ARTICLES, BLOGS & VIDEOS

The latest news, trends and information to help you with your recruiting efforts.

Posted September 07, 2006 by

Miss me? Back in the game!

Hey gang, it’s been a few days, owing to a few technical issues here and there, but no worries, we’re back in the game. Here’s what you missed over the past couple of days:
1. Student loan consolidation controversy! It seems that some lenders are using delaying tactics to avoid releasing student loans to consolidation companies, like returning payoff statements with chewing gum stuck to them or with nothing on the statement except a coffee stain. The tactics are ethically questionable, but technically NOT illegal. Has this happened to you? Let me know – leave a message in the comments or email financialaidpodcast at gmail dot com.
2. On Tuesday’s show we talked about money saving tips for college students. Among the tips: joining a credit union can potentially save you hundreds of dollars in pointless fees from major banks, and chances are your school has a credit union. Ask if students are eligible to enroll. Find a credit union near you with the NCUA finder! Other tips include actually showing up at class, because you’re paying a hefty amount per hour.
3. Yesterday we touched on what warning signs often come with a scholarship scam. Among them – receiving unsolicited offers of scholarships, sites that have no WHOIS registration information, ANYONE asking you to pay money for a scholarship, and scholarship ID theft schemes where they ask you for sensitive information like your SSN or date of birth.
4. In today’s show we answer listener questions, including whether you can get a student loan as a non-traditional student for child care and other related expenses. The answer? Yes, you can. Private student loans can be used for anything up to the cost of education, and that includes child care, food, living expenses, rent, even babysitting.
It’s good to be back!
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

Posted August 30, 2006 by

All about the credit cards today

In today’s show, we’re talking credit cards. What to look for, what to avoid, and how to calculate a minimum payment. If you can’t calculate your minimum payment, then honestly, you really shouldn’t have a credit card. It’s that important to know and understand how they work. Here’s the basic formula:
Average daily balance + interest = total balance for period * 4% = minimum payment
Example: $1,000 average daily balance, 18% APR:
$1,000 + (1000 * (.18/12)) = $1,015 total balance for period * 4% = $40.60
Look for no annual fees, long grace periods, electronic payment options (stay on time), low interest rates, fixed interest rates. Stay AWAY from cash advances at all costs!
Finally, one secret tip you can ONLY find out by listening to today’s show – why making one big monthly payment isn’t as good as making four smaller payments totalling the same large payment.
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

Posted August 29, 2006 by

How much should you borrow?

Figuring out what you can borrow for student loans can be tricky, particularly if you’re still in school, or not even to college yet. Choose right, and you’ll be able to enjoy a comfortable standard of living after college, pursuing the life path you want. Choose wrong, and you get crushed by debt, or you don’t go to/finish college. How do you determine what is a reasonable amount to borrow?
Work in reverse. Debt has to be paid off, so figure out how much debt is sustainable. Most financial planners advocate not exceeding 10% of your net income for debt service, so that’s a good number to remember. What you can pay is of course dependent on how much money you make.
Statistically, college graduates average a starting salary around $30,000 per year. This is highly dependent on where you live, the cost of living, etc., but $30K for liberal arts, up to $50K in medical and technology fields seem to be about the national norms.
Let’s work backwards now. From gross pay, we’re going to write of 1/3 of the salary to taxes and mandatory deductions (social security, etc.). Yup. Uncle Sam takes that much. Here’s the result, your NET income after taxes:
$30K gross: $20,000 net
$40K gross: $26,700 net
$50K gross: $33,300 net
Now, divide each by 12 and you get your net monthly income.
$30K gross: $20,000 net = $1,666/month
$40K gross: $26,700 net = $2,225/month
$50K gross: $33,300 net = $2,775/month
Okay. Now, let’s assume you are free and clear of all other debts (credit card, auto, etc.) at the time of graduation and you just have student loans. You can now afford to make the following maximum payments at a 10% debt service to net income ratio:
$30K gross: $20,000 net = $1,666/month = $166/month
$40K gross: $26,700 net = $2,225/month = $223/month
$50K gross: $33,300 net = $2,775/month = $276/month
Today’s federal student loan interest rates are 6.8% for Stafford Federal Student Loans. Based on this, we can use a student loan consolidation calculator in reverse to see the maximum amount of money you can borrow at 6.8% with and without consolidating your federal student loans.
$166/month = $14,424 if you don’t consolidate, $18,700 if you consolidate
$223/month = $19,378 if you don’t consolidate, $29,213 if you consolidate
$276/month = $23,983 if you don’t consolidate, $39,765 if you consolidate
The higher your estimated income at graduation is, the more you can afford to borrow, and if you consolidate your federal student loans upon graduation, you will be able to borrow more. This is a pretty good methodology for figuring out how much you can afford to borrow – and a good example of how overborrowing can limit your career choices to jobs that can pay for your student loans.
For more information about student loan consolidation, visit StudentLoanConsolidator.com on the web.

Posted August 28, 2006 by

So what should you spend your money on?

Today’s topic is things you SHOULD spend money on, and how to make those decisions. I spend a lot of time on the Financial Aid Podcast talking about ways to trim expenses, save money, etc. but I don’t usually talk about what you should spend money on. There are two measures by which I judge spending in my own life.
First, quality. There’s a cliche about buying a cheap watch every year or buying an expensive watch once. There’s a lot of validity to this cliche. Quality is very often cheaper in the long run.
Second, use. If you’re going to do, use, or have something only rarely, there’s no point in making a huge investment in it. Case in point, an iPod. If you buy an iPod just because everyone else has one and you don’t use it all the time, then you probably could have either done without it or gotten something cheaper.
So, what should you spend real money on? Number one: the bedroom. I’ll wait for the inevitable jokes in your brain to finish. Basic fact – you’ll spend between a quarter and a third of your life in bed, asleep. The quality of that time is just as important as your waking time, so if you have substandard equipment, you’re basically spending a third of your life miserable. Test out combinations of different kinds of sheets, pillows, and mattresses as you can until you find a combination that lets you wake up even after a short nap feeling refreshed. If you persistently wake up without an alarm after a normal night’s sleep and you’re tired, then your sleeping gear isn’t doing the job.
Second: food. You’ll spend an awful lot on this in your life, and what you spend it on is going to drastically impact the rest of your life. How many times have you sat down to eat, knowing what you were about to eat wasn’t good for you, eating it anyway, and then asking yourself in half an hour, why did I eat that? Spending money on good quality food – food that is nutritious, fresh, and tasty – is never a loss. Now, that said, you can overspend on food very easily by buying prepared instead of doing it yourself, but that’s a topic for another show. One other area I think spending is worth it – good quality filtered water. It can make a huge difference in your day.
Third: learning tools. I’ve made it no secret that I love my iPod and my Apple Powerbook. As tools go, these are much pricier than the bargain basement computers and MP3 players on the market, but they save me LOTS of time each day. I use my iPod probably 4 – 6 hours a day. Most of that time is spent listening to podcasts, audiobooks, training, and stuff that helps me learn. I spend 8 – 12 hours a day on my Powerbook, mostly work related. Having good, reliable, and easy to use tools saves time and stress. Good tools that give you access to knowledge are essential, because in this age of instant job portability, your knowledge and ability to use it are your top values. I should add that a great pair of headphones are also a must if you’re going to consume a lot of audio. I use the Bose QuietComfort headphones at the office. They’re pricey at $300, but they’re well designed and kill the ambient air conditioning rattle, letting me do more work. The cord is also a breakaway cord so when you do something boneheaded like leave your desk and forget the headphones are on, you don’t give yourself whiplash or destroy the headphones.
Fourth: a decent chair. At home and at work or in your dorm room if appropriate. Especially at work if you fly a desk. You’ll spend an awful lot of time in it.
There’s a theme here. If there’s anything you’ll be using for an awful lot of time every day, you want to make sure it’s quality, it’s something that is going to be reliable, easy to use, a pleasure to use, something that will add satisfaction to your day rather than stress you out.
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

Posted August 24, 2006 by

Top 50 questions asked in a job interview

In today’s show, we tackle interview questions in the Jobcast – the top 50 questions asked in interviews, and some strategies for a couple of the most loaded questions. The key phrase? Things that made me feel uncomfortable – because that’s such an ambiguous sentence that it could imply harassment versus general stupidity. What am I talking about? You’ll have to listen to the show to find out. Also, coverage of the Department of Educations’ privacy breach over the weekend, and help with non-need-based private student loans.
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

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Posted August 23, 2006 by

Your questions answered

All music show yesterday. Today, lots of questions answered, particularly about financial aid for international students. Most US companies don’t deal in this because, frankly, the risk to return ratio is unacceptably high. If an international student takes out a loan without a US citizen cosigner, and skips the country, there’s no way to recover that debt. That’s why international student loans and financial aid need someone stateside to provide insurance that anything lended will be repaid in one form or another.
That’s also why you shouldn’t ever offer to cosign anything for someone you don’t know or know casually. It gets REALLY ugly when the bills come, and cosigners are legally liable if the principal borrower skips town. Caveat emptor!
International resources:
+ InternationalStudent.com
+ InternationalStudentLoan.com
+ InternationalScholarships.com
Enjoy today’s show!
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

Posted August 21, 2006 by

Inflation – what it is and why it’s bad

In today’s show, we tackle basic money theory and inflation – what it is, why it’s bad, and more:
+ The role of money as a store of value, medium of exchange, and unit of account
+ Prior to money, you bartered everything
+ One cow is worth how many chickens?
+ If you needed goods for which no one wanted a cow, you were in trouble
+ Enter money – people agree upon money as a medium of exchange. A cow is worth $20. A chicken is worth $2. A wool cloth is worth $1.
+ Money has no worth in and of itself – it’s only worth what it can buy
+ Money is arbitrary – the Federal Reserve creates it and puts it into the system
+ If there were a total of 20 bills printed, and 20 bills used, the system would have no inflation
+ If one day someone created 5 more bills, there would be more money than goods used
+ This is bad, because it means that the system will absorb that money – banks will lend it, etc.
+ Net effect: prices go up – it takes more bills to buy something
+ Just like if ten cows suddenly appeared – you’d have more cows to trade, and someone who wanted to trade with you could say, well, you have 10 cows now instead of one, so you can afford to spend more, so I want two cows for 10 chickens.
+ This is inflation.
+ There’s a disconnect between when more money is created and when it arrives in your pocket to be spent
+ Wages very often don’t keep up with inflation because banks (who receive the money from the government) lend it – and you are paid but don’t receive loans as pay
+ That’s why inflation is very bad – because a seller of goods says, there’s more money available now, so I want $3 for a chicken instead of $2. But you as a wage earner don’t get paid more, so you get poorer.
+ Put another way, $1 will buy you 1/3 of a chicken today instead of 1/2 of a chicken.
+ Controlling inflation is the Fed’s job – but they’re losing control because more of the money is out of their control – a combination of the national debt and things like oil
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

Posted August 18, 2006 by

It’s Free Stuff Friday!

Nothing makes a college student happier than free stuff, especially when it’s high quality free stuff. Today’s show delivers in spades. We’ve got TONS of free stuff! Check it out:
Free Stuff Friday!
+ FreeMacWare.com – terrific site for the Mac community
+ Free videos on iTunes
+ Got a video you like on YouTube? YouTubeX will save it for you.
+ Free Scholarship Search eBook
+ Free comic books from the Federal Reserve Bank
+ Free FAFSA filing
+ Free podcast directory at AmigoFish
+ Free podcasting seminar at PodCamp
Free stuff abounds. Go get it! One I really recommend, from FreeMacWare.com – it’s called Schoolhouse. Coordinate your courses, papers, and more all in a very slick interface on the Mac.
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.

Posted August 17, 2006 by

Using the one page budget and zero based budget ideas

In today’s show we talk about the zero based budget, the idea that once you have your personal finances under control and your cashflow is positive on a per-pay-period basis, you have to allocate the extra cash before you fritter it away. There are three buckets you need to set up – savings, debt service, and investments. Learn which ones to use and when. We also talk higher education legislation and the commisson on higher education’s conclusions regarding Stafford federal student loans, parent PLUS loans, and alternative student loans.
Also, on an unrelated note, if you want to learn more about podcasting, blogging, and new media, be SURE you are attending PodCamp Boston on September 9-10, 2006. It’s at Bunker Hill Community College, sponsored by a whole bunch of companies like the Museum of Science, Boston, Porter Novelli, The Student Loan Network, and many more. As such, it’s COMPLETELY FREE to all attendees. Free learning, free food, free non-alcoholic drinks, and a chance to meet up with some of the greatest minds in new media. Register on the PodCamp website, PodCamp.org.

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Posted August 16, 2006 by

Your questions answered

Today’s show answers listener questions and has followups about using federal student loans to pay off private student loans.
Kimberly writes: Yes, the federal loan can replace the private loan, and in most cases, aid administrators would reduce the private loan if adding the federal loan made the student have an overaward. We have one student who does this every year, but our costs are so high that she doesn’t totally pay off the private loan. She does end up with a smaller private loan at the end of the year since her federal aid covers some of what the initial private loan covered. It all depends on the cost of attendance, the student’s grade level and the directly billed costs. Make sense?
Gerrie writes: Usually the alt loan has to be taken into account in the cost of attendance. However if the cost of attendance is high enough that the student can take out the max Stafford as well as the amount of alt loan already borrowed, what that student does with the funds disbursed to him or her is up to them. As long as the student has maintained enrollment, you can retroactively award fall (taking into account the alt loan as a resource). However, if the COA is low enough it’s possible that the earlier alt loan could impact the total Stafford borrowed.
Check it out at:
The Financial Aid Podcast Web Site
If you have iTunes, visit:
FinancialAidPodcast.com/itunes
As always, please contact me with any feedback, either here, on the show, or on the phone.