College Finance
College student tax vote in Pittsburgh
As part of its bid to become the Least Cool City in America, Pittsburgh's City Council is preparing to vote on a plan to add a 1% tax to tuition bills for the 100,000 college students who call Pittsburgh home.The mayor announced a one-week delay on the vote this morning, and colleges and students in the area are lobbying aggressively to get the mayor to back off the plan -- which, it should be noted, is one of the dumbest ideas in history.
WalletPop experts answer your bankruptcy and college savings questions
The Dow may be over 10,000, but unease about the economy persists as unemployment hovers over 10%. To help ease some of your concerns, WalletPop is ready to answer your personal finance questions. Here's this month's sample:Question: My wife and I are in debt that I no longer can tolerate. I am retired and have burned through my 401(k) and my annuity to pay the $6,000 a month in mostly credit cards and home mortgages.
What are my options? I don't think we qualify for Chapter 7 bankruptcy. What about Chapter 13, and what does that entail?? Do I need an attorney? How do I keep creditors from calling me day and night?
--Gary Anders
Answer from James Caher, co-author of Personal Bankruptcy Laws for Dummies
"Bankruptcy is definitely something you should look into, since it looks like you're sinking fast and probably wasting your retirement paying debts that you might be able to eliminate in bankruptcy. But there are many, many things to consider.
"I suspect that you may very well qualify for Chapter 7 (the one that does not involve a repayment plan of any kind), since you are living on retirement income. But this depends on whether your income exceeds the median income for your state, which is probably around $4,300/month before taxes. Social Security income does not count. Even if your income exceeds the median, you may qualify for Chapter 7, but you would have to pass the Means Test.
For-profit college loan default rates soar
Earlier this month, I warned readers not to enroll -- or encourage their children to enroll -- in for-profit colleges.New student loan default rates from the U.S. Department Education highlights in more detail why these institutions are such a bad idea. According to a Wall Street Journal analysis of the data (subscription required), 21% of students who use federal loans to attend for-profit college go into default within three years. That compares to 7% at public four-year colleges and 16% at public two-year colleges.
New Notre Dame coach free to move but players remain enslaved
College head coaches are free to come and go, but the NCAA denies college football players the same freedom. We were reminded of this travesty this week when Cincinnati Bearcats head coach Brian Kelly jumped ship for the greener pastures of Notre Dame. Football coach Kelly, who led the Cincinnati Bearcats to an undefeated season and the chance to play Florida in the upcoming Sugar Bowl, had signed a five-year deal with Cincinnati in 2007, which was adjusted just this year to add time and money to the more than $1 million a year he was being paid. His new five-year contract with Notre Dame is rumored to bring him $3 million per year, not that it will have any impact on how long he decides to stay or the school decides to keep him if he doesn't produce a winner.
Amazon.com: The lazy, rich student's option for trading in textbooks
Amazon.com has launched a new system to allow customers to trade in their old textbooks. Just type in the ISBN, find out how much your book is worth, print out the shipping label, and get a gift card once the book arrives at Amazon. Amazon only accepts books in good condition.Sound easy? It sure does. And if money isn't tight and you can't be bothered to maximize value for your old books, it's a great option -- if you like Amazon store credit.
But for students with a bit more time, it's easy to get more value. Amazon seems to pay around half of cover price for recent titles. For instance, a copy of The History of Modern Art will net you $47.55. But if you listed it in Amazon's used marketplace, you could underprice the competition by listing it for just $89 -- and probably sell it quickly.
Selling books direct to other students will always offer the most bang for the buck -- by selling to Amazon, you invite in a middleman which has to pay a low enough price to earn some profit -- and cover the cost of shipping the book twice instead of once. Trade-in programs are just not as efficient as the deals made possible by sites like Half.com and the Amazon Marketplace.
Is there a place for Amazon's new trade-in system? Absolutely. But if you're as cash-strapped as most students are, it's worth the extra effort to list it on Amazon or Half.com yourself.
Get an online MBA from the 'Manager of the Century' - Jack Welch
Getting a degree online still isn't seen as credible as attending a bricks-and-mortar institution, but a legendary CEO wants to change that. Starting next month, you can get an online or in-person MBA that's blessed with the approval of Jack Welch, the former CEO of General Electric. He built GE into the largest company in the world and was named by Fortune as "Manager of the Century." Not a bad guy to pick up a few business tips from, right? Up until this year, Welch (who doesn't have an MBA himself) has been teaching a group of hand-picked MBA students at the MIT Sloan School of Management. But starting January 4, his Jack Welch Management Institute will be open to MBA students under the shelter of the Chancellor University System LLC in Cleveland, a, little known, for-profit system which was formerly the bankrupt Myers University and is still on probation with education accreditors.
Welch paid more than $2 million for a 12% stake in Chancellor. Why the interest? According to this article in The Chronicle of Higher Education, Welch was swayed by Michael Clifford, Chancellor's leading investor, who told him there needed to be an online business degree called "The Jack Welch MBA."
Amazon introduces textbook trade-in program
Just in time for the end of the semester Amazon is rolling out a new textbook trade-in program to turn old textbooks into an Amazon gift card.
The service, which is available right now, allows students to search by ISBN, title or author to find out what their used textbooks are worth and if the price is right, ship them to Amazon free of charge.
In order to sell your book to Amazon it must be in "good condition," which for textbooks means there can be no damage to the book and you will need to have any media which you received with the book. After a third-party receives and inspects you books Amazon will credit your account for the trade within two days. If, for some reason, your textbooks are damaged or unacceptable they will be returned to you in 14 days.
For-profit colleges rake in federal funds: Don't participate!
The Associated Press reports that huge for-profit college chains are raking in huge sums of federal student loan dollars.According to the AP, "Last year, the five institutions that received the most federal Pell Grant dollars were all for-profit colleges, collecting more than $1 billion among them. That was two and a half times what those schools hauled in just two years prior, the AP found, analyzing Department of Education data on disbursements from the Pell program, Washington's main form of college aid to the poor."
The problem isn't that for-profit colleges are evil: it's that they're at a huge competitive disadvantage. Non-profit public colleges benefit from state funding, endowments, and they don't have to pay taxes.
Can't get a student loan? Take off your clothes
It hasn't gotten much press in the United States, but college students in the United Kingdom who rely on loans to pay their expenses are facing a serious problem: The Guardian reports that "Three-quarters of universities polled said they had made extra payments from their hardship funds to help students pay the rent, buy books and feed themselves while they wait for the Student Loans Company (SLC) to work its way through the backlog of tens of thousands of student applications."The SLC took over student loan processing duties from local authorities this year and, evidently, wasn't prepared for the task. Students are being placed on hold for hours, and loan sharks are descending on campuses to cash in at the expense of students who need cash for rent, school supplies, and food.
Will sending my kid to a party school make him a degenerate alcoholic?
It seems like there is data (or at least numbers) on every factor that any family could ever dream of considering when selecting a college. Which colleges have the highest graduation rates? Which college produce the most Nobel Prize winners?But let's be honest. There's one thing we really want to know. Which schools are most likely to turn kids into drunken train wrecks? Happily, the National Institute on Alcohol Abuse and Alcoholism has put together some data on the topic:
Top 10 tips for college planning
While your kids are stressing about college, as in their essays and SAT scores, you're probably stressing about college planning, as in coming up with the money. Of course you want your kids to have the best education possible -- but have you seen what the best education costs these days? Don't worry -- with these top 10 tips for college planning, you may not have to spend the rest of your life paying for the next four years of your kid's life.College Planning Tip #1: Negotiate your financial aid. You should start to receive financial aid packets from colleges about two weeks after receiving an acceptance letter, and these packets are crucial for college planning. In fact, it can help in your final college planning decision, as schools vary widely in what they'll offer, as they present what they can do to try to make up the difference between their fees and your expected contribution. They calculate this amount via several factors: your financial need, your kid's academic achievements and the aid they have available. This calculation often poses the biggest problem for middle-income families who are college planning -- they have too much to qualify but too little to pay.
If you can't afford mortgage, don't borrow to send kid to college
When I can't think of anything else to write about, I sometimes like to pick up a copy of US News & World Report's America's Best Colleges, and spend about 30 seconds flipping through to find one piece of really, really, really horrible advice.And so here it is, from an article by Kim Clark:
The federally backed parent PLUS loan can cover the student's entire cost of college (less any other financial aid). But PLUS loans can cost as much as 8.5 percent a year plus a fee of 4 percent of the loan amount, for a total annual percentage rate of as much as 9.4 percent. Shoppers can find discounts, however. Those who borrow directly from the federal government and make automatic electronic payments are charged just 7.65 percent in interest. (After fees, the APR totals 8.55 percent.) And the eligibility criteria are comparatively forgiving, even for parents who are a little behind on their mortgages.
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Interest Rates
| Type | Current | APR |
|---|---|---|
| 30 yr fixed mtg | 5.06% | 5.20% |
| 5/1 ARM | 4.32% | 3.81% |
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| 36 month new car loan | 6.70% | 0.00% |
| 1 yr CD | 1.44% | 1.45% |
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Saving for College: Basics
Saving for college gets easier the earlier you plan. Read more on student loans, 529 plans, education tax credits and other innovative ways to save.
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