Credit 
10
comments

How Students Use Credit Cards

Sallie MaeEach year, Sallie Mae does a national study on how undergraduate college students use credit cards and their usage trends. 2009′s report was released this week with a bang because they discovered that credit card usage has increased to levels never seen before.

Here are some staggering statistics:

  • Students have an average of 4.6 credit cards!
  • 84% of students have at least one credit card.
  • The average (mean) balance is $3,173, the highest ever recorded in the study’s history.
  • The median balance was $1,645 with 21% of students having between $3,000 and $7,000 in debt.
  • 39% of students already have a credit card before they arrive on campus.
  • Median debt of those students was $939, up from $373 in 2004, with only 15% having a $0 balance.
  • Students graduate with an average of $4,100 in credit card debt with almost 20% having more than $7,000 owed on credit cards.
  • A third of students rarely or never discussed credit card use with parents.


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 Education 
5
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Understanding Your College Savings Options

This is a guest post from MLR @ MyLifeROI. This is a 3 post series and each post is going live this morning on three different blogs: Bargaineering, Green Panda Treehouse, & Poorer Than You. I will be posting a wrap-up post to tie it all together and summarize each article.

You are 22 years old. You have just spent the past four years paying tuition, room and board, books, food, utilities, transportation, etc. The worst part is that it is all getting more and more expensive beyond peoples’ expectations. Where does that leave you? In a mountain of debt upon graduation. For some of us that means letting our debt dictate a less than optimal career.

However, what are some ways that we could better prepare for our college education? And if it is too late for you, how can we better plan for our children’s education?

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 Credit 
18
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Best Student Credit Cards & Tips For Smart Credit Use

Student StudyingDuring a recession, the flow of credit tends to tighten up as banks and lenders take fewer “risks.” The result of this is that people who are credit-worthy but have no credit history, such as students, are caught in the middle. Without a credit history, they can’t get credit cards and loans. With credit cards and loans, they can’t establish a credit history.

An old standby practice, piggybacking, was recently eliminated as the new FICO score rules changed how it treated authorized users. In the past, someone with poor or no credit could “piggyback” as an authorized user on an account of someone with good credit. Many parents put their children on their credit card accounts to help them establish credit, the parents were “co-signing” their child’s debts, so it was perfectly acceptable. Unfortunately, people started abusing this and selling “authorized user positions” on their accounts, some for as much as $500 or $1,000 a piece, so FICO had to respond.

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 Education 
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How to Navigate the College Financial Aid System

Financial Aid Money GrabApplying for financial aid can be an overwhelming and stressful task. There are many steps involved and some of the steps can be rather complex. It is important to remember, however, that the financial aid system has been set up to help you. With a little patience, the system can really pay off in the end. This article will give you an overview of the steps in the financial aid process and will give you a little bit of advice along the way.

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 Cars 
34
comments

Best Used Cars for College Students

Beater Used CarI never had a car in college and I never really wanted one because our student IDs doubled as free bus passes (the cost was rolled into our student fees). In fact, there were only a handful of occasions where I really wanted a car and those were cases where the bus ride would take an hour and a half (from CMU to Monroeville, which is really just a 20 minute care ride away!). I was fortunate to live in a city where public transportation was pretty good, but what about colleges where the public transportation isn’t as good or where you need a car just to get to class? You need a reliable used car.

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 Education 
21
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Salary Breakeven for Private vs. Public College Graduates

Bachelor of Arts English DegreeI had lunch today with a few friends and the topic of private versus public college came up, a topic they recommended I put on my blog (so to appease them, I did!). As the graduates of private colleges, we were all curious what the difference in salary between graduating from a private college, paying $30,000+ a year for tuition/room/board/etc, and graduating from a public college, paying $10,000 a year for room, board, etc. The impetus of the conversation was that one friend knew someone who was graduating as a radiation oncologist and did a similar analysis between doctors and typical engineers (his analysis said it took twenty years for the doctor, a radiation oncologist, to “catch up” to an engineer, after accounting for typical raises, college loan debt, and other factors). So what’s the break-even point between private and public college graduates?

The answer …?

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 Education 
190
comments

American Opportunity Tax Credit Details

CNNMoney has broken down the details of the latest stimulus package and has the following to say about the American Opportunity Tax Credit, which was a refundable credit pushed heavily by Pennsylvania Representative Chaka Fattah (D):

New temporary college credit: The bill introduces the American Opportunity Tax Credit, which would be in effect for 2009 and 2010. It expands the existing Hope Scholarship tax credit and would be worth as much as $2,500 for higher education expenses, up from $1,800 currently.

The full credit would be available to those making less than $80,000 ($160,000 for joint filers). Those making between those amounts and $90,000 ($180,000 for joint filers) would get a partial credit. And the break would also be partially refundable, meaning lower income families with little or no tax liability could now claim some of the credit. Estimated cost: $13.9 billion.

The stimulus package also has another education related tax break, the Pell Grant has been increased to $5,350 for 2009 and $5,550 for 2010; an increase of $500 in both cases.


 Education 
10
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Free College Money: The FAFSA

FAFSA FormThe last few weeks have been hectic in the BFP household as we had a combination of the holiday festivities and my wife’s applications for graduate school. She’s applying to Ph.D. programs, so she’s been researching graduate programs, writing applications, preparing for the GRE, and taking the GRE these last few weeks. Fortunately, one problem she hasn’t had to tackle was how to pay for the Ph.D. because they often get tuition covered by the school, plus a stipend.

I graduated undergrad with about $25,000 in student loans, a paltry sum when compared to some of my friends who had upwards of $50,000 and $80,000 in student loans. Also, the majority of my loans were low-interest deferred Stafford loans. I was only able to get those loans, and other grants, because I filled out a FAFSA form… something 25% of families fail to do.

I was amazed when I read a press release from Sallie Mae that stated 25% of families didn’t even complete the FAFSA application! Sallie Mae is another one of those former government sponsored entities that privatized a few years ago (like Freddie Mac and Fannie Mae) and they deal strictly with student loans and college savings plans. The FAFSA is the Free Application for Federal Student Aid.

How do I apply?
You can either fill out a paper form or you can apply online. Applications can be submitted starting January 1st (so you can do it now) and the deadline is June 30th.

Why is the FAFSA so important?
It’s used to determine everything in federal aid. Need- and non-need-based grants, scholarships, work-study and low-cost student loans – they all use the FAFSA to determine who gets what. Last year, $163 billion dollars in student aid was awarded and 40% of them were grants that do not have to be repaid. That is free money. If you don’t complete a FAFSA, you are not eligible for any federal financial aid. No Stafford loans, no Perkins loans, no PLUS loans, and not even unsubsidized Federal loans. Zero. Zip.

I heard student loans are really hard to get this year.
That may be true, but if you don’t spend the hour or two to fill out the FAFSA, they will be nearly impossible for you to get because you won’t be eligible for any of the federal loans.

What are the interest rates on subsidized loans?
The Stafford loan is probably the most popular subsidized loan as it has the most favorable interest rates, it’s a need-based loan and the rates are schedule to be (all loan rates are listed on Sallie Mae):

  • July 1, 2008–June 30, 2009 the interest rate is 6%.
  • July 1, 2009–June 30, 2010 the interest rate is 5.6%.
  • July 1, 2010–June 30, 2011 the interest rate is 4.5%.
  • July 1, 2011–June 30, 2012 the interest rate is 3.4%.
  • Beginning July 1, 2012 the rate is 6.8%.

Those rates may not look incredibly favorable now but remember that interest is tax deductible if you earn under a certain amount and the interest is deferred until after graduation.

I recognize that some part of that 25% of families may not be eligible for federal financial aid on a need basis, but there are plenty of non-need related federal financial aid options that everyone should try to apply for.

I am extremely thankful that I was able to get federal financial aid (and some grants directly from Carnegie Mellon) and it all starts with filling out and submitting a FAFSA.

(Photo: btreenews)


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