Wednesday, December 08, 2010

Forecast: The State of Student Loans and Financial Aid

My focus has always been on the markets and more macro areas of finance. But I’m working on a new series featuring the “ins and outs” of student loans. My daughter is currently applying to colleges, and as a father I wanted to learn more about the state of student loans from the perspective of a seasoned financial consultant.

So here’s part 1 of that series.

Online Programs, Student Financing
Continuing your education is a critical part of financial success in today’s economic climate. Jobs are competitive and often, applicants with a college degree and little experience have a definitive edge over experienced, seasoned potential job candidates with no degree. Obtaining a college education, however, can be expensive, and many students turn to a variety of cost saving measures to get them on the path to their degree.

Quite often, online programs and trade-oriented colleges can be the best choices for the non-traditional student because of the flexibility they can offer as well as the focus on career-oriented training and education. While many online programs tend to be profit driven and cannot offer all the amenities of traditional degree coursework, there are stalwart programs out there that can provide excellent educational opportunities. Sanford-Brown, for example, has long been a useful resource for workers who want to further their education, and the school offers many practical, career driven degree programs (like pharmacy technician and nursing, two careers in high demand), that can give students the edge they’re seeking in their current jobs, or the ability to switch career paths.

Funding Your Education in 2011

Student loans have long been the first line of defense for those who need a little help funding secondary education. While federal loan programs have been the primary source of borrowed funds for many years, private loan companies do exist and have become more prevalent in recent years as more and more people are looking for loan options due to the economy. Most financial experts (including two I talked to last week), however, still recommend using federal loan programs whenever possible due to the program’s commitment to offering low interest rates and flexible repayment options.

While qualification through a private company may be a slightly easier process (because there are not as many income guidelines and regulations), the federal student loan program offers clear advantages over the private loan market. Federal student loans typically do not begin to accumulate interest charges until the student has graduates or leaves school.

What’s more, federal student loan programs have deferral programs if a borrower meets with unexpected financial hardship during the loan repayment term. Private loan companies tend to be slightly more rigid about repayment and typically cannot offer financing terms and interest rates to rival the federal student aid program.

Stay tuned for more on the world of student loans. It’s an interesting realm ☺.

Monday, December 06, 2010

2011 Forecast: Rates on Insurance

Caught up in the holiday spirit, it’s easy to spend hundreds of dollars on gifts. But amid the spending frenzy is easy to overlook future costs, including those unassociated with shopping, such as insurance costs. Predictions for next year’s insurance costs forecast what insurance rates are likely to do. Consumers can use these forecasts to get an idea of what they’ll be spending next year on insurance.

Car Insurance
With the advent of pay-as-you go plans in California coming next February, intermittent car drivers will save tons. So far, AAA and State Farm introduced the plans for customers who seldom get behind the wheel.

The concept is simple. Drivers report their mileage to the insurance company and agents check how far drivers actually drove. AAA plans to implement a device that will report the mileage, thus speeding up the process.

Calculations for car insurance aren’t simple. Consumers that shop hard online at aggregators touting a free insurance quote or similar comparison offerings can find differences in ultimate costs due to things as specific as ZIP code.

The rates are also based on driver age, history and region. Frequency of use (mileage) does not have an affect, as some consumers have questioned recently. Drivers who don’t often use their cars pay the same rate as somebody who commutes daily. The pay-as-you-go plan will lower rates for some drivers, and if the plans go nationwide rates will fall even more.

Homeowner’s Insurance
Chances are these rates will rise in 2011. In fact, property insurance rates in general are expected to spike. A report from Moody’s last month indicated that little demand caused insurance providers to increase rates. Some states already saw rates increase from different insurers. All State and State Farm announced rate increases.

Life Insurance

Moody’s report drew similar conclusions about all casualty insurance. Back in April, Conning Research and Consulting completed a Property-Casualty Industry Forecast, which anticipated a spike in property and casualty insurance rates in 2011. Moody and Conning noted that a number of catastrophes contributed to expected rate hikes next year.

Overall, 2011 could be a revolutionary year for the car insurance industry, but a pricier year for homeowners and customers with life insurance plans.