From My Inbox

(thanks Gaping Void)
On Sat, Aug 22, 2009 at 12:51 PM, W. wrote:
Hi Anya,

I haven't even finished your piece, but I think it's great, interesting topic, good info, and well written. I have a question, I feel is important so I hope you know; Why did "the college tuition rise more than any other good or service since 1990"?
What are the main factors that led to this huge cost in such a short time?
Please let me know or where you found that statistic. Thanks
Sincerely,
W.


Thank you for writing.
I am working on a book with the working title "Hacking Education" and I will address this question in an entire chapter. There are many different explanations; the combination of government subsidies, the secondary loan market, and cost shifting from states to the federal government are the top three. Imagine if people could take out a low-interest mortgage from the federal government to pay for their routine health care costs and you'd have pretty much the same situation, with hospitals charging even more than they do now to take advantage of that federal loan money, which was in turn sliced and diced and resold as derivatives.

The source for that fact is the American Institute of Economic Research. I realize people may find it amazing.

All the best,
Anya

BlogTalkRadio tonight at 7pm

Anya Kamenetz: Hacking Education (Higher Education in the Digital Age)

You can catch me live at 7pm tonight talking to the wonderful Dr. Hope May, director of the Ethics Center at Central Michigan University in Mt. Pleasant, Michigan, and her delightful students. I met these folks on a speaking engagement last year. This is a wonderfully meta moment as I will be talking about the incorporation of technology into higher education, on a college-student-produced podcast.

Future of Higher Ed: Edupunks + Open Ed

My new article is out in Fast Company's September issue: "How Web-Savvy* Edupunks* Are Transforming* American* Higher Education*."

To annotate, if I may:
"Web-savvy" is of course, a distasteful term. Pls read something like "Internetty."
"Edupunks", and entrepreneurs, and investors, and open-education advocates, and educational technologists employed by universities large and small...with varying agendas.
"Transforming" Some seek to supplant it. Some to tinker with it. Some to destroy it.
"American" global, even more so.
"Higher Education." Learning, workforce preparation and accreditation.

In the Future, The Cost of Education Will Be Zero

Article on Mashable, a social media website, gives a good overview of many of the same innovations in higher education I cover in my new book...Open CourseWare, Flat World Knowledge, University of the People

One of the commenters raises a question I've been mulling over. "I would like to see innovations that problem-solve around issues of FULL access to higher education (and quality k-12 education for that matter) for low-income communities in the US and around the world. This includes opportunities for learning that necessitate physical learning communities that dominant groups will surely continue to build for themselves... I fear that those with the resources to take these innovations to scale will focus their energies around notions of campus-free learning to the detriment of those whose only economical option might be such incomplete learning opportunities, thus dangerously perpetuating a tiered system anyway."

I think in any society you can imagine, there is going to be some inequality and the school system is going to reflect that. What distinguishes the current round of innovations in open education, from what I've seen, is an unusual amount of cross-institutional collaboration from Ivy League colleges to community colleges, and internationally, too.

Also, campus-free learning doesn't have to be seen as incomplete, but complementary to a course of lifelong learning, seeking out learning communities for oneself and incorporating one's life experience as well.

No File, No Future

This story will make your blood boil: In several cases, corrupt Chinese officials have stolen the manila folders of exemplary young, often poor students, which contain their permanent records of test scores and other official documents, and sold them for thousands of dollars. Without the documents, the students, who have slaved and sacrificed everything to achieve a greater place in society, are doomed to low-wage work. Questions raised by the story:

1) What are the consequences of basing people's life chances on a series of tests?
2)Is this an extreme version of the flawed American meritocracy, or does the rigidity of the no-second-chances system make it something else altogether?
3) Why the hell don't they have electronic records, or at least copies of these documents?

Today's Scary Debt Chart

Via Henry Blodget:

The world's governments are borrowing $5 TRillion this year. $3 TRillion will be borrowed by the US.
Where will the money come from? And how will we pay it back?

Where the money comes from gets into a weird existential question about the nature of money. Basically sovereign governments print more money. This causes the value of the money to go down = inflation.
Inflation is one basic way we will "pay" the debt back. A second way is for future taxpayers to pay more taxes to service the debt and the interest. In this sense we are borrowing from ourselves and future generations. If households and companies buy more Treasury bonds, this is a way for these private entities to lend more money to the government, but it also means that these entities are spending and investing less in other things, which keeps a lid on economic growth.

Save Our Jobs, Plead Student Loan Companies

Sallie Mae and 31 other student lenders and allied groups have come up with a counterproposal to the switch to direct lending. Surprisingly, they are agreeing to the elimination of all subsidies for making the loans--this means they are agreeing that the business of actually lending money to students themselves is too risky or otherwise undesirable for private sector lenders. Instead, they want to collect fees to service the loans for which the federal government will provide the capital. Not so incidentally, their plan "...would preserve 35,000 jobs that are supported by the current system."

As student-aid expert Sandy Baum told me today, "At this point in time it seems pretty clear that private sources are not actually funding these loans, so it doesn't make sense to pay them to fund the loans.
We should do whatever is most efficient, saves money, and works for students." Whether that means a single, government-administered and serviced program or a complicated nationwide network of public and private entities using additional taxpayer money to produce the image of "competition"...well, you can ask the health care reformers.

Local NYC Debt Help!

Heard about this from a new acquaintance on the 4th of July. She writes:

"The CLARO clinic. Every Thursday from 2:30-4:30 and 6-8 PM (Kings County Civil Ct, 141 Livingston St rm 403), volunteer attorneys assist those in need of consumer debt legal assistance by filling out the proper court documents etc. It's run by Sidney Cherubin, the supervising attorney of the Brooklyn Bar Association's Volunteer Lawyer's Project"

Is the Bachelor's Degree Obsolete?

Wick Sloane is a business guy who got obsessed with fixing our education system. He actually volunteered for the front lines, taking a job teaching at Bunker Hill Community College. If you go here you can read his entertaining column and download his enlightening and provocative pamphlet on the future of higher education, modeled after Tom Paine's Common Sense.

In other news, some private student loan borrowers who got ripped off by a flight school are suing. Alan Collinge has collected a million stories like these. Vocational schools (beauty school, truck driving school, culinary school) + private student loans = trouble.

"You'll Never Be A Lawyer," Says Sallie Mae (Mwah ah ah)

This guy has absolutely no luck, and his case is sure to cause a deserved outcry.

Robert Bowman grew up in foster care, worked his way through community college, college and law school, and survived two accidents, on an ATV and a Jet Ski, the former of which nearly cost him a leg. Along the way he took out 32 separate student loans, both federal and private, which because of the medical deferments (and because of his private loans going into collection) ballooned from $270,000 to $435,000 over a period of four years.

Now the NYC bar is refusing to admit him because his loans are so crazy huge! But of course unless he can practice law he has little hope of ever paying them back.

Anyone who thinks that a crushing burden of debt is a sane way to offer opportunities to the disadvantaged, speak up.

College Doesn't Pay?

Not so sure about the NYPost's math here, but it's interesting that the conventional wisdom may be shifting...

"College degrees bring higher income, but at today's cost they can't make up the savings they consume and the debt they add early in the life of a typical student. While Ernie was busy earning, Bill got stuck under his bill."

What Counts

Yesterday I attended the funeral of my mother's oldest sister, Anna Lisa Crone. My aunt was a blonde beauty and a warm wit who spoke eight or nine languages fluently, and left behind her upbringing in rural North Carolina to marry and live among Russian intellectuals. She got her PhD from Harvard and taught in the Slavic department at the University of Chicago for nearly 30 years. At her memorial service, held in an ivy-shrouded Gothic chapel on the campus of the Divinity School, distraught colleagues and students stood up one after the other and bore witness to her achievements as a friend, scholar, mentor and teacher. My mother, who gave the eulogy, repeated that my aunt's essential engagement with life was as an educator even when she was a little girl, drilling her baby sister in Latin conjugations for fun.
Although she contended with sexism at the beginning of her career, my aunt survived to be lauded nationally and internationally for her contributions to the study of Russian letters and even more so, to the community of scholars who loved these 18th, 19th and 20th century writers--Derzhavin, Tsvetayeva, Turgenev--as much as she did.

My aunt was a specialist. She was an expert in a concentrated area of the humanities with no immediate economic payoff, the type of department that is most likely to be targeted for cuts in an era of scarcity like today's. Her life's work was not interdisciplinary or innovative when it came to technology or a million other buzzwords. She imparted her wisdom as a teacher the old-fashioned way, through time and intense attention, face to face.

I'm working on a book about the future of higher education: cost, access, productivity, specific learning outcomes, and many other values that can be measured. In honor of my aunt's memory, and of my parents, who are both lifelong academics as well, I will be working hard to keep in mind the values of education that cannot be measured.

Community Colleges Get Some Respect

Obama's main man Rahm Emanuel hinted at a big announcement that's coming from the administration soon to get 5 million extra students through community college in the next 10 years. Mainly the new funding will go toward vocational programs, likely through the reauth of the Workforce Reinvestment Act.

Obama's administration has been unusually respectful of the role of community colleges. I had the pleasure of interviewing Martha Kanter last month at Foothill-De Anza Community College in Los Altos, CA where she is the chancellor. She is the Undersecretary of Education-nominee --the first person with a community college background to be tapped for such a high position in the Department of Education.

I've said it before, I'll say it again: community colleges are the big, important, unsung heroes of the higher ed system in the US. They educate half of high school graduates, 11.5 million students in all.
Their enrollment is going up as the economy and their funding is going down. CCSF in San Francisco is having to cancel 800 classes for the fall unless they can find private donors to sponsor them.

Others have expressed concerns that expanding the role of community colleges, particularly with an emphasis on vocational training, will lead to a further stratification of our higher education system by class. Ideally, you don't want poor kids--solely due to income, not aptitude or interest--tracked into institutions with fewer resources overall, weaker liberal arts programs, and no original research. Conversely, middle class and rich kids who attend the four-year privates and publics may be overpaying for useless perks and filler and missing out on economically sound, reality-based vocational skills. ( I went to Yale: one journalism course, zero in personal finance. More would have been useful.)

I think the answer is to break down barriers among institutions to allow disaggregation of the various benefits of higher education, sharing of best practices and access to the best knowledge and research available, for everyone.

Cuomo Decides What to Do With Student Loan Blood Money: Lame

So a couple of years ago, NY Att'y General Andrew Cuomo pursued this huge crackdown on student lenders and college financial aid officers for improper business relationships and high-pressure marketing tactics. Total settlement payments collected: $13 million.

New York State is finally announcing what he's going to do with the cash: (1) create a "Web-based, live-operator staffed student loan center" to help students and parents choose the best loan options and minimize loan debt, and (2) produce a campaign of public service announcements about financing a college education, with an emphasis on avoiding loan debt.

Ok, another source of independent, easily accessible information for navigating the byzantine financial aid system is not a bad idea. Perhaps the Project on Student Debt could expand its excellent efforts along these lines into call-center model.

But PSAs? Really? Do students or families need to see TV commercials about the evils of loans?

America's Biggest Personal Debt Items

At Cnbc.com, in ascending order: Payday loans, small business loans, farm loans, car loans, tax debt (unpaid taxes), home equity lines of credit, and of course student loans (now at $583 billion).

Update :Good point! Medical debt, which is huge, is not included on this list b/c it's "not reliably tracked."

Advice For The Young And Jobless

NYT blog coverage of an event at the Century Foundation which I moderated yesterday...
My takehome messages from the event:

1) The job market is really terrible for everyone right now, but no one is better equipped to compete than young college grads.
2) The long-term outlook is much better than the short-term outlook.
3) The real opportunities lie in helping others (both people in your own social network, who are your richest resource to find work and vice versa, as well as actual job openings in education, health care, nonprofits and social services.)
4) What this country really needs is a labor movement to improve the quality of all jobs.

Hear Me on the Takeaway Talking Foreclosures, Health Care

Great show. I always marvel at live radio and how calm everyone stays under pressure. Another guest, a woman who almost lost her home, was supposed to call in but they couldn't reach her, so it was just John Hockenberry & me for 10 minutes.

How Much Student Debt is Too Much?

I have an answer on the New York Times' Room for Debate blog.

Podcast on Young People and Credit Unions

Private College President: Please, Save Us From Our Own Wasteful Ways!

“If we’re going to change our ways, we’re really going to need to be pushed,” Mr. Diver said, referring to colleges generally. “It’s not going to well up from within.”

Next Crisis for Business: Consumer Credit

From The Big Picture:






From Harvard Business Review:
(Ratio of household debt to earnings.)

So the average American household OWES 20% of their assets, 28% of their net worth, and 130% of what they earn in an average year. That includes mortgages, student loans, auto loans, and credit card debt--everything.

This bubble--everything but mortgages-- actually has yet to pop, and when it does, all kinds of businesses will be affected, according to a great article by William Jarvis and Ian MacMillan in the HBR.

That's because most of the American economy depends on consumer spending. 68% of the entire economy, to be exact, up from 63% in the 1950s.

People are furiously trying to get out from under this debt. Savings rates have bounced from -0.5% to almost 6% in scarcely a year. Until they pay it off, the US economy can't recover. And after they pay it off, it's hard to see how we can go back to the spending rates the economy depended on before.

5 Ways To Fix Colleges

So glad to see the Times staying on this topic.

"AMERICAN education was once the best in the world. But today, our private and public universities are losing their competitive edge to foreign institutions, they are losing the advertising wars to for-profit colleges and they are losing control over their own admissions because of an ill-conceived ranking system. With the recession causing big state budget cuts, the situation in higher education has turned critical. Here are a few radical ideas to improve matters."

Compared to the previous Op-Ed on the topic they ran, "End The University as We Know It," this one is a lot more practical and down to earth, but less provocative and memorable.

Opening the books on accreditation is a great suggestion. An extra year of compulsory schooling is interesting, but maybe too one-size-fits-all. I'm not sure that I agree that college should pay for huge mass-marketing campaigns though.
The two pieces taken together encompass a dichotomy in the way we tend to think about the purpose of higher education. One side is economic development and extending opportunity to the disadvantage. The other side is the advancement of knowledge, the liberal arts, and innovation.

What's Good for GM

"It's hard not to see GM's bankruptcy as a signal moment in a larger history. If mighty GM can fail, cannot also the United States? And the answer is, absolutely." The company's stark decline is "a rebuff of the notion of exceptionalism," notes Neil. "Any organization that fails to sufficiently safeguard its means of self-correction and reform, that forsakes long-term investment for short-term gain, that piles up debt year after year, will eventually fail, no matter how grand its history or noble its purpose.""

(Via Slate)

What Happened To My Loan Forgiveness Program?

My two best friends from college are pursuing careers as a public school principal and a public interest lawyer. Both are relying on loan forgiveness programs.
Now these programs, which were supposed to encourage people to enter essential public service occupations, are imperiled by the economy.

Loan forgiveness programs across the country , whether sponsored by states or private organizations, are reneging on millions of dollars in promises and leaving young workers in the lurch. Ron Lieber writes, in an important scoop,
"There are no guarantees that financing for the loan forgiveness programs will survive the next state legislative session (or that the economy will improve enough for them to find other ways of financing the forgiveness). We found this so disturbing that we decided to call up every single entity, state or federal, that we could find that offered loan forgiveness programs. Then, we asked them point-blank if they would like to offer an absolute promise to borrowers or potential borrowers that the loan forgiveness programs would not go away while the borrowers were still using them." The answer, often, was no. You can visit the New York Times website where they are building a database of the fates of various programs nationwide.

There is no way this can stand. It just isn't feasible, long term, to have people incur tens of thousands of dollars in debt to pursue basic middle class jobs.

A Moment of Clarity On Student Loans and the Bailout

Increasingly it looks like the combination of a credit crisis and Democratic leadership will do away with the FFEL (the lender-based student loan program that is more costly for taxpayers), saving up to $94 billion over 10 years that could be used for the Pell Grant. Even Sallie Mae is sorta playing ball.

But in attacking the FFEL program, the Department of Education has committed a gaffe (defined as "a politician accidentally telling the truth.")

"Education Department leaders repeatedly describe the guaranteed loan program as being "on life support," which strikes some loan industry officials as hypocritical since the White House boasts in many other settings that its efforts to shore up the financial industry have been hugely successful."

Let's not kid ourselves. The financial system as a whole IS on life support thanks to a free flowing IV drip of federal dollars, which ultimately swell the national debt that our grandchildren will be paying back. That includes the student loan industry, the mortgage industry, and the credit card industry.
I defer to those with greater expertise who say that this life support project is necessary in a broader sense; but for student loans, if a government department is in a position to take it over at less expense to taxpayers, let's do it.

Our Hero, Elizabeth Warren

Thanks, James Scurlock (the Morgan Spurlock of debt) who wrote a great piece about why Elizabeth Warren is so awesome. She gets what the real problem is: the financial system was profiting on the backs of American families. We're not going to be able to fix it or prop it up as long as people can't pay off their credit card debt. In fact several rounds of defaults are still looming.

"We can't have a modern economy without solvent banks, but we can't have solvent banks or a functioning economy without solvent families." That such a notion remains controversial is almost mind-numbing."

And that Ms. Warren would be attacked and berated for it by a usually incredibly smart and savvy financial journalist on a podcast, Planet Money, that I listen to every week is kinda bewildering. What I heard NPR's Adam Davidson say last week is that Ms. Warren is improperly imposing her "out of the mainstream" views on a process, the TARP, that is supposed to be led by sober "elder statesmen" (yes, he did say statesMEN--unfortunate choice of phrase). But her ideas should not be out of the mainstream. They are the new mainstream. She belongs to a select group of economic observers who warned that a day of debt reckoning was coming--not with scary voodoo or black swan hocus pocus but in plain, sober, easy-to-understand terms--"the problem is as much a credit crisis as a slide in conditions for average American families."

The Two-Income Trap should be required reading for Tim Geithner and crew.

NACE Can't Sugarcoat: Job Market for New Grads Sucks

You can usually rely on the National Association of Colleges and Employers for some happy talk about how this year is the "best ever" for employment for new grads.

Not in 2009.

"NACE’s 2009 Student Survey shows that just 19.7 percent of 2009 graduates who applied for a job actually have one. In comparison, 51 percent of those graduating in 2007 and 26 percent of those graduating in 2008 who had applied for a job had one in hand by the time of graduation."

Not only have fewer found jobs, fewer are even looking for work. And, interestingly, you don't see too many going to grad school, either.
What's the plan, guys? Move to Norway?

chart via Planet Money

The Trouble With Suze

Generally, I think my fellow Yahoo! Finance Expert gives pretty solid financial advice. Sure, she's compromised somewhat by her endorsements like MyFICO.com, but she seems to genuinely care about helping people, the opposite of an irresponsible clown like Jim Cramer.

However, after reading her profile in the New York Times Magazine, I realized that I think her priorities are totally screwed up. She seems to equate financial security with being rich.
I mean, maybe this is obvious, since she wrote a book called "The Courage To Be Rich." But really, that's BS.

If we learned anything from the past year's fiscal insanity, it's that financial security, financial integrity, and financial freedom have nothing to do with having a ton of money. You have financial security if you are able to cover your basic expenses and save for the future. You have financial integrity if you're not fronting by buying a bunch of crap you can't afford while neglecting your future. And financial freedom, for life, means the ability to live well within your means. They are relational values, not absolutes.

Ok, you might argue that "basic expenses" requires a certain dollar value per year, but I think it's all contextual. You could live on the beach in Goa for $10,000 a year, and as long as you manage to play enough guitar to clear $11,000 in tips, presto, you have financial freedom.

This was the part of the story I found the most galling:
"She has been reluctant to work on school curricula on personal finance, because she says students can’t learn empowerment from people who aren’t empowered, and teachers, she says, are too underpaid ever to have any real self-worth."

Seriously?? Suze is suggesting that people who go into teaching aren't empowered and don't value themselves because they're too big of losers not to become a stockbroker or a TV personality like she did? Teachers, who do the most important job in our society, have no self worth because they're underpaid? Ok, I might agree that they're underpaid, but in point of fact, in most places in the US they make a solid middle class living, with security and benefits that are unheard-of in most careers. Teaching is an enviable career to a huge chunk of the American public. This is incredibly out of touch.

Suze's right about one thing: young people shouldn't be learning about personal finance from her.

Young People Cutting Back More In Recession

The Pew Research Center takes a look at the impact of the recession on various age groups. Not surprisingly, folks my parents' age are the hardest hit since they've lost so much of their nest eggs. Older, retired people are feeling the least stress since they hopefully already had most of their finances squared away. Young adults had very little money to lose in the stock market, but they're cutting back more on spending. Which is a good thing.

Amazing Piece By Design Legend Tim Brown

From FastCompany.com, titled "Creating a Post-Crisis Economy: Moving Beyond Consumption

"Whether it is reputations created through brands, relationships created through services, ideas created through knowledge, or access created through networks, many more forms of value are now created in our modern information society. And yet, our economy does not measure those in any meaningful way."

Important Article: End Universities As We Know Them

"If American higher education is to thrive in the 21st century, colleges and universities, like Wall Street and Detroit, must be rigorously regulated and completely restructured."

It's so interesting that this is written by a religion professor. He must be a brave guy.
See also:

Graduate School In the Humanities--Just Don't Go

The Capital Is Personal

By me, via Reality Sandwich:
" to make amends in the wake of the financial crisis, the path is toward healing the separation between our "economics" and our politics, our morality, our friendships, our earth, our family, and our spirituality."

Optimism - Redefined

"But I prefer the optimistic view, which is that this recession will force us all to rethink every aspect of our society – from the way we run the financial system to the way we consume to the way we raise our children."

Does H&R Block Do Well By Doing Badly?

Cross-posted from FastCompany.com

Fast Company likes to cover businesses that do well by doing good. But sometimes the opposite is equally true. Earlier this year, the nation's leading tax-preparing company paid $4.85 million to settle a class-action lawsuit over its "refund anticipation loans"--high interest, high-fee cash advances of consumer's own money that California's attorney general, along with many others, said were deceptively marketed. H&R Block is still selling these loans, only with the effective APR lowered to 36 percent from the insane heights (500%?!) previously seen. The list of consumer complaints goes on and on--an overpriced IRA product, hidden fees and charges, employee identity theft. And to top it all off, just yesterday, they were ordered to pay $2 million to a software contractor in a fraud and contract fight.

Yet despite all these black eyes, and despite the strong emergence of do-it-yourself online alternatives like TurboTax, H&R Block is going gangbusters in the final sprint of tax season. They're doing twice as well as the Dow Jones over the past year, and their revenues are up this tax season as individuals and businesses cope with a tsunami of tax complications: foreclosures, unemployment claims, and billions of brand-new tax credits and incentives found in Obama's stimulus package. Tax preparers are leasing newly vacant storefronts to cope with the growth.

This is a company that demands you turn over all your financial and personal information for the year. it's hard to think of a business model that depends more on trust. So how long can H&R Block go on brushing off the bad press?

Well, everyone has to do their taxes. And most people would rather not think about them. H&R Block is fast, they have a ubiquitous, easy-to-recognize brand, and best of all--they have the ability to offer money to everyone who comes in the door. Sure, it's the customer's own money, but that doesn't matter. As long as there's a group of Americans--possibly less educated or less digitally savvy--who prefer not to spend time thinking about managing their money, retail tax preparers will probably continue to thrive.

I'll be talking about H&R Block and tax time on WNYC's Financial 411 Podcast today, you can listen here:

Don't Get Your Free Credit Report from FreeCreditReport.com

Quarterlife Crisis Canada Style

I hear great things about Toronto but apparently young people get depressed there too.

Kamenetz says “Debt and lower income can affect your choice of jobs. It can take longer to move out of your parents’ house or stop accepting those cheques and become fully independent. And many young people find themselves asking the question: ‘Why haven’t I made more progress?’ It makes people feel like failures when really there are larger trends at work.”

I'm only 28, by the way!

The Crisis of College Affordability

Great story -- written by a current student at U Michigan!--on how bloating tuition + recession is threatening to widen the class divide for younger members of this generation--even dividing older and younger siblings. If we don't fix this millions of people will have reduced prospects for the rest of their lives.

"The longer this crisis continues, the more our four-year public and private colleges are likely to be transformed (in the words of Richard Vedder, director of the Center for College Affordability and Productivity) into "gated communities of higher education" and engines of inequality. "

More Top College Spots for Rich People

Facing fallen endowments and needier students, many colleges are looking more favorably on wealthier applicants as they make their admissions decisions this year.

They're using a few different tricks so they can still pretend to be "need blind": admitting full-tuition payers from waiting lists, or admitting more rich international students. They're profiling kids: "many of these colleges say they are more inclined to accept students who do not apply for aid, or whom they judge to be less needy based on other factors, like ZIP code or parents’ background."

The Times concludes, " the inevitable result is that needier students will be shifted down to the less expensive and less prestigious institutions."

No kidding.

New Changes to Student Loans, From Obama and Sallie Mae.

Whenever a youth is ascertained to possess talents meriting an education which his parents cannot afford, he should be carried forward at the public expense.
James Madison

Obama is giving it a shot: trying to make Pell Grants an entitlement and cut student lenders out of business in favor of direct loans. But these measures have been tried and defeated before. Private lenders, led by Sallie Mae, have already started to battle again this time.

What's different this time? The credit crunch.
Exhibit A: Sallie Mae's new version of private, unsubsidized student loans replaces the "signature loan" with the "Smart Option" loan. The interest on these loans must be repaid while students are still in school. This reduces the overall cost of the loan as well as shortening the repayment period (avoiding negative amortization that comes with putting off the interest payments until graduation).

But that means Sallie Mae is getting less money out of each borrower, in exchange for reducing the risk; and the in-school payments make more apparent the full cost of private loans, which are often blithely ignored by families today. If families and students can't come up with the monthly interest payments, they will be more likely to stick to government loans and grants, or make hard decisions about whether they can actually afford the tuition in the first place.

Possible Class Action Over Hidden Student Loan Fees

A Hofstra law school graduate has sued Education Finance Partners over fees he said were hidden, and a judge has ruled that the student lender can't force him into arbitration, paving the way for a class action suit. The highly annoying and according to the judge "unconscionable" charges had to do with the way payments were applied to the principal vs. the interest.

I have heard about this kind of thing before--this game playing is pretty common among lenders. I don't understand how the guy is going to get satisfaction from Education Finance Partners, however.
The company is now in bankruptcy & in 2007, they had to pay $2.5 million to settle charges brought by Attorney General Andrew Cuomo over its shady business practices.

20somethings Coping with the Recession

Emily Bazelon over at Slate is perfecting the feature-story-by-email-solicitation, a bit lazy, but hey we're all cutting corners these days.

A familiar refrain:
"the most strangling aspect, I think, is the perception of my Gen Y e-mailers that they dutifully set up their lives based on assumptions that suddenly no longer apply."

And even more familiar:
"If I were a touch more paranoid, I would think there has been a conspiracy to systematically entrap me and my fellow graduates into an endless cycle of debt. Student loans, buying necessities on credit because the student loan payments bludgeoned my bank account, racking up greater credit card debt than student loan debt, credit scores, having children, taking out another round of loans to pay for their education, wondering if retirement is possible when Social Security is a joke."

First Question Of Virtual Town Hall is About Education

Full Transcript here.

Smart Growth Manifesto

Read it.
I am going around delivering this message to students because I believe it's what they need to be thinking about.

20th century capitalism is eating itself. For the first time since World War II, global growth is forecast to turn negative -- and that's an optimistic forecast, relative to the possibility of a global lost decade.Today's leaders are plugging dikes, bailing out industries and banks as they fail. Yet, what negative global growth suggests is that the problem is of a different order: that we have reached the boundaries of a kind of growth.

Reigniting growth requires rethinking growth. The question Davos -- and most leaders -- are asking is: where will tomorrow's growth come from? Will it result from oil, cleantech, bailouts, China, or Obama? The answer is: none of the above. Tomorrow's growth won't come from a person, place, or technology - but from understanding why yesterday's growth has failed. The same growth models applied to new people, places, and technologies will simply result in the same crises, over and over again. We have to reboot growth: the problem is not what is growing versus what is not, but how we grow.

20th century growth was dumb. The central, defining lesson of the macropocalypse is that 20th century growth wasn't built to last. Dumb growth is unsustainable - if the world grows the same way that developed countries did, well, there won't be a world. Dumb growth is unfair: it's growth that's an illusion for many; just ask the American middle class. And, ultimately, perhaps most dangerously, dumb growth is brittle: it falls too easily into collapse, reversing many of yesterday's gains; just ask Iceland.

Recession and Generational Psyche

Interview with me from Grown Up Digital, the blog from the team that authored Wikinomics and Grown Up Digital.

For some deeper thinking on the effect of the recession on the Net Gen, I turn to Fast Company staff writer and author of Generation Debt, Anya Kamenetz. As Anya rightly noted in one of her Yahoo! Finance columns, “Economic dramas shape an entire generation’s beliefs about the nature of the economy and the risks involved.” That was a year ago and already she was postulating about how the Net Gen’s psyche might be shaped. Specifically, she noted that young people:

• Won’t expect to get rich quick.
• Will “get real” about consumption.
• Will buy on the cheap.

I spoke with Anya recently so I thought I’d ask her to elaborate on her thinking.

What effect do you think this recession will have on the psyche of people entering the workforce now?

“The climate in the last 10 years has been a very unrealistic one. We have been living in this huge bubble. For young people who are entering the 20’s now, this is really all they knew: Inflated expectations, ridiculous monthly consumer debt, and the idea that you don’t need to save for the future because you can just count on the equity in your house. But, when the bubble bursts, the paradigm shifts. For young people now, they are really looking around and seeing the world as being a very different place. For older people, it can be a lot more traumatic to have this happen, but for young people, they’re more ready to maybe accept that change.

And so, if you look at ‘The Greatest Generation’ that came of age during the depression and then entered World War II, they were able to achieve at incredibly high levels and get a great education. That legacy of the depression, obviously it was very hard for a lot of people, but it also led to realistic attitude about money, and a very practical down to earth determination to try to succeed, and some strong family-oriented values. I think that I’m starting to see the beginning of that among this generation. People are saying, ‘Well, you know, this idea of endless wealth and greed, it’s not something I really want to sign up for.’ Young people are forced to consider, at a very young age, what is really important to them and what they really want to have because they know they can’t have it all.”

So, really, this is good for us?

“From a purely economic point of view, I think it could be [good for us]. It’s a mixed bag, right? Because on the one hand, the drama that you enter into upon graduation, it actually can determine your salary for years to come. So if you start in a down market or you have to take a job that’s not exactly matching your skills, it could have a long term effect on your income. But on the flip side, if you get into a habit of saving very early, you have the magic of compound interest on your side, plus you develop lifelong healthy financial habits.”

So, in the end, a generation known for being spoiled, having unrealistic expectations about work, and graduating university with an inflated sense of entitlement might actually end up being the “sensible generation.” I would add to Anya’s analysis the notion this will be a generation that will trust corporations even less than previous generations and will be more adamant in demanding integrity from their corporate and government leaders.

And while I hope all of this is true, I also know that there is a layer of insulation between the Net Gen and the economy: their parents. The extent to which many Net Geners will feel the impact of the economy is also dependent upon how well their Boomer parents are able to weather the storm and continue to provide for adult children that may still be living in their basements. Given that many Boomers are being forced to delay retirement, I would say the insulation is getting thin. In fact, if pensions shrivel up and forced retirements put a strain on the family coffers, the Net Generation may even have their own basements occupied by Boomer parents that need caring for in old age. I’m sure there is an entire school of psychology devoted to that topic, so I won’t even get started.

Rick Steves Knows What's Up

He's that "off the beaten path" nerdy European travel guy that your parents probably watch on PBS, and he's apparently really smart.

"A headline today said, "Americans lose 18 percent of their wealth." Well, no, it wasn't real wealth, it was a bubble. You're down 18 percent? You're not. It shouldn't have been up there in the first place. So get over it. Shut up. Go to work, produce stuff that has value. I really think the days are gone, I hope, when people can rearrange the furniture and get rich on it. You got to produce something."

Check out DIYUBook.com For the Latest

Hello folks,
It's book launch season!
between now and the summer I'll be blogging at DIYUBook.com, Fastcompany.com, and the Huffington Post as well as Twittering at Anya1anya.

Please come check me out at one of those places!
Anya

GDP = Gross DEBT Production

“We have an economy where we steal the future, sell it in the present, and call it GDP" - Paul Hawken

Good News, Bad News: Proposed Changes to Student Loan System

NYTimes.

1) Raise the maximum Pell Grant. Make it an entitlement (indexed to inflation +1%) for the first time. This is great news.
Problem #1: Tuition has been rising at inflation + 4 or 5%. Problem #2: Most students don't get the maximum Pell Grant. Pell Grant amounts are determined by the vagaries of the FAFSA form and the discretion of colleges.

2) Eliminate subsidies to lenders in favor of the Direct Loan program for Stafford loans. Cheaper for taxpayers. Problem: Private lenders, frozen out of the student program, will instead aggressively market private loans, which are more expensive for students.

3) Raise total subsidized loan amounts available by increasing the Perkins loan program. Problem: interest on Perkins loans is due while you are in school.

Overall problem: Raising federal tuition subsidies tends to lead to tuition increases. There are no countervailing measures to get colleges to examine costs.

Lawmakers Take $ From Student Loan Companies, Oppose Reform

Bipartisan, but united in greed...



Obama wants to save money by cutting subsidies to banks and thus eliminate the FFEL in favor of Direct Loans, which are much cheaper for the taxpayer. It was tried under Pres. Clinton and failed because of political flimflammery.
These senators and congressmen, the recipients of thousands in lobbying money, oppose the idea.
Even though the entire function of a bank-provided student loan program has been rendered hollow and absurd by the current credit crunch and the collapse of securitization. Banks have been pulling out of the program by the dozens. On top of the normal 95% guarantee, the federal government has made available TALF funding to buy up student loans to the tune of up to $200 billion. If Obama's proposal succeeds, this bailout money can be used for its other purposes--credit cards and auto loans, for example.

via TitaniumDreads, via Future Majority;

Boomerang Kids Story in Phila. Inquirer

I can't get it to load, but apparently I'm in here somewhere.

Not Something to Brag About

(Parody of this)

Obama Gets Tough On Education; What About Higher Ed?

This commenter said it better than I can:

It’s interesting that Obama, a part-time university professor, takes on teachers’ unions, but ignores rampant inflation in university tuition.

Why does Obama demand accountability of grade-school teachers, but not of universities? Tuitions have gone up 400% in about the last decade. There is absolutely no justification for such egregious increases.

Obama’s plans to offer even bigger tuition subsidies, without requiring reform of university finances, will simply feed more inflation that undoes the benefits of scholarships and loans.

Universities are run with the same condescension and air of entitlement that plagues Wall St., and taxpayers are footing the bill in both cases.

Define "Generation"

An attempt to describe what will befall the generation of the Great Recession.

"loss of confidence on the part of both parent and children that life in the next generation will inevitably be better.”

"Today, the most immediately affected may be the oldest members of Generation Recession — those in high school and college. Research shows that the wages of those graduating into the recession of the 1980s were held back for more than a decade. And weak stock markets tend to make the young more risk averse about investing into the next decade."

(Risk averse is not necessarily such a bad thing, is it? I mean, isn't the popular approach to investing overdue for a correction?)

More civic-minded, more creative, closer to their families...it's not all bad.

Student Newspaper story on UT-Knoxville speech

It's really interesting to me to see what one student, diligently taking notes, got out of my presentation.

"A sustainable economy is one that does not rely on borrowing from the future to support the present, she said. She added, The Great War of this generation may be climate change."

Sayonara, FFELP!

I don't know if this is really going to go through--certainly the banks are going to fight against it with everything they've got--but Obama's budget calls for phasing out all subsidies to student lenders in favor of the direct loan program, and using the subsidies to fully fund the Pell Grant program and turn it into an entitlement.

Obviously, I have been calling for this for years. I'm sorry it took a global economic crisis and credit crunch to get us here, but publicly supported student lending is definitely the better way to go.

However, these days I'm more concerned about the multiple underlying factors that keep driving the cost of college upward, and increasing federal aid is actually not helping in the long run. For example, last night I visited the University of Tennessee at Knoxville (Go Vols!)

According to what the very intelligent and engaged members of the student Issues Committee told me, The school is going through simultaneous budget cuts and a 9% tuition increase. The budget cuts are so severe that 5 to 7 percent of students won't be able to get into the classes they need to graduate , which may force them to add another semester or even another year, which raises their burden even more! Simultaneously, a giant stadium renovation is going on, to the tune of $200 million. The students are steamed! But apparently the concerns of families and students are not being consulted here.

State Loan Forgiveness Program is Out of Cash

Thousands of Kentucky teachers suddenly have to pay back their own student loans because the state government ran out of money to fund the forgiveness program.

Students Are Flocking to Public Colleges

But instead of worrying how New York State is going to serve everybody who qualifies with a good quality college education at a price they can afford, this story is written from the point of view of the administrators, who are taking advantage of the bump in enrollment to groom their campus standing and student body, even as their budget is being cut.

"Over the last decade, enrollment in the SUNY system has grown by 20 percent. But officials at New Paltz do not want to grow, and instead see the swelling applicant pool as a way to further refine its status and student body. In the last five years, the college has winnowed the student-to-faculty ratio to 14 to 1, from 17 to 1; more than two-thirds of courses are taught by full-time faculty members today, compared with 50 percent a decade ago."

Can Peer to Peer Lending End the Credit Crunch?

Crossposted from FastCompany.com, where I've been blogging like crazy this past week and have been too busy to post over here. I'll get back to it momentarily.

Credit card companies are canceling your account . Student loans, home mortgages, and auto loans are all getting harder to obtain, and the big bank where I have an account is insolvent; how about yours?

Starting today, a range of next-generation financial services companies, all of whom employ technology in innovative ways, have teamed up to market some much-needed help to consumers with the Uncrunch America campaign. Like a team of of financial Superfriends, Lending Club offers personal loans through a peer-to-peer model, Virgin Money (yes, a pro-social for-profit offshoot of the Branson empire) has peer-to-peer mortgage financing, OnDeck Capital offers small business loans with a proprietary holistic scoring model, CreditKarma has credit score tools, and Geezeo offers personal finance and budgeting tools.Since the beginning of the year, UnCrunch members have lent almost $75 million to each other.

The site has an overwhelmingly grassroots, patriotic feeling and look, as though it were a stray page from MoveOn.org or recovery.gov. "The American people will solve the credit crisis by helping each other," it proclaims.

Does this fine-sounding premise hold up? Peer-to-peer lending is one of the oldest ideas in finance. In its online incarnation, it doesn't have anything like the volume yet to fill the trillion-dollar gap in the consumer credit market. But it does offer an intriguing alternative to the standard profit-happy credit model, and it's been spreading as a close cousin of the microfinance or social lending movement. As a niche both for borrowers shut out of the credit market and for investors looking for a better return than the stock market can offer, it's likely to grow.

via Uncrunch America

Brian Lehrer Show--Your Questions, 2/19

Hi everybody, thanks for listening!

[3] sophie from manhattan:
Chapter 11 bankruptcy is for businesses. Chapter 7 and 13 are for individuals. If you earn more than the median income in your state, it may be difficult to declare Chapter 7 and fully discharge debt. You may have to negotiate a payment plan instead under Chapter 13. You need to pay a fee, typically $300, and find a lawyer who will help you file, and appear in court. Also, bankruptcy typically stays on your credit report for 10 years--not 7.

[4] John Eiche from Queens: Yes, the mortgage plan is targeted to help people who are paying more than 43 percent of income on the mortgage.

[5] Tony from San Jose, CA: Yes, they could close it, more likely is that they would lower your credit limit or send you increasing solicitations to charge more (like a "cash advance" check). You might want to apply for another card if you are worried about it.

[6] Scott from Cambridge, MA: Yes, go to annualcreditreport.com to get an idea of your credit record before you take out loans.

[7] Mike from Long Island: That sounds screwy because 783 is a very high score. Maybe you should get your other 2 credit scores (Experian and Equifax) as well as your credit report and see if they agree. If not you may need to correct some errors on your report.

[8] FranciL from NYC: Yes, might as well keep it open. The amount of available credit is part of your credit score; so is the length of your credit history, which may be affected if this extra card was opened before your other cards.

[9] Edward from NJ: Frustrating! But I don't think this should affect your credit score. What could ding it was if you were shopping around for a home equity loan and made a lot of loan applications at the same time.

10] Suki from Williamsburg: It sounds like you have a healthy attitude towards credit, but I dont understand why you would have a bad credit score if you are paying off the card on time every month. It could be because you are maxing out the one card or you just don't have a long enough credit history. If the former is true, it may not be a bad idea to open another card. Or just stick to cash!

[11] C from Manhattan, NY: I am a fan and a member of Mint.com. They make money by referring customers to bank products (the Ways to Save section)--these offers are vetted to make sure they are really saving you money, but it is a paid product placement. The rest of their information is very reliable and they have been free of security concerns so far. I think it's a good tool.

Listen Live to the Brian Lehrer Show

Going on at 10:40 am. You can listen here. Afterwards, I'll respond to questions on my blog.

Local Help for Money Woes

A couple of weeks ago I taped an interview with "It's the Economy, NY" on channel 13, the local PBS station in New York City. I think it's supposed to air tomorrow night. The show can be viewed online and I'll post the video as soon as it comes up. Their site has a useful list of links to local resources to help with money problems.

Economic Avengers

You can volunteer with Home Defenders, run by Acorn, to commit civil disobedience when the sheriff shows up to evict people who face foreclosure.

“This is a desperate, last-ditch effort by folks who are working two or three jobs, single mothers, elderly people who don’t know what else to do to save their homes,” said Ginny Goldman, Acorn’s lead organizer in Texas, where the campaign began in Houston on Saturday.

Brian Lehrer Show: Your Questions

Read all comments here.

Diane from Long Island: With Sallie Mae Signature loans--private student loans--consolidation doesn't necessarily help to lower interest rates. For the public, federal portion of your son's loans he may be eligible for Income Based Repayment: look at ibrinfo.org for more info.
I am not sure the full extent of your negotiations with Sallie Mae but they say that they offer both graduated and extended repayment--both of these would lower the monthly load, although they would not lower the interest rate. The National Consumer Law Center has a list of lender ombudsmen--these are the people with the most power to help you negotiate a solution.

Sam: If you can register with a state employment agency and document that you are looking for a full time job, you should be able to qualify for unemployment deferment
whether or not you're eligible for benefits.

Darren from Brooklyn: Consolidation won't necessarily lower your interest rate on private student loans. The exception is if you can improve your credit score significantly (by 50-100 points) you might be able to get better terms. I would concentrate on seeking income based repayment, deferment or another solution to make it easier to manage your federal student loans, and just keep paying off the private loans on time to build up your credit score. Also, I have to ask you to reconsider going back to school. You already have enough debt for a lifetime.

katie from brooklyn, ny: shouldn't the higher likelihood of securing a job factor into the decision to pursue higher degrees, since a moderately paying job is better than no job at all?

Depending on the job, there are cheaper ways of improving your job prospects: get relevant experience by interning or volunteering. Travel to enhance your language and cultural skills, or even seek a job overseas (Dubai is popular these days). Or even take a single targeted course to improve your skills in a specific area ( software programming, statistics, or LEED AP certification to name a few).


Clem from Brooklyn Whatever happened with the investigation into the conspiracy between NELnet and countless college loan officers to steer students toward higher interest loans, and how do you combat that as a borrower in these times?

Some lenders went out of business, and lenders in general had their subsidies lowered. You are free to search beyond your school's preferred lender list if you are worried about the relationship between your college financial aid offices and certain lenders.

Christina from Brooklyn February 11, 2009 - 10:58AM What do you consider a minimum manageable amount of debt for a student getting a PhD in a social science or a discipline in the humanities? Is there is a number you can cite where it's simply not manageable?

I wrote a column on this question back in '07. According to the U.S. Census Bureau, the payoff from social science and liberal arts master's degrees is actually negative -- the average liberal arts MA earns less than the average of all BAs.And according to an in-depth study conducted back in 1999, those with Ph.D.s in the humanities had the highest debt and lowest income of all students in all disciplines.

That said, I think a debt amount roughly equal to your starting salary -- 35K or so--is relatively reasonable.

Alaina from Weehawken: It is indeed very difficult to discharge these loans in bankruptcy, but not impossible. Your mom being a little older is helpful. You might be able to find legal assistance here. Good luck.

Frank from Westchester: PLUS loans are meant to be up to the cost of attendance.Your credit score has more bearing on your eligibility than the overall amount of the loan. However it's not a bad idea to have your son take out his due amount of federal FFEL loans as well.

Student Loans on Brian Lehrer

listen here.

I really like this comment (Nick from NYC):

People carrying these huge education debts are "frozen", just like credit, in that they aren't free to be mobile, innovate, make purchases, all of those things that will generate economic activity.

If the solution continues to pretend not to see both the huge hidden load of student debt and credit card debt, there will continue to be a rotten core to the economy.Perhaps, like in ancient times, we need an imperial decree that all debts are cancelled, and we start from the year zero.

MyRichUncle is Out of Cash

crossposted from FastCompany.com )

MyRichUncle was an intriguing startup student loan company with an innovative, white-knight approach when I wrote about them in the 2006 Fast Company 50.

When I talked to them, the two 20something founders seemed cocky, but sincere. They believed they could bypass the punitive terms and high-pressure sales tactics used by other student lenders in favor of better analytics to predict students' chances of repayment, and that they could build customer loyalty through transparency. They gained a higher profile in 2007 when they took out a full page ad in the New York Times to publicize the shady collusion between college financial aid officers and other student loan companies. Lenders like Sallie Mae often offered colleges kickbacks and sweeteners in exchange for inclusion on "preferred lender" lists. The ad campaign helped fuel a large-scale investigation into these practices by New York State Attorney General Andrew Cuomo, which led in turn to some federal policy crackdowns, including subsidy cuts to lenders.

But the student loan market today looks very different than it did in 2007 when it was seeing 27 percent annual growth. In fact, there's a looming crisis.

Throughout those years of growth, federal and private student loans were heavily repackaged and securitized just like home loans and credit card debt. So in the face of the credit crisis, 168 lenders have pulled out of the program. So-called "subprime students," typically at community and for-profit schools, are having trouble getting federal or private student loans, and all students are seeing fewer discounts on loans. More student loan defaults may be looming as the economy sheds jobs. And the Treasury Department and Federal Reserve have quietly authorized up to a $260 billion bailout for the student loan industry, separate from the $700 billion bailout we've all heard so much about.

MyRichUncle won't be seeing any of that money. They had had trouble raising capital as the market got tighter, had stopped making new loans, and today, declared bankruptcy. As if they didn't have enough trouble, it came out in December that one of their former employees allegedly embezzled $2.3 million from their accounts. Troy Hill, of Jersey City, blew much of the cash on several Mercedes, bling from Jacob the Jeweler, and two coffeehouse franchises.

The student loan market is definitely not getting any more clean or transparent in this atmosphere of scarcity and panic. In this environment, it's a tough time to be the nice guys.

"The Economy's Getting Smaller"

For good.
Asset deflation, consumer spending, retail stores, autos, Wall Street, media, pharmaceuticals.

"What is the sum total of all this? The US GDP will contract 4-6% 2008 Q4 - 2009 Q2; Down 1-3% for the second half 2009; And is possibly flat in 2010 –Back in 2001, we had forecast the US Economy could hit $15 Trillion by 2010-11; That now gets pushed back to 2015-17 . . ."

Southern NH U: Not As Awesome, But Cheap

One reader of my Times piece last week brought this to my attention: a much cheaper, no frills satellite campus of a private college.

Innovative, yes. Yet students are missing out on the social benefits of the pastoral main campus.
On the other hand, maybe they don't have to work 3 jobs and have time for a social life in the first place.

Cooper Union: Awesome and Free

Cooper Union college is going to become far more selective than Harvard next year--applications have surged 70 percent.
Not only do they offer a downtown Manhattan location and excellent courses of study (many of which connect to good jobs in creative fields like engineering, architecture, and design), they are committed to full scholarships for every student.

Interestingly, Cooper Union's not any richer than, say, Amherst. They ran huge deficits just a few years ago and now stand at $608 million. There are dozens of colleges with bigger endowments. Free tuition is just a tradition at Cooper Union.

Colleges that want the best students might consider how they might rearrange their resources to drastically cut or even eliminate tuition.

Brian Lehrer Show Questions: Bankruptcy, Credit Card Offers, More

You can listen here.

lucy from brooklyn February 05, 2009 - 10:47AM when should one seriously consider bankruptcy?

There's no litmus test. Generally it's indicated if you have high unsecured debt (medical bills, credit cards, utility bills) and assets to protect (like a car, savings account, or wages that could be garnished). There is also an income test to declare complete (Chapter 7) bankruptcy.
Bankruptcy can't get rid of student loans and you may still lose your house or your car. It affects your credit for 7 to 10 years. Also, you can't declare bankruptcy again for 6 years.
A bankruptcy lawyer would be more likely to advise bankruptcy if your money problems come from one-time bad luck like a divorce or medical problems, and not from years of poor spending habits.

[12] Matthew from Manhattan February 05, 2009 - 10:50AM Is there one credit card she can recommend applying to now?
I can't recommend a specific one but you could try creditcards.com or bankrate.com. You might also look into products offered by credit unions which are nonprofit community financial institutions.

16] Chris from Putnam county February 05, 2009 - 10:52AM I haven't paid interest in years via the 0% offers. Is this a bad idea for any reason?
Congrats. The only problem I can think of is if you apply for a bunch of new cards in a short period of time it could lower your credit score. Check out your report at annualcreditreport.com

17] Christine from Brooklyn, NY February 05, 2009 - 10:52AM I have heard that you can negotiate lowering finance rates with credit card companies. How low can you realistically get them to go? If you negotiate it once, can you try again later?
The best would be if you have a competing 0% offer in hand and you can threaten to switch your balance over. There are lots of forums and online resources for negotiating with credit card companies. I don't see why they wouldn't renegotiate as long as you have been sticking to the terms of the original deal.

[18] Darren from Brooklyn February 05, 2009 - 10:52AM How closely should I be watching Citibank to see if they are playing around with my terms, billing cycle, etc.? Also, I am planning on using my tax return to pay off the credit card, seems like a good idea, right?

If you use a free service like Mint.com they can send you text messages when you're charged a fee, or tell you how much you're paying in interest on your credit cards.
Yes, I think that paying off your card with a tax refund is a great idea! It's like instantly earning 15%.

The Mortgage Crisis In 10 Panels

This is soo going in my PowerPoint for colleges. Click here to buy Ruben Bolling's book.

Credit Card Delinquencies at Record High

Crazy things going on with peoples' budgets these days. Spending is down (which is hurting the economy). The savings rate is up. Personal income is down. And late payments on credit cards are at an all-time high.

People are finally trying to do the smart thing with their money, but they don't have enough money to do the smart thing with it.

Meanwhile, a Credit Cardholder's Bill of Rights is before Congress. It passed the House in September
and would prohibit actions like:

--Applying unfair interest rate hikes retroactively to balances incurred under the old rate;
--Assessing hidden and unjustified interest charges on balances already paid off;
--Piling on the debt that consumers owe by requiring them to pay off balances with lower
interest rates before those with higher rates;
--Charging late fees even though consumers mail their payments seven days in advance of
the due date; and
--Charging excessive upfront fees to subprime cards targeted at consumers with blemished
credit histories.

Check out the Brian Lehrer Show Tomorrow

Photo: flickr
I'll be on from 10:40--11am. It's the first of four weekly slots I'll be doing throughout the month of February.
Also, they've had some great coverage of the local economy lately:
Uncommon Economic Indicators (a likely homage to Planet Money's similar feature)
and a bunch of interviews under the tag "jobless".