The Wall Street Journal reported recently that over 93% of the 529 Plans lost money during the past year and over 1/3 of the plans lost over 40%. Is it a poor enough record to demand a bailout? Let's look at the eveidence and you make the decision.
Here are some reasons to support a bailout
1) Families were enticed to invest in 529 Plans because of the tax benefits.
2) Chances of a financial collapse were never discussed over even mentioned.
3) There were virtually no financial suitability checks. Just go to the State's 529 Plan website and sign up.
4) Alternative guaranteed tax free programs were never provided as an option.
5) The Wall Street Journal reported that many of the plan designs were too risky.
6) The Wall Street Journal also reported that many of the plans were poorly managed
7) There was a conflict of interest since states benefited financially from the purchase of the 529 Plans.
8) It is almost impossible to recover the losses because students have a very short period of time to take advantage of the tax benefits.
One important question to consider is why should Congress bail out 529 Plans. Have the halls of Washington received any large donations from 529 families? Money talks in Washington. Why do you think AIG was bailed out. It wouldn't be because AIG insures the Congressional retirement plans would it? But you make up your own mind about the chances for a 529 bailout.
Homer Sweeney
Monday, March 23, 2009
Friday, March 20, 2009
Cheaper Private Loans?
With defaults rising and investor confidence low, banks and other lenders are rethinking the way they structure private student loans.
Sallie Mae will begin requiring borrowers who take out its private loans to make interest payments while they are still in college and repay their loans in 15 years or less, rather then the typical term of 15 to 25 years. The company's goal is to reduce the costs of borrowing thereby lowering the risk of default, and making private loans more attractive to investors.
Sallie Mae provided this example to illustrate how the loan will work for a student who wants to borrow $17,000 over two years.
For the first semester of freshman year, the student would pay $40 a month. That figure would rise each semester, reaching $160 by the second semester of the sophomore year. The $160 monthly payments would continue until graduation. Once out of school, the student would owe only the principal of $17,000.
This would be paid off over the next six years at $328 a month. Under the previous setup, the student would have repaid the money over 15 years at $250 a month. The new requirement will lower the total cost of the loan to $28,000, compared with the previous $45,000.
The changes will apply only to private loans, where a growing number of students use to cover the gap between their grant aid and federally subsidized loans, and the cost of attending college. Private loans are not federally guaranteed and tend to carry higher interest rates then federal loans.
The changes could push more borrowers to federal loans. Parent PLUS loans were retooled last year to allow parents to wait until their kids had finished school before beginning to repay the loan. Previously, the program required parents to start repayment within 60 days of the loan being issued.
Chronicle of Higher Education and WSJ
Sallie Mae will begin requiring borrowers who take out its private loans to make interest payments while they are still in college and repay their loans in 15 years or less, rather then the typical term of 15 to 25 years. The company's goal is to reduce the costs of borrowing thereby lowering the risk of default, and making private loans more attractive to investors.
Sallie Mae provided this example to illustrate how the loan will work for a student who wants to borrow $17,000 over two years.
For the first semester of freshman year, the student would pay $40 a month. That figure would rise each semester, reaching $160 by the second semester of the sophomore year. The $160 monthly payments would continue until graduation. Once out of school, the student would owe only the principal of $17,000.
This would be paid off over the next six years at $328 a month. Under the previous setup, the student would have repaid the money over 15 years at $250 a month. The new requirement will lower the total cost of the loan to $28,000, compared with the previous $45,000.
The changes will apply only to private loans, where a growing number of students use to cover the gap between their grant aid and federally subsidized loans, and the cost of attending college. Private loans are not federally guaranteed and tend to carry higher interest rates then federal loans.
The changes could push more borrowers to federal loans. Parent PLUS loans were retooled last year to allow parents to wait until their kids had finished school before beginning to repay the loan. Previously, the program required parents to start repayment within 60 days of the loan being issued.
Chronicle of Higher Education and WSJ
The Devil Wins Again!
The $410 billion spending bill that President Obama signed on March 11, 2009 contains a provision that will allow pharmaceutical companies to once again supply college-health clinics with discounted birth-control pills and other contraceptives. "This is definitely great news" said the pharmacy manager at the University of Wisconsin.
Chronicle of Higher Education
Chronicle of Higher Education
National College Fairs
Six National College Fairs will be held in California during April 2009.
April 4 San Francisco
April 14 San Diego
April 16 Ontario
April 19 Anaheim
April 20 & 21 Pasadena
April 22 Ventura
For additional information go to www.nacacnet.org. Click on Events/Training then College Fairs
To view Making the Most Out of Attending a National College Fair go to www.nacacnet.org. Click on Events/Training then webinars.
NACAC
April 4 San Francisco
April 14 San Diego
April 16 Ontario
April 19 Anaheim
April 20 & 21 Pasadena
April 22 Ventura
For additional information go to www.nacacnet.org. Click on Events/Training then College Fairs
To view Making the Most Out of Attending a National College Fair go to www.nacacnet.org. Click on Events/Training then webinars.
NACAC
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