Monthly Archives: July 2016

Tips for Families Seeking Help Paying for College

Tips for Families Seeking Help Paying for College

According to Sallie Mae, high school seniors are “all in” on continuing their education at a higher level. The education financial company says 83% of college students and parents “strongly agreed that higher education is an investment in the future, college is needed now more than ever (70%), and the path to earning more money (69%).”

Paying for college has also become something of a balancing act. Sallie Mae says students pay for 30% of college bills while their parents cover 37%, with scholarships, grants and direct college aid covering the rest.So college expenses are something parents and high school seniors should handle together.”Students and parents should weigh the cost and affordability of college as a family,” says Charlie Rocha, senior vice president at Sallie Mae. “There are a number of options available, and it’s important that they do their homework together in order to best realize their return on the educational investment.”Unfortunately, not many families take the ‘team’ approach. Sallie Mae says only 25% of families shared decision-making responsibilities on college financing, and only 15% collaborated on where the student will ultimately go to college.But not only should students and families act together, they should act soon. May 1 is only a few weeks away, and that’s the date most colleges and universities want an answer from accepted applicants on whether they’ll be hitting campus come Labor Day weekend.When high school seniors get their collegiate acceptance letters, they’ll also likely see a financial aid letter spelling out financial aid eligibility and the type, amount and source of aid for the upcoming year. With that letter in hand, students and families will need to create a financial battle plan — not just for the freshman year, but for all four years in college.

Here’s Sallie Mae’s advice on how to get the most financial aid possible:
  • Get your “Shopping Sheet.” Families should log on and download the U.S. Department of Education’s college financing “shopping sheet.” More than 600 U.S. colleges participate in the program, which essentially covers all the college financing options available to incoming freshman.
  • Ask about the Pell Grant.If a family is struggling financially, the U.S government offers Pell Grants of up to $5,645 annually.
  • Hammer away at scholarship opportunities. Sallie Mae advises maxing out on all the scholarship applications possible. To get started, visit the company’sScholarship Search Web page.
  • Keep in touch with your collegiate aid office.If you lose your job or otherwise suffer a loss of income, get in touch with your college of choice’s financial aid office right away. Often a change in income levels can earn you more financial aid — but you have to ask for it.
  • Take an “installment” approach.Sallie Mae advises families who can’t afford a lump sum payment to pursue an installment payment plan. The company says such plans are available at hundreds of colleges and universities.

Tips When Looking for Car Loans

Tips When Looking for Car Loans

If you’re stuck driving a gas-guzzling SUV, you may find yourself eyeing the fuel-efficient Toyota ( TM) Prius, or maybe the Mercedes-Benz ( DAI) Smart Car.

You’re not alone.The price of oil has passed the $120 mark, and many industry analysts believe that consumers will soon be paying $4 a gallon for gas. Many Americans are considering shifting away from big gas-guzzlers to smaller cars that won’t have as big an impact on their wallets.The economic slowdown has hurt car sales, with sales of trucks and SUVs suffering much worse than sales of more efficient small cars. General Motors ( GM) reported in April that its first-quarter truck deliveries were down 15% in 2007 compared to a 6% drop in car deliveries.Chrysler reported a similar trend in April, with a 22% decline in truck sales, year to date, although their car sales were up 6% over the same period.Before you decide to swap your gas-guzzler for a small car to reduce your fuel bills, consider how the trade will affect your finances in other ways.If you bought a new car just a few years ago, you may be stuck with an upside-down loan — that is, you may owe more money than your car is worth in resale.Also, consider how much you’ll get for your old vehicle. Less fuel-efficient cars and trucks are commanding lower prices on the second-hand market than they did before gas prices soared.”Year over year in April, there’s been a 17.5% decline in the price for SUVs,” says Tom Webb, chief economist for Manheim, an automotive auction company. “Compact cars, on the other hand, are up 2% — this even though the overall market is down 5%.”

If you do decide that a new car is right for you, you may want to consider financing the purchase with an auto loan. To get you started, here are some of the lowest rates available on car loans across the nation (all loans are based on $25,000 of financing):

  • In Miami, Fla., the Navy Federal Credit Union is offering a 36-month, 3.5% rate loan with 100% financing.
  • In Atlanta, Ga., the Bank of America, National Association is offering 36-month and 60-month loans at 4.34% with 90% financing.
  • In Houston, Texas, the Members Choice Credit Union is offering a 36-month, 4.25% rate loan with 100% financing.
  • In Detroit, Mich., the EDS Credit Union is offering a 36-month, 4.74% rate loan with 100% financing.
  • In Chicago, Ill., the Suburban Bank and Trust is offering 36-month and 48-month loans at 4.99% with 80% financing.
  • In Dallas, Texas, the Resource One Credit Union is offering a 36-month, 4.85% rate loan with 100% financing.


Things You Must Know Before the Market Opens

Things You Must Know Before the Market Opens

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Here are five things you must know for Monday, Sept. 19:

1. — U.S. stock futures were pointing to a higher start for Wall Street on Monday asoil prices rallied after Venezuelan President Nicolas Maduro said a deal between OPEC and non-OPEC countries to curb output was close.

Maduro said officials held a long meeting with Iranian President Hassan Rouhani, who over the weekend was quoted as saying he supports any move to stabilize the oil market.

West Texas intermediate crude oil rose 1.6% to $43.72 a barrel in early trading Monday.

European stocks gained Monday following Asian markets higher.

The economic calendar in the U.S. Monday includes the NAHB Housing Market Index for September at 10 a.m. EDT, and Tuesday begins a two-day meeting of theFederal Reserve, where the central bank is forecast to keep interest rates steady.

2. — Canada’s autoworkers’ union Unifor and General Motors (GM) made little progress resolving the key issue of new investment in contract talks late on Sunday, the union’s president told Reuters.

The strike deadline is 11:59 p.m. on Monday.

The automaker and the union representing its Canadian manufacturing workers have been divided over union demands that GM commit to building new vehicle models at its Oshawa, Ontario, plant, Reuters reported.

3. — Indonesia plans to pursue Alphabet’s (GOOGL) Google for five years of back taxes, and Google could face a bill of more than $400 million for 2015 alone if it is found to have avoided tax payments, a senior tax official told Reuters.

The tax office believes that PT Google Indonesia paid less than 0.1% of the total income and value-added taxes it owed last year, Reuters reported.

Most of the revenue generated in the country is booked at Google’s Asia Pacific headquarters in Singapore. Google Asia Pacific declined to be audited in June, prompting the tax office to escalate the case into a criminal one, Muhammad Hanif, head of the tax office’s special cases branch, told Reuters.

4. — French drugs giant Sanofi (SNY) filed a lawsuit against Merck’s (MRK) international unit alleging infringement of 10 patents.

In the filing in the U.S. district court of Delaware, Sanofi said the suit was triggered by a notification received from Merck in early August, in which Merck stated that it had filed a New Drug Application with the Food and Drug Administration for an insulin glargine drug product.

5. — Microsoft (MSFT) plans to shut down the London office of Skype, potentially cutting up to 400 jobs, the Financial Times reported.

Microsoft said it has “made the decision to unify some engineering positions, potentially putting at risk a number of globally focused Skype and Yammer roles,” and will be entering into a consultation process to help those affected by the job cuts.

Skype was originally founded in London in 2003 and was acquired by Microsoft in 2011 for $8.5 billion.

Former employees said the move was’t surprising given that several Skype executives have been quietly departing over the past three years. “I know it’s natural to integrate, but Skype is a shell of the company it once was,” said a former employee, who wished to remain unnamed, the Financial Times reported.


Deutsche Bank is Boosting Capital Ideas

Deutsche Bank is Boosting Capital Ideas

Deutsche Bank  (DB) , which buttressed its balance sheet last year by securitizing at least $11 billion of loans, is employing the tactic again as the lender grapples with rising investor concern about its capital adequacy.

The move would reduce risks and improve the largest German lender’s financial picture as it negotiates with U.S. regulators who proposed a $14 billion settlement of probes into mortgage-backed securities, people with knowledge of the matter said.

The deal, under the same program the bank used to securitize $5.5 billion in loans in June 2015 but for a smaller amount, is set to close next week, in time for inclusion in the German lender’s third-quarter results, said the people, who asked not to be identified because the transaction is private. Capital is the buffer of extra assets that banks are required to keep to protect depositors from losses and prevent the need for government bailouts.

While Deutsche Bank says in its annual report that such efforts are a part of routine risk-management operations, next week’s deal would be the first such transaction this year, one person said, in an indication that the lender is deploying all available means to bolster capital shy of a new equity offering. The overall size of the new deal and the amount of capital relief that would come from it couldn’t be determined. A Deutsche Bank spokeswoman declined to comment.

Deutsche Bank’s credit-default swaps — a type of financial instrument used to speculate on the likelihood of a company’s default — are trading at more than twice the average for global banks. Last week, Deutsche Bank’s CDS price surged 8.4% in a single day after the lender confirmed the size of the mortgage settlement sought by the U.S. Department of Justice.

Deutsche said it expected to reach a settlement with the U.S. for a “materially lower” amount. Still, Credit Suisse said Friday that the German lender could need an additional 7 billion euros of capital ($7.8 billion) to meet expected regulatory requirements. The bank is likely to post a loss in 2017 and may have to cut its dividend, Credit Suisse analyst Jon Peace wrote in a report. He rated the stock “underperform.”

“Weak profits and difficulties in disposing assets are slowing the capital build,” Peace wrote. “Although an organic rebuild is still possible, a potential capital raise should not be ruled out.”

Deutsche Bank’s new deal is structured as a synthetic collateralized loan obligation, or CLO — a type of financial instrument that uses derivatives to transfer the risk of losses to investors, the people said. Synthetic CLOs allow lenders to retain relationships with their customers while working like insurance policies to protect against defaults. The deals provide an alternative to a straight sale of loans, where the customer relationship transfers to the buyer.

Selling synthetic CLOs allows lenders to reclassify risky loans as higher-quality exposures, since the bank would only incur losses under a dire economic scenario. Once the loans are reclassified as less risky, the bank gets to reduce the amount of capital that must be held against them. The tradeoff is that much of the expected income stream from the loans goes instead to the investors, who stand to collect attractive coupon payments sometimes in excess of nine percentage points over benchmark money-market rates.

Other European banks including Stockholm-based Nordea and London-based Standard Chartered have used similar deals to manage risk and free up capital, which can then be applied toward new loans. Last month, Nordea securitized 8.4 billion euros of corporate and small-business loans through a synthetic CLO. In that deal, investors agreed to invest in notes that would be first to suffer losses if defaults on the loans escalate, according to a Nordea statement.

While synthetic CLOs are often sold to a small group of investors who specialize in them, the Nordea notes were bought by the Dutch pension fund PGGM, Bloombergreported last week.

In December, Deutsche Bank used a synthetic CLO to reduce its risks on a $3.5 billion portfolio of trade-finance receivables, according to a statement at the time.

The new deal is being issued under an existing program known as Craft, which is designed to accommodate a mix of corporate loans from the U.S. and elsewhere, the people with knowledge of the matter said. The last transaction under the program was in June 2015 and involved the sale of $385 million of notes that effectively insulated the lender from the first losses on a $5.5 billion collateral pool, according to Bloomberg data.

A previous deal, in March of that year, involved the sale of $139.8 million in notes that protected the lender from losses on $2.35 billion in loans.