Posted On: 2005-11-28
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Good Monday everyone it is the 28th of November, 2005, this episode number 125 of the financial aid pod cast and my name is Chris Penn. Welcome back after the long holiday weekend, for those of you who took off the weekend like I did, and took a little extra time for traveling and I hope everyone traveled safely and I hope everyone had a good Thanksgiving holiday with their families and if you're listening in the United States were you celebrate Thanksgiving, I hope it was a great one. We have so much to talk about, I'm not even sure how I'm going to fit it into one show, so I may have to split up some of the stuff into two or three different shows because there has been so much going on not only in the world of student financial aid, but in the world of consumer finance and stuff. And as you know, financial aid podcast also covers consumer finance issues when they relay to students or when they impact students especially when it comes to how much money you have in your pocket to pay for things like college.
So without further ado, let's kick it off right into the news. First things up, The advent of high school diploma mills, the primary audience of which are top athletes with the lack of luster academic skills. The NCAA is looking at the number of problems with students coming out of schools such as University High School, which is a on paper school, on paper high school really that will help a student boost their GPA and meet any academic admissions requirement for colleges without the student actually having to take any courses. They receive packets in the mail along with open book un-timed exams in return for $399 diploma fee. This a $399 diploma fee then meets the NCAA certification requirements for athletes and their academic certification. This will then allow them to play college football, basketball, or any other NCAA sports while not being the best student possible. The NCAA and colleges are looking at trying to restrict the further pollution of their student bodies from high school diploma mills. But certainly an interesting event on the horizon. Colleges are reporting that energy costs are taking an additional chunk out of a budget. Schools everywhere are looking at anywhere from a 20 to 40% increase in energy consumption costs for the winter. As the temperature drops on campuses, heating bills especially when it comes to oil and gas are as high for colleges as they are anywhere else around the nation. And colleges are having to find new ways Of both reducing energy consumption and finding ways to generate additional incomes. So look for possible things like heating and energy costs in your tuition bills, they may be there before you know it. Finally, newly remodeled, the International Student Loan website part of the International Student Network has published a massive update to www. InternationalStudentLoan.com. If you're an international student you can apply for an International Student Loan to study in the U.S. or a broad the loan is offered through the Act Education Loans program which of course is part of the Student Loan Network. You can apply by visiting at www.internationalstudentloan.com or calling 617-535-7001 if you need to call directly out of the states, if you're calling within the United States, its 866-229-8900. As with all International Student Loans, co-signers are required there are no exceptions to this rule, but stop by and take a look.
Let's move on to the next segment really quickly here. News you can use. If you're looking at dealing with gifts, monetary gifts to a student to help pay for college, you are probably aware of the "gifting rule" which allows up to $11,000 per year to be transferred without a tax penalty to a student as a way of getting additional assistance, additional financial assistance two that student. Parents, grandparents, and relatives, can contribute up to $11,000 per person per year after that, there is a tax penalty that must be filed with the IRS, its publication 709. However, here's one little work around that you may not have known about. If you are a grandparent, or a non-parental relative of the student, rather than giving the student money, gift the money, rather pay the tuition bills for the student directly to the institution. Any money paid in that manner, is completely invisible to the "gifting rule" so you can continue to give up to $11,000 per year per person and at the same time make payments to the students tuition. So that they can go ahead and get their bills taking care of and possibly have additional money for non-tuition related expenses. That's an exemption for the "gifting rule" kind of-it's also a little bit like money laundering but we're not going to say anything if you won't. All right, let's move on to the first of the Monday morning pod safe music we'll do "Thank You," from Small Fish.
"Thank You," by Small Fish from the Podsafe Music Network at www.podsafemusicnetwork.com. I actually heard that song first on The Father Roderick's Catholic Insider podcast. It is a bit of a religious song, but it still got a very catchy acoustic rhythm so I thought I'd play any ways just because, well it's fun and it's a good way to wake up on a Monday morning. Other than using like Planet of Women which we did last Monday. All right, next up the scholarship update. The Patriots, unfortunately they got really really hammered this past weekend playing the Chiefs, but that doesn't diminish their scholarship program in any way. Yes, the New England Patriots offering their totally Patriots Write-On Contest weekly, yes weekly scholarships from the New England Patriots up to $2,500. What you have to do, you write a 500 word essay on the previous week's game. So watch the game, write a 500 word essay on and submit it either on the Patriot's website at www.totallypatriots.com or by postal mail. At the end of the season a $15,000 grand prize winner will be awarded. This will be a cash scholarship, so of course It will have to be declared nontaxable because it will be paid to the institution, but the $15,000.00 grand prize winner will win a gigantic scholarship to be used for college. This week's scholarship update-really its weekly up until the playoffs or until the Patriots are not in bowl contingent which hopefully want happen but it's not looking good; is this week's scholarship update. You can find more information about the scholarship as well as details on how to apply and additional requirements at our student scholarship search web site at www. Student scholarships search.com and they'll be a link in the show notes at www. financialaidpodcast.com for this scholarship. All right next up, let's do some pods safe music let's do Christmas 2004 Live, "Walk a Thousand Miles" by Matthew Eble.
Fantastic new pod safe music from Matthew Eble that was "Walk a Thousand Miles" from his Christmas selections and of course we are starting to bring in the Christmas music as you have around our podisphere. I know that C.C. Chapman Chastity a couple of Christmas shows on his pod casts and I'm looking for to listening to those. I'm trying to get caught up. Unfortunately with the Thanksgiving holiday, my parents don't really have a broad band so that kind of rules downloading pod casts out because trying to download 38MB file over a 336 modem line just not the kind of thing that's going to happen. But it was a good holiday though nonetheless. All right leads to the last segment today it's a new segment I'm going to call it "Eye on the Economy." We're going to talk about broader consumer financing issues especially for families of parents. We've talked a lot about finance for students but-looking at the demographics of people who listen to pod cast and things like that, it occurred to me there's probably a fair number of parents or families who listen to the show as well. We have about a thousand listeners total so I'm sure some of those are families and parents. I wanted to do a segment that kind of addressed things that are happening in the broader economy that will or impact the family's ability to pay for college; but not necessarily affect a student's ability to pay for college immediately or address student's cash in pocket which in the other segments we generally talk about too. Today two things. First of all, pensions and hedge funds. There's an interesting report by the Wall Street Journal that shows that the number of pension funds are starting to invest very very heavily in hedge funds. Hedge funds of course are a kind of a mysterious black art part of investing.
They are basically, their called rich people's funds, because the minimum investment, a hedge fund, is usually $1 million or more. Hedge funds are run similar to mutual funds but are completely unregulated or almost completely unregulated and nobody really knows how they work except that they seem to get reasonably good returns. For the most part most of the time, at least the reputable ones do. The report in the journal points out that hedge funds however are just as susceptible to stock market risk as any other form of stock market investing, and when it comes to pension funds, the last thing you want to have in the world is a fund that people are relying on for their retirement be subject to market, market conditions and market uncertainty. Be sure to check out in your own personal Retirement portfolio, whether you have a 401K, or whether you have pension fund make sure you check out what's in it and who's doing the investing for you. Make sure you check out what it is that their goals are; the reason like pension funds are going after hedge funds is that they need very very aggressive returns to keep up with the expenses and inflation. Right now treasury notes are not able to deliver that kind of performance. So they're looking to the stock market trying to get at least some measure of stability with it which is of course not a guarantee when it comes to hedge funds because they are proprietary enclosed, nobody knows how hedge fund managers make their decisions. They, for all you know, could be throwing darts at a dart board. So take a look at your personal finances and make sure that your hedge fund--that your pension funds and your retirement plans, if they do include hedge funds make sure you know what the head fund is and try and get much information about it as much as possible. If you try and contact a hedge fund representative, and they are unwilling or unable to answer any of your questions you may seriously want to rethink having any part of your retirement based in a fund where they won't tell you what they're doing.
Finally, this is from all over the web. I posted a little bit about this in a financial aid news blog over the weekend. Two contradictory stories on the holiday shopping season. One article from the Associated Press says that the holiday shopping season got off to a lukewarm start. Another from CVS Market Watch says that the holidays shopping season got off to a spending spree. Who's right? Once you get past the sound by headlines, you'll discover that the usage of credit cards is up 14% over this holiday season, which is what the CVS article got their holiday spending information from. It's the data comes from a Visa, the Visa USA corporation. Overall spending is down year over year that comes from Shopper Track and that's where the Associated Press.their numbers from. So, consumers are shopping but they're using debt to do it with. So how does this affect financial aid student loans and other things? You may think that Christmas shopping has nothing to do with and education finance but you would not necessarily be right. The effects of this holiday season will start to show up immediately in 2006. Once the holiday shopping hangover clears up, we may start to see more people in financial distress. Especially for consumers who were fully leveraged, meaning that they have got as much debt as they could possibly afford. This may mean more bankruptcy filings. In years past consumers have pulled equity out of their homes to pay down more expensive consumer debt. But increases in mortgage interest rates are putting the brakes on that method of refinancing and bursting housing bubbles in certain metropolitan markets like the Boston market are instantly reducing the appraised equity that consumers have access to. For financial aid purposes, this may mean as a family you will have to take a look at instruments like the PLUS Loan or the Alternative Parent Loan. These are loans that are available through the student loan network that don't require collateral or equity. You can get more information at www.parentplusloan.com or www.acteducationloans.com. What else is the Christmas shopping season tell us? There's really going to be a massive consumer debt hangover in January. A couple with facts and IRS papers work you might see a spade of consumer debt consolidation and refinancing to restructure the debt that families accrued over the holiday season. On the one hand, less cash fewer assets means improved eligibility or FAFSA because if you're broke your broke. But it also means diminished capability to meet the EFC, the Expected Family Contribution without supplementing non-federal aid like private student loans.
"Do You Hear What I Hear" by Jill Par from the Podsafe Music Network. I think that one's going to be another huge holiday hit the season. I'm sure we're going to see that song on a few other pod cast song and things like that. I hope it gets a lot of play because Wow, that's really really well done. All right folks that is going to tie it up for this Monday morning. The financial aid pod cast episode 125. as always, it's questions to firstname.lastname@example.org. Show notes at www.financialaidpodcast.com you can find out more information about everything there. Reminders, We have only three more days, three more days until the Ipod Nano giveaway, so if you're looking to get a Ipod Nano for that special someone and you want a chance to get it without having to pay money for it, this is the way to do it. Visit www.fiancialaidpodcast.com and go ahead and apply to enter. There are two ways to enter. The first is to apply to any student loan network product in a loan product of ours, Stafford Loans at www.staffordloans.com, PLUS Loans at www.parentplusloans.com, Student Loan Consolidations at www.studentloansconsolidator.com or Act Education Loans at www.acteducationloans.com. Or the second way it is of course to enter for free with no purchase necessary at www.financialpodcast.com. You can do so, there's an entry form on the web site. So be sure you do that, be sure you enter, the drawing will be on Thursday and you must be a subscriber to the show. You must be a master of the show in order to find out who wins, because we are not going to tell you any other way except on the show itself. Be sure that you are subscribed, tune in Thursday to see who won. The way to subscribe is very very easy just make sure you have the latest copy of iTunes an then go door web site at www.finanicalaidpodcast.com, there's a nice big purple but there that's as add to my iTunes and you'll be subscribed. That way you will not miss any of our shows. Hopefully we will be coming out with some more interesting new content in addition to the daily show in the upcoming weeks. So you definitely want to stay tuned because there is a lot going on. There so much going on that it's hard to put a finger on where to start. If you don't read the blog, which occasionally has more than just the show notes and to be sure to check that out as well and you can find that at www.financialaidnew.com/blog or there's a link from www.financialaidpodcast.com it's called the show notes. So check that out as well. I will be talking a lot on the weekends about yield curves and things like that. Economics terms, yes But still interesting reading at least I hope it is, and if it's not, tell me. Again, email@example.com. All right folks it's time to get this Monday started, got to get the office up and running for a very busy work week ahead so I hope you have a great one and again I hope your holiday season was great and I guess we'll see you until next time. Take care.