February 2008 Archives

Staci

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2008 is a leap year , and today, it's leap day . Apparently, we're now astronomically in synch. Whew, some sort of calendar crisis has been averted!

I don't claim to know much about leap years, but lately I have been thinking about different kinds of leaps: leaps of faith. Not so much in the religious sense, but more in the "take a chance" sense.

We all take these leaps from time to time. We move forward and hope for the best. In fact, it could be argued that every choice you make is a leap of faith, one that sets you on a course that could affect your life's outcome.

Recently, I made a leap of faith — and a rather large one at that. I bought a piece of land, and with a contractor's help, I'm in the process of designing and building a new home. Yikes!

Sure, I worried that it's a crazy thing to do in today's economy, that I wouldn't be able to sell my current home, that I should be waiting until I'm more of a grown-up to take on this type of project.

And then I leapt.

Students, during this exciting time in your lives you're taking leaps of your own, and you may not even know it! The college you decide to attend, the course of study you select, even the way you pay for your education — they're all leaps of faith. You don't know for sure, but you hope that these decisions will pay off in the end — personally, professionally, and financially.

If they don't turn out exactly the way you planned, though, you've still gained something important: life experience on which to draw, and wisdom with which to try again.

What leaps of faith are you taking these days?

Dinna

A couple of weeks ago, our good friend Staci shared a useful resource related to checking accounts and received a comment requesting something similar for credit cards.

Well, look no further!

The Student Guide to Good Credit, Smart Moves Today for College and Beyond has the basics for understanding and building a solid credit history. This short brochure explains why a high credit score is important, offers three easy ways to build good credit, and provides tips on how to avoid fees and finance charges. It also includes online resources and important phone numbers for reference.

FYI, the brochure automatically comes with every new College Credit Card but is helpful for anyone wanting to shore up on basic credit knowledge. Check out the file here on the blog or request it at your local Wells Fargo store!

Staci

In January, I wrote about some colleges reducing tuition costs for families below certain income levels. I thought it was an interesting topic, and it seemed like a rather novel idea at the time, but it didn't generate any discussion.

Two months later, several more universities have followed suit — and not just big, prestigious ones like Stanford  and Brown , but smaller colleges and state schools, too. The Project on Student Debt actually keeps a running list  of schools that are either limiting or eliminating student loans from their financial aid award packages.

Sure, it might put me out of a job if student loans are eliminated altogether, but if these colleges can use their endowments to help low- to middle-income families afford education and avoid debt, I'm all for it. I was fortunate enough to not need to borrow money for college — I can only wish the same for students today.

However, I wonder if prospective college students (and their parents) are paying much attention to these financial aid policy changes — and if they're impacting where students apply for admission. Time will tell...

Staci

What does your online persona say about you?

Let me clarify here, because I'm not talking about your avatar in a virtual world or your online dating profile.

What I mean is this: Would a web search reveal any skeletons in your social networking closet that might impact your future? For example, are you concerned about what college admissions counselors, scholarship search committees, or potential employers might find if they happened upon your MySpace  page?

On occasion I google  myself to find mentions of this blog or, since I serve as a company spokesperson, any news articles referencing Wells Fargo student loans. Sure, this research is necessary for my job — but honestly, I am curious. Who isn't?

So far, I haven't found any surprises (good, bad, or otherwise). I try to be careful — I blog only for work, and for the most part, I keep my Facebook  profile settings private. Even so, in the online world, nothing's really all that private.

If you're a high school student, college student, or a soon-to-be graduate, you probably have a far more active and visible online persona than I do. What precautions are you taking to keep your online self cloaked? Or do you use the internet to highlight your accomplishments and market yourself?

Barbara

Student LoanDown readers: I have a great link to share with you from one of my favorite personal finance bloggers, Trent at The Simple Dollar .

The blog covers a wide range of personal finance topics. Today he wrote an awesome post  about managing your money while in college and touches on making the most out of your education investment. Definitely a good read for the SLD community.

Barbara

By now, you've likely heard a little (or a lot) about the state of the economy — including the Federal Reserve decision to drop several key interest rates.

Have you thought about how these changes will affect your student loans?

We know some Student LoanDown readers have — several of you have been asking great questions through comments and Ask the Expert. Well, ask and you shall receive…

Private loan rate changes
Most private loans have variable rates that are generally based on the Prime Rate  (taken from the Money Rates column of The Wall Street Journal). Some lenders base their rates on other rates like the LIBOR  (London Interbank Offered Rate). If you're not sure what your rate is based on check the terms of your loan or call your lender for more details.

These base rates change with the economic conditions. You can see the historic changes of the Prime Rate here . As those rates change so does your student loan interest rate. When the rate change occurs will vary by lender. Some lenders adjust your rates quarterly (every three months ). Others change on a monthly basis. Again, if you're unsure, your lender is just a call away.

Some bloggers  noticed their rate change after the last time the Federal Reserve cut rates. So check your rate! It may have already changed without you knowing!

Federal loan rate changes
Federal loans are a bit different. For those of you with loans made after July 1, 2006, your rate is fixed and won't change. But loans made before that date are generally variable. However, federal loans aren't based on an interest rate index like the Prime Rate or LIBOR. They are based on a Treasury bill  auction and may change each July.

This means that they aren't directly affected by recent interest rate cuts, but in general they tend to follow the trend . Some industry experts are predicting the rates will drop. Check out the quote from Mark Kantrowitz (of finaid.org)  at the end of this article .

For you December graduates currently in a grace period or for those of you set to graduate this May, possible rate changes could play a large part in your decision to consolidate your loans — or at least when you consolidate.

If your reason to consolidate is to lock in a fixed interest rate, then it could behoove you to wait and see if they lower. If you take the risk, however, know that rates aren't guaranteed to change.

Right now variable interest rate Federal Stafford Loans are 6.62% during in-school, grace period, and deferment and 7.22% during repayment. May graduates will be able to see if the rates change while they're in their grace period. But for you December grads, you could miss the 0.60% difference if you let your grace period expire to wait for the possible rate change. Signs point to the rates lowering, but again, it's not guaranteed (just playing Devil's advocate  for you!).

Dinna

I was talking with a co-worker the other day who was telling me all about his vacation plans this year...how he had planned everything at the end of 2007 and had made all of his flight and hotel arrangements already.

It got me thinking: What do I want to do this year? And is there any place I could visit this spring?

Then it hit me: "Yes, there is!" As I was driving in to work, a commercial came on the radio. The voice had that familiar, friendly accent and hyped up places like Bondi Beach  and the Sydney Opera House . "Now is the perfect time to visit Australia!" the voice said, encouraging me to get info about Qantas flights .

I visited Australia  while in grad school. I really had no money, but a friend of mine worked for an airline and got me a "buddy pass" that allowed me to fly for a steal. Once there, I was also able to stay with my friend's relatives. Unfortunately, because we were flying standby, our trip was short, and I've always vowed to return.

Nowadays, I use frequent flyer miles  to go on vacation. But nothing is ever "free," and I still have to consider the cost of airport taxes & fees, hotel, meals, ground transportation, sightseeing, and of course, local shopping!

So, even though I really want to go, I have to ask myself: Can I afford to go? I could charge everything — I usually use my credit card anyway when I travel because it's safer than cash, adds additional insurance, the exchange rate is usually better, and I get rewards points for every purchase. But can I (or would I) pay it all back when I return?

What would you do? What are some of your vacation planning considerations?

Staci

Did you know that there's a lot more to this February than Black History Month, Ash Wednesday, Valentine's Day, President's Day weekend, and Leap Day ? It's also Financial Aid Awareness Month, which we certainly would be remiss not to acknowledge (being that we're a student loan blog and all)!

In the spirit of awareness, I offer the following tidbits of advice for making the best of financial aid:

1. Save, save, save. Save your birthday money from Great Aunt Millie, your summer job earnings, and your tax return. I know it's hard. But save at least part of it, and sock it away for the biggest investment you'll ever make — your own education.

2. Find all the free money you can. Apply for every scholarship and grant that's applicable to you. Be tenacious — there's money out there for those who are willing to do a little digging. If all else fails, look for spare change on the sidewalk.

3. If you're gonna borrow, borrow a federal student loan first. Federal student loans have the lowest interest rates and the most flexibility for repayment, so you have options when the time comes to pay them back. Take the bit of time and effort it takes to complete the FAFSA (Free Application for Federal Student Aid) and get a federal loan first. Seriously, it's worth it.

4. Only AFTER you have secured federal funding should you borrow a private student loan. Private student loans are based on credit, and they're usually more expensive than federal student loans. You'll probably need a cosigner to get one, too. For some, private loans are necessary — that's why Wells Fargo provides them. But before you borrow, check out all the loan terms very carefully and think about what it'll cost to pay the loan back. (You will have to pay it back.)

5. Borrow only what you really, really need. C'mon, do you really, really need a BMW, a daily $4 latte, or a spring break trip to Cancun? No, you do not. You're in college. Be poor and whiny now so you don't have to be poor and whiny later.

Recently there was a great article in BusinessWeek  that provides some family financial aid strategies and an overview of the student lending landscape. In honor of this special month, check it out to boost your financial aid awareness, or share your own thoughts with the community here!

PS: I actually have a Great Aunt Millie.

Barbara

For many animal lovers it's natural to want a pet of your own once you are able to house and afford one. I've always been a cat person, so it was only a matter of time before I found a feline friend.

I adopted the adorable Bill the cat (her cuteness has been previously displayed on this blog) about a year and a half ago. And what a ride it's been.

Let me preface by saying that I love my cat very much. She's been a fabulous, constantly purring companion during some difficult times, and she's always good for a laugh with her random kookiness .

However, Bill has put an interesting spin on my financials! I knew that getting a cat meant funding trips to the vet, food, litter, etc. However, I did not bargain for the expenses of her multiple "issues."

Soon after I adopted Bill, she started biting and scratching herself. I mean ferocious, violent scratching to the point of losing her fur and breaking the skin. I'll spare you the gore-filled details. At the time, I thought it'd be a trip to the vet and things would be smooth sailing again. Well, a couple vets and multiple rounds of trial and error later, the issues are subdued with medication.

But to be honest, the cause of this is still a little fuzzy. It's likely a combination of allergies and anxiety. At the other end of the spectrum from fuzzy, the additional costs are very clear. Thanks to My Spending Report through Wells Fargo Online® I can see that during 2007, my Pet/Veterinary category totals $788.40. Yeesh!

That grand total includes:

• Declawing to prevent her from physically harming herself

• Limited-diet food  (yummy) since she's allergic to the proteins in most cat food

• Monthly steroid shots to keep allergies at bay

• Daily anti-inflammatory medication

• Some animal hoodies (go ahead, I'd groan, too) so she doesn't bite at her sides

• A pheromone plug-in  to keep her relaxed in her environment

Clearly, Bill is an extreme case of pet expenses blowing up in your face. But the point of my tale is this: Animals are one of those variable expenses. You never know what could happen that could end up costing you a pretty penny. Luckily, I could swing a few extra pet expenses. If your finances aren't that flexible, perhaps you could consider a nice house plant! :)

Have any of your variable expenses (pet or otherwise) ballooned into bills like Bill's?

Staci

A couple of months ago, I finally got a BlackBerry® . I had resisted for a long time, much as I had resisted getting a cell phone (it took me until 2002!). But I spend a fair amount traveling and in meetings, and I was getting tired of hauling my laptop around everywhere. So I relented.

Unfortunately, this poor device and I just aren't very compatible. I know some people are addicted — hence the term "CrackBerry"  — but I've really been struggling with mine. First, I couldn't get the hang of typing with my thumbs (still can't). Then my calendar kept disappearing. Then I had problems synching — and so on.

So I read the 258-page online manual. I called my internal tech support folks. I spent way more time monkeying with the thing than I had time for. What I really wanted was someone (or something) to show me the basics and patiently explain what I needed to know in plain language until I felt comfortable. Is that too much to ask?

I suppose the same thing could be said for anything — technology or otherwise — that seems foreign to us: We all could use a good user guide.

If a checking account is one of those things, I can offer some help. Wells Fargo recently developed a new educational booklet called "Getting Started: Your New Checking Account." It was designed to help customers understand the fundamentals of their Wells Fargo checking accounts. And while this may seem really basic to some, for others who haven't learned from family or friends or been through a financial literacy  program, it's downright necessary.

Even if you think you know all there is to know about checking accounts, I encourage you to take a look. I've had a checking account for more than half my lifetime, and I actually learned a few things! Check out the file here on the blog, or visit your local Wells Fargo store and pick up a copy from a banker. They're available in English, Spanish, and coming soon, multiple Asian languages.

Anyway, that's my advice for the day. While you work on your relationship with your checking account, I'm going to work on my relationship with my BlackBerry. I'm determined to make it work.

Caroline

With one child in college, one in preschool, and another one due any day now, college savings plans are never far from my mind.

I've given some consideration to a 529 Plan , but after looking over some of the details, I'm not so sure. There are a few pros and cons  to consider, but the thing that keeps stopping me is that if the money is not used for education-related expenses, there are heavy penalties to pay.

I certainly will encourage my kids to go to college, and hope that they do. But do I want to pay a penalty if by some chance they don't? It's not that I won't save money for their education — we're certainly investing and saving right now, if not in a college-designated fund — I just wonder if there isn't another more flexible option  that is still a smart choice.

Parents: How are you saving for your child's education? Do you have any concerns about the investment vehicle you've chosen?

Editor's note: There's a new addition to Caroline's family — her son Gus was born on January 25, 2008! Caroline will be on leave from the Student LoanDown for the next few months. Please join us in congratulating her!