COSTS
Continued from page 4
Wednesday, Education Secretary
Margaret Spellings planned to
propose a new form that shortens
the FAFSA from more than 100
questions to 26.
COLLEGE PRICES
A recent survey by the College
Savings Foundation found that one
in four parents want the federal
government to cap college costs.
Neither candidate plans anything
like that, or even smaller steps
such as forcing schools to spend
more from their endowments
to hold down prices. That's a
relief to colleges, which resent
interference from Washington.
The reasons why college prices
are rising are complicated, and
largely beyond the purview of
the White House. Washington
provides $B6 billion annually in
grants, loans and tax benefits to
support students, but it's state
budgets that mostly determine
public colleges' list prices.
Critics say colleges share the
blame, for failing to curtail their
own spending. Families also bear
some responsibility: While they
gripe about rising prices, in the
end, many still choose more costly
schools. That could change in a
prolonged economic downturn.
Michael Dannenberg, senior
fellow with the New America
Foundation and a former adviser
to Sen. Edward Kennedy, D-
Mass., says Obama's proposals
take the problem of college
affordability more seriously than
McCain's. And he calls the tax
credit a significant innovation.
"McCain's message when it
comes to increased tuition is,
`You're on your own,'" said
Dannenberg, who has not worked
for Obama's campaign. "Obama's
message to families is, 'We'll
give you more financial aid to
help you with college costs, but
your kids are going to have to
help others.'"
But Richard Vedder, an Ohio
University professor affiliated
with the conservative American
Enterprise Institute, believes more
spending on federal aid such
as what Obama proposes will
just encourage colleges to charge
more. (However, as a member
of Education Secretary Margaret
Spellings' higher education
commission he signed on to
recommendations that included
more money for Pell Grants).
"I think this is just going to fuel
the academics race rather than
restrict it," Vedder said. Spending
more on aid means "treating the
symptoms and not the disease."
Fed, in emergency move,
Bar JEANNINE AVERSA
AP ECONOMICS WRrrEat
WASHINGTON (AP) _
Frantically trying to stop the
bleeding on Wall Street, the
Federal Reserve took a first-time
step Tuesday to get cash directly
to businesses and hinted that
interest rates could come down
soon. Stocks continued their free
fall anyway and hit new five-year
lows.
The central bank invoked
emergency powers to lend money
to companies outside the financial
sector and buy up mounds of
commercial paper, the short-term
debt that firms use to pay for
everyday expenses like salaries
and supplies.
The Fed, which has only loaned
money to banks before, made
the move as the gravest financial
crisis in decades wore on and
concern spread around the world.
In a speech to the National
Association for Business
Economics, Fed Chairman Ben
Bernanke delivered a strong
signal interest rates may need to
be cut. And he warned the country
could be stuck in the economic
doldrums for some time.
"The outlook for economic
growth has worsened," Bernanke
said. "The heightened financial
turmoil that we have experienced
of late may well lengthen
the period of weak economic
performance."
The gloomy assessment appeared
to open the door wider to an
interest rate cut on or before the
Fed convenes again Oct. 28. The
Fed's key interest rate now stands
DEBT: College students struggling
with loan and credit cards
Continued from page 1
"I use my credit card at the
begging of every semester to buy
my books and school supplies,
which is always well over $5OO
per semester," said junior Renee
Balliet.
While there is more and more
research being conducted to
explore why student debt loads
are exploding, evidence indicates
that the majority of today's debt
is the result of the many resources
available, students today have a
much higher standard of living.
With the development of new
technology, travel, apartment
style dorm living, and eating out
have all become "necessities"
instead of luxuries.
There is little room for trail and
FITWI'77IIWYM
at 2 percent.
Wall Street turned its back. The
Dow Jones industrials lost 508
points, more than 5 percent, to
close at 9,447, the lowest since
Sept. 30, 2003. The Standard &
Poor's 500, a broader stock itidex,
closed below 1,000 for the first
time since that same day.
President Bush again sought to
strike a reassuring tone and said
the nation would make it through
an economy blighted by job losses,
record foreclosures and shriveled
retirement savings. Congress' top
budget analyst estimated Tuesday
that Americans' retirement plans
have lost as much as $2 trillion in
15 months.
"Have faith, this economy is
going to recover over time,"
the president said in a speech in
Virginia. "I wish I could snap my
fingers and make what happened
stop. But that's not the way it
works."
Bush reached out to European
leaders earlier Tuesday to urge
coordination on efforts to solve
the crisis. The White House said
Bush was open to the idea of a
summit.
The contagion has spread
overseas. Britain's chief financial
regulator was readying a statement
to make before markets opened
Wednesday, and the BBC reported
that the British government was
poised to announce a rescue
package for the banking system
there.
Concerns are mounting that a
global recession is developing,
and pressure is growing on the
U.S. government to do something
beyond the $7OO billion financial
error when it comes to credit
cards and taking out loans.
Mistakes made in college can
haunt students up to 25 years
after graduation. Credit scores
can have a major impact in
a graduates life, whether its
getting a job of their choice,
getting qualified for a house or
apartment, or getting approved
for something important.
Student debt is a major problem
across the country that cannot
be solved as easily as one would
like. Most students cannot afford
school without taking out a student
loan. Reading through small
print before signing any papers
and coming up with a payment
plan that will suit ones lifestyle,
can be the answer to managing
student loans successf u lly.
will lend to companies
bailout package that Bush signed
into law Friday.
To that end, the Fed announced
it would begin buying companies'
short-term debt. The powers were
bestowed during the Depression
as part of the Federal Reserve
Act.
The government's bailout
package is aimed at thawing
lending by buying bad mortgage
related debt off the books of
troubled financial institutions.
The idea is that the banks would
then be in a better position to lend
and get the economy moving.
Commercial paper borrowing
usually ranges from overnight
to less than a week. But in the
current climate of mistrust, the
market has dried up considerably.
The action makes the Fed
a crucial source of credit for
nonfinancial businesses in
addition to commercial banks
and investment firms and also
exposes it to risk because so much
of the debt would not be backed
by collateral.
Credit markets, clenched up for
weeks now, relaxed somewhat
after the Fed's move.
The Fed said it was creating a
new entity to buy two types of
short-term debt, known as three
month unsecured and asset-backed
commercial paper, directly from
eligible companies. It hopes to
have the program up and running
The Capital Times is hiring
- Have fun working on a team that reaches out to
an audience of approximately 4,000 students.
- Meet people, make friends and expand your net
work as well as future opportunities.
- Take on assignments that complement your
schedule and workload.
- Publish your work for family, friends, professors
and future employers.
- Show on your resume you can be responsible,
meet deadlines and work on a team.
- Take advantage of access only journalists get to
cover assignments.
Turn to page 2 for open
positions and job descriptions.
Oct. 8 2008
soon, Fed officials said.
Fed officials said they would buy
as much of the debt as necessary to
get the market functioning again
but refused to say how much that
might be. They noted that around
$1.3 trillion worth of commercial
paper would qualify.
The Treasury Department,
which worked with the Fed on
the program, said the action was
"necessary to prevent substantial
disruptions to the financial
markets and the economy."
The Treasury will provide
money to the Federal Reserve
Bank of New York to support the
new program, the Fed said. The
money would be separate from
the $7OO billion financial bailout
package.
The Fed said it planned to stop
buying the short-term debt on
April 30 but may extend the
program.
There was $1.6 trillion in
outstanding commercial paper,
seasonally adjusted, on the market
as of last week, the most recent
data from the Fed. The market
has shrunk from $2.2 trillion last
summer.
Associated Press writers Madlen
Read and Tim Paradis in New
York and Ben Feller in Washington
contributed to this report.
Why join?