"For years, Tom and Lori Lapin dutifully prepared for their two sons' college educations. They made regular contributions to 529 accounts, invested in some stocks and mutual funds, and lived as frugally as they could. They figured they'd be able to supplement their savings with some of the income from their business—a small commercial sign shop in Portland, Conn., that they've owned for 30 years. But as their older son, Ben, prepared to enroll at Union College in Schenectady, N.Y., in fall 2008, the economy began to nosedive. So, too, did their company's sales, many of which are tied to the real-estate market. "It was pretty dramatic," says Lori. "It just got worse and worse." After Ben headed off to Union—where tuition, fees, and room and board total roughly $50,000 a year—the Lapins struggled to keep their business afloat and began tapping some of their investments. When Lori sat down to prepare the couple's taxes in January 2009, she quailed at the numbers. "I didn't know how Ben was going to go back to Union the next year," she says.
Despite the availability of federal money, many students rely on private loans from banks. According to TICAS's Project on Student Debt, the proportion of undergrads who took out such loans jumped from 5 percent in 2003–04 to 14 percent in 2007–08. That trend has likely abated given the squeeze in the credit markets. But it's still prevalent enough to worry many financial-aid professionals, since private loans are usually more expensive than federal ones and have higher interest rates. "Make sure you know your federal-loan options before you turn to other sorts of financing," counsels Lauren Asher, TICAS's acting president. If you've maxed out your Stafford loans, she says, consider asking your parents to take out a federal PLUS loan, which carries a fixed rate of roughly 8 percent. In the event your parents are denied because of credit problems, says Asher, your school's financial-aid office can nearly double your eligibility for Stafford loans."
Read the full article The New Math of Financial Aid on Newsweek's Web site.
"Direct mail offers are flowing for business credit cards, many with attractive promotional interest rates and balance transfer deals...while there are many reasons to open an account, there can be substantial risks involved."
More infoEleni Constantine, director of the Pew Health Group’s financial security portfolio, issued the following statement in support of legislation creating an “automatic IRA,” S. 3760, introduced by Sen. Jeff Bingaman (D-NM) and H.R. 6099, introduced by Rep. Richard Neal (D-MA).
More info“The student loan proposal announced by the President today could not come at a better time, as the weak economy and high unemployment are making it harder than ever for people to make monthly payments on their student loans."
More infoYesterday the U.S. Department of Education released a preview of college “cohort default rates” for federal student loans using a more robust methodology that will take effect in 2011.
More infoThe Project on Student Debt's fourth annual report on the student loan debt of new college graduates. The analysis of the most recent available data found that student debt continued to rise even as it got harder for recent graduates to find jobs, and that debt levels vary considerably from state to state and college to college.
More infoStarting July 1, borrowers will have a new option: a repayment program that caps monthly payments based on income. It targets borrowers who would have a hard time paying basic living expenses if they had to make standard monthly payments on their loans, says Lauren Asher, acting president for the Project on Student Debt.
More infoThe Retirement Security Project announced today that J. Mark Iwry, Principal of The Retirement Security Project, Nonresident Senior Fellow at the Brookings Institution, and former Treasury Department official, has been appointed by Treasury Secretary Timothy Geithner as Senior Adviser to the Secretary and Deputy Assistant Treasury Secretary for Retirement and Health Policy, effective April 27, 2009.
The Administration’s budget outline, released today, includes the Automatic IRA proposal developed by the Retirement Security Project.
More infoOne in 18 homeowners in Arizona is estimated to be in foreclosure by the end of 2010, as a result of a subprime-related loan. Years of easily accessible credit and relatively low home prices that facilitated homeownership in the state have ended, leaving in their wake stricter lending terms and stagnating home appreciation.
More infoIn the midst of a campaign with opposing views on most aspects of domestic policy, the presidential candidates have now both endorsed the Automatic IRA.
As traditional pensions fade from the retirement landscape and workers are forced to take a lot more responsibility for their own financial futures, employers are rolling out a variety of features to help workers prepare for retirement.
There's no shortage of retirement-savings services for the affluent. But for those who fall in the middle of the wage scale or lower, it's a different story.
"Frustrated by the slow pace of federal relief, states around the country are pouring hundreds of millions of dollars into their own programs to stem the rising tide of home foreclosures."
Foreclosure-related filings for June jumped 72 percent in Suffolk and 2 percent in Nassau from the previous month, according to RealtyTrac, an online foreclosure marketplace.
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