Maybe you’ve thought about lending your niece money for college. Imagine her excitement – and how good you will feel - when she doesn’t have to grovel to some bank for a loan, which might reject her any way because she doesn’t have much of a credit history. (ed note: These are Eileen's sage words. I'm just posting this for her. -- DD)

Maybe then it crosses your mind: “What if she doesn’t pay me back?” How will you ask her for your money? Or, what if you do ask, and she still doesn’t pay and stops taking your calls? Will every Thanksgiving family gathering be spoiled forever?

Maybe you conclude you all would be better off if you didn’t even broach the idea of a loan.

But it doesn’t have to be that way. Enter GreenNote, the latest peer-to-peer lending site and one that deals strictly with student loans.

Peer-to-peer sites match people who need money with friends or strangers who are willing to lend small amounts, usually at least $50, in return for interest income. I wrote last month about how such sites are beginning to focus more on student loans, besides the usual borrowing to pay off credit cards or open a business. The story is posted below.

Continue reading "Moola for College" »

Posted by Dan Thanh Dang at 6:45 AM | Permalink | Comments (0)
                    

Morningstar, the investment research company, has published its annual report on the best and worst 529 college savings plans.

Among the top five: the College Savings Plan of Maryland managed by Baltimore’s T. Rowe Price Associates. The Maryland plan was one of Morningstar’s five favorites last year, too.

Here’s what Morningstar says about the plan this time:

“T. Rowe Price runs the College Savings Plan of Maryland. Residents get a big break because they can deduct up to $2,500 of their annual contributions for each beneficiary from their state income taxes, and contributions in excess of $2,500 can be deducted in any of the following 10 years. The plan looks equally good on the fee front. Total annual asset-based fees are well below industry norm, ranging from 0.68% to 0.97%. (Investors also pay a $25 annual account fee.) Better still is the fact that this plan is packed with top-quality funds that cover the market spectrum. So while the taxes advantages make this plan particularly attractive for residents, we consider it a topnotch option for nonresidents too."

Morningstar’s other top picks are the Virginia Education Saving Trust and Virginia College America, Illinois Bright Start College Saving Program and Colorado Scholars Choice College Saving Program. That last one is run by Baltimore’s Legg Mason.

The five worst plans, according to Morningstar:

— Ohio Putnam College Advantage. Poor fund performance and high manager turnover.

— Mississippi TIAA-CREF Affordable College Savings Program and Mississippi TIAA-CREF Affordable College Savings Advisor Program. High fees and limited investment options.

— New York 529 College Savings Program. Reasonably priced, but lacks diversification.

— Nebraska AIM College Savings Plan. Too expensive.

Read the full report on Morningstar’s site.

Posted by Eileen Ambrose at 2:00 PM | Permalink | Comments (0)
                    

If you’ve been procrastinating about signing up for the Maryland Prepaid College Trust, you’re running out of time.

You have all day tomorrow to sign up before the latest enrollment season ends.

The prepaid plan allows you to pay for college in advance. The price of the contracts are tied to the cost of tuition and fees at Maryland public colleges. If your child ends up not attending a Maryland school, you can always use the cash at a private or out-of-state college.

Applications must be postmarked by Friday. But you also can complete the form online up until literally the last minute tomorrow.

You don’t have to buy four years of school, either. You can prepay one semester at a university. Or, buy one or two years at a community college. Or, split the difference, buying two years at a community college and two years at a university.

Payments can be made in lump sum or on installment plan.

Posted by Eileen Ambrose at 7:56 AM | Permalink | Comments (1)
                    

Not to be outsmarted by Harvard, Yale University today says it’s slashing the cost of college by more than half for families with incomes under $120,000.

Make $120,000 to $200,000 and the college bill will be trimmed by a third or more. Quite a discount when you consider a year at New Haven now costs about $48,000.

But the Yale tuition sale didn’t stop there. Yale says it is eliminating the need for students to take out loans and making changes so more families qualify for aid. And it will no longer count the first $200,000 of family assets in its needs formula.

Yale says this is the biggest boost to financial aid spending in its history. The school’s annual aid budget will rise by about $24 million to more than $80 million.

These changes are in place for students arriving on campus in the fall.

No doubt about it, higher education is on sale these days.

Harvard a month ago said it was overhauling its financial aid policy to attract more middle- and upper-middle-income students. At Harvard, families with incomes under $180,000 won’t pay more than 10 percent of their income for college. Some won’t pay anything at all. Harvard also is getting rid of student loans in its undergraduate aid packages.

Also last month, Duke University and the California Institute of Technology said they plan to eliminate loans for lower- and middle-income students.

More schools are expected to announce similar programs in the weeks ahead.

Of course, you still have to have the grades to get into these schools. But it’s about time they started cutting families a break on price. The cost of four years at a top school is more than most parents have saved for retirement. And retirement is expected to last 8 times longer than college.

But before we start giving out a college cheer, consider this sobering analysis by the Project on Student Debt’s executive director Robert Shireman.

“While Yale will cost significantly less for many students, it’s important for families to realize that a no-loan policy is not a no-cost policy, and that they may still end up borrowing in order to cover costs,” he says.

Plus: “Now that Yale and Harvard have increased financial aid for a wider range of incomes, there is a danger that other colleges will move their more limited financial aid dollars from lower income families toward higher income families in order to compete for top students,” Shireman says.

Let’s hope that schools don’t leave lower-income families behind.

Check out the Project on Student Debt for a list of schools that promise to reduce or eliminate loans for students.

Posted by Eileen Ambrose at 6:29 PM | Permalink | Comments (0)