[]
 
Your Sponsor
[] 
Robert Nahum
Bob is a Certified Public Accountant and a Certified College Planning Specialist specializing in unique tax and financial, and investment strategies to provide families with affordable solutions for the high cost of education.

[] 

Bob Nahum, CPA,
CFP, CCPS
College Tuition
Planners LLC
1650 Lexington Avenue
Lakewood, NJ 08701
and
16 Powell Drive
West Orange, NJ 07052

866-468-6287
rnahum@aol.com

Student Loan Rates Are On The Rise


College graduates today are enjoying the lowest student-loan interest rates ever on record. However, you must act quickly if you want to lock in those low rates for Stafford or PLUS loans. If you miss the June 30, 2005 deadline for consolidating loans at current rates, you could wind up paying twice as much interest on your debt.


Rates are poised to jump as much as two percentage points this July 1 on variable-rate Stafford loans for students and PLUS loans for parents. Currently, the rate for Stafford borrowers is only 2.77% while in school and during a six-month grace period after graduation, then 3.37% until the loan is repaid. PLUS-loan borrowers currently pay 4.17%. But students and parents who consolidate their loans before the rates rise can secure the current low rates for good. And spring graduates who consolidate will be locking in during their six-month grace period will get the lower grace-period rate (2.77%) rather than the regular repayment rate (3.37%).


How much money might consolidation save you? Consolidate a $20,000 Stafford Loan at 2.88% and you'll pay $110 per month, including about $6,300 in interest over 20 years. A student who misses the boat and consolidates after June 30 and after his or her grace period ends would pay 5.38% if rates rose two percentage points. That would double the interest cost, to about $12,700. A med- or law-school student with $125,000 in debt could see the cost of borrowing rise from about $61,700 in interest to about $127,000.


There's even more benefits if you consolidate with a private lender and take advantage of payment incentives. Private lenders, such as Sallie Mae or Citibank, will cut one-fourth percentage point off your rate if you sign up to have payments automatically debited from a bank account. Furthermore, they'll reduce the rate by another point after 36 on-time payments. So after the third year, you could be paying a mere 1.63% (2.88% - 1.25%). Plus the interest is tax-deductible, cutting the real cost of borrowing even more. You can deduct up to $2,500 of student-loan interest each year, and this write-off is available whether or not you itemize deductions. The right to claim this deduction begins to phase out if your income exceeds ! $50,000 on a single return, or $100,000 on a joint return.


Whether the student is in high school, or college, parents need to realize that a proper loan strategy can yield tremendous savings over the long-term. And since a good loan strategy must be synchronized with any tax, financial aid, or other college planning strategy, it's important that your game plan be initiated as early as possible. If you have a sophomore or junior in high school who is considering a private college that may force you to incur a large amount of debt, please contact our office as soon as possible to discuss potential strategies and opportunities.


College Sports And Spending Habits


Spending by Division I and II athletics programs grew sharply between 2001 and 2003, according to a study released by the National Collegiate Athletic Association (NCAA). So, too did the amount that colleges spent out of their own institutional funds to subsidize the sports programs? bottom lines.


The study found that in Division I-A, which includes universities that play football at the highest level, revenues and expenses both grew at a rate of about 17 percent from 2001 to 2003. The average Division I-A budget in 2003 was $29.4 million and the average operating expenses were $27.2 million. That would appear to create an average ?profit? of $2.2 million ? except that $3 million of the revenues, on average, came from what the report calls institutional support, which it defines as ?direct transfers of college administrative funds.?


While the revenue and expense numbers are not as high in the other NCAA divisions, the deficits, and in some cases the institutional subsidies, are greater.


In Division I-AA, for instance ? colleges that play big-time basketball but compete in football one notch down from the big boys ? the average athletics program spent $7.5 million and took in $7.2 million in revenues in 2003. But $3.4 million of those revenues were provided from "institutional funds", resulting in an average actual deficit of $3.7 million.


Division I-AAA programs, which do not give out athletic scholarships, took in $6.2 million in revenues against $6.5 million in expenses, and with a $3.2 million subsidy from the colleges, accumulated a deficit of $3.5 million.


Among other findings of the study:
Critics of big-time sports look at these growing college subsidies as a runaway train in which athletic funding is leading to the detriment of funding academic achievements and Title IX funding (women?s sports). If you have a sophomore or junior in high school?that may eventually play college sports, we can show you how to market your athlete to the colleges to maximize the chance of receiving an athletic scholarship. Contact our office so that we can help you set up a self-recruiting game plan.

The author of this newsletter is Robert Nahum.

If you have any questions about the information contained in this newsletter, or any questions about college funding in general, please contact your Sponsor. rnahum@aol.com
Home Page About CTP Q & A Events Newsletter RX Link
College Calulator College Tools College Resources Further Info Site Map


Robert Nahum, CPA, CFP, CCPS
College Tuition Planners LLC
1650 Lexington Avenue Lakewood, NJ 08701
16 Powell Drive West Orange, NJ 07052
(Toll Free)1.866-468-6287
1.866.GO TO CTP
rnahum@aol.com