College Finance
From IRAs to 529s, our experts answer your questions
With Christmas and New Year's just days away, WalletPop hopes to spread some holiday cheer. Here are answers to some of your questions to help usher in 2010 on the right financial footing.Question: We're retirees age 70 and older holding an IRA rollover. In 2010, will we have to take money/stock out of our IRA? In 2009, we did not have to.
--Barbara J. LeFeve
Answer from Gary Lesser, author of Quick Reference to IRAs: For 2009 Contributions
The relief available for 2009 required minimum distributions (RMD) has not been extended. Thus, absent another extension (which I believe is unlikely), the next required minimum distribution from the taxpayer's traditional IRA will be for calendar year 2010. That distribution -- the 2010 distribution -- must be made by Dec. 31, 2010. However, for individuals reaching age 70 1/2 in 2010, the traditional IRA RMD amount may be distributed up until April 15, 2011.
Will certain states help your kid avoid the evils of student loan debt?
The Project on Student Debt recently released its Student Debt and the Class of 2008 study and the results are sobering, to say the least. The average graduate of a four-year college with loans is now leaving with $23,200 in debt, up from $18,650 in 2004.
The state by state numbers are also interesting: the District of Columbia clocked in with the highest average debt load: $29,793. Iowa, Connecticut, New York, and New Hampshire followed.
C'mon, Mom! Co-signed credit cards return in wake of reforms
One of the better provisions in the forthcoming credit-card reform legislation is a push to making it harder for students to get potentially ruinous access to too much credit. As you might suspect, the credit-card industry is looking for ways around that, and one trick it's come up with is bringing back co-signed credit cards.According to this article, Discover is launching a co-signed credit card that will be available by the time the credit-card reform provisions kick in, and Capital One is also considering rolling one out. Four other major banks queried offered only a "no comment" in response to the question; a finance-industry trade group spokesperson suggested that many banks will consider co-signed cards in the near future if they're not already.
As cards go, co-signed cards are a whoppingly poor idea. In a nutshell, the co-signer doesn't get to use the card, but he or she is the one responsible if the person whose name is on the card flakes out and doesn't make their payments.
Imagine having to scarf down someone else's wilted green beans at Christmas dinner; in return, they get to eat all of your pie. If it sounds like a raw deal, it is. Nearly every reputable consumer-credit advocacy group advises consumers to run, not walk, away from this option.
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.
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Interest Rates
| Type | Current | APR |
|---|---|---|
| 30 yr fixed mtg | 5.25% | 5.38% |
| 5/1 ARM | 4.28% | 3.78% |
| $30K HELOC | 5.16% | 0.00% |
| 36 month new car loan | 6.71% | 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.
- Loans & Interest Deductions
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