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Archive | June, 2013

3 Little Known Facts About Student Loans

3 Little Known Facts About Student Loans

student-loans-building-blocksYou can never know too much when it comes to financing your education. Here are some facts that may help you pay down your loans more quickly and make the most of your investment.

1.      Size doesn’t (necessarily) matter when it comes to paying off student debt.

No one wants to be burdened with huge amounts of educational debt. But when it comes to paying it off, the size of the debt may matter less than where you attend school, your degree choice, and where you decide to live after graduation.

In a recent report by the Federal Reserve Bank of New York, states with some of the highest average student debt burdens per person tend to have some of the lowest student loan delinquency rates. States where residents carry the lowest levels of student debt, on the other hand, have some of the highest delinquency rates.

The takeaway: Even a high level of student debt can be more easily tackled by a well-prepared graduate who settles in an area where opportunities abound. Graduates with much lower amounts of student debt may struggle with repayment if they choose a low-demand degree, move to an area with a high employment rate, or leave school before graduating.[1]

2.      Participating in an income-based repayment (IBR) program now can result in tax pain later.

Designed to help debt-burdened grads build a little more flexibility into their monthly budgets, IBRs allow you to adjust your federal student loan payments to take up no more than 15 % of your current monthly income. The payment timeline is extended to 25 years, and interest continues to accrue during that period. At the end of that time, Uncle Sam forgives the remainder of the debt.

Here’s the catch: The forgiven portion of the debt will be taxed as a gift, and those taxes must immediately be paid in full. The tax bill could be substantial. For example, on a forgiven balance of $41,000, taxes could be $10,000 or more depending on your tax bracket. Before enrolling in an IBR, be sure you fully understand the repayment terms and the tax bill that could be waiting for you down the road. [2]

3.      Repaying student loans by direct deposit can save you big bucks.

The Department of Education and most other educational lenders offer some type of discount – usually about 0.25 % – on interest for borrowers who sign up for direct deposit payments. Over the life of your loan, that can add up to significant savings. While you’re checking on the availability of direct deposit, it’s a great idea to ask the lender if they offer any other interest rate breaks that could help you pay your way out of debt faster. It never hurts to ask! [3]

References

[1] Weismann, Jordan. “These Maps About Student Loans Explode One of the Biggest Myths About Student Loans.” The Atlantic. Web. 15 May 2013. http://www.theatlantic.com/business/archive/2013/05/these-2-maps-about-student-loans-explode-one-of-the-biggest-myths-about-student-loans/275868/

[2] Lieber, Ron. For Student Borrowers, Relief Now May Mean a Big Tax Bill Later.” The New York Times. Web. 14 Dec. 2012. http://www.nytimes.com/2012/12/15/your-money/for-student-borrowers-a-tax-time-bomb.html?pagewanted=all

[3] Feldman, Benjamin. “4 Ways to Pay Off Your Student Loans Faster.” Yahoo! Finance. Web. 13 Feb. 2013. http://finance.yahoo.com/news/4-ways-pay-off-student-110002948.html

About the Author:

Today’s guest article comes from Donna Parshall. She writes articles about frugal living and personal finance for Allied Cash Advance. Allied Cash Advance is a responsible payday loans and cash advance lender.

Posted in Financial Aid1 Comment

4 of the Most Versatile Degrees to Use in the Real World

4 of the Most Versatile Degrees to Use in the Real World

collegedegree1The natural path for most high school students is to attend college and graduate with a degree of their choosing. After graduation, students try to use their degree to land a job in the field they are interested in, but sometimes it doesn’t always work out. After all, with an increase in the number of people graduating college, the hiring process is full of competition for any given position.

A degree is still an extremely important thing to have, but for those starting college soon, it may be in their best interest to select a field that will bring diverse employment options such as Accounting, Business Administration, Computer Science, or Psychology.

Develop Financial Literacy in Accounting

Earning a degree in Accounting will bring many career options your way. Financial Analyst, Payroll Manager and Auditor are just some of the choices available to those with a degree in Accounting. In all positions, data is gathered, recorded and then, interpreted.

If an analytical position that deals directly with finances in some capacity sounds like something you’d be interested in, Accounting is the career to choose. On top of the typical jobs that one could get with an Accounting degree, CFO positions are available, as well as Comptroller and International Accountant.

Cultivate Managerial Experience in Business Administration

A Business Administration degree is as versatile as the color spectrum, and just as honorable, too. Employers have a high regard for business degrees since the skills learned in the courses can apply to any number of positions. It’s a broad-based degree with broad-based skills, firmly rooted in the management of a business, which can apply to an array of situations.

Obtain a Bachelor of Science in Business Administration in Miami and your path can be paved for a career in Human Resources, as an entrepreneur, in sales and marketing, or even as an Investor. A bachelor of science in business administration degree ensures a solid future in countless business-related fields. Solid business practices learned in school will help when your career involves investing, networking, forecasting, management and/or budgets.

Establish Critical Thinking Skills in Computer Science

Computer Science careers have been popular and lucrative for the past several years. Future employment for one with this degree is continuously on the rise with jobs available such as Programmer, Designer, Software Engineer and Information Systems Specialist.

A Computer Science degree program will prepare you by providing hands-on experience in communicating with a computer and learning the language. Computer Science involves computation theory and design of practical systems that can later be used in your career.

Foster People Skills in Psychology

Psychology degrees are especially popular and for good reason. With this degree, a very wide range of career choices are open to the college graduate. Although those with psychology degrees who want to be in a higher-level career would probably have to attend graduate school, there are a plethora of entry-level positions available to those with a bachelor’s degree.

The diverse career options available to holders of this degree are proof that the skills learned in the courses for this major are as diverse as the career options themselves. These courses help students to learn how to assess situations, build relationships and interpersonal skills, and research and write.

Those with psychology degrees can hold jobs as a counselor, mental health worker, recruiter, or a range of administrative positions. Sales and Marketing are also popular careers paths for Psychology majors.

With the current state of the job market being what it is, it’s more important than ever to graduate with a degree that is versatile enough to offer a range of career options. Especially for those who aren’t completely sure what they want to do with the rest of their lives, following this path will offer many alternatives to choose from.

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$5,000 Safe Driving Awareness Scholarship *free thumb socks!

$5,000 Safe Driving Awareness Scholarship *free thumb socks!

thumbsocksWhen you text while driving at 55 mph, your eyes go off the road for the length of an entire football field. Tell your friends about the dangers of texting and driving to enter to win a $5,000 scholarship. After entering, DoSomething.org will send you a free pair of “thumb socks” – a physical reminder to stop texting and driving. Send them a picture of you with your thumb socks and you’ll double your chance of winning the $5,000 scholarship. Go to www.dosomething.org/thumbwars#scholarship to get started.

Scholarship Name: $5,000 Safe Driving Awareness Scholarship
Sponsor Name: DoSomething.org, Toyota, Sprint
Scholarship URL: www.dosomething.org/thumbwars#scholarship

Start date: May 29th

Deadline: August 2nd

Amount: $5,000

# of scholarships: 4

Questions and Answers:

Is texting and driving really that dangerous?

Totally. Here’s the stat that kills us: on average, texting while driving at 55mph takes your eyes off the road for the length of a football field!

Ah! That’s insane! What do I do?

Join Thumb Wars. Enter your email and phone number in the sign up box above. You can then sign up to receive thumb socks. Once you get them, share them with your friends and family to let them know how dangerous texting and driving can be.

How do I use the socks?

First step: pick a friend or family member who you know texts while driving. After that, you can tape the socks to their steering wheel, ask them to wear them while driving for a day, or hide them in the glove compartment. Be creative! Have fun with it! And if you take a picture of what you do and send it to us, you’ll be entered to win a scholarship.

Does everybody who signs up get socks?

Not necessarily. When you sign up above you’ll be directed to a page where you have to tell us who you will share the socks with and what you will do with them. If you don’t fill those fields out with something (and not just “i don’t know”) you won’t get them.

This is kinda silly.

Isn’t it great? And that’s totally the point. We’ve learned that scare tactics push people away from learning about an issue. Thumb Wars is a way to make it fun for those you care about to learn how to be a bit safer. Go crazy! Have fun!

Hey! I entered to get some socks! Where are they?

We start shipping the socks when the campaign begins, on May 29th. It can take up to 12 business days from when you sign up to get them in the mail. Remember, not everybody gets socks – you have to tell us who you’ll share them with and what you’ll do with them when you sign up.

I have more questions!

We have more answers! Email Sarah at thumbwars@dosomething.org with any other questions you have.

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How An Accounting Degree Can Help You Save Money

How An Accounting Degree Can Help You Save Money

FrugalScholarPigOf course, an accounting degree is a great way to earn money, bringing its bearers an average of $64,000 per year. But an accounting degree can also save you thousands of dollars over the course of your lifetime. Here are the ways this degree helps you save money over the years.

Enables You to Do Your Own Taxes

Last year, people who paid for tax preparation and had no itemized deductions paid an average of $143. For those who had itemized deductions, this number skyrocketed to $246. With an accounting degree, you won’t need to pay for these services. Over the course of a 50 year working career, this can save the average person $10,000.

To put this in perspective, if you invested this $10,000 now, it would be worth approximately $60,000 in 50 years when you retire, depending on the interest rates and assuming you allowed the interest to roll into the initial investment principle. So, instead of paying out that $10,000 to have your taxes done every year, save that money, invest it, and enjoy it during your golden years.

Allows You to Be Your Own Accountant

Hiring an accountant costs between $100 and $200 per hour. If you ever need an accountant to go over your personal or business books, this is a huge out-of-pocket expense that can be completely eliminated if you’ve got an accounting degree.

Since many people who complete the Bryant Stratton accounting program go on to establish their own businesses, they’re prepared to do their own bookkeeping and don’t have to hire this work from outside sources. The average person can save several hundred dollars per year, and the business owner can save upwards of $50,000 per year if they’re equipped to do their own bookkeeping.

Let’s You Be Your Own Financial Advisor

A single consultation with a financial advisor can cost over $1,000. Let’s say you consult an advisor once per year between college graduation and the year you retire. You can plan to pay $40,000 over the course of your lifetime for financial advising services.

You can get a degree from the Bryant Stratton accounting program for a fraction of this cost, saving yourself the $40,000. Plus, you’ll be able to save close friends and family members money on their financial advisors over the years, too. It’s difficult for people to find a financial advisor they trust.

Empowers You to Self-Audit

An audit can be a scary thing. Having the ability to conduct a self-audit means you aren’t at the mercy of an independent or government auditor. You can audit your own affairs and know exactly what’s in the books, so you do not have to guess or worry about what an outside audit might drag up.

Independent auditing firms’ charges start at $100 per hour and go up to over $500 per hour. If you get an audit once per year between college graduation and retirement (even at the lowest rate, assuming prices do not go up), you’ll save $4,000. Though this number is likely much higher, as it’s almost certain these prices will rise over the next 40 years.

So, in addition to all the money you can earn as an accountant, an accounting degree can also save you big bucks over the course of your lifetime.

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Student Loan Consolidation – Puppet Rap (video)

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The New Pay As You Earn Program For Student Loans

The New Pay As You Earn Program For Student Loans

pay-as-you-earnHow many people do you know with crippling student loan debts?  I know too many to count.  Increased student loan debt combined with a lagging job market has created a segment of the population that is struggling to keep up with their monthly loan repayments.

Recently President Barack Obama instituted the new Pay As You Earn (PAYE) loan repayment program to help these new graduates.  As if the world of student loans wasn’t confusing enough, we just got one more.  Let me illuminate this new option for you.

So what is PAYE?  Well it’s pretty simple actually.  The PAYE option allows loan recipients to pay back their loan in monthly amounts based on their income and family size.  The PAYE amount is to be paid over 20 years and is capped at 10% of monthly income. Sounds pretty great, right?

So, who qualifies?  First of all, you must be a new borrower as of October 1, 2007.  Secondly, you qualify if you are considered under partial financial hardship, or that your monthly payments under the PAYE program would be lower than under a standard 10-year plan.  And get this; once you qualify, you may continue to make payments under PAYE, even if you are no longer under a partial financial hardship.  Only certain loans fall under the PAYE umbrella, though.  Direct subsidized and unsubsidized loans count, as do Direct PLUS loans given to graduate and professional students, and only Direct Consolidation loans without underlying PLUS loans made to parents are included.  Sadly, private loans do not qualify for this program.

The new PAYE program is really great, and will help numerous college graduates stay on top of their finances.  Additionally, there are a number of hidden bonuses included with the new program.  If your monthly payments aren’t enough to cover the interest that is accrued, then the government will cover 3 years of interest payments from the first repayment date.  So if you are really hurting, you basically get an interest free loan for the first three years, as long as you are timely on your payments.  Another great feature of this loan is that interest will never capitalize above 10% of the original loan amount. This could make a big difference down the road for a college grad.  Let’s imagine that you have a total loan debt coming out of college of $35,000.  As you pay this off over the next 20 years, the max amount of interest that can be capitalized, or added to the amount of the loan, would be only $3,500.  One more thing you should be aware of: after 20 years of paying your loan debt, the remaining amount is forgiven, and this is reduced to 10 years if you work for the government.  Now, hopefully most college graduates will be able to pay off their loan in 20 years, but if times stay tough for them, the government has added this little caveat to make sure that no one is paying of their college debt during retirement.

Seems totally great, right?  Well, there are some downfalls to the program.  First of all, the repayment period of 20 years is longer than the standard 10-year repayment, which translates to more interest paid over the life of the loan.  If you do wait for the full period to pay off your debt, then when the remaining amount is forgiven, that amount is counted as income, possibly affecting taxes owed.  Due to the monthly payment being based on income and family size, applicants must update annually.  If you default on this requirement, your monthly amount will change to the 10-year standard amount and interest may be capitalized.  Also, FFEL loans are not included under PAYE.

A college education is an incredible thing, but sadly more and more people graduate college in a worse financial situation than when they started.  The new Pay As You Earn program will help these new grads from drowning in their debt and should lead to more people attending and eventually graduating from colleges across the nation.

 About the Author:

Today’s guest article comes from David Fridland, a staff writer for CollegeFocus.  He graduated from the University of Colorado-Boulder with a degree in Political Science.  When not writing, David spends most of his time out on the Ultimate Frisbee Field.

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