Y u r M®ney and Y u “ASK THE BROKEN” with Gary R. Miles Is your outlook bullish or bearish for the market during Q 3 & Q 4? Bearish. It's a natural cycle...it's slowing down. Do you think Alan Greenspan is doing a good job? Not too bad... Yes, he is doing an excellent job. Do you think we'll have an economic recession? A: No. We won't have over two quarters slow down. Productivity per individual will increase . Q: Can you tell us some of your favorite stock picks for the rest of the year? A: Lucent GE PNC Bank Erie Insurance Biomira Adelphia Any other points we should know? Everything will slow down for a year..it's a cycle. It will come back..not like it did before, however. The market is finding its own true value right down. Q: A: Mr. Miles graduated from Behrend with an Ac counting major in 1973. He now clears through US. Clearing and is an arbitrator with the Na tional Association of Security Dealers (NASD). He currently works as an Investment Broker and can be contacted at (814) 725 - 6446. From Wall Street, the closing market figures for 03/21/2001: DJIA: 9487.00 down 233.76 (- 2.40%) NASDAQ: 1830.23 down 27.21 (- 1.46%) S&P 500: 1122.14 down 11.37 (- 1.46%) BOND: ioi 7ne down 5/32 (current rate is 5.27%) Interest Rate: 5% Consumer Price Index (CPI): Up 0.3% Unemployment Rate: 4.2% All about student loans This is a 2 part article about all you ever wanted to know on stu dent loans, right from which loan you should get, to tips on paying back your loan and how you can save hundreds of interest payment dollars on these loans. Much of the information in this ar taken from www. cnnfn.com& www.freschno. com. As with any newspaper article, this is not meant to be used as your loan adviser or to supplement your finan cial adviser. This article is just to give you a basic idea on student loans. All information in this article was accu rate as of August 14,1996. If you are interested in taking out a student loan, contact your local bank or credit union. In an August 1996 Education Daily article entitled :”Education Loan Programs,” Rebecca S. Weiner stated: “the average college under graduate leaves school $lO,OOO in debt, an increase of 15 percent from last year, says the nation’s largest stu dent loan guarantee agency. The In dianapolis-based USA Group at tributes the increase to higher college costs, expanded loan eligibility and the growing amount of student aid offered through loans rather than grants.” Here are the most basic types of stu- dent loans For students with demonstrated need. Includes subsidized, unsubsidized, and direct student nt Loans f< ; ederal For parents with good credit his tory, demonstrated need not neces sary. Borrow up to the total cost of education minus any student aid awarded, per child. Loans: Also known as “supplemental” or “alternative.” Ideal for families that cannot get any or enough aid to meet their full need. The Federal Stafford Loan Pro gram (formerly called the Guaran teed Student Loan Program) permits students with demonstrated need to borrow money for educational ex penses from private sources such as banks, credit unions, savings and loan associations, and education or ganizations. In some states, a public agency and/or a college can act as a lender. Subsidized Federal Stafford Loans Federal Reserve lowers key interest rates by William Neikirk March 21, 2001 Chicago Tribune WASHINGTON - Amid a Wall Street clamor for bolder action to stimulate a sluggish economy, the Federal Reserve opted for a more moderate course today in deciding to reduce short-term interest rates by one-half percentage point for the third time this year. Yet the nation's central bank, headed by Chairman Alan Greenspan, sent a strong signal it would slice in terest rates again if it saw "substan tial risks" in the form of lingering weakness in sales and production. "In these circusmtances, when the economic situation could be evolving rapidly, the Federal Reserve will need to monitor developments closely," the Fed said in a statement. Analysts take these words as signaling another pos sible interest rate cut well before its next meeting on May 15. Disappointment in the stock mar ket was evident by the way the major From the desk of the Money Page Editor Are you a motivated writer? Do you take keen interest in Finance, Economics, or anything with business related affairs? Would you like to see your name and your lurticjes in the future issues of the Behrend Beaconl If you answer is yes,to any of the questions above, Weafe looking for keen, energetic people like you to join the the Money Page team. % 1 ■.■/ :. Please email the Moneyjkige Editor at axs42B@psu.edu for further consideration. Thank you forreadhig ttuslMoney Page and have a very productive semester. 1 ' Amortya Sinha . , Money Page Editor 2000 - 2001 have lower interest rates than most commercially available loans except Perkins Loans. The government pays the interest while the student is en rolled. For new borrowers, the inter est rate is variable, based on the 91- day Treasury-bill (T-bill) rate plus 3.1 percent, capped at 8.25 percent. Repayment on both interest and prin cipal is deferred until six months af ter a student graduates or leaves school. In most states, a state gov ernment guaranty agency (or a pri vate organization authorized by the state government) insures the loans. In those states where there is no guar anty agency, the federal government insures them, in which case they are called Federal Insured Student Loans. Most states require Federal Stafford Loan borrowers to be full time students. First year students may borrow up to $2,625 a year, and upperclass students may borrow larger amounts annually, to a maxi mum of $23,000 for dependent un dergraduates ($46,000 for indepen dent graduates). If you borrow money under the Stafford Loan Pro gram, you are charged an origination fee or service charge of 3 percent. Your guaranty agency may also charge you an insurance premium of up to 1 percent. This amount is sub tracted from the amount of your loan money before you receive payment. Stafford Loans are insured against the student’s death or total disabil- "The average college undergraduate leaves school $lO,OOO in debt, an increase of 15 percent from last year, says the nation’s largest student loan guarantee agency. The Indianapolis-based USA Group attributes the increase to higher college costs, expanded loan eligibility and the growing amount of student aid offered through loans rather than grants.” ity, but there are no provisions for cancellation of any part of a loan for other reasons. Under certain circum stances (such as full-time study or economic hardship), repayment can be deferred temporarily. The sched ule for repayment is worked out be tween the student and the lender; the borrower usually has between five and 10 years to repay, with the amount of monthly payments and the length of the repayment period de pending on the total amount bor rowed. idized F Loans: indices plunged, with the Dow Jones industrials dropping 238 points. But the Fed made it clear it is still concerned about a possible recession, saying its monetary policy was tilted toward treating "conditions that may generate economic weakness in the near future." The Fed’s policymaking arm, the Federal Open Market Committee, re duced the federal funds rate - the in terest rate commercial banks charge each other for overnight lending - from 5.5 percent to 5 percent. To make this happen, it will pump more money into the economy, which in turn will lower other short-term interest rates, such as the prime lending rate. As a result, there will be a quick decline in many consumer interest rates. Automobile financing and home equity loan rates will be cheaper. Mortgage rates also could fall, al though the Fed has no direct control over long-term rates. Some analysts said the central bank would have to push interest rates down by 0.75 to 1 percentage point Financial Outlook Amortya Sinha money pat»4‘ editor Unsubsidized Stafford Loans are intended for use by students '-< V ; (.f -who do not qualify for a Fed- /jjtVV / eral Stafford Loan and/or who - need additional funds. The Kyis , } amounts, interest rates, and terms are generally the same as for subsidized Federal Stafford Student Loans, with a couple of important differences. Re payment begins when the loan is dis bursed instead of when the student graduates or leaves school; the bor rowers may opt to postpone pay ments until leaving school, but inter est begins to accrue immediately. When given a choice between a SUBSIDIZED loan and an UNSUBSIDIZED loan, always choose the subsidized loan. The fact that you do NOT have to pay back the interest that accumulated on a subsidized loan while you were in school can result in thousands of dol lars saved. With UNSUBSIDIZED loans, if you can afford to do so, arrange to -Education Daily, August 14, 1996 by Rebecca S. Weiner, Education Loan Programs make monthly or quarterly payments on the accrued interest while you are in school. You will save a lot of money over the long run by doing so. Also, your monthly payments upon leaving school will generally be lower. Direct gram (FDSLP): Some students can borrow subsi dized and unsubsidized Federal Stafford Loans from the federal gov ernment through a new Federal Di rect Student Loan Program (FDSLP). If the college you attend is partici pating in the FDSLP, the financial aid office will tell you how to apply for before the economy begins to turn around. "The Fed is behind the curve," said Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thomp son, a Chicago investment banking firm. Stan Shipley, economist at Merrill Lynch in New York, agreed. He said the markets had been expecting a 0.75 percentage point cut, and naturally there was a sharp stock plunge after the Fed made its move. At the same time, Shipley said he expected another interest-rate cut before the May 15 meeting. "This is a good, safe, middle-of-the road action," said Brookings Institu tion economist Barry Bosworth. While many Wall Street analysts were pushing for a 0.75 percentage point decrease, he said that the bolder move "sounds a little panicky" and might have been interpreted as a bailout of Wall Street. The White House declined to com ment on the action, although President Bush continued to express his concern about the state of the economy. The these loans. (Parents of students en rolled at participating institutions will also be able to borrow Federal PLUS Loans under FDSLP.) The interest rates, maxi mums, and other terms and conditions are the same as a Federal Stafford and PLUS Loan. The Federal PLUS Loan Program al lows parents to borrow up to the total cost of education minus any student aid awarded, per child. (There is no longer an annual limit or aggregate total.) The interest rate on a Federal PLUS Loan is variable, based on the 52-week T-bill rate plus 3.1 percent, and is capped at 9 per cent. Monthly repayments begin within 60 days of disbursement although some lenders may pennit borrowers to make interest-only payments while the child is still enrolled. Federal PLUS loans are made without regard to financial need, but borrowers must demonstrate that they have a good credit history. Because re payment must begin within 60 days. Fed eral PLUS loans are primarily assistance in meeting the cash-flow problems caused by college bills. Some parents borrow under the Federal PLUS program to meet all or part of the expected family contri bution, while others borrow to make up the difference between costs anti their con tribution plus available financial aid. Privately sponsored and insured loans are ideal for families that cannot get any or enough aid to meet their full need. These supplemental education loans have more favorable interest rates and/or other special features than other consumer bor rowing options. Eligibility generally re lates more to demonstrated creditworthi ness than demonstrated financial need, and parents rather than students are gen erally the borrowers under such programs (although creditworthy students may be eligible as well). A few private supple mental loan programs permit students and parents to borrow jointly. The terms and conditions of each of these and other supplemental loan programs differ con siderably. Prospective borrowers should “shop” for the loan that best meets their needs. nt Loan Pro president once again called on Con gress to approve his tax cut bill. Sen. Tom Harkin (D-lowa), one of the most persistent Federal Reserve crit ics on Capitol Hill, said he was dis appointed that the central bank moved by only 0.5 percentage point. "In the past, Alan Greenspan has talked about the 'wealth effect' of a rising stock mrket causing excessive spending and perhaps creating pres sures that would accelerate inflation," the senator said. "Now, we have the opposite impact, the 'poor effect. " Some analysts site the wealth ef fect, the rise in value of stock portfo lios, as one of the major factors in the economic boom of the last few years. Economsits disagree over how much economic growth occurs from a stock supported sense of well being, but Bosworth said it is clear there is a positive impact on consumer spend ing. / j ■ :nt Loans for Undergraduate isored & Insured Loan;
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