Colleges Even Cutting Back – on Financial Aid!

Well, when you hear about the credit crunch, which has been hounding the US economy just as badly as the predecessor to the great fall in financials such as the housing market going bust, and the massive foreclosures and job cuts and downsizing, you don’t generally about other, non private sectors of the economy cutting back as well which are actually going toward the development and improvement of our workforce – meaning our colleges and their students.

But guess what? The credit crisis has even hit colleges hard in their pocketbooks, and they are responding by cutting back once more generous financial aid. Yeah, that’s right, as if college weren’t hard enough to finance for the majority of students who had to finance much of their college education, schools are now being forced to also peel back on some of the financing in the form of student aid, which is very unfortunate.

Not only is it unfortunate because it cuts out some of the students that may have otherwise been able to go to college thanks to financial aid programs, but it may also make students resort to college student credit cards, which as we all know, can be a dangerous thing when you’re in college and always seem to be broke, when a credit card seems like your best option for keeping food on the table and a roof over your head.

Some schools are even dropping loans all together from their financial aid packages, making it even harder for would be students to enroll. This is because of all the financial turmoil in the market, and the government is not able to endow these schools as generously as they could before, forcing some schools to finance in house, and making it much more risky for them from a business stand point.

This is one of the last areas the government should think about scaling back on. This is scary to me. After all, college students are the answer for tomorrow, they are the adults of tomorrow that will be running things when we all get older, and here we are, limiting even further who can and cannot go to college. It just doesn’t seem like it’s a very “land of opportunity” mentality to me, and that’s what we’re supposed to be here in the US, is it not?

Student Loans High Interest?

With the overall credit crunch, even student loans have become a commodity that is hard to come by, especially when it comes to government or bank funded, purposely low interest loans that were the given only a few years back for students who wanted to start attending college but did not have the cash means or the credit means to effectively start going without a large funding source to pay for the increasing tuition and other expenses associated with attending aa higher education facility.

So, what started happening is that colleges themselves started their own, in-house student loan programs where they could lend money directly to the students themselves. Sounds like a great idea, but what ended up happening is that often times students would not be getting those great student loan interest rates of years past with these in house loans, instead they would be getting charged interest rates as high as 18% – heck even some credit cards are better than that, even the fixed low interest credit cards are much more competitive than this, so some of these students conceivably could have gotten a better deal by charging their tuition and books, which is a totally ludicrous and sad notion.

The reason this is especially disturbing for many students is that they are still going to be stuck with huge high interest bills when they graduate from college, but they also have the added burden now of graduating into a tanking economy and a horrible job market where, not only will a job be infinitely difficult to find, but also they will not be able to find jobs that pay as well for their chosen fields most likely since a lot of employers are even scaling back on their pay scales to help make up for lack of profitability.

This compounds the pressures on newly graduated college students, and the fact that their interest on their student loans may be astronomical only adds fuel to the fire and makes it more difficult for them to stay afloat. Also, with more and more people attending higher education now, the competition is fierce out there, as it seems more and more people are getting their master’s degrees, and so on and so forth, so these institutions that hire for people who are more highly educated are going to have a lot larger of a lot to pick from than they did before, which means you have to stand out and do your best even more so than you did before.

Loan Defaults Hit High

As of early April, there have been skyrocketing numbers being reported as to how many consumer loans are being defaulted on and how many are also more than thirty days late. Since this is just what some economists think is the beginning of huge job losses, these numbers very well may rise even more in the coming months and even the whole next year or so.

The numbers of unemployment and jobs lost in April was also staggering, with almost 700,000 more people losing their jobs in the latest report, which depending on where you read, was less than or greater than expected (who can keep track any more, it seems like even our different media outlets are always conflicting on these numbers). Because of this latest increase in jobs lost, lenders expect that their defaults will again go up and reach new heights, and many lenders are still gun shy about lending for this very reason. Ironic, because this recession is really just prolonging itself by the reactions to the worsening economic news.

Top economists say that the greater the job losses become, the more severe the economy will contract, since creditors will be holding customers to way higher standards, and also will be losing money hand over fist due to defaults and late loan payments, missing out on both principle and interest payments. It is said that this last quarters report was the highest in defaults since the numbers started being tracked in 1974 (hey that’s the year I was born – fun fact).

When they talk about consumer loan defaults, they mean a lot of different things. For one thing, it’s auto loans that are made for the purchases of new cars (this one is fairly common, especially considering psychologically how people don’t think a car is necessary when it comes to stripped down necessities), credit cards, lines of credit, store credit cards and other consumer related credit extensions. They don’t think that the creditors will see any form of relief until 2010.

Does the FAFSA Really Do What It’s Supposed To?

The government does put forth an effort to help those in need of financial assistance to further their educational background, however, after recently filling out the FAFS form online (Thank God they allow it to be done online now, I remember this thing being a bear to complete fifteen years ago when my parents had to fill it out for me straight our of high school), I question whether it is able to get a true financial picture of people’s individual abilities to pay for school through their own financial means.

I remember my parents complaining about this very thing, saying that they don’t really ask for your other financial obligations, but instead they base it only on your income and tax information rather than assessing your needs based on a complete financial debts and assets picture, as I feel they should. Sure, they shouldn’t be giving grants to those that make six figures and squander that money on luxury items or a grandiose mortgage payment, but within reason, they should ask about mortgages, car payments and other financial obligations of that nature.

The FAFSA is the Free Application for Student Aid, and it is now available in online format. It’s actually not the long, overbearing form it used to be, and it is used to determine eligibility for Federal grants, loans and student financial aid, but it is definitely also not the end all, be all when it comes to finding ways to finance your higher education.

There are hundreds of foundations, programs and grants that are set up to help people in certain demographics and niche professions that should also be looked into on a state specific basis. For instance, Ohio where I live may have different special offerings when it comes to financial grants and gifts when it comes to education, while the state of California may have dramatically different offerings on a state level. There are some websites that can help you in your quest to find these monies that can help you on your next step to higher education as well.

After completing the FAFSA, you will get a summary of findings that will basically tell you right away if you are eligible for any of the federal grant money for that year or not, and I’m assuming this is based purely on your economic and financial information. It also asks which schools you want your information sent to, and it will send it to them for you so they have your financial aid information. All in all, government sponsored financial aid is a great thing, I just do question whether it is truly a fair way to gauge who is most in need and deserving of grant money.

Talkin’ Bout My Generation….Borrowing More

Wow, talk about a tough economy. Apparently, recent surveys have shown that roughly one in ten baby boomers and middle to getting-up-there agers, are having an especially rough time, turning to borrowing via lending from friends and family, charities or other relief outlets just to pay their bills. Many are relying on parents who are older to help them pay their bills, hopefully only while this economic glut is happening, because we all know that our seniors usually don’t make nearly enough to survive on with social security being a joke and many not putting away adequately for retirement.

But, this one also goes both ways. The majority of reitirees said they’d helped their children or child out with bills, while only a smaller portion of people not in the retirement age category said they had helped their parents out with their finances and bill paying. So, you see, families are having to rely on one another to just make it by in this tough market and raising food costs and skyrocketing gas prices.

Oh, by the way, as we speak, Bush has just asked Saudi Arabia to increase it’s oil production to meet higher US demand, and been met with a resounding no, so that’s squashes that idea. I wonder if now we can start drilling here, or if it really is too big of an environmental risk to start doing so over here. And where are all these alternative fuel sourcse and vehicles? We have the hybrids now, true, but are they really an effective alternative? Anyways, I digress.

Many baby boomers, as much as one third, have also made the startling admission that they have cut back on what they are putting in their retirement accounts, or have cut that out all together so they could have more money to pay their bills. The said part about this is that they are missing out of a great tax benefit if they are cutting out an account like a 401k that is tax deferred, so this makes me really sad that this is happening to our fellow Americans, it just seems like a double shot of unfairness to be honest.

Many also reported that they have cut back on doctor’s visits and medications, because of high copays and the fact that they may not absolutely need them, makes them a non-necessity in hard economic times. About one third is also admitting that they are having a tough time making their rent or mortgage payments, and that this has contributed to their cutting back on spending, although to no avail since they are still having harder times paying their rents and mortgages.

Sorry to report all this bad news, but this is what we’re getting from the media. Hopefully they will report on the good news as readily when the market recovers – they’d better!

Credit Card and Auto Loan Spending Drove March

The results are “in” for April’s spending reports on the American public spending habits, and borrowing habits, and it’s actually what appears to be a bright spot in the otherwise dark doppler forecast for the economy as of late. Apparently, consumer spending and borrowing, mostly in the form of credit card spending and auto loans, went up modestly in March. Yes, it takes almost a full month to calculate these types of numbers, and believe me, even then I feel many times they are unreliable – after all, how can they account for ALL of it? That’s just my inner skepticism though, so ignore me for the moment.

This, paired with news that the GDP, the beacon by which recessions are gauged, has increased modestly as well, and that is counter to what we’ve been hearing about an already-here or pending recession, which is marked by a series of slowing GDP all the way around, which basically means that the whole economy has slowed for so many months in succession. Of course, this can never be accounted for until it’s actually over and all the numbers are reported, so recessions can rarely be absolutely earmarked until they are actually over, since no one can really say for certain one has happened until it’s after the fact.

Borrowing on various types of credit cards, including gas credit cards and low apr credit cards with fixed rates, went up almost a full three percent more annually than they do normally, so that’s good news, depending on how you look at credit card borrowing I guess (wink wink). Does this mean that consumers are still over extending themselves?

Well, that’s a matter of judgment so it really depends on who you ask, but for me, I’ve seen the struggling of my friends and coworkers, and the signs are there that people are having to tap credit sources they normally wouldn’t which many times comes in the form of a credit card, or revolving debt as we’re all aware. Those government issues rebate checks?

Hmm, well most people think that these are going to be spent on paying bills and putting the money away for savings, but that remains to be seen in about another month when we see if the first distribution of the stimulus checks helped with our GDP at all. Let’s be optimistic though, it does seem like there is some positive activity going on her, which is a good sign.

Borrowing Among Consumers Slows

Ugh, it’s hard to keep up with what’s going on in the crazy economy today, isn’t it? I swear just a few short weeks ago, I read a headline that promisingly claimed that US consumer borrowing was on the up trend. Not so any more according to this latest headline, claiming that no, consumer borrowing is in fact on a downswing. Apparently it has to do with credit cards (we wonder why we have bad credit these days, read on for more of why) Can’t keep up? Neither can I, so bear with me.

They have all these nifty figures that they use to figure out whether consumer spending and borrowing is up, but what they don’t tell you is that even though it may be technically “up” from last year, it’s still not considered “up” to them because they have already made projections about what it would be at for the next year at the same time.

Not really sure how they come up with all those numbers, since I haven’t heard of a recent population explosion which would lead me to believe that consumer borrowing or spending would skyrocket in one certain year over the next, but I guess we should listen to them because they’re the experts. Economic analysts had expected consumer borrowing to be up more than it actually was, so apparently this is a signal of some sort that yes, we are indeed experiencing a faltering economy right now. News flash, right?!

The bad part is that consumer borrowing went down in relation to non-revoloving types of credit, such as mortgages and loans, but went up ever so slightly for other sectors that really don’t benefit the consumer because they are charged on a revolving basis, which means the consumer is charged on purchases they made months ago but havent’ paid off, over and over and over until the card is paid off. It’s a system where credit cards, even the best credit cards out there, charge interest every month, even on balances that are carried over.

So you don’t just pay interest once on that set of dishes you charged on your favorite low fixed apr credit card, but you keep paying whatever percentage you signed up for over and over again on that amount until it’s totally paid off. Raw deal, but also a great deal when you think about the things you have been able to purchase because of credit cards that would not have otherwise been possible due to budget restrictions.

Home Improvement Time? Need Loan?

It’s hard sometimes to spend the money needed to do long overdue home improvements. However, maintaining and upgrading your home is a necessity to hold the value of your home and it can save you money in a variety of other ways. Also, there are some great home equity loans that can let you borrow against the value of your home, especially if it’s for the purpose of home improvement to the home you’re borrowing against.

Replacing old worn windows seems like a large investment, but in the long run, the dollars saved on energy costs will pay off. Replacing worn doors and storm doors can pay off signifigantly, over time, also with reduced energy bills.

Many home improvements can save in other ways by saving you money on your home insurance costs. If you have done large improvements, let your home insurance agent know about it and find out if discounts apply.

Home insurance companies usually offer discounts for substantial improvements such as replacing a roof or roof repair. Other improvements that could translate into insurance savings are upgrading plumbing, a new furnace, or rewiring or upgrading the electrical system in your home.

Security alarms are another discountable item with most home insurers. Good smoke and fire alarms can also add to your savings on discounts.

If you are a retiree or are employed in your home, you may be eligible for a discount since you are present in your home for most of the day. Sometimes, a discount of up to 10% is available for retirees on their home insurance.

Student Loan Know-How

If you’re looking to further your education and go on to college, usually the biggest obstacle is the matter of how you can finance this challenge. There’s a variety of student loans to choose from to make college dreams a reality.

To start on your financing options, you need to first obtain and complete a FAFSA, which is a Free Application for Federal Student Aid. The FAFSA has to be completed before you can be evaluated for federal financial aid. The FAFSA should be filed shortly after January 1 of your senior year in high school.

After completing the FAFSA and sending it in, you’ll find out what kind of loans, grants and school sponsored scholarships you qualify for. The various types of loans available are the Federal Stafford Loans, PLUS, and Graduate PLUS loans. There are two types of Federal Stafford Loans, the subsidized and unsubsidized varieties. The subsidized Federal Stafford Loan is based on financial need. With this type of loan, interest is not charged until you begin repayment.

The repayment schedule does not begin until six months after graduation and the amount of time for payment spans 10 years. The government subsidizes the interest on the loan during the time the student is in school. With the Federal Stafford Unsubsidized Loan, interest does accrue while you are in school. As with the subsidized type, you do not have to pay until six months after graduation or leaving school. The repayment time remains at 10 years.

The Federal PLUS Loan is designed for parents to fund their child’s education and may be used for books, living expenses, tuition and room and board. Some of the benefits of this type of loan are a fixed interest rate and the ability of the parents to completely fund the entire cost of their child’s education. Ther is no origination fee with this type of loan, and you should definitely be able to comparison shop for loans like this online.

The Graduate PLUS Loan is for graduate students and, like the Federal PLUS Loan, gives the student the ability to fund the entire cost of their education. The borrowers can defer repayment until after graduation and there is a fixed interest rate. Repayment options are flexible and varied.
There is a credit check, however, the loan is not based on assets or income level.

There are many opportunities for going to college if you just look into and research financing options available to you.

Six Months Same as Cash Popular Financing Option for Furniture

We recently purchased a house, and on top of all the abundance of mortgage information, there are other financing options that you have to look into when buying things that are necessities or “home improvements” for you new home. One of those necessities is furniture and electronics such as TV’s, DVD players and stereos, and also outdoor stuff like riding lawn mowers, and gardening tools.

All this stuff really adds up cost-wise, as you can imagine, so most people opt to either put it on a credit card or use an available financing option that the place they are buying the product from either offer in-house, or through a secondary broker.

For example, we purchased a lot of our furniture through a local and huge furniture store that’s been in business for over sixty years, and they offered a six months same as cash financing option that we were more than happy to take them up on, considering the decent chunk of change we spent in the store.

However, when you read the fine print, you realize that you really have to get the thing paid off in six months or else you get charged retroactive interest to the date of purchase, and the interest rate is sky-high for this particular line of credit.

Most of them do work in some way where it benefits the purchaser to definitely get this paid off in that six month time frame, or in the end, they are paying much more interest, sometimes even more than what the actual goods they bought are worth!

You may want to look into balance transferring any high interest debt that’s left over if it’s through a bank of line of credit that a lower interest balance transfer credit card will take as a balance transfer, if for some reason you don’t get it paid in those six months or however long the interest free grace period happens to be. Or, you may want to see if you qualify for a longer grace period if they have the option available, say one year or two years, then you can budget yourself a little better with the payments.