Wednesday, June 18, 2008

July 1 is Day One for student loans

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For many people who must borrow money to access higher education, July 1 is a big day.

On that day, the rates on federal student loans will drop nearly a full percentage point. The government will also free up access to more unsubsidized Stafford loans. And unconsolidated variable rate Stafford Loans will drop to 4.21 percent, more than three percentage points below the current rate of 7.22 percent.

Compared to what college students were getting before, I'd say these developments are enough to put a smile on any student-debt-worry-wrinkled face.

Personally, I was lucky. I locked in my federal student loans at a cool 3.5 percent interest rate back in 2003. But I just missed the start of the time frame for New York State Attorney General Andrew Cuomo's probe into the shared beds of financial aid offices and private student loan companies.

No doubt, this is good progress on the part of our government. Now if only private student loan companies would follow suit...

For me, federal student loans were never the problem. Private loans, on the other hand, nearly cost me my decent credit and played a role in my decision to change jobs a couple of years ago.

After I graduated, my full student loan payment on both the federal and private loans (both sets of which I consolidated) was about $350 - very manageable, because at the time the interest rate on the private loans was about 4.5 percent. Two years later, those interest rates doubled to about 8.5 percent.

I'd gone to college to be a newspaper reporter, knowing full well the money would suck in the beginning, but I didn't care. I was doing what I loved and believed the money would come later. Ready and willing to wait it out, I deferred my student loan payments. Then, the folks at the Student Loan Corp. came calling, and said I could no longer defer my private loans. I suddenly realized I couldn't make the payment on my salary. I tried to compromise and work things out with the company, but they wouldn't budge. So, I found a better-paying job as a communications specialist. In the month or so it took to transition to the new job and pay scale, I couldn't pay the loan. Even though I explained and explained the situation and always paid on time before, rude and nasty collections staffers from the company called relentlessly, one so rude and demeaning she reduced me to tears.

I consider myself somewhat lucky, because I at least enjoy what I do now and I didn't have to make a drastic career change. But realize there are others who had to find a higher salary doing something they hate or have no passion for, all to satisfy the hungry student loan beast and avoid life-ruining credit blemishes.

I hate the fact that I cried in audible earshot of some scumbag collections agent who had her soul taken from her when she signed on to do her job.

Perhaps she could get her soul back if the government did something I think would over time truly boost our economy and society: simply turn all those federal loans into grants.

Let's face it - most middle class families don't make enough, but they still make too much in the eyes of the federal government to qualify for grants or even the maximum amount of student loans allotted. My parents saved and saved for years for my college education and in a matter of two years, it was gone. That's why they took out private loans for me and while I'm forever grateful for the intent, the resulting blow to my wallet is just unnecessary.

But if all the federal loans I took out had been grants, I'd have a lot less debt worry on my hands right now. So would millions of other students. That's the kind of debt shrinkage that would enable newly-minted baccalaureates to (gasp!) save money, buy the stuff they need to start a new job and a new life after college, even purchase real estate. Call me crazy, but those sound an awful lot like economic stimuli.

Not to mention, many students of color or working class students who would otherwise never consider college because of their financial lot in life might finally get the true access to higher education they deserve, creating more diverse workplaces and more equality among classes and races.

If we can spend billions on a war Congress didn't even authorize, why can't we give money to our future leaders to go to college? That's something I'd rather see my tax dollars go to anyway.

So on July 1, I hope college students enjoy the slight lightening of their debt load - and I hope our country's leaders think about just how easy it could be to widen the college road.

Friday, June 13, 2008

Rest in peace, Tim Russert

From now on, something will be missing from my Sundays.

As a journalist, I looked up to him. As a political junkie, I turned to him for information. As a middle class Catholic family man from rough-and-tumble upstate New York, I identified with him.

He spoke at a commencement ceremony at my college, The College of Saint Rose. I sat wide-eyed in the presence of a such a giant in journalism. I remember thinking about how I wanted to a reporter and how I'd be happy if in my career people might respect me half as much as they respected him.

I always admired how he never forgot where he came from, and how that place, and the people in it, permeated every question he asked.

I feel for Luke. I know what it's like to lose your dad, your hero, suddenly and too soon.

Deepest condolences to the Russert family, from someone who Tim Russert, through his extraordinary professional example, inspired to do her best.

Saturday, June 7, 2008

A hidden housing mess: overpriced homes

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We've all heard about "mortgage crisis" this and "credit crunch" that, and it's all blamed on evil speculating lenders who bamboozled hopeful home buyers with deceptive mortgage terms.

Yes, sleazy lenders are to blame. So are stupid home buyers. But I've yet to hear anything about how overblown home prices may have also contributed to the dashing of American dreams.

What's perplexing is that towns and assessment companies perpetuate this ridiculous cycle of inflation under a clever guise of legality.

Let me give you an example.

A friend of mine bought a house last year in our hometown. I'm going to adjust the prices here to protect privacy, but the math will be the same. The original sale price of the home was $300,000. After a price reduction or two, it sold to my friend for $270,000.

Then, the official assessment came from the town. Lo and behold, the home carried a taxable value of $300,000. Now why would anyone want to kick in taxes on an additional $30,000 they didn't even pay? At first, the assessor wouldn't budge. Then, my friend took the assessment to court - and won.

The assessor later apologized for his "error" and informed my friend that it would be corrected immediately.

This scenario brings to light what I view to be a very deceptive practice in towns that take part in "rolling assessments," or property assessments conducted annually.

In the state of New York where I live, towns are "required" to have an equalization rate of 100 percent. (Equalization rates, by the way, compare a home's assessment to it's market value. The lower your town's equalization rates, the more your town's properties don't match up to fair market value). This is to ensure fairness of taxes and fairness of sale price.

But here's how "fair market value" can quickly become unfair: when I was still a fledgling reporter, I did a story on "transplants" - or downstate residents and New York City folk who move upstate to escape the bustling city and its ridiculous home prices. These people are used to paying big bucks for a house, so when they come up here, a super-nice house on a super-nice piece of property still sells for hundreds of thousands of dollars less than what their homes in the city will sell for. What a bargain!

So much of a bargain, in fact, that many will make offers on homes that well exceed the asking price - because they can. One of my future in-laws used to live in Brooklyn. One day, somebody knocked on his door and offered to buy his home. He said no. Then the guy said, "I'll give you double your asking price." SOLD! They took their equity and paid cash for a sprawling $400,000 property in the Hudson River valley. No haggling, no negotiating, no nothing.

Who's to say that property was worth $400,000? Was it assessed properly? Or did they just go by what some guy was willing to pay?

Which brings up the other issue. Towns - particularly those that perform rolling assessments, simply don't have the time, energy or manpower to go to each and every property and REALLY assess it. They try, but often fail. A true assessment should involve a full walk through both the outdoor and indoor aspects of the property. Instead, most assessment companies hired by towns perform "drive-by shootings" - that is, pulling up in front of your house, snapping a picture from the car, and driving away.

How can one capture a true, fair and balanced property assessment within the confines of a digital picture window?

You can't. Which is why that extra $100,000 some big shot offered you for your home will often automatically get tacked on to your property's value - regardless of whether or not it's worth such an increase. Awesome for you, not so awesome for whoever gets suckered into buying your home.

There's a legal term for this practice of assessing houses based on their sale value: it's called "welcome stranger." Technically, it's illegal, but as you might have guessed from my friend's situation, versions of it happen every day.

Don't get me wrong. Assessors really do try. But how can one person possibly get it right all the time, every time?

So be diligent and check your property's value on your town's assessment rolls - especially if they perform assessments annually. This information is available to the public in your town assessor's office. If you're not happy with your assessment, challenge it. Make them come to your home and take a tour. Ensure that fair market value stays fair. Because you wouldn't want to be the guy paying more than you have to either.

Tuesday, June 3, 2008

Middle class women willing to take a beating?

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Do working class women have more self-respect? It appears so, according to one counselor in Mississippi.

The counselor penned a very interesting article in her local community newspaper in which she states that studies show poor women are more likely to seek help to leave a violent relationship.

More impoverished women, she says, are more aware of the social services available for escaping abusive relationships, and do not have stigmas associated with seeking help from these services, basically because they're usually on a list to get a government check somewhere anyway.

Professional women married to white-collar men, on the other hand, will stick around and play punching bag because they fear their powerful husbands might use connections against them. These girls also fear no one will believe them, as well as the threat of being "ostracized from the social community." (Oh, the scandal!)

I don't know about you, but if I wanted to leave a husband who beat me on a regular basis, the opinions of some Gucci-wearing hag who secretly criticizes my outfits at tennis club every week wouldn't exactly influence my decision.

This information makes me wonder if rich people really do value money more than true friendship. If you're hanging out with "women" likely to take joy in gossiping about your unhealthy marital situation, then that's not a "social community." That's a "superficial prison." And if you're willing to bear a concussion or two because you're afraid you'll lose all of your nice things, then that's beyond pathetic.

Perhaps the less you have to lose, the more you have to gain.