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.
Lakewood, NJ 08701
16 Powell Drive
Orange, NJ 07052
Student Loan Rates Are On The
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
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
College Sports And Spending
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.
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.
findings of the study:
- The gap between the "haves" and the "have-nots" in big-time
athletics seemed to grow between 2001 and 2003. The portion of Division I-A
colleges reporting a profit (after removing direct college support from the
equation) rose from 35 percent in 2001 to 40 percent in 2003, though their
average profit declined slightly.
- Furthermore, while the amount of money that the average Division
I-A college spent on women?s sports rose from $4.6 million in 2001 to $5.4
million in 2003, the proportion of the average sports budget that was allocated
to women remained flat at 20 percent. The proportion of budgets going to women
rose slightly in Division I-AA and Division III, but declined across Division
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.
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.
Robert Nahum, CPA,
College Tuition Planners LLC
1650 Lexington Avenue Lakewood,
16 Powell Drive West Orange, NJ 07052
1.866.GO TO CTP