Credit Card Scam

One reason more and more college students are find themselves in debt could be contributed to the credit card industry. A recent article by CQ researcher found that between 1980 and 2005, Americans' annual credit card purchases jumped 25-fold — from $69 billion to $1.8 trillion and even worse credit card companies seem to be targeting college students, with many students receiving hundreds of credit card offers in just one year. Credit companies unfairly target student because of the expense of college life and many students who but into these companies schemes end up in debt. Many university officials and congressmen have begun investigating these companies and placed restrictions on how credit cards can be marketed t public universities. With financing from the Ford Foundation, U.S. PIRG has begun a national campaign urging schools to adopt some common-sense principles that would help shield students from credit card marketers and financial ruin. Hopefully with a better education on the damages of credit cards and more protection from greedy companies students will be able to make wise decisions regarding credit cards and focus on more important and manageable issues such as paying off student loans.

Thoery Post

As I mentioned in my last blog student loans are becoming more common and are in high demand due to higher rates of unemployment and debt within families, a result of the recent financial crisis. Not only are low-income families affected by the economy failure, middle class families are also finding it harder and harder to put their children through college.The federal government is doing its best to supply loans to families in need but with both tuition costs and the federal deficit at an all-time high, this is more easily said than done. Although the government has been able to provide some loans to most families in need, they rarely cover the entire cost of tuition and many students must find other means of paying their tuition in full. Both Obama and McCain seem to agree that student loans are an important aspect in allowing students to receive a higher education as well as that reform is needed on the no child left behind act in K-12 schools.

Before I discuss lower level education more thoroughly I want to recall one of my older blog posts dealing with loans versus merit-based scholarships. The federal government right now offers a majority of its aid in the form of loans because it fairer for low-income and minority students who normally don't have the grades to earn scholarships. The capability of minority and low-income students to earn good grades is a result of both the schools they attend and their family background. One way the government is trying to improve education and school quality is through the controversial no child left behind act. While this act, originally designed to bring all students at every American school to proficiency in reading and math by 2014, has helped students show improvement, many people, particularly teachers believe it places way to much emphasis on standardized tests and sets near impossible standards. For example in California students are required to increase 11% in proficiency each year until 100% is reached and many states have more rigorous testing than others . In order to improve this act, Congress should lower the requirements it sets but continue to place emphasis on highly-qualified educators and improvement in schools. If there was another way to determine the effectiveness of the act besides testing I believe the act would help improve schools much more efficiently because teachers would not have to base their curriculum according to tests.

How badly is the economy affecting college students?

According to a recent article in the New York Times the recent financial crisis is affecting students ability to pay for college. Federal loans account for 3/4 of student borrowing and the government assured to keep money flowing by buying those loans even with fewer companies in business but often times these loans are not enough to cover the entire tuition. With an increased rate of unemployment and the threat of recession gripping the country, many more families are expecting to need student loans this year. The number of applications for federal aid so far this year has risen to 13.5 million, up nearly 10 percent from 12.3 million from last year. One way that students and parents are paying the extra cost of tuition is by purchasing PLUS loans, which are the same as Stafford loans but are signed in the parents name. However many students do not qualify for PLUS loans and must resort to borrowing from relatives or private lenders who are becoming hard to recieve due to the financial crisis. Although colleges have taken many measures to make tuition more affordable, such as converting loans to grants and allowing tuition cuts to families making certain amounts, the financial crisis has placed a bump in the road and outweighed the amount of help colleges can provide. Hopefully the next elected president can help get our economy back on track so that not only student loans, but stock markets, government funding, and everything else affected by the failure of the economy can get back to normal and work more efficiently.

Recommended Blogs

With the 2008 election occurring next month things are really heating up in politics. In my opinion some of the most important issues in todays society are the economy, the energy crisis, and the always controversial debate over taxes. Below are three blogs that I have found to be extremely helpful in keeping up with the fast-paced and ever changing world of politics, especially in the issues described above.

Renewable Energy:The New Oil?
With the depletion of nonrenewable resources such fossil fuels and natural gas, the growing price of gas and oil, and increased global warming, America is in serious need of some new energy resources. This blog by Tommy discusses the danger of Americas large consumption of nonrenewable resources and offers many different renewable techniques such as geothermal energy, biofuels, solar energy and hydropower that can be improved and mastered to help make our energy use more efficient. Through his blog, readers learn not only learn the views and solutions offered by McCain and Obama but are also well informed of the effects of fuel consumption in US and the rest of the world. Tommy keeps his blog up to date and has the latest information on the election and energy world.

Apparently Money Doesn't Grow on Tree's
2008 has introduced a lot of new problems into the economy. The mortgage bubble that has been building up for the past few years has finally been recognized and created a major financial crisis. Huge companies are crumbling, banks are declaring bankruptcy, and the stock market is crashing. All of these factors have created the need for a bail plan, which is just one of the issues discussed in Britney's blog. It also provides details on candidates plans for boosting the economy back up and discusses whether the US government places enough regulation on its capitalist economy. Britney includes many interesting video clips and images and updates her blog regularly to help readers stay in touch with the financial issues of America and the latest plans to bailout the economy.

The Issue On Taxes
No matter who gets elected in this years election, one thing is for sure...the amount Americans pay in taxes will see drastic change. Whether this change will be good or bad and who is affected most will be determined according to who is elected president. If Obama is elected president then lower and middle class Americans earning less than 250,000 a year will be very greatful to see tax breaks while those earning more will not be as happy to see an increase in taxes. If McCain is elected, Americans earning over 250,000 will be appreciative of tax breaks while those earning less will have a heavier burden to pay. This and other issues relating to taxes and the economy are analyzed and discussed in this blog by IGetNosSleep. The views of the candidates are expressed in extreme detail while possible consequences of their plans to the economy and government services are presented. This blog really helps readers to develop an educated opinion of whose tax policy will best benefit the economy and who to support and vote for in the 08 election.

Nationalization of Banks

The US is following Europe's example in the financial crisis as a race to stabilize the economy forms. The $700 billion bailout plan has failed so Bush has advocated $250 billion of it directly to banks. Bush proposes an extra $100 billion to buy troubled assets held by firms or to make additional capital infusions into banks. The US guarantees 3 years of new debt issued and unlimited guarantee on banks deposits without interest. Federal deposit insurance will cover small businesses as well. The goal is to recapitalize banks and get them lending again among themselves, consumers, and businesses. Conservatives are upset, but liberals applaud this action. Conservatives worry about government interevention in a capitalist society but as Bush states "These measures are not designed to take over the free market but to preserve it." This plan has already triggered the biggest jump in stocks in history, but will it be enough to freeze the credit market and stabilize the economy? Only time will tell...

Student Loans, Education, and The 2008 Presidential Campaign

When it comes to financial assistance, the amount received by college students could be extremely impacted in the coming years depending on who is elected president in the 2008 election. While both Obama and McCain believe in increased access to higher education, Obama's plan seems to be more beneficial to future college students than McCains plan. McCain's plan focus's on simplification, specifically higher education tax benefits and federal financial aid, and repairing the student lending programs. By simplifying the complicated existing tax benefits, McCain hopes to ensure that a greater number of families will have a lower tax burden when sending their kids to college. McCain also plans to consolidate financial aid programs and the application process for student aid in order to simplify the administration of these programs and help students have a better understanding of their eligibility for aid. McCain has also proposed an expansion of the lender-of-last resort capability of the federal student loan system and will demand the highest standard of integrity for participating private lenders. Effective reforms and leveraging the private sector will ensure the necessary funding of higher education aspirations, and create a simpler and more effective program in the process. Obama is also in favor of simplifying the financial aid process, only he plans to eliminate the current federal financial aid application and allow families to apply simply by checking a box on their tax form, authorizing their tax information to be used, and eliminating the need for a separate application. Another plan Obama has proposed is the creation of the American Opportunity Tax Credit which makes college affordable for all Americans. This universal and fully refundable credit will ensure that the first $4,000 of a college education is completely free for most Americans, and will cover two-thirds the cost of tuition at the average public college or university.
In a presidential debate on Tuesday, October 7, the candidates discussed their higher education goals in more detail. Obama is a strong advocate of government spending for higher education placing the issue of education as his top third priority, right after energy and health care. According to him education has to be at the top of the list so that the nation can help young people be competitive in the global economy. Obama relates his views to personal experience thanking scholarships for his ability to attend college. He remarked that the American dream seems to be diminishing, in part because young people “who’ve got the grades and the will and the drive to go to college” don’t attend because they don’t have the money. While Obama advocated higher education spending, McCain focused on eliminating wasteful spending by eliminating earmarks — spending that individual lawmakers allocate on a noncompetitive basis to colleges and other entities — and by freezing most federal spending. The areas he singled out as exceptions that might receive more government support were defense and veterans affairs. “Obviously we’ve got to stop the spending spree that’s going on in Washington,” was McCain's explanation adding that he wanted to reduce the debt being left to young people.
The candidates approach the matter of government spending form opposite directions. Senator Obama believes in increasing financial aid spending while reining in government spending in other areas.,This will directly affect students and families and allow a more immidiate solution to college affordability. McCain believes in eliminating federal earmarks that often benefit college projects, and advocates an across-the-board freeze in federal spending, to help stabilize the economy. This will not help families in paying for college but may help with the current financial crisis. Obviously being a student, I am going to side with Obama, as his plan will allow students many more options in paying for college tuition.

Student Loans: Analysis

College can be extremely expensive, especially when it is paid for through private loans. This is why the federal government offers a variety of student aid packages in the form of both loans and grants. Students can apply for federal aid through FAFSA (federal application for student aid) and even though it is a long, complicated process, the benefits it provides to low income and middle class students are worth it. Examples of the grants available through the federal government include Teacher Education Assistance for College and Higher Education Grant's(TEACH grant), Federal Pell Grant's,Federal Supplemental Educational Opportunity Grant's (FSEOG), Academic Competitiveness Grant's(ACG), and National Science and Mathematics Access to Retain Talent Grant's (National SMART Grant). There is some controversy concerning the TEACH grant because students don't always realize that if they fail to uphold certain standards required by the grant, such as performing service as a highly-qualified teacher, then they are must repay the government in the form of a direct unsubsidized loan. Grants differ from loans in that loans must be repaid while grants do not need to be paid off. A major federal loan awarded to students is the Stafford loan which is divided into the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Under the Direct Loan Program, the loan funds come directly from the federal government whereas funds for FFEL will come from a bank, credit union, or other lender that participates in the program. In addition to being direct or indirect(FFEL), loans can also be also be either subsidized or unsubsidized. Subsidized loans are loans based on financial need and allow the government to pay (subsidize) the interest on the loan while students are in school and for the first six months after they leave school. Students with lesser financial need are eligible for unsubsidized loans. Students with unsubsidized loans are responsible for the interest from the time the unsubsidized loan is disbursed until it's paid in full. They can choose to pay the interest or allow it to accrue (accumulate) and be capitalized (that is, added to the principal amount of your loan). Capitalizing the interest will increases the amount to be repaid. Another loan similar to the Stafford loan that can be taken out by parents is the PLUS loan. PLUS loans are available to parents good credit history with dependent undergraduate students enrolled at least half time in an eligible program at an eligible school. Graduate and professional degree students are also eligible to borrow under the PLUS Loan Program. The terms and conditions applicable to Parent PLUS Loans also apply to Graduate/Professional PLUS loans. These requirements include a determination that the applicant does not have an adverse credit history, repayment beginning on the date of the last disbursement of the loan, and a fixed interest rate of 8.5 percent in the FFEL program and 7.9 percent in the Direct Loan program. Other forms of federal financial aid (called campus-based programs because they are administered directly by the financial aid office at each participating school) include The Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan programs. Not all schools participate in all three programs.Both FFEL and Direct federal loan interest rates provide far greater savings over more expensive private loans, whose interest rates can run as high as 19%. Another reason to choose federal loans over private loans is that private loans often have variable rates that can result in an unexpectedly high monthly payments. In contrast, federal loans will stay fixed at the same low rate over the life of the loan. Due to the College Cost Reduction Act of 2007, rates on subsidized federal Stafford Loans will continue to drop over the next few years: to 5.6% for loans disbursed between July 1, 2009 and June 30, 2010; to 4.5% for loans disbursed between July 1, 2010 and June 30, 2011; and to 3.4% for loans disbursed on or after July 1, 2011.
In April 2008, Congress enacted the Ensuring Continued Access to Student Loans Act of 2008 , to protect families’ access to federal students loans from turmoil in the nation’s credit markets. The law provides new protections, in addition to those in current law, to ensure that students and families could continue to have access to all the federal loans they were eligible for – and at no cost to taxpayers. While no student or college has reported any problems accessing federal student aid to date, it is only prudent for the federal government to make sure that contingency plans are in place that would provide students and families with continued, uninterrupted access to federal loans, regardless of what’s happening in the credit markets. Goals involved with the act include reduceing borrowers’ reliance on costlier private college loans, encouraging responsible borrowing, giving parent borrowers more time to begin paying off their federal PLUS college loans, helping struggling families pay for college and providing the U.S. Secretary of Education additional tools to safeguard access to student loans. Thanks to the Ensuring Continued Access to Student Loans Act of 2008, the recent mortgage crisis has not affected federal student loans.
On another note due to the state of the economy and the energy crisis, education does not seem to be nearly as important in this years presidential election as it has been in the past, and when it is discussed, it normally focuses on lower level K-12 education such as reforming the No Child Left Behind Act put in place by the Bush administration, rather than higher level education. Even so demcratic candidate Barrak Obama stresses federal spending on higher education much more than Republican John McCain. Obama has proposed creating new Teacher Service Scholarships that will cover four years of undergraduate or two years of graduate teacher education, including high-quality alternative programs for mid-career recruits in exchange for teaching for at least four years in a high-need field or location. This in turn will hopefully strengthen our school systems and promote equality for all schools K-12. Obama also plans to make college affordable for all Americans by creating a new American Opportunity Tax Credit. This universal and fully refundable credit will cover two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students. Obama also plans to ensure a tax credit to pay up to $4,000 of college expenses for students who perform 100 hours of community service a year to and simplify the Application Process for Financial Aid by eliminating the current federal financial aid application and enabling families to apply simply by checking a box on their tax form, authorizing their tax information to be used, and eliminating the need for a separate application. John McCain is proposing a student loan continuity plan. Students face the possibility that the credit crunch will disrupt loans for the fall semester. John McCain also plans on simplifying the financial aid process and tax benefits as well as calls on the federal government and the 50 governors to anticipate loan problems and expand the lender-of-last resort capabilities for each state's guarantee agency.
According to a blog by Sara Hebel, in a debate Tuesday night Senator Obama spoke about making college affordability a priority even as he would rein in government spending in other areas while Senator McCain focused on eliminating spending he considers wasteful, including federal earmarks that often benefit college projects, and advocated an across-the-board freeze in federal spending. I believe that even though both candidates share similar views such as simplifying the federal aid application process, Obama tends to lean more towards helping make college more affordable while McCain doesn't express much concern on the matter.