With the US presidential election five months away, the candidates are making an effort to get their voices heard on topics such as health care, taxes, the economy and the ongoing war. But what about topics closer to a college grad’s bank account - student loans and the college tuition? Here is a breakdown of what is known about Barack Obama and John McCain’s stances on these issues so important to today’s students.

Faced with steep inflation of college tuition, many college aged people are looking to find out where the candidates stand on student aid and the rising cost of higher education. As over 17 million voting-age college students stand to be affected by the troubles in the student loan market, it has been harder for the candidates to avoid discussions on the costs of higher education.

From Bnet’s article on college costs in the candidate’s agendas:

This year, students are voicing concerns more loudly about their ability to afford a higher education as ever-rising college costs — up 22 percent in the last five years alone — have been thrown into especially stark relief amidst a media and public storm about the potential unavailability of student loans facing families in the upcoming academic year.

Traditionally Republicans like to cut public programs and funding in favor of projects deemed more important and McCain’s stance so far seems to be in line with that. To deal with the expanding federal deficit, McCain’s preferred solution is cutting government spending. This is good and bad since earmarks will decrease (under Bush the number has grown substantially). Read more…

A few days ago I was sorting through my miscellaneous pile of random papers, bills and notes from way back, when I discovered a rare, ancient artifact - my checkbook. Haven’t seen that for awhile., I said to myself. This brings up a good question I’d like to pose to everyone reading now. Do you still use your checkbook? And if so, why?

Ah, the checkbook. I remember my first checkbook. It was college and I opened my first checking account so I could pay rent and buy beer books. But soon that little book went the way of the doodoo with the advent of online banking. It took me more or less a year to fully make the switch but my finances are much more streamlined because of it. But I do still use checks to pay for a few things. Mostly just rent. Besides rent, the last time would have been… paying a parking ticket over a year ago.

In this time of convenience, checkbooks just don’t make the cut. Instead of carrying around a wallet of those paper slips that we have to fill out for every purchase, we have a plastic card that we slide. Instead of paying your monthly bills with checks and mailing them, it’s just easier to go online and get them all done in 10 minutes or less. And going online also gives you the option of seeing what your current balance is, something a checkbook could never give. It’s also a time of environmental responsibility; save more and conserve. Checks are soon becoming a thing of the past, at least from this blogger’s perspective.

So who’s still using their checkbook? Let me know in the comments!

Some of the biggest banking institutions are bailing on the student loan industry, referring to it as “unprofitable” and “a risky investment.” The hardest hit are community college students. Some providers, such as Citibank, JPMorgan Chase and SunTrust, are cutting their lists of colleges (mainly community and less-selective four-year colleges) whose students they will provide loans to, making students turn to other sources for pay for their college tuition.

Report by the New York Times:

By splitting out community colleges and less-selective four-year institutions, some remaining lenders seem to be breaking the marketplace into tiers. Students attending elite, expensive, public and private four-year universities can expect loans to remain plentiful. The banks generally say these loans are bigger, more profitable and less risky, in part perhaps because the banks expect the universities’ graduates to earn more.

Lenders are keeping quiet on how many colleges they’ve dropped which makes it tricky to estimate how many students have been affected. Colleges who have higher default rates are more likely to be dropped. And since most lower-income students attend community and a easy-to-get-into four-year colleges, these schools are the ones being dropped in most cases. Read more…

Every time I turn around it seems like a new peer-to-peer lending service is being launched. The latest, Fynanz, launched in March and is trying to bring the peer-to-peer structure to student loans. If you are looking to get into peer-to-peer loans (or P2P for short), either as a borrower or lender, you have many options to choose from; Prosper, Zopa, Lending Club, and Virgin Money are just the well-known ones that have recently launched. But with all the these sites launching so close together and all with basically the same idea, will the market be big enough for them all?

As the credit crisis forces banks to tighten their lending practices, peer-to-peer lending has stepped in to fill the void in the loan industry. P2P lets people bypass banks and borrow directly from a real person. It works for lenders because the security of being guaranteed and insured against loss is still there like a traditional loan backed by the government. The upside for borrowers is that lenders compete to give them better rates.

Zopa and Prosper seem to be best equipped to last the longest and emerge as the front runners in this yet developing industry. Lending Club, with its unique marketing strategy of first launching as a Facebook app, is targeting a slightly different audience than the rest and this strategy will help them spread their name faster than the others. Read more…

Photo by micsalac.

In my last post, Save Early and Become a Millionaire, I commented on how a 16 year old can go from a pauper to a millionaire by saving up some cash and investing it in a Roth IRA over 40 years. I wanted to do a little more research and find out exactly what an IRA is. So this is what I found out…

IRA stands for Individual Retirement Account. It’s a retirement plan that lets you contribute up to a certain amount per year and provides tax advantages too. After you establish the account you can invest in bonds, stocks, mutual finds and CDs just like a regular cash account. There are a few different IRAs but the two most common types are Traditional and Roth. Roth IRAs were created to encourage people to save for retirement by offering significant tax breaks.

So what’s the difference between Traditional and Roth? Good question. Now listen up, this part is important. With a Roth IRA you pay income tax, and then make your contribution with after tax dollars. There are no taxes when you make a withdrawal. With a Traditional IRA you get a tax deduction, which lets you deposit before tax dollars then when you make contributions but you also pay income tax on the entire amount of your withdrawals. Roth has the extra advantage since taxes will probably rise in the future; paying taxes now rather than later will save you money in the end. Read more…

Photo by theritters.

It’s easier than ever to become a millionaire. So what’s the secret? Don’t laugh, but it’s plain old saving. Getting an early start on your savings coupled with the right investing strategy will bring you up to millionaire status. The catch? You’ll have to wait a few decades.

According to the MSN Money article Start on your first $1 million at age 16, the simple recipe to become a millionaire has five simple steps:

• Work 4 summers, from age 16 to 20
• Save the income in a Roth IRA account
• Invest in a simple, low-cost equity portfolio
• Wait 47 years
• Collect at age 67, untaxed and ready to spend (maybe on a new hip by this point)

The article takes into account that, starting from age 16, a person earns $2000 each summer for four straight summers. Then if invested in a Roth IRA, it will grow, tax-free, for as long as the account exists. All withdrawals from the account after age 59 1/2 will be tax-free. The money grows to $25,917 by age 30, $197,943 by 50, $547,037 by 60 and finally gets over one million by age 67 or $1,114,423 to be exact.

Two problems I see right away. First, getting an average return of 10.7% isn’t as easy as the article says it is. But, then again, some people say the opposite. The article also states that if you invest in small company stocks, whose long-term annual return clocks in at 12.5 percent annually, you will have even more money. Nice to know. Read more…

If you’re a college student it’s safe to say you need money. Believe me, I understand. Students usually live on Ramen and infrequently do their laundry to save every quarter. One of the reasons the must cut back is the outrageous cost of normal college textbooks. The average college student spends about $900 every year on textbooks. Instead of footing the bill again next year, apply for the Chegg Textbook Scholarship and receive $500 in textbook rentals from Chegg, the place to rent college textbooks.

The winner of the Chegg Textbook Scholarship will receive $500 in textbook rentals from Chegg, and with the savings we offer that’s more than a year of free textbooks! Four runner ups will receive $50 each.

But what do I need to apply you ask? You need to write an essay of course; it is an real scholarship after all. The question you must explore in your essay is “What can one student do to help the environment?” The answers need to be submitted by June 20th and must be five-hundred words or less.

Check out the official page with the rules, eligibility and technical stuff at Chegg.com.

Helpmepaymyloans is now on Twitter. For those who don’t know what Twitter is, it can be summed up as a free social networking and micro-blogging web application that allows people to send “updates” to the Twitter website, via short message service (SMS), instant messaging or a third-party application. It’s not too well known outside the tech industry (I’m actually a web designer during the day, or so I hear) but it is a great tool to keep in touch with the latest news and happenings from the people you follow.

Updates are displayed on a user’s profile and delivered to people who sign up to receive them. People can receive updates via the Twitter website, instant messaging, SMS, RSS, email or through a third party application (I recommend Twhirl or Twitterrific on a Mac).

So if you’d like to receive up to the minute news, resources and info about college finances, ways to save money and student loans news, follow Helpmepaymyloans on Twitter. First, signup at Twitter.com if you haven’t yet (it’s free). Then go to Helpmepaymyloans’s Twitter page and start following. Or just look on the sidebar. Go ahead, take a peak, it’s over there too.

I will be covering interesting articles and news that I may not normally cover in the regular HMPML blog. So check out Twitter and as always, let me know what your thoughts in the comments (or just @helpmepay through Twitter)!

If you need a loan for college, there is no question that federal loans are the way to go. The interest rates are low and fixed, fees are small and the government pays the interest for students while they are still in school and sometimes even after graduation if they become unemployed or face other economic hardships. Federal student loans are offered to all students, regardless of background, class or credit history. So it was a surprise to find out that some community college students cannot get any form of federal loans. Instead they are forced to go with more expensive private loans or find other alternatives to pay for their education.

While almost all four-year colleges and universities in the country participate in the federal loan program, a large number of community colleges do not. The students who attend these community college cannot get a federal student loan. As a result they are forced to resort to credit cards and costly private loans to fill the gaps in their finances.

So what’s the reason for not supporting federal loans? As summed up in an issue brief from The Project on Student Debt, colleges sometimes think that students should not borrow for a community college education to prevent student debt from ballooning for individuals. As the brief also points out, this is not realistic when students must still cope with the ever-growing costs of tuition and other costs. Even a bigger slap in the face is when colleges try to guide students to other, riskier borrowing options like private student loans. Read more…

Photo by Alec Peden.

If you are curious about your credit report like I was, you’re probably thinking about your options for finding out about it. Apart from a major purchase like a house or car, there aren’t many opportunities to just look it up. Enter sites like AnnualCreditReport.com, Credit.com and FreeCreditReport.com. If you search for “free credit report” on Google, about 23 million results pop up. Everyone wants to give you your report… the trick is, you just have to ask.

To give you some back info into how obtaining credit works: everyone’s credit history is tracked and rated by three national credit reporting companies; Experian, Equifax and TransUnion (sounds like a railroad company right?). A law signed in 2003 called the Fair and Accurate Credit Transactions Act (FACT Act) allows consumers to get one free comprehensive disclosure of all credit history from each of the three national credit reporting companies once every year. AnnualCreditReport.com is the central source by which you can get your free report.

Five minutes of filling out a couple forms will get you access to your credit reports from the three credit reporting companies, but AnnualCreditReport.com does not give out your credit score (that 3-digit magical number), just the reports. Once you’re in, it’s a good idea to print these reports to study for mistakes or just to save for your records. Read more…