Younger people, like recent college graduates, are optimistic about their future, even though they expect to not be as well off as their parents. Photo Credit: apermanentwreck/Flickr.com/CC-BY-SA

People of college student age are expecting to be less wealthy than their parents but more satisfied with life, according to a recent survey. An Associated Press survey of people ages 18 to 24 revealed that younger people, especially those saddled with higher amounts of student debt, expect a lower quality of life than their parents.

Younger generation expects less money, more happiness

The college age set is less optimistic about how much money the future may bring but is confident that the long term course of their lives won’t be doom and gloom, according to MSNBC. A poll conducted by the Associated Press and Viacom of 18- to 24-year-old people found that 40 percent of survey subjects thought that traditional goals like raising a family and purchasing a home would be more difficult than it was for their parents. About 25 percent believed that life would be easier for them than their parents. About 90 percent of the survey subjects believed they would eventually find a career they find fulfilling.

Student debt increases the burden

The people in the AP survey indicated that they believed making a living would be harder because of increased costs. Among costs steadily increasing for people in that age group is student debt. The average college graduate has about $24,000 in loan debt, according to the New York Times, which at an interest rate of 6.8 percent demands a payment of $276 per month, and student loans cannot be discharged in bankruptcy. The Department of Education reports that 65.6 percent of all undergraduates from 2007 to 2008 received some sort of financial aid, and 38.5 percent of all undergraduates had student loans of some sort. The Department of Education found that 30 percent of all undergraduates took out subsidized Stafford loans and 22 percent borrowed non-subsidized Stafford loans.

Investment that does pay off

The average wage earner with a college degree grosses about $53,000 per year, according to the Bureau of Labor Statistics, but few people earn that much upon graduation. A college degree is not a guarantee of immediately falling into a healthy income, but it increases the likelihood that a person will earn a solid middle class income during their lifetime. People with college degrees also tend to have lower rates of unemployment; Americans with bachelor’s degrees had a 4 percent lower rate of unemployment than those with only a high school diploma in 2009. However, the cost of the security that a college diploma offers is going up.

Sources

MSNBC

Department of Education

New York Times

Bureau of Labor Statistics

Student loans for middle-income students are available for those willing to put in the legwork. (Photo Credit: CC BY-ND/Federal Student Loan Debt)

Financial aid is a necessity for many low- to middle-income students and their families. Thankfully, there are student loan programs designed specifically for people who fall within the low- to middle-income brackets. Banknote suggests those looking for ways to pay for college use this three-pronged attack.

Aim high for need-based qualification

If a student doesn’t qualify for student loans at one college, it is quite possible that student could qualify at a more expensive university. Sally Donahue, Harvard’s director of financial aid, points out to Banknote that need-based financial aid is contingent upon income and assets, relative to admission costs. Thus, not qualifying at a $20,000-per-year school doesn’t mean a $60,000-per-year option is out of the question.

“We have probably 600 families with incomes over $180,000 receiving grant aid right now, and that’s usually because they have two or three students in high-cost colleges,” says Donahue. “It just depends on where you go.”

Harvard happens to be a “no-loan” school that enables students to obtain the necessary financial aid via grants, scholarships and work-study programs. The Institute for College Access and Success indicates that there are more than 50 such no-loan schools across the U.S. from which to choose. Keep in mind that most require family income to be below $50,000 annually.

Tax credits offer long-term help

Carol Stack, co-author of “The Financial Aid Handbook,” claims that 2011 is a banner year for student loan tax credits. Specifically, the American Opportunity Credit is one to watch. Extended through 2012, this credit can mean an extra $2,500 for families, as long as at least $4,000 is spent each year on college-related expenses. Intended for the first four years of post-secondary education, the American Opportunity Credit applies 100 percent to the first $2,000 spent during the tax year, and 24 percent to the next $2,000. At least half-time enrollment is required and family income must not exceed $160,000 per year. Check with the IRS for more information.

The Lifetime Learning Credit is great for part-time students and those who attend college for more than four years. Approved college expenses up to $10,000 are reimbursed at a 20 percent clip.

Good aid for good students

Merit-based aid exists for men and women who may not qualify for need-based student loans, grants or scholarships. Collegiate financial aid search engines, like College Navigator and Meritaid.com, state that $11 billion in merit-based aid is distributed annually. Thus, there are plenty of opportunities for good students to take advantage. Chris Long from Cappex, a Meritaid.com sister company, advises students to find schools outside their geographic area that would benefit from their test scores and GPA.

“You should also apply to schools where you’re at the upper end of the academic scale. You’re going to be very attractive to those schools because they want to increase their average GPA, SAT and ACT (scores),” he said.

Sources

Bankrate

Cappex

College Navigator

IRS.gov

Considering scholarships and grants

Major credit card companies spend millions on college credit card agreements allowing them to recruit customers on campus. Image: Thinkstock

Credit card companies pay colleges millions of dollars for the right to market their cards on campus. A Federal Reserve report on college credit card agreements said that Bank of America was by far the most aggressive, paying colleges and alumni associations $62 million in 2009. The Fed report is part of a Credit Card Act provision passed earlier this year requiring credit card companies to disclose how much they pay schools to market their products.

College credit card agreements

Credit card companies paid a total of $83.5 million to colleges in order to recruit card holders on their campuses. That money netted 53,164 new student credit card accounts, according to the Fed report. The University of Notre Dame got more money than any other school from Chase Bank USA, which paid $1.8 million and ended up with just 77 new customers. FIA Card Services, the credit card arm of Bank of America, paid $1.5 million to the University of Southern California to net 659 new accounts.

Loan card rakes in penalty fees

A controversial credit card that started appearing on college campuses this year is called Higher One from MasterCard. It’s called a “loan card” to circumvent new credit card rules that prohibit such things as charging customers for inactive accounts. Higher One was created to make money off students’ financial aid. But card holders are charged a $19 monthly penalty for accounts that aren’t used for nine months. Higher One racked up $27 million in sales in its most recent quarter. More than three-quarters of that money came from fees charged to merchants and students.

Big banks on campus

The Fed report on college credit card agreements collected information on 1,044 campus deals made by 17 credit card companies. Bank of America’s FIA, U.S. Bank and Chase own 96 percent of all the college credit card agreements in 2009. FIA led all card issuers with 906 separate agreements that account for 1.61 million student credit card accounts.

Sources

CNN

Washington Post

Philadelphia Inquirer

Harvard University is a pillar of higher learning. Administrators there are as observant as pillars, as Adam Wheeler has proven. (Photo: Flickr)

Ivy League college administrators no doubt viewed 23-year-old Adam Wheeler as a young go-getter. He had the grades, the references and more extracurricular activities than Batman. But as stories go, Mr. Wheeler’s tale was a bedtime fairy tale for our cynical age. The prince charming Adam Wheeler faked his entire educational career, according to ABC News. He gained admittance to Harvard University and was able to fool grant agencies into giving him more than $45,000 in grants, scholarships and other forms of financial aid, perhaps even including payroll loans. Now he awaits arraignment on more than 20 charges, among them identity fraud, larceny and forgery.

Adam Wheeler could roll fake transcripts in his sleep

It was all too easy for him to fool college staffers who were eager to collect his ill-gotten scholarship funds. The cash register sounds in their minds drowned out the thought of verifying his documents and claims. Or is it that Adam Wheeler simply was that good at the con? Whatever the case, administrators in charge of the Rhodes and Fulbright scholarships actually paid attention and began to uncover work samples Wheeler claimed were his own. The reality is that they were plagiarized, of course. One lie discovered led to another, and then the house of cards began to fall.

‘An elaborate, entangled web of lies’

That’s what Middlesex County District Attorney Gerry Leone said about Adam Wheeler’s ruse. From the sterling prep school grades to allegedly perfect SAT scores that led to a stint at MIT, Adam Wheeler rode his lies into Harvard. He’d also applied at Brown and Yale Universities as an Ivy League transfer student. The reality of his scholastic situation is that he went to public school, did not have perfect SAT scores and had actually been kicked out of Bowdoin College in Maine.

Fellow students can’t figure out how Wheeler got so far

“What are these accomplishments if they’re not something that you kind of have done yourself?” one anonymous student asked the media. It was of course a rhetorical question, as much of the collegiate experience could be considered legalized fraud, with U.S. politicians fully on board. Then again, it can also be said that college indeed has value, but not quite as much as when a bachelor’s degree actually meant something.

(Photo Credit: http://www.flickr.com/photos/the-o/ / CC BY 2.0)

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“But where do I put the money?”

There are so many options out there that can make it confusing as to which option or options will be best for you. Let’s focus on one option, the 529 Plan, which every parent needs to know about and understand. When considering how you should invest your money, I hope that I will, by the end of this article, have outlined a new option for you. With the tax breaks helping you avoid tax debt, flexibility and ease of use, the 529 Plan should be at the very top of every parent’s list of financial options when they start researching for their child’s college education fund.

The 529 Plan

Many of us have never heard of the 529 Plan, but it can be a great way to help with your child’s college fund. It is a state operated savings fund, which offers tax incentives. Every state has some kind of 529 Plan; we will look at 2 common types.

• Savings Plans: These are most similar to a 401K or IRA. You invest money into mutual funds and/or investments. Your state’s plan will outline several choices for you to choose to invest in and depending on what you choose, your savings plan will fluctuate based on the performance of the option you chose.
• Prepaid Plans: These are a great option if your child is a bit older and knows that he wants to attend an in-state college, because with this plan you will start to pre-pay all or some of the cost for your child’s education. Some of the funds can be transferred to an out-of-state college; please refer to your state’s laws on this.

529 Plan Advantages

There are many advantages to the 529 Plan, starting with State and Federal Tax Benefits. Federally your 529 investment will come out tax free. Each state has different rules for their 529 Plan, but it is worth the time to figure out what your state offers. Also, the plan offers you the freedom of changing which investment option you choose, usually once every 12 months, so you are not tied into any one investment. After you have chosen your first investment option and made a contribution to the fund, you can set up automatic deposits, allowing you to continue to grow your investment, without having to sit and worry about when and how much you will put in next.

Financial Aid and 529

When being considered for financial aid, as of the 2009-2010 college school year, the 529 Plan will be taken into account, along with the parental assets, at a maximum of 5.64% rate when figuring the student’s Expected Family Contribution. This is another reason why the 529 Plan is a great option; it has minimal effect of the student being able to get financial aid.

Last Thoughts

Do yourself a favor and look into your state’s 529 Plan and start your child’s college fund today.

Each year, parents and students search for financial aid resources to help pay for college costs. While it can be overwhelming to think about, particularly when prior financial preparations have not been made, financial aid for college can be a life saver. Financial assistance for college can be acquired through grants, loans, and work-study programs, which help students to work while paying for school.

Educational grants

The Pell Grant is one of the most popular forms of financial assistance for undergraduate students. With a Pell Grant, students may receive up to approximately $4,050 that does not have to be repaid. Another popular federal grant is the Supplemental Educational Opportunity Grant (SEOG), which is available for undergraduate students who can demonstrate extreme financial need. With SEOGs qualifying students may receive up to $4,000 for each year they attend.

College scholarships

Scholarships are another option for financing a college education. Like grants, scholarships do not have to be repaid. However, scholarships differ from government grants in that they are awarded based on specific academic criteria. If students who receive scholarships fail to continue satisfying the minimum requirements, usually include a specified grade point average or participation in a sport or other activity, scholarships can be withdrawn.

Compared to the relatively few government options for educational financing, scholarships are available and numerous and a student can often qualify for more than one at a time. Scholarships are generally awarded by non-profit organizations, and there are literally thousands of them. Students can apply for more than one scholarship at a time and, if enough scholarships are received, they can cover the entire cost of a student’s college education.

Plan ahead

No matter how you pay for college, it’s best to begin exploring options and making investments as early as possible in a child’s pre-college education. Financial aid, grants, and scholarships are widely available, but it’s a good idea to apply for them before the student actually needs them. Most students wait to apply for federal financial aid until they’re seeking admission to a college or university. Very few are aware that applications for government aid can be made ahead of time. In fact, it’s recommended that anyone considering applying for government-sponsored financial aid should apply sooner, rather than later because aid is awarded on a first-come, first-served basis. It is advisable to begin applying for government aid in January of the year that a student intends to commence his or her college education.

A necessary luxury

Attending college is a luxury, there’s no arguing with that.  In terms of both career opportunities and personal achievement, however, a higher education is also something of a necessity. Although a college education is an expensive undertaking, financial assistance is available and should be utilized whenever possible. For further information and answers to questions about college financial aid, visit the Department of Education website at www.ed.gov. For help finding scholarship opportunities, visit www.fastweb.com, which maintains a database of more than 175,000 available scholarships.

Pay for college with a little help from these good ideas, thanks to your Personal Money Market.

According to the College Board (a non-profit college advocacy organization), the average cost of a year’s tuition at a public four-year college was $7,020 for the 2009-2010 school year. Private four-year colleges fell significantly higher on the financial scale, with costs averaging $26,273 per academic year. Multiply these costs over four years and add in fees for room, board, books and other supplies and you’re looking at a significant financial investment for a college education these days.
But don’t be alarmed if you don’t have hundreds of thousands of dollars in your bank account to cover college expenses. There are a number of different programs available to help cover some – or all – of these costs. Let’s look at some of the most common.

Need-Based Financial Aid

Once you commit to a college, they’ll review the “Estimated Family Contribution” number listed on your FAFSA (Free Application for Federal Student Aid) and compare this to the cost of their tuition. If the amount your family is expected to contribute is lower, the school may offer you a financial aid package containing some or all of the following options:

• Federal grants – Federal grants, like the Pell Grant or the Academic Competitiveness Grant, are gifts of money from the government that do not need to be repaid upon graduation. They range in size from a few hundred to several thousand dollars and are typically restricted to certain groups. The Pell Grant, for example, is only offered to undergraduate students in specific income brackets.
• Federal student loans – Federal student loans, on the other hand, must be paid back after college, although the interest rates on these loans are usually very reasonable. There are a number of different programs available, such as the Federal Stafford Loan and the Federal PLUS Loan, as well as federal loan programs for parents.
• College scholarships/grants – Most colleges administer a wide variety of scholarship and grant programs, including funding for specific demographic groups or a history of academic merit. You may be considered for some of these programs automatically, while you’ll need to apply for others – be sure to speak with a financial aid counselor to find out which scholarships or grants you may be eligible for.
• Work-Study funding – The Federal Work-Study program offers students part-time employment as a way to help with college expenses. Typically, you’re offered a specific dollar amount; it is then up to you to find a job and ensure that you don’t work more hours than your award will cover.

Private Funding Sources

If the aid package your college offers still isn’t enough, don’t worry. You still have several options for funding your college education.

• Private scholarships – There are many hundreds of private groups that offer college scholarships, from professional organizations to major companies to local and national charities. Your high school or college can help you determine which programs you might qualify for, and a little time spent searching the Web should turn up several more promising candidates.
• Private student loans – Private student loans are generally less desirable than federal loan programs as their interest rates are often substantially higher, but they can be used as a funding source of last resort if you aren’t able to come up with enough money from other programs.

One word of Caution

Student loans can’t be discharged in a bankruptcy, so you’ll be stuck paying them off no matter what. Take the time to calculate what your estimated post-college monthly payoff amount will be so that you don’t take out more money than you’ll be able to pay back later.

Consumers look to personal loans to help with finances during this recession. Will gains made at the G-8 conference trickle down and help their finances? (Photo: wikipedia.org)

Consumers are still looking to personal loans for financial aid as the world recovers from the recession.  Later this week, the G-8 nations are gathering to discuss the economic recovery.  Despite anticipating change, they warn that it is too soon to announce the end of the global crisis as many countries are still stabilizing from the recession. The full impact of the economic crisis has yet to be felt by some economies and the G-8 nations want to give the world time before they start generating short-term solutions.

“Operating Well Below Potential”

US Treasury Secretary Timothy Geithner stated, “These early signs of improvement are encouraging, but the global economy is still operating well below potential and we still face acute challenges… Economic and financial recovery will be stronger and more sustainable if we make clear today how we get back to fiscal sustainability when the storm has passed.”  Additional numbers are suggesting that there will be many economic challenges to overcome before the world returns to any state of normalcy.  The World Bank is projecting the global economy to shrink by three percent this year, which is much worse than their previous projections of only 1.75 percent.

In addition, a two-day summit that included the US, Japan, Germany, France, Britain, Italy, Canada, Russia and the European Union concluded that the “situation remains uncertain and significant risks remain to economic and financial stability.” They also confirmed their decision to provide additional stimulus as needed upon reassessment of the global economy.

Help Us, International Monetary Fund

The summit leaders asked the International Monetary Fund to help the assessment process, giving viable exit strategies from world-wide stimulus plans. They believe that tax cuts and decreased interest rates are keys to encouraging “sustainable recovery over the long term.” Though this sounds like a good solution, some countries aren’t as supportive. In particular, Germany has been an opponent of continued usage of tax cuts and lowered interest rates, warning that it could cause higher inflation and increase the deficits even more.

Despite opposition, there are some accepted precepts of the G-8 meetings.  They confirm that to get the global economy back on track new rules must be created. These rules need to focus on transparency in the global marketplace and finance. This transparency is crucial to producing trust throughout the world population.

What This Means for Americans

In the short-term, this means that more tax cuts may be on the way for Americans. In addition, lower interest rates will be available.  This is all good news to a nation that has relied heavily on personal loans, credit cards and business loans to finance lifestyles as the recession hit hard.  One supporter of the G-8 summits is Dallas, Texas resident Crone Adkisson. Adkisson stated, “I’m delighted that the entire world is gathering to find some answers to our problems. I know the recession isn’t completely over, but I want to be prepared financially to handle things when it is.”

The World’s Plan

The U.S. is asking foreign banking regulators to create methods of quickly resolving failures of cross-border financial firms. They also want to address poverty in third-world countries and how to best handle climate changes. With a full agenda, the G-8 leaders agree that the meetings probably “won’t find agreements, but we will need to have political compromises.”

U.S. Consumers’ Future

Polls are showing that U.S. citizens are encouraged by the meetings, hoping that the full brunt of the recession will soon be revealed.   Many families have relied on personal loans, family aid and government grants to help them through the economy for far too long.  They want to be met with an economy that is reinvigorated and is providing adequate jobs, moderate interest rates and affordable mortgages once again.

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