Education 
10
comments

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)


 Personal Finance 
2
comments

Roundup: McCain vs. Obama, Taxes & Other Good Stuff(tm)

If you want to compare the economic policies and plans of Presidential hopefuls John McCain and Barack Obama, CNN Money has a good comparison between the two on a variety of issues from Social Security to Personal Taxes.

Jeremy at Generation X Finance has a very good explanation of why the GAO report of 2/3rds of companies paying zero tax is political hogwash. Besides Jeremy’s good points, famous United States Court of Appeals for the Second Circuit judge Learned Hand once said – “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

SVB tackles the question of saving for college, a question I’m going to put off for a little while.

Nickel’s favorite cashback credit card is the Blue Cash from American Express, a card I don’t have. It seems to have a lot of great features, like a comparison of your cashback performance, and good cashback categories as well.

The Consumerist confirms once again why I love Southwest in publishing it’s top 3 most and least “fee crazy” airlines. Southwest was they’re #1 least fee crazy airline.

Flexo wrote about a study that says sleep makes you smarter.

Have a great long weekend!


 Personal Finance 
5
comments

7 Deadly Sins of Personal Finance: Being Penny Wise, Pound Foolish

7 Deadly Sins of Personal FinanceIt’s fitting that the sixth deadly sin of personal finance would be this one, after making a case for adequate insurance in the 5th deadly sin. Sometimes, in the quest to be frugal, we make decisions that can be short-sighted. These decisions, which may be beneficial in the short run, end up costing us big dollars in the long run because of unintended consequences or unforeseen circumstances. This is why the sixth sin of personal finance is …

Being Penny Wise, Pound Foolish

The simplest and most relatable example I can think of is buying 12-packs of Diet Coke at the super market. At normal prices, a 12-pack costs about four bucks a piece, for a unit price of thirty-three cents each. When it’s on sale, you can get a 12-pack for only $2 a piece (5 for $10 deals in the summer happen about once a month). I would only buy packs when they were at the $2 price… and then find myself spending $1.39 for 16 oz. bottles whenever I had an urge for Diet Coke. Penny wise… pound foolish.

That was a simple example, how about a more realistic one? Let’s say you’re a young professional looking to buy a car and trying to find easy ways to some extra money. You stumble onto my post about credit card offers and think about signing up for a few cards for their bonuses. Bad idea. In the short term, you might get a few hundred bucks signing up for cards and spending the required amount but in the long term, you lower your credit score. That lower credit score will result in a car loan with a high interest rate. If you’re planning on buying a house in the next year, avoid these types of things!

Finally, here’s one that I grappled with while I was in school: working during college. My dad and I often discussed whether I should work while I was in college. His reasoning was that I was going to school to get a degree, not to work a part-time job that would distract me from the primary goal. I understood my Dad’s position, why work for $10/hr when I was paying $30,000 a year for tuition?

But I was impetuous and eager to earn my own way in the world, so I took some odd jobs and did some things on the side. Fortunately none of the jobs ever detracted from my study time (while my grades weren’t stellar, I could claim graduating early which saved a good chunk of change) but it could have. While I’m not saying you shouldn’t work in school, make sure you’re working for the right reasons. Working at a research assistant in your field of study is a smart move, working anywhere because you need the money to pay for school is a smart move, working at the local coffeehouse so you have some beer money is probably not the best.

To make sure you’re not committing this deadly sin of personal finance, weigh both the long term and short term impacts of the decisions you’re making. You don’t want to be too heavily emphasized in either direction.


 Career 
6
comments

US News & World Report’s Best Colleges of 2009

While these types of lists are about as valuable as lists for the top paying jobs, they sure are fun to read, aren’t they? I put even less stock in these types of lists since they’re far more generic than top job lists and less quantifiable. It’s like when the coaches are polled to get the rankings of the NCAA Division I football teams… I can’t remember the last time a pre-season #1 ended up with the trophy that next January (I don’t follow much college football though, I did go to Robocup powerhouse Carnegie Mellon).

(Click to continue reading…)


 Devil's Advocate 
30
comments

Don’t Go To A Private University

Devils Advocate Logo
This is a Devil's Advocate post.

All throughout high school, the importance of going to college was everywhere. If it wasn’t my parents, it was my teachers. If it wasn’t my teachers, it was the guidance counselor. Everyone stressed the importance of college. In fact, they were even more specific. They stressed the importance of getting into a good college, which in guidance counselor terms meant a college that was good in the field you were interested in. In many many cases, that college was a private university. While safe advice, it’s not necessarily true.

Going to a public university gives you a better shot at success than a private university. You don’t have to go to a private university to succeed. In fact, going to a private university gives you no advantage over a public university. To take it to an extreme, going to a private university puts you at a disadvantage in life because you are paying significantly more for your education, thus saddling you with debt obligations, with no benefit.

(Click to continue reading…)


 Devil's Advocate 
55
comments

Don’t Pay Your Children’s College Education

Devils Advocate Logo
This is a Devil's Advocate post.

You should not sacrifice your retirement, your savings, or your future financial stability in order for your children to attend college. They are fully capable of supporting themselves, just as generations have before them.

The average cost of a year at a private four-year college institution in 2007-2008 was $23,712. The cost of a year at a public four-year college institution was $6,185. Both were increases of over 6% from the prior year and don’t even include room and board! [CollegeBoard.com]

Bottom line (a surprise to no one): College is expensive.

(Click to continue reading…)


 Personal Finance 
6
comments

My Best Financial Moves in College

When Patrick at Cash Money Life tagged me for this meme, he said that I probably had a couple little “hustles” going on the side when I was in college. I have no idea how he knew, though I had hinted about them in the past (selling stuff on ebay, online poker and blackjack), I don’t think I ever really wrote them all out in their full glory. I had some pretty lucrative things going, in college student terms, and it certainly easily sustained my lifestyle. However, the number one best financial move in college made the rest pale in comparison.

The number one best financial move I did in college was to graduate a semester early. That one move alone saved the cost of one semester’s tuition at Carnegie Mellon University, located in Pittsburgh, PA; which amounted to somewhere in the neighborhood of $15,000 plus room, board, food, whatever. I was able to do that because I always loaded myself up with classes, with AP classes in high school and then regular classes in college, and always pushed myself to the limit for those three and a half years. I don’t think all my little side projects, in total, earned close to that.

Of course, that financial move isn’t at all interesting and is borderline boasting (“oh look how smart Jim is!” we won’t go into what my grades were, shhhh!), so let me tell you about the most interesting of the side jobs I had:

Selling on eBay: eBay had started to get big and the whole “Buy Hot Deals from Fatwallet and resell on eBay” was still in its nascent stages. Whenever I see someone trying to make money, I try to figure out how that person is making money and then try to do it and then improve on it. So I saw these great deals on eBay for brand new products and so I investigated where they must be getting these great deals. Some were getting them wholesale (I didn’t want to get a tax ID and go through that process so I skipped it) but some were just buying stuff that was cheaper after rebate and then selling it on eBay. I did that a couple times before I realized the effort wasn’t worth it.

Eventually, I realized that what you needed to do was find products on sale where the eventual buyer wouldn’t be searching the Fatwallet forums or other deal sites. Computer and electronics shoppers are savvy enough to search the forums for a deal so eBay margins on those items is much lower. If you want DVDs, hats, and sports jerseys… those shoppers go to eBay first. Over the course of a year or so I sold maybe a eighty Michael Jordan Wizards jerseys, fifty John Deere hats (this was after Ashton Kutcher made them popular on Punk’d), and who knows how many DVD sets (my fiancee likes telling the story about how we ripped open a package from Canada of Band of Brother Gift Sets and then shoving them into packages for the post office because I was late on shipping them).

Eventually it got to the point where I was tired of looking at the eBay completed sale pages to try to figure out how much something could sell for and I put that Carnegie Mellon Computer Science education to good use. It took a few hours but I put together a Java application that went onto the eBay website and screen scraped the text off the completed auction pages. It collected the last two hundred auctions and then ran some simple statistic numbers. It told me percentage sold, average sale price, standard deviation, range, and who knows what else. I just wanted to know, in a few seconds, whether I could make money with a deal. It eventually started collecting the names of bidders, repeat bidders, losing bidders, and other information that would tell me how many people out there still want this stuff. So if someone was a losing bidder many times, I know at least one person is going to probably want this.

I actually sold the tool, after converting it from a Java app with a GUI to strictly command line, to a PhD candidate friend of a friend for $500, the first, and only, time I had sold a piece of software for money. It was pretty cool! Now eBay’s systems make the tool useless as they now require login, sanitize much of the bidder information, and otherwise make data collection difficult for people who don’t use their API. It was still a ton of fun though and I learned quite a bit from doing it.

So there you have it, both the smartest and the most interesting financial move I made in college. The smartest overall move, of course, was meeting my lovely wife! :)


 Credit 
11
comments

How To Start A Credit History

When you’re young, have little or no income, and want to build a credit history, it’s really difficult. The current credit environment has made it much more difficult so here are a few methods I’ve used, or have seen recommended, in the past in order to build your credit history.

One tip that has been removed from lists like these is the Authorized User tip. In the past, a parent could add a child onto one of their accounts as an authorized user and the child would see credit history benefits. Many people took advantage of that by “renting” out these authorized user slots and so FICO responded by cutting that link. Now, it appears, that authorized users have no bearing. This is the case of people trying to subvert the system for profit and the system, rightfully, punishing everyone. You can read more about the whole authorized user practice here.

(Click to continue reading…)


Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2015 by www.Bargaineering.com. All rights reserved.