favorite Greek yogurt. Bonding over our mutual love of yogurt, Christina shared how in a purely cost savings measure she had taken to actually making her own yogurt. (Seriously you can make it? I thought it only came from the dairy case at Stop and Shop?). Christina said that when faced with the realization of how much she was spending buying those little individual yogurts she realized she could save some significant funds doing it herself. And she didn’t stop there.. .she also shared how she makes her own fast, affordable and healthy steel cut oats breakfast (in lieu of high cost cereals) and how she prepackages healthy snacks from home for munchies cravings while at YLS. Better than anything from Rachel Ray or Martha Stewart, here Christina shares her self-proclaimed “money saving tips and tricks in the kitchen” proving that budgeting can be done while here at YLS:

1. Make your own GREEK Yogurt.

What you’ll need:
* Crockpot
* Thermometer
* Milk (any fat content will work—higher fat = richer/smoother)
* Starter (1/2 cup per ½ gallon of milk of yogurt with live cultures)


  1. Heat the milk in a saucepan on the stove or in a microwaveable safe container (in the microwave) until the milk reaches 180 to 200? F.
  2. Let the milk cool until it reaches 110-115? F.
  3. Once cool pour the milk into the crockpot.
  4. Remove one cup of the milk and whisk in the starter. Stir this mixture into the crockpot.
  5. Place thermometer inside the crockpot (you can simply crack the lid slightly). Cover the lid with a towel to keep the heat in.
  6. Check the yogurt after a few hours to see that the temperature hasn’t fallen below ~105-110? F. If it has simply turn on the crockpot (warm or low setting) until the thermometer reads 110-115.
  7. Leave the yogurt to sit for a total of ~8 hours, longer will yield tangier yogurt.

* Once the yogurt has sat for ~8 hours you should have a layer of whey on the top. I like to pour this into a container and use it for banana bread (higher protein content than plain old water). This also makes the yogurt thicker.
* For extra thick yogurt strain it in a colander lined with cheesecloth, heavy duty paper towels, or coffee filters.

2. Make overnight steel cut oats for a fast, affordable, and healthy breakfast

What you’ll need:
* Add-ins of your choosing (suggestions to follow)
* Crock pot or regular pot
* 1-1/2 cups milk (any variety will do)
* 1-1/2 cups water
* 1 cup uncooked steel-cut oats
* 1/2 teaspoon cinnamon
* 1/4 teaspoon salt
* Optional garnishes:


  1. Coat inside of slow cooker with cooking spray.
  2. Add all ingredients to slow cooker.
  3. Stir, cover, and cook on low for approx. 7 hours (slow cooker times can vary).
  4. Spoon oatmeal into Tupperware containers (1 cup portions are perfect) and store in the refrigerator for an easy grab and go breakfast.

*I like to pour ¼ cup milk on top, pop them in the microwave, and add additional toppings for a warm breakfast.

Mix-In Ideas
* Chopped apples, walnuts, and apple pie spice.
* Chopped bananas, cocoa powder, and slivered almonds.
* Flaxseeds, canned pumpkin, and pumpkin pie spice.
* Maple syrup and brown sugar.

3. Portion your own snacks into individual bags.

* Sounds easy enough but we’ve all spent way too much money on snacks because hunger strikes during a class break.
* Buy some Ziploc baggies and large sizes of foods you love—portion all of them at once and you’ll never have to worry about spending money frivolously on snacks.

A Few Great Snack Ideas:
1. Dry Cereal: Instead of paying $2 per serving for an individual cup of cereal in the dining hall do your own. A $4 box of cereal with 12 servings is just 33 cents a serving—saving you $1.67 every time you bring your own.
2. Nuts: Any variety will do but I love the flavored varieties.
3. Chips/Crackers: Just divide them up and pack some hummus for dipping.
4. Raw veggies and dip or hummus: Slice, portion, and bag them up. Grab a bag with a few tbsp. of hummus or dip if you prefer not to eat them plain. (mini Tupperware is great for this).
5. Raw fruit: bananas, apples, and oranges are great for packing.
6. Hardboiled eggs: boil a whole dozen at once.

There are great buys [Note: Christina cites Amazon] for stocking up on DIY snack essentials including: Food Storage Containers (less than $25 and great for your dips, oatmeal, and homemade yogurt), Thermometer (less than $5 and a must-have for yogurt) and the Crockpot (less than $25).

Any other YLS students have their own resourceful tips and tricks for living within the student budget? And yes .. I am talking to you… 3Ls… who have had three years of learning how to make a budget work for you. If so share them in the blog comments below or email them to our office (financialaid.law@yale.edu) as the topic of their own future blog posting…

The Means To Live Within Your Means

I could give a million and one euphemistic quotes on saving money. My personal favorite: “if saving money is wrong, I don’t want to be right” from that wise sage William Shatner (presumably as the Priceline Negotiator and not Captain Kirk).

The bottom line is that as a YLS student we expect you to live within a budget and,as such, assume that you will need to modify spending and make financial sacrifices along the way. The same budget or Cost of Attendance must be applied to all students within the same degree program. Why do we do this? Because the Department of Education Title IV federal regulations which allow us to disburse federal loans dictate that we must do this… “students must be awarded on the basis of a Cost of Attendance comprised of allowable costs assessed all students carrying the same academic workload”.

What the regulations do allow is that every school can develop their own budgets based on estimate “allowable” costs specific to their institution and their student populations. In the case of YLS we do something that not every school does… each year we survey our current students on their primary “living” costs to ensure that what we are allotting for this expense is (again as defined by the federal regulations) “reasonable”.

This year 44% of our current enrollment (including both JD and Graduate students) responded to the “Cost of Living” survey (up from 38% last year). That’s a very good response rate and as such probably gives us a pretty accurate sampling. Aside from the obvious data on “rent” or housing we individually poll on a variety of other expense types including utilities, phone, cable/internet, food and local transportation. We average those individual expenses by type and then add them together to determine a typical inclusive “monthly” expense which we can then project for the nine month academic year to determine an average “cost of living” . The result for 2012-2013 is:

COL Table Black White

The survey also yields other interesting facts on how YLS students live which we factor into our decision on the cost of living allotment:

  • The majority of our students (35.6%) make the decision to live alone and, as such, are most likely incurring higher monthly costs (Although we did see a slight increase (18% to 22%) in the number of students living with two or more roommates from last year to this year’s survey).Col Living arrangement Chart 3
  • Most students are paying rents in either the $600-$800 range (31%) or $800-$1000 range (25%) Though we did see an increase (from last year) in the number of students at the extreme low end $400-$600 of the rent scale. Again in the survey rent was defined as the portion of the monthly payment that you personally are responsible for.
  • Surprising (to me at least) …our 1L students have the lowest total living costs per academic year ($14,031) while our 3Ls have the highest ($16,074). I would welcome feedback on the blog from 3Ls as to why that occurs.COL by class color version

The survey also monitors some additional expenses including books/class supplies where the average of $849 per year is within the $1,000 allotment already included in the student budget as a separate allowance. Average childcare costs in the survey were $10,377 per year and YLS presently allows an additional $17,500 in childcare costs to be covered by non COAP eligible loans.

Finally, the survey asks an open ended question regarding “what other ongoing expenses do you have not captured elsewhere on the survey”? There is always a great diversity in the answers to this question – my personal favorites this year being the response of “Gym, Tan, Laundry” (did you seriously think you could slip a Jersey Shore reference in there and I would not get it?) .

Of these “ongoing expenses” the most common response was Travel- particularly as cited for the holidays and to visit significant others. YLS specifically budgets an equitable travel allowance into all student budgets based on home state (as reported on the Need Access application or FAFSA.) The allotment is based on making two roundtrips- getting to YLS in the Fall, going home for the holiday break in December, returning to YLS in January and going home at the end of the academic year in May. Any other travel beyond that schedule is a personal budget choice. However always be aware that if emergency travel or if a personal crisis arises which necessitates travel, we can exercise professional judgment based on a justifiable expense to increase the travel allotment. As much of a romantic as I am, visiting a love sick significant other does not constitute “emergency” travel.

I also want to address a survey comment that YLS cost of living is less than other Yale Graduate and Professional Schools. The reality is that we have one of the highest cost of living allowances because on top of the basic living expense we build travel and books/supplies as separate budget items. Most of the other G&P schools are incorporating those costs in their general living allowance.

So… the reality is that the current $17,000 allowance well surpasses the average costs of $15,003 per academic year as documented in survey and provides a buffer of almost $2,000 to support those other “ongoing expenses”- however you may prioritize them. As such, we feel the $17,000 living allotment, in addition to the travel allowance by state and with the book/supplies allowance of $1,000, meets the federal guidelines as “reasonable” expenses for the 2013-2014 student budget.

Does it meet your own personal needs? Maybe not. Does it allow you to maintain a standard of living to which you are accustomed? Maybe not. But it’s still an equitable allowance to live “like a student” for the short time that you are here in New Haven. Will you need to make some sacrifices or make priorities? Probably. Is it going to be a challenge to live on what is essentially “fixed income&rdqurdquo;? Most likely yes. It is going to be a difficult to receive an influx of funds at the start of a term (no more weekly paychecks) that then has to stretch for several months? Of course. Ultimately will you need to carefully budget your funds? Absolutely yes.

And that’s also where the Financial Aid Office comes in… to support you as you face the potential challenge of living within that allowance and to assist you in that budgeting process. Our office has many budgeting tools and web resources that we can share with you. We can also sit down with you through one on one counseling to actually develop a personal budget based on your own financial aid, your expected refund and your monthly expenses. We also offer workshops throughout the year which provide basic budgeting how tos, manageable spending tips and credit dos and don’ts .

Because despite the preconceived notion that the budget in some way “hinders” you, the reality is that the budget parameters actually “help” you minimize your overall loan borrowing and , ultimately, ensures that 25-30 years from now you are still not paying off the lifestyle “choices” you made in law school .

Pay Attention to the “Pay As You Earn” Loan Repayment Option

Hot off the press from the Department of Education is a new addition to your loan repayment plan options. And pleasantly this plan has a much more descriptive and understandable name that the other plans (i.e. Standard, Extended, Graduate Extended etc.) – it is quite simply “Pay As You Earn”.

“Pay As You Earn” is a new income based payment plan akin to the existing Income Based Repayment (IBR) or Income Contingent Repayment (ICR) plans. “Pay As You Earn” is generally considered the most “generous” of the repayment programs and was announced by President Obama last October acting as one of the cornerstones of his student loan relief efforts. Final regulations on the program were issued by the U.S. Department of Education last week and the specifics of the plan are already up on the DOE student loan website.

“Pay As You Earn” is really an accelerated version of the existing Income Based Repayment program. Whereas IBR was based on making loan payments equivalent to 15% of your discretionary income (as calculated by the DOE) Pay as You Earn drops that payment to 10% of your discretionary income. Also whereas IBR forgave any existing loan balances after 25 years of consistent payments, Pay As You Earn will forgive significantly earlier at the 20 year mark.

The key to Pay As You Earn is not just determining if you can meet the “partial financial hardship” qualification (based on loan debt to income) but also have specific eligibility based on your loan portfolio. To qualify you must have taken out your first federal loan after September 30, 2007 and you must have also received a loan after September 30, 2011. As such, if you are a current YLS student with just law debt you more than likely meet that standard.

But just like Income Based Repayment there a couple of things to be wary of with Pay As You Earn. First if you r payments based on income are calculated so low, you may not be keeping up with the interest building on your loan and may have negative amortization. Second, the forgiven amount at the 20 year mark can be a taxable occurrence in the calendar year when the forgiveness occurs (increasing your tax liability significantly). Finally, if you have any FFEL loans (federal student loans provided through private lenders) those cannot be repaid using Pay As You Earn (although they will be counted in your total loan debt to determine the financial eligibility hardship). If you are not sure if you have FFEL loans- check your loan history at the National Student Loan Database.

And Pay As You Earn is already stirring up some controversy among critics who feel it is primarily benefitting those graduate and professional students with high loan debt (with some specific references to Law students) more so than undergraduates.

Very high hopes have been placed on Pay As You Earn to revolutionize student loans repayment and significantly impact the student debt crisis. Referencing the Pay As You Earn initiative, former President Clinton himself stated that “this will change the future for young America”.

Right now the DOE readily admits that its biggest challenge is simply getting the word out there that this new repayment option exists for both current and new borrowers amongst the myriad of other loan repayment programs they offer.

For more information – view the DOE Pay As You Earn information sheet or use the Pay As You Earn calculator to estimate eligibility and loan repayment. If you have questions on your eligibility, use of the calculator or how this program may work for your personal law debt, stop by the Financial Aid Office for one on one loan counseling.

The Big Payoff- should you take care of student loan debt as soon as possible?

A very interesting (and timely as you will see below) article on the AP this morning which I wanted to share … “Should you pay off your student loans quickly?”… detailing the story of one recent Grad School graduate who felt that alleviating himself of his student loan debt burden was the key to his personal and professional freedom. His strategy for how he did this is a good replicable model for any new “loan repayer” to follow.

The article (as indicated by its title) also debates if paying off the student loan debt when compared to other pending debt (credit cards, car loans) is the best strategy. Basically it encourages students to develop a “debt stacking” model where debt sources are triaged for repayment based on the amount of total debt and the interest rate.

Want to know more about the value of “debt stacking”? It just so happens that Lori Moore, Financial Literacy Director for the Access Group will be here at YLS for two workshops in October both of which will incorporate the debt stacking strategy. On October 15th Lori will present “Loan Repayment… Pick Your Plan “- a workshop targeted to 3Ls for whom loan repayment is imminent and on October 18th Lori will be back to talk about “Borrowing and Budgeting Wisely”- a workshop geared to 1Ls and 2Ls addressing what proactive steps they should be taking as students to put their financial house in order now. Both workshops are from 12:10-1:00 p.m. in Room 127 and, in the spirit of strategies to save money, include a FREE lunch. Check the YLS calendar for more info.

“Upgrade” With Help from A YLS Technology Loan

In April, I made the big leap and ditched my dinosaur of a home PC for an IPad (such are the dangers of working a block away from the allure of the Apple Store). But for all of us there comes a time when no matter how trusty the old computer has been or what fond memories you may have of it … it’s just time to let it go quietly into the night.

So this is reminder that if you are at that point you can avail yourself of the YLS Technology Loan to make that new purchase. The loan is made on a reimbursement basis meaning that you will need to make and fund the purchase yourself (not just “ordered” but actually purchased). After doing so bring the receipts to the Financial Aid Office and complete a budget revision form.

Reimbursement is made by adding an additional loan to your financial aid award package. In most cases this will be an additional Graduate PLUS loan or Yale Graduate and Professional Loan (for international students). If you already have a Grad Plus or Yale G&P loan in place adding the extra loan requires no additional loan paperwork or promissory notes. There is one tricky thing in terms of cash flow… because student loans must disburse 50% for Fall term and 50% for Spring if you purchase a computer in the summer or at any time in the Fall term you won’t have the full reimbursement until the beginning of the spring term when the second installment of the loan comes in. Some students have waited to purchase until the very end of the Fall term or even into the Spring term itself so that the full reimbursement comes in all at once.

The reimbursement amount is based on your year at YLS. 1Ls are reimbursed at $3,000, 2Ls at $2,000 and 3Ls at $1,000. As such, if you are planning on taking advantage of this buying the computer in the 1L year will allow the maximum reimbursement. Any computer purchases made in the summer are reimbursable but only at the next academic year level (because the loans will not be put into place until that academic year). So if you are a rising 3L and purchase a computer in July- you will be set up with a $1,000 technology loan for the 2012-2013 academic year.

What constitutes “technology” for the sake of this loan? Well we are making the loan on the basis that the technology purchased is essential and necessary to your studies at YLS. That being said we maintain a fairly liberal definition of what we will allow under this reimbursement. In addition to a core computer we would allow accessories and or ancillary devices (printer, scanner etc.) up to the reimbursement level if all purchased at the same time. If you feel a tablet or IPad serves your needs better than a PC or Macbook that’s fine as well. But keep in mind it is a one time only reimbursement so whatever you purchase you will need to live with for the balance of your YLS life.