March 2010
Financial Education Newsletter
For students, created by students.
Volume 4
Obama Proposes Student Loan Changes
By Eric Niederhelman
In his recent State of the Union address, President Barack Obama hit on something that first appeared in the United States budget proposal over a year ago; he is looking to end the involvement of private banks in student loan-origination.
Currently, banks active in the student loan market receive subsidy payments, which Obama would like to divert toward increasing grants to low-income students if his proposals are eventually passed. The plan would make the Department of Education the sole provider of government backed-loans, but the role of private banks would not be completely eliminated as they would still have a role in servicing the loans after they are made by the government.
According to the 2011 Budget, the proposed plan would result in $43 billion in savings over the next ten years, but the concurrent increase in Pell Grants, the main federal program for making college affordable for poorer students, would cost over $68 billion over the next decade.
Goldman Angers Shareholders
By Kyle Weiland
In a surprise move, the Board of Governor’s for the esteemed Goldman Sachs investment bank rejected the motion from shareholders to investigate the compensation packages given out to the top executives. In a time marked by extreme consumer defiance, the Goldman executives were awarded billions of dollars to their executives, shortly after the US Government bailed out the industry. Goldman spokesperson Lucas van Praag defended the policy by claiming, “[w]hen the firm does well, our people do well as when the firm does less well, our people do less well.”
After recording a record profit in 2009, which should be highly commended considering the economic climate, the board initially shelled out just under $20 billion in compensation to top executives; although shortly after they conceded to shareholder dissent and capped the reward at $16.2 billion. The sheer size of Goldman’s investment portfolio should be highlighted by noting that on 131 days in 2009, the firm earned $100 million in trading profits.
Simple Ways to Save Money
By Brandon York
Americans in general had forgotten the importance of saving over the last couple decades. They merely tapped into profitable stocks or relied on home equity to pull them through tough times. When this bubble of false stability broke in 2008 many people realized that their habits of saving bogus.
So in preparing for the next economic downturn I want to help my fellow students. These tips will also help with the financial struggles that hinder everyday college life.
1. Conserve energy. In the winter I recommend turning down your thermostat down to 65 degrees during the day and around 60 degrees at night. We all have blankets, so bundle up in them and save hundreds in gas expenses.
2. Quit driving! You live on a college campus and can easily walk to your destination or borrow a bike. Oil prices are bound to spike in the near future and will only add to your monthly expenses.
3. Learn to Cook. By merely packing your lunch or making it each day you could save upwards of $1250 a year. If you could cook for your other meals a day this would save additional money.
4. Credit. As a college student I recommend getting a credit card to begin building credit for your future. This will become very advantageous in the future when you decide apply for a mortgage or car loan. With this being said I would recommend paying off the maximum balance in order to avoid interest. If this is not possible I would recommend paying with cash or checks.
Proposed Credit Check Bill
By Kyle Weiland
In this time of remarkable job uncertainty, 16 states have proposed a bill to ban credit checks on job applicants. With a struggling economy comes the inherent problem of bankruptcy, something millions of Americans have suffered through in these tumultuous times. After a failed business venture, people have to declare bankruptcy and as a result their credit score suffers tremendously. With the current law, employers are allowed to run a credit report as a final check on the applicant; if the score shows up sub-par, the applicant is denied.
Good news for local businesses, among the 16 states in favor of the new legislation are Illinois, Ohio, Michigan, and Wisconsin. The underlying point behind the proposal is the notion that how good you are with your money has no bearing on your ability to perform your job. The bill covers all industries and is expected to be on the ballots of these states in the not-too-distant future. It is a last-ditch effort by these struggling states to save their economies, a daring move which many states are expected to adopt.
Created by: Students for Good Credit—www.fmscu.org
Questions? Comments? – please e-mail our VP of Financial Education Brandon York– yorkbt@muohio.edu
