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3 steps college grads can take toward financial independence

The following article is CNBC

June 25, 2019

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Goodbye study sessions, dorm food and lecture halls. Real life awaits.

For Jessica Granofsky, 23, however, that means moving back home.

Granofsky graduated from college last year and now works full time as a communications coordinator in the Toronto office of a San Francisco-based start-up. Although she says she earns a good salary and even makes more than many of her friends, she also owes $40,000 Canadian (about US$30,300) in student debt.

"It influences every decision I make," she said.

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Those armed with a newly minted college diploma will enter a U.S. job market with unemployment near the lowest level in 50 years and job prospects up significantly from just last year.

Starting salaries are also higher. In 2018, college grads earned an overall average of $51,022, according to a survey by the National Association of Colleges and Employers.

And yet, 7 in 10 college seniors graduate with debt, owing around $30,000 per borrower, according to data from the Institute for College Access & Success. Overall student debt stands at more than $1.5 trillion, according to the Federal Reserve. Americans are now more burdened by college loans than they are by credit card or auto debt.

A whopping 87 percent of millennials say they have been broke in the past or are currently broke, according to a survey by CreditLoan.

Those hefty student loan bills from school, which are at an all-time high, have put a severe strain on most recent graduates' financial circumstances. A whopping 87% of millennials said they'd been broke in the past or were currently broke, according to a separate survey by CreditLoan.

Abril Hunt, outreach manager at Educational Credit Management Corp., or ECMC, a nonprofit dedicated to helping student borrowers, offers the following tips on the road to financial independence for those just starting out and facing student loan payments, in addition to other expenses:

1. Build a budget

For starters, don't "put the cart before the horse," Hunt said. "Your income determines your lifestyle, so figure out all your expenses and expected take-home pay," she added, if you have a job after graduation.

"Look at how much money you'll make and adjust your lifestyle accordingly," she said.

For example, if you're earning $32,000 a year, that leaves $2,238 in take-home pay each month after taxes, according to Hunt's hypothetical. A good rule of thumb is to spend no more than 30% of income on housing, Hunt said. She also advises saving for retirement as well as building an emergency fund.

"If you don't think about retirement, you'll be scrambling later on," Hunt said. From there, you can determine how much you can afford in rent or how often you can eat out. See her budget breakdown for that $2,238 a month below:

  • $223.80, or 10%, to student loan payments. (10% of your income is the standard repayment amount income-based repayment plans.)
  • $335.70, or 15%, to groceries
  • $223.80, or 10%, to retirement savings
  • $223.80, or 10%, to transportation, including gas, car payments and insurance
  • $223.80, or 10%, to an emergency fund
  • $671.40, or 30%, to housing
  • $335.70, or 15%, on discretionary spending, such as clothes, eating out, gym memberships and travel

2. Find a job

"Be practical," Hunt said. You'll want a revenue stream coming in even while you are hunting for the perfect position, so take something short term to pay the bills while you are looking for your dream job, she said.

To that end, regardless of your age or lack of experience, when it comes to landing a sought-after gig in today's market, networking is still your best bet, experts say.

In the meantime, take steps to cut costs, such as canceling a gym membership you don't use, scaling back food and clothing purchases to the bare necessities and opting for free entertainment until your income picks up.

3. Start paying back your student loans

The good news for graduates is that, for federal loans, which make up the bulk of student debt, there is generally a six-month grace period after graduation that gives borrowers time to get on their feet before they have to start repaying their college debt.

However, even though payment is not required during the grace period, interest continues to accrue, so consider starting your payments as soon as you can, Hunt said.

By default, you are likely in a 10-year standard repayment plan but there are other options, including pay-as-you-earn or income-based repayment.

"Be aware of the many repayment options, and understand you can switch between plans if necessary," Hunt said.

If your budget feels stretched too thin, look into those income-based repayment programs, which allow you to pay a percentage of your income rather than a flat rate, as long as you are under a certain income threshold.

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Minnesota can lead the way in bridging the skills gap

The following article is from the Star Tribune

May 28, 2019

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Minnesotans have much to be proud of, including the third-highest labor-force participation rate in the country and an unemployment rate below the national average for 10 years running.

Even so, a shortage of skilled workers is impeding Minnesota's economic growth. By 2024, projections show a gap of 400,000 workers needed to fill middle-skill jobs — those requiring education beyond high school but not a four-year degree.

My organization, ECMC Group, recently hosted several experts to discuss the biggest issues facing the education, training and workforce industries as part of the annual MN Cup competition. Panelists emphasized that the rising cost of traditional four-year college is an opportunity to spur changes to our outdated workforce training model.

Every year, high school students say the same thing: They are enrolling in college — particularly four-year institutions — to find a job. Yet only 27% of four-year degree holders are working in a job directly related to their college major, with many underemployed.

And students are getting left behind financially while businesses aren't finding the supply of trained workers they need. Aanand Radia, managing director of University Ventures, summarized this concisely, "Clearly, the way higher education is set up today and how it's traditionally been set up is not going to answer the needs of what employers want and to shrink the skills gap."

It's long past time to expand our horizons. Many don't realize that middle-skill credentials, like an associate degree or training program certificate, can lead to an equally well-paying job and long-term career growth as a four-year degree but at a significantly lower cost.

Instead, Americans still see traditional four-year higher education as the only pathway to the middle class. Panelist Mitch DeJong, chief technology officer of Brooklyn Park manufacturer Design Ready Controls, called it the "dirty hands stigma" where middle-skills jobs are considered less-desirable or for the less-intelligent. In reality, these "new collar" jobs also typically require strong backgrounds in mathematics, critical thinking and collaboration.

Kim Taylor, CEO of job-matching software provider Cluster, similarly lamented the stereotype that "if you don't go to college, you have somehow lost the opportunity to be successful." She rightly emphasized how elitist that notion can be, "knowing that two-thirds of Americans don't have a college degree."

Instead of leaning on four-year institutions as the only option for workforce preparation, policymakers, businesses and higher-education leaders should champion alternatives including career and technical education programs and "learn and earn" models to equip students with the skills needed for the 21st-century workforce.

Thanks to collaboration between local employers and the Department of Labor, apprenticeships in Minnesota have grown nearly 30% over the last five years. But we cannot close the middle-skills gap without first diversifying the middle-skills workforce. White men often dominate high-wage apprenticeships, in fields like construction, while workers of color and women are overrepresented in lower-wage programs.

Last month, Sen. Amy Klobuchar, D-Minn., reintroduced bipartisan legislation with Sen. Susan Collins, R-Maine, to increase funding for tuition-assistance programs for participants in pre-apprenticeship and apprenticeship programs. Speaking about her bill, Sen. Klobuchar rightly emphasized, "Today, there isn't just one path to success — there are many ways to access the skills and education necessary to get a high-paying and rewarding job."

During our discussion, DeJong and fellow local employer Louis King, president and CEO of Minneapolis' Summit Academy OIC, spoke candidly about how they've diversified their recruitment and training efforts. When underserved populations can't get the quality, affordable education and training they need, Minnesota employers face more severe skills gaps. As King said, while we search for skills-gap solutions, there is already "a workforce hiding in plain sight."

Our workforce needs are changing, and it is time for our attitudes about what will put students on the best pathway to success to change as well.

If local policymakers, employers and educators can work together to train more people in more effective ways, shaping them into lifelong learners and valued employees, the country will owe Minnesota a debt of gratitude — and that is a far better debt to carry.

Jeremy J. Wheaton is the president and chief executive of Minneapolis-based ECMC Group, where he creates and executes strategic initiatives for ECMC Group and its affiliates, and the president and CEO for Zenith Education Group, a nonprofit provider of career school training.

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Thousands of Latino students expected at leadership conference

The following article is from WoodburnIndependent

April 30, 2019

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The Lynchburg Public Library will host a workshop to help prospective college students in their preparations for college.

"Beyond the SAT," with Danny Eckstein will go over tips and tricks to get accepted and pay for college.

The workshop will help prospective students find and apply for federal financial aid and discuss ways to help pay for school.

Eckstein, director of the Educational Credit Management Corporation, will provide free resources and helpful information to navigate the Free Application for Federal Student Aid (FAFSA) process as well as tips on college resume building and work study options.

The workshop will take place in the Community Meeting Room and is free and open to the public.

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How to write a financial aid appeal letter

The following article is from U.S. News and World Report

April 10, 2019

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Successful Financial aid appeals are rare, experts say. But crafting a good financial aid appeal letter can give students the best chance of getting more money for college.

After receiving an award letter, students may be able to appeal the financial aid package they were given by a specific college. Not all students find themselves in a circumstance that merits writing an appeal letter to request more financial aid, and in some situations appealing could even lower the amount of aid they receive.

But Mark Kantrowitz, publisher and vice president of research for, says more awareness is needed about appeals.

"Too often families think of the financial aid award letter as being set in stone and not subject to appeal," he says. "The first sign there might be an issue is if the financial aid offer is not merely a harsh assessment of your ability to pay, but an impossible assessment. Chances are there is some bit of information the financial aid office was unaware of when they calculated your financial aid package."

In those cases, families should consider appealing the financial aid offer, he says, noting that an appeal letter should be written by a parent if the student is considered a dependent.

Read: Why Your College Financial Aid Letter May Be Misleading.

Whatever the circumstance, students and their parents typically must demonstrate to financial aid administrators a significant change in their ability to pay for college by providing proof or new information. For families who determine an appeal is the best route, here are tips on how to write a successful financial aid appeal letter:

  • Start by calling the financial aid office.
  • Include specific examples.
  • Gather documentation.
  • Be respectful and honest, and keep it short.
  • Submit the financial aid appeal letter the right way.

Start by Calling the Financial Aid Office

The appeal process can vary across colleges. Some require students to fill out a form in addition to writing an appeal letter, while others don't require a letter at all. For this reason, experts recommend students call the target school's financial aid office before taking any steps toward an appeal.

But students and families should plan to do more than just make a phone call, experts say. A physical letter can be powerful.

"There's a formal process if the student is asking to have their eligibility for aid re-evaluated, because you have to have a reason to be re-evaluated," says Abril Hunt, manager of outreach and financial literacy for Educational Credit Management Corp., a nonprofit based in Minneapolis that aims to promote financial literacy and student success in higher education.

Include Specific Examples

No two financial aid circumstances are the same. Even in situations when two families have a similar event occur that inhibits their ability to pay for college, Kantrowitz says they shouldn't expect the same outcome from an appeal. Colleges and financial aid administrators have significant flexibility in deciding how to respond to appeals.

"Schools are able to practice what is called professional judgment," says Megan Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators.

"This is a process that we think works pretty well right now, and we like the flexibility schools have. If you made it a little more standardized or rigid, you'd run the risk of it being too one size fits all, and there are so, so many different scenarios in which students might appeal or ask for professional judgment to be done. So we think that's in the hands of the financial aid office and the student," she says.

The way families present their financial circumstances can affect the result of an appeal. Experts say parents should list specific circumstances that have an impact on their ability to pay for college in their appeal letters, possibly in a bulleted list. Using a clear bulleted list can help quickly convey the facts of a family's situation in a way that is digestible for financial aid administrators and easy to connect to supporting documentation.

Some of the most common situations that may warrant an appeal are if a parent dies or loses his or her job; if parents get a divorce; if child support has ended; in cases of significant natural disasters that result in losses for the family; in the case of significant medical or dental expenses; if the student has a special needs family member or cares for a special needs child; or if the estimate for commuting and other educational costs is significantly lower than the actual costs, Kantrowitz says.

Families should also explain how the specific circumstance has affected their ability to pay.

The contents of the letter should be different depending on whether the family is hoping to get more need-based or more merit-based aid. If the aid is based on merit, it might be helpful to include more information about a student's GPA and accomplishments, but if it is strictly need-based, experts say that information is unnecessary.

See: 12 Colleges That Give Merit Aid to the Most Students.

Gather Documentation

Providing proof of the specific circumstances listed in the appeal is critical, experts say. If the appeal letter doesn't include any documentation, students and families can expect to get a response from the financial aid office asking for it.

The best kind of documentation families can provide is a document from a third-party source, Kantrowitz says. An example of a good document to include might be a paid medical bill or pay stubs and W-2s showing a decrease in income.

Letters from other sources can also be included, but those from family members may not carry the same weight as one from an outside source with knowledge of the family's financial situation, such as an insurance agent or health professional who can speak to the family's situation.

"It's not just narrative," Hunt says. "You need something in writing to back it up. They won't take your word for it; they need to have some proof of the situation changing or the information being inaccurately reported."

Hunt says if other colleges have offered more generous packages, copies of those offers can be included with the appeal letter.

Read: How to Get the Most Generous Financial Aid Package From Your College.

Be Respectful and Honest, and Keep it Short

An appeal letter should include other information beyond specific examples of financial changes or hardships. A parent should thank the financial aid office for its consideration, and write briefly about the student's excitement to attend the institution.

Experts say families should never lie about their financial need or treat the process like a negotiation.

While the financial aid appeal letter should include specific details, Kantorwitz warns: "Don't tell them your entire life story."

For an appeal of need-based financial aid, writing a long narrative or including too many details are unlikely to help a student's chances. The most important elements of the letter, experts say, are often the examples and corresponding proof.

"Processors really don't have the time to read long letters like that, so I would say be succinct and to the point." Hunt says. "Stick to the facts."

In his book "How to Appeal for More College Financial Aid," Kantrowitz provides examples of good and bad financial aid appeal letters. Here's an example of what he says a good appeal letter written by a parent might look like:

"Dear Director of Financial Aid,

I am very excited that my daughter, [name of daughter], has been accepted by such a prestigious university. I am proud of her accomplishments.

Unfortunately, there are some unusual aspects of our family's finances that make it difficult for my daughter to afford to enroll, despite your generous financial aid offer.

* I am a single parent, raising three daughters on my own. My husband died last year, after a long battle with cancer.

* Our family income has decreased significantly in the last two years. Besides the loss of my husband's income, I was laid off by my employer and had to accept a job at a much lower salary after six months on unemployment. Also, my income two years ago included a big one-time bonus that obviously will not be repeated.

* I am still making payments on a significant amount of medical debt. The insurance company did not cover all of the costs of my husband's cancer treatment because it included therapies that were classified as experimental by the insurance company. The COBRA payments after my husband lost his job because of the cancer were and remain very high. We also liquidated our small retirement plans to cover the deductibles and co-pays.

* My daughter's Social Security survivor's benefits end next year when she turns 18.

* My daughter's younger siblings are enrolled at a private high school. Although the school has helped with a scholarship after my husband's death, it doesn't cover full tuition. I thought about sending them to public school because the expense is no longer affordable, but I don't have the heart to do that to them after they lost their father. I don't want them to lose their friends. Plus, our reasons for sending them to a private school are still valid.

I have enclosed copies of documentation of these circumstances, a copy of my pay stubs before and after the job change, a copy of the unemployment benefits, a copy of my husband's death certificate, copies of our medical bills and a copy of this year's federal income tax return.

Your university is my daughter's first choice. I hope you will provide her with more financial aid, so she can afford to enroll at your fine institution. I am sure she will thrive there.

Thank you for your time and consideration."

Submit the Financial Aid Appeal Letter the Right Way

Parents should submit the appeal letter as soon as possible, Kantrowitz says. While experts say it is rare for a student to receive financial aid before being admitted to an institution, Kantrowitz says in most cases parents should submit an appeal letter early, even if financial aid administrators won't respond to it until the student is admitted.

The letter should be mailed, ideally through certified mail that includes delivery confirmation, to the financial aid office in most cases, Kantrowitz says. Parents should confirm the correct address with the institution's financial aid office.

However, families who don't have clear changes to their financial situation but feel they could still get more financial aid through an appeal may want to wait to send the letter, Hunt says.

"They might want to wait until the first round of award letters, after mid-June," Hunt says. "Then the school will have a better idea of what the enrollment numbers will be. And if the school is behind in their enrollment numbers they might be more likely to find an extra couple thousand dollars for the student in order to get their enrollment numbers up."

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

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Mayor Frey proclaims April 1 "ECMC Group Day" in Minneapolis

April 1, 2019

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Minneapolis Mayor Jacob Frey signed a proclamation officially recognizing April 1, 2019, as "ECMC Group Day." The proclamation reads:

Mpls Proclamation

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