Econ 101
By Adam Rathe | MainStreet.com

For kids about to start college, there are plenty of experiences to look forward to, but for far too many students debt will also be on the horizon. And with little practical knowledge of finance, those who aren’t careful can graduate with way more than just student loans hanging over their heads.

“Every golfer hates Tiger Woods because he started playing golf in the womb,’ says Alan Corey, author of A Million Bucks by 30. “Those pre-natal golfing lessons have obviously paid off because he started playing golf so much earlier than the competition. The same applies with finances—the earlier you start, the wealthier you are.”

But where to start? Between books, booze and snacks, most students don’t have two dimes left to rub together. “If you are going to live below the grid financially, you might as well make the suffering fun,” says Corey. “Find free concerts in parks or stage your own rock show there. Host a ramen noodle cook-off with friends that can feed a party of twenty, or have a $2 thrift-store party where everyone has to wear an entire outfit they bought for under $2 at a thrift store. I’ve done this, and I found such great threads that I still wear some of them even today - and get compliments.”

Looking for a more creative endeavor? “Host a drunk art gallery,” Corey recommends. “Everyone comes over, gets blasted and paints something. The next day, bring your hung-over selves and your modern art to the local flea market or garage sale, but keep the drunken aspect of it under wraps. Price them $15 - $100 each and watch the offers fly. It’ll at least be enough to cover the costs of your drinks and paint for the next go around.”

But it isn’t all fun and games. Students who save are sure to have an easier time transitioning to the real world after graduation. So, unless mom and dad want to refill an empty nest, they should keep a keen eye on the way their kids spend.

“It can be a challenge for college students to manage their finances when they first head off to school, says Steve Katz, director of consumer education for TransUnion’s TrueCredit.com. “While flexing their independence, some flex their wallets too. That’s why it’s so important for parents to sit down with their kids well before the school year begins to map out a spending plan. Parents and students should determine how much they will have to spend each month, how it should be allocated and should discuss what happens if they run short on money.”

Part of that discussion includes the importance of not racking up credit card debt when they do run short on cash. Citing a survey to be released next week, Katz says, “Nearly one in four respondents left school with more than $5,000 in credit card debt. In fact, one in 10 respondents indicated they owed more than $10,000 for purchases made with credit card.”

Corey also says to avoid credit cards that come with gimmicks like free t-shirts emblazoned with a bank’s logo. “Pay cash for everything until you have graduated,” he says. “That’s the definitive way to avoid both debt collectors and the fashion police.”

Related Articles:

How To Be a Millionaire By 30
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Clock’s Ticking for Student Loan Applicants

Student-Loan Woes Hurt Upper Middle Class
By Lauren Tara LaCapra | MainStreet.com

Problems in the student-loan market are especially hurting upper-middle-class families whose children won’t go to the local community college, but are not quite up to snuff for the Ivy League.
The tight credit markets are making private student loans more costly and difficult to obtain, with several major lenders stepping out of the fray. Wachovia (WB) became the latest major bank to cut back on undergraduate loans last week. It follows Citigroup (C), which took similar steps earlier this year, along with Bank of America (BAC), JPMorgan Chase (JPM) , Student Loan Xpress (owned by CIT Group (CIT)) and a slew of others.

Kevin Walker, CEO of SimpleTuition.com, says the number of companies offering loans on the site has dropped dramatically to about 22 today from about 77 at this time last year. He says about 20% of those enrolling in higher education—or about 3 million students—seek out private loans to fill in the gaps left from scholarships and limited state and federal support.

Those who will be hit worst by the student-loan crunch will be students whose parents don’t earn enough to pay the escalating cost of enrollment. The problem will be particularly acute for students entering schools that have high tuitions, but don’t have large endowments to entice them to come.

“It’s not everybody,” says Walker, “but it’s people who go to high-profile schools - great institutions that don’t have the deep pockets that Princeton has.”

Even before the credit markets began to tighten up last year, Walker says private student loans were made “almost exclusively” to prime borrowers. Students without cosigners, or those with cosigners whose credit scores were below 650 have always had a tough time getting approved.

“These loans were not subprime,” Walker says.

But in today’s market, regardless of how credit-worthy the borrower is, lenders and investors have little appetite for unsecured debt that has a 2-, 3- or 4-year lag in repayment. During that time economic conditions –and family finances—can change dramatically.

Today’s market can be summed up in the recent results of Student Loan Corp. (STU) , whose chief shareholder is Citi. The company posted a 40% drop in second-quarter profits as it increased reserves for loans that may go bad—despite the fact that private student loans are generally offered to prime borrowers who repay their debts.

The company faced higher costs for acquiring the capital, as well as a tough market for re-selling its bundled loans, since investors today are more skittish about such unsecured debt. As a result, Student Loan Corp. boosted the fees for those making payments, more than tripling its “fee and other” income to $39 million from $9.4 million.

In other words, students (and their parents) are paying the price of the current credit-market malaise, regardless of how credit-worthy and responsible they are.
Walker emphasizes the fact that there are still private lenders offering loans, and some have not yet restructured rates to reflect current credit conditions.

“It’s a dramatic difference from this year to last year—that’s the bad news,” says Walker. “The good news is that there are still [some] out there who feel that they can get to more borrowers than they could in a more competitive market.”

Students should consult their institution’s financial-aid office—which knows best what options are available—and hurry to secure an aid package before those lenders boost rates or exit the student-loan market as well.

And remember, there are no four-year guarantees. Private lenders don’t often make commitments beyond the current school year, meaning that students and parents could be in for a tougher—and more expensive—slog ahead in obtaining education financing going forward.

One of our favorite people, personal finance writer Carmen Wong Ulrich, discusses whether it makes sense to buy an apartment during your college years. How do to research the market? It is always a good strategy? Click here to watch the video.

Tune in to CNBC tonight at 8pm EST as Carmen’s television show “On the Money” debuts.

P.S. It’s not too late to enter our Gas Giveaway Contest!

With the graduation rush finally over, the question in many grads minds remains the same…what now?! This question holds endless answers – even if you might not know which answer is for you! The opportunities range from getting a job, to volunteering, to signing up for the military, to going to grad school…the path you choose is completely up to you!

There is a lot of pressure after graduation, many times even before graduation arises. In the School of Management at Boston University, the buzz throughout the college your senior year is if you have gotten a job yet…you always just want to say “yes” so that people will stop asking. After graduation, the question keeps coming, this time usually from your relatives or close family friends.

I think searching and actually receiving a job was one of the most frustrating experiences I have been through. Don’t always be envious of those that received offers while you were still at school. I know many students with a finance concentration that got their offers pulled because of the current economy and the company no longer being able to take on new hires.

My advice for graduates:

1.) Don’t Give Up – If you don’t yet have a job, don’t give up and get frustrated. Yes, it is frustrating and repetitive filling out all those applications, but something will come up. It is not the easiest time to apply for jobs, but keep with it.

2.) Don’t Take a Job Just for the Money – Your friends may take jobs with a higher paying salary, but don’t take a job just for the money. Out of my friends, my job that I will start in the fall probably has one of the lowest paying salaries, but I’m happy about the job I got and excited for the opportunity. I got offered a job that paid around $5,000 more per year but declined it because I didn’t think the job was the right fit for me. According to an article on Mainstreet.com by Jessica Wakeman, a friend earning more than you is not an uncommon occurrence. You should make sure that you include spending money into your budget so that you don’t feel left out when all of your friends go out for a night.

3.) Don’t Feel Pressured by Others – Just because many of your friends have full-time time jobs, don’t feel like you need to get one as well. Internships often lead to great jobs so don’t disregard them…you might even find one that is paid (I did)! Or even better, one of my friends is volunteering in Africa to teach English and another is going to New Orleans to help re-build houses…anything is possible!

Life after graduation may not be the easiest time and many people have no idea what they want to do with their lives. Just remember, most people don’t stay in the same job that they started in for too long and most do not even stay with the same company. Make sure to do what you want to do and what you think will make you happy! It may not be the path that everyone else is taking, but in the end, it may be best for you.

Many people around you are in the same position (or have been in the past)…there are some other great articles on Geezeo that may help you, here is a great one about entering the “adult world” and how to manage.

Student loan rates dropping? Yeah, right. When pigs fly!

Look out the window now — you may catch a glimpse of a pig flying. Yes, there is true magic in the air right now. If you have student loans, read this article. With luck the interest rates on your loans will be falling.

Hooray! From our partners at TheStreet.

—
If You Have Student Loans, Read This
by Terry Savage

The world of student loans just became more complicated and expensive for some borrowers, while others are about to get a great deal.

It all depends on whether you’re borrowing now or dealing with loans from the past.

Interest rates on variable-rate student loans will drop sharply on July 1st. That will make newer, fixed-rate loans look like a terrible deal, although for most borrowers, they’re the “only deal in town.”

Two years ago, Congress changed the student-loan program from a variable-rate deal based on Treasury bill rates to a fixed rate program at 6.5%. That rate now looks extremely expensive in comparison with falling interest rates in the marketplace. Still, those who have Federal student loans taken out after July 1, 2006, are stuck with those relatively high fixed-rate loans for the life of the loan.

The divergence becomes even more apparent because interest rates on older, variable-rate loans are about to be cut in half — to 3.61% from the current 6.62% — starting July 1. The cut comes because rates on those older loans are tied by formula to the T-bill auction that took place the last week in May.

That creates some interesting opportunities for those who borrowed in earlier years and are now graduating, as well as for graduates who have not yet consolidated their old, variable-rate loans. Not only will they get lower rates, they’ll also have the opportunity to lock in those low rates for the duration of their loans.

Continue reading and pray flying pigs pass your window!

School may be out for the summer — but the tuition bills continue for a long, long time.

If you’re still in the market for student loans, be sure to check out brand-new peer-to-peer lending options. They may come with better, or more flexible, rates. This great article thanks to our partner, Mainstreet.com.

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Learn About Student Peer To Peer Lending
By Juliana Bunim (05/21/08)

Costs for higher education are soaring, and with students up against rising interest rates, it’s harder than ever to finance a college education. Students and parents borrowed an estimated $17.1 billion in private loans in 2006-7, representing 22% of all lending that year. Now the subprime mortgage meltdown has changed the student loan landscape, and not necessarily for the better.

“A lot of easy money was going into education via the home acting as a piggy bank through refinancing,” says Akash Agarwal, CEO of GreenNote, a social networking and microfinance website. “That has completely stopped.” It’s increasingly difficult for parents to take out home equity lines, and students are looking away from traditional avenues such as Sallie Mae (SLM) and Bank of America (BAC) in favor of more creative ways to finance their education. (Yearly expenses for a public university, including room and board and financial aid, have risen to $9,980 a year from $7,650 according to the College Board, a non-profit examination board. The average net cost for a private college is $23,000, up from $18,050.)

Click here to read more about peer-to-peer student loan options. Sallie Mae: be frightened… very frightened!

Its that time of year when upcoming college graduates are starting to freak out that the time has actually come to enter the “real world.” Lets be real, most of us are definately not ready for this transition…or for some, this giant leap!

When I was a Freshman at BU I thought 4 years would seem like an eternity. But looking back, I can still remember skipping many of my large lectures and regretting it when exams came around…attending parties where you maybe knew the 3 people you came with…and wondering when things with school would actually get any easier! Now looking back, its hard to imagine that getting a job seemed so far away and now it is just around the corner!

Last week I accepted my first job. It was not my first offer, but it was the first one that I had actually accepted. Its hard when you get offers, you think of all the pros and cons…and unless its the job you have been searching for your whole life, it really is hard to make that decision! I’m still not 100% positive about what I want to do with my life…so eventually you just have to take that leap right?

My job entails eventually becoming a buyer for a major company. Believe me, if you know anything about me…shopping is one of my MAJOR downfalls. I just figure why not put it to use at a company that NEEDS me to shop for them right? The salary (at $38,000) was not all I had dreamed for, but being a Marketing major I knew my first salary would be much lower than someone graduating with a Finance degree from the School of Management.

It took me a little while…but I really realized that money isn’t everything. The job was something I knew I would be good at. It is a really reputable company. And everyone I had talked to loves it there. It took me a while to come to grips with the money, but in the end I realized that I would rather be happy with my job and get paid less…than be miserable and making a ton of money (which is why I chose Marketing in the first place!).

My advice to and you of out there looking for jobs (and believe me…I know it is NOT a fun time to look for jobs!):

1. Don’t give up – No matter how frustrating the application process may get, something will come around. And if you accept a job and don’t love it…don’t worry! Most people don’t stay at their first job for life anyway!

2. Apply everywhere! — Although this may not seem logical, I have found out that only a few of the companies you apply to will even look at your application. You want to get yourself out there as much as possible. And so what if you have to go to a million first round interviews, it just increases your chance that you will get a second round interview!

3. Weigh your pros and cons — This is important. Like I said, the money aspect was hard for me to get over…but in the end I realized that money was not everything. You need to look at more than just the short run…consider also what you want for the future. Would you rather be happy and get paid less? Or unhappy and get paid more? If you’re very lucky, you won’t have to make this decision at all and you will get paid a TON at a job you love!

4. Don’t let people make your decision for you – For a while I got sucked into listening to my friends and family too much. Don’t get me wrong, I value their experience and advice a great deal…but in the end, the decision is yours and only yours to make.

5. Don’t get hung up on an offer you might let go — There is no point in looking back. If you turn down an offer because you think it isn’t for you…you have to move on! Having regrets won’t help you in the long run it will only hurt you. Move on without the regret, there was something about the job you didn’t want. So even if you end up without a job when you graduate, at least you won’t be stuck in a job you didn’t think was right for you.

6. Don’t let graduation freak you out – Don’t make rash decisions just because graduation is around the corner and it feels like everyone else around you has a job! THEY DON’T! The market is so bad right now that I know some people at my school that accepted jobs in the Fall and have had their offers revoked because the company just can’t afford to take on new employees! Many people are in the same boat…don’t think your the only one!

This is some of the advice that I have learned that I hope many of you can use as you move forward into the “real world.” It won’t be easy…but its just another step in your life, and like the past 4 years of college — it will probably go by much faster than you ever imagined!

Also, make sure to check out our college/university groups! Many students that attend the same school as you may have some advice to get you through!

(Image by Cohdra)

Attention soon-to-be college graduates! Enjoy the parties. Post-college will entail a lot of financial sobering-up.

Suddenly it will feel like everyone wants you to pay them. Here are three smart things to do to make sure you pay #1 first and build yourself a solid financial future.

1. Make your savings automatic. Use your online skills to set up automatic drafts from checking into long-term savings. Take it from all of us who didn’t do it. You’ll thank us!

2. Go card-free. Now is the time to build your first “real world” budget. The fastest way to do this is to use cash for all your expenses for a month. This will show you exactly where your money is going. If there’s not enough to go around now is the time to make lifestyle adjustments. You can also use Geezeo’s spending target tools. (Click here to join Geezeo.)

3. Contribute to your 401(k) — even if you have student loan debt. If you’re lucky enough to have a 401(k) associated with your first job make sure to take advantage of it! The money you contribute now will have a longer time to grow. Therefore, it’s the most powerful. If you don’t have a 401(k) option now is a good time to open an IRA. (You can do both!).

Happy graduation!

Related:
Graduation…celebration or another expense??
Graduating and entering “Adult World” — how to manage it
Are college tests testing your wallet?

With graduation just around the corner (for both college and high school graduates…but mine being college), I am realizing that not only is this a celebration, but just another expense to add to mine (or my parents) credit cards!!

I was surpised how quickly all the expenses add up…and how I always thought of graduation as a celebration, not really as a time to spend a lot of money. I suppose high school is a little different, graduation just kind of happens and your parents deal with the money aspect of things. But college is a little bit different, there are the parties, the celebrating at bars, senior week, the drinks…you name it the expenses just keep on coming!

Here are a few things I have realized in the past few weeks:

1. Cost of Cap and Gown — In high school we didn’t have to BUY our cap and gowns…they were given to us on “loan” and the tassle was FREE! Nope…that definately is not the case with college. A basic package of cap, gown, annoucements, and your tassle at Boston University cost $85.00!…what a bummer! When am I EVER going to wear my cap and gown again? I mean come on!

2. Adding a Frame to your Basic Package — The frame for your diplomas were nice, I will give BU that. But I mean come on, over $200 for a frame with the BU crest on it. I thought that was a little bit excessive. I figured I would just get mine framed once I received it.

3. Cost of Dinner and Celebration — This my parents will pay for for the obvious reasons…its my celebration I suppose and they want to be a part of this. But with 7 people attending this dinner, drinks, appetizers, you name it…the price will definately add up!

4. Cost of “Senior Week” — This is fun! And actually, the prices weren’t so bad. Senior week in total probably cost me about $150, but we are doing some really fun things. Martha’s Vineyard trip, Mogegan Sun, Jake Ivory’s (I highly recommend this Piano bar…it’s near Fenway Park and it really is just amazing), and we are also doing a few other trips as well, all at a reasonable cost. But the catch is…NO DRINKS INCLUDED! That kinda puts the cost of these trips up a little bit. Besides our “Champagne Reception”…drinks are not included at any of the other events…we shall see what my bill accumulates to after that week is over.

I think the costs are definately worth it though! This is a once in a lifetime thing. I won’t be graduating from college again…and this achievement is much greater than high school. I just can’t believe 4 years has gone by so fast. I’m sure many of you are stuck in the same predicament…where the heck did the time go? And can’t I just live this lifestyle for a little bit longer!?

haha, really the answer is nope! After you walk across that stage…it really is time for the real world! But don’t worry…”Work Hard, Play Hard” is how I think of it! Don’t look at this as the end of all your fun, its just another stage in life with more fun to come! :o)

(Image by Heather)

This week I turned down my first job offer and I think it was one of the hardest decisions I have ever made. The job was one that I wanted, the pay was good (well…at least for a Marketing major), but the location was all wrong for me at this time in my life.

The job required me to move to Dallas…how do you make a decision when everything else is right but the location is just not for you? I had one week to make up my mind. Do I move all the way across the country and take this job position that I knew I would have liked? Or do I stay here and continue my never-ending job search for another opportunity to come knocking on my door?

When I got the job offer, I cried. That should have been sign #1 to me that I wasn’t ready for this move. But regardless of how unappealing Dallas felt for me, I still wasn’t able to let go of the job offer that quickly. When I thought I had made up my mind, I would think of another reason to go or vice versa…another reason to stay and not take the job. I seemed to be caught in a battle with myself — having completely no idea what to do.

I asked everyone around me for advice…most of the responses I got were, “You really have to make this decision for yourself. Do what is best for you and make sure you have no regrets!” I understood all this, but how do you just do that so easily?! The answer is…YOU DON’T. The decision to not take your first job opportunity is difficult. You don’t want to let go of it because then you are stuck still searching, no idea when the next job will come along. But at the same time, if you take it…the job search is done and you can breathe for a little while!

My brother finally put things into perspective for me. After constantly sending my family e-mails and asking for advice, this is what he said (and possibly this advice can help some of you that are struggling with the same type of decisions):

You have to do what feels right for you really. If it doesn’t feel right to move across the country, then you shouldn’t do it, regardless of the job. It will only backfire on you to be unhappy somewhere and you will only want to come home. The job is one thing, a pretty important thing at that, but it’s not everything. I have no doubt that you will get a job if you don’t take this opportunity.

If it doesn’t feel right to you, in your gut to move, then you shouldn’t do it. You have to be happy and if you like your job, but you are unhappy outside of that, then what’s the point? Conversely, if you hate your job, but you like your life outside of work, you won’t be completely happy either. Nothing is ever perfect, but whatever you do will be the right thing and be sure you make the decision and move forward - you cannot think about “what ifs” and you can’t look back. Everything happens for a reason and if you choose to stay local and continue your job search, then that was the right decision.

I’m not trying to talk you out of taking it, but YOU are the only one that can make the decision and you have to feel comfortable with it. You don’t want to take the job and then regret it everyday until you move. You want to be excited about it, not scared of it.

So, with that said, if taking the job will make you excited - I say go for it. But, if it leaves you sad, politely decline, tell them you love the company and would love an opportunity in the Boston area, but you’re just not ready for that kind of move. And, if you decline, move forward, keeping working hard at your job search and the right job for you will come.

The e-mail left me in tears of course! I knew he was right. I couldn’t accept a job that I would be counting down the days until I had to leave and move to Dallas. He ended the e-mail with a quote from Yoda: “Make the right decision, you will.”

So I made my decision and declined the job. I try not to think about it anymore, I know that there is no turning back and only moving forward from here. I hope this advice from me and my brother may help some other people that are feeling the same job uncertainty and are looking for some answers!! Also, don’t forget to check out our Geezeo career groups…maybe some advice/postings can help you there as well!