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The FAFSA May Be On The Way Out

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The New York Times printed an article this morning talking about how the Free Application for Federal Student Aid (FAFSA) is too cumbersome for most families to fill out. They cited how some families are even turning to paid consultants to complete the form, paying somewhere between $80 and $100 per application (which defeats the whole purpose of a free application).

Clearly, if you’ve read this blog over the years, you know that I have a long and storied history with student loans. Over the course of my 7 years as an undergraduate and graduate student I filled out a bunch of these things; my Mother and I filled out my first few FAFSA forms and I filled out the last few. What I remember about filling out the forms was not that it was tedious (filling out any government form is tedious), but rather that the results reports were not good enough.

In other words, you’d put together this FAFSA and then get a report back (mine was from my undergraduate institute) telling you which aid you qualified for based on your responses. The report didn’t speak to potential repayment scenarios or to existing debts under each program; both pieces of information could really help students and their families make better decisions. I’m not sure why this information isn’t included in the report as both the federal government and the college have the information at their fingertips.

The FAFSA should be changed, but this change should be a part of changing the entire student loan process.

Sirius XM Stays Alive, But Internet Media Continues Attack

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One of my frequent readers sent me an article earlier in the week that talked about the Sirius XM/Liberty Media deal that saved the fledgling satellite radio company from bankruptcy. As a shareholder in the company, believe me when I say that I was watching the newswire with baited breath on Monday night/Tuesday morning waiting for news of an announcement heralding Sirius XM being saved from the financial woes – and after a long while, that news finally came.

As the article linked above puts it:

The money-losing home of Howard Stern, Opie & Anthony and the NFL got a $530 million investment from John Malone’s Liberty Media Corp. that will keep Sirius XM out of bankruptcy. Shares of the New York-based company are soaring.

Malone is demanding a steep price in exchange for bailing out Sirius XM. Liberty will provide a senior secured loan of $280 million which matures in 2012 at an interest rate of 15 percent. Sirius XM, though, may have had little choice but to accept such a high interest rate because it had $171.6 million of its maturing 2 1/2 percent notes due Feb 17. Even with today’s huge run up, Sirius shares are down more than 94 percent over the past year.

In the second phase of the investment, Liberty will provide a $150 million loan and to buy $100 million in loans issued to XM Satellite Radio. The company will then issue Liberty 12.5 million shares of preferred stock which is convertible into 40 percent of the common equity. Malone and Liberty CEO Greg Maffei will join the board of the satellite radio company.

I take issue with the article’s use of “money-losing” as an adjective to describe Sirius XM. If you look at the figures, Sirius was on the brink of making money before it acquired XM and their unbelievable debt load. At this point, though, that doesn’t mean much since there is only one company – Sirius XM.

Since the deal was finalized, many online media sources have commented on it with varying levels of support (or contention). The New York Times’ DealBook blog, for example, looked at the Form 8-K filed for the transaction and proceeded to tear into the particulars of the deal (which are admittedly not the greatest). After the Times posted their review of the 8-K, stock prices for the company began to sink. In terms of real dollars (cents?), the stock price was at 18 cents before the Times posted their review. The stock price is now at 12 cents.

For months I’ve been harping about how Sirius XM is a great niche product for those who have extra long commutes and those who want special content like Howard Stern. The company is also poised for success in the long-term as it has some 20 million subscribers paying generally $13 per month for their service. That’s approximately $260 million per month; over $3 billion per year. Of course there are costs that have to be deducted from that $3 billion figure each year, but over time that built-in revenue base is a gold mine.

I have to wonder, though, if Sirius XM will be able to succeed in the long run with the way the internet media continues to lambaste and destroy it. The Motley Fool has it out for the company and it would appear that the would revel in its failure. And with the way the New York Times’ DealBook blog is listened to by investors, you have to wonder how many more negative reports the company can withstand in the current market.

Another Ridiculous Piece of Fear-Mongering

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Earlier today I heard yet another ridiculous piece of fear-mongering on FOX News’ 2-hour Saturday morning business block. I forget which of the half hour shows it was on, but one of the special guests made a comment that America is losing more than 20,000 jobs each day. Twenty-thousand jobs each day.

Really?

Let’s think about that in real figures for a minute. If America was losing 20,000 jobs each day, that would be 140,000 jobs lost each week. There have absolutely been horrible announcements about new sets of layoffs each week. But if this country was losing 20,000 jobs each day, that would mean that we’re losing 7.3 million jobs each year. Ahem…losing seven million, three hundred thousand jobs each year.

This is clearly not the case. Think about it in terms of real jobs: Wal-Mart employs about 2.1 million people; McDonald’s employs some 400 thousand; Home Depot employs about 330 thousand; Bank of America has around 172 thousand employees; and Macy’s has about 182 thousand people currently employed. Combined, you’re still looking at approximately 3,180,000 workers – less than half of what the woman on the show this morning was fear mongering about.

If you believe what this fear monger believes with respect to America losing jobs, then you might believe that more than double of the equivalent amount of total jobs provided by Wal-Mart, McDonald’s, Home Depot, Bank of America, and Macy’s will be gone in a twelve month time period.

The economy is in a rough period right now and it might last for a few more weeks, months, or even years. But when people go around trying to sell fear like this it does nothing to help get the nation’s psyche back where it needs to be.

Anyway, check out New Jersey Carpet Cleaning for the best carpet cleaning in the Garden State!

Whose Obligation Is It To Kick Start The Economy?

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The other day I was reading an article somewhere online (sorry, didn’t bookmark this one) where the writer was talking about a friend of hers who was troubled by the economy. Not a surprising story to be sure – especially these days. However, what was interesting was that the writer’s friend actually felt guilty that she hadn’t put more money into the economy and, instead, was saving more; the point was that she wasn’t sure if she was supposed to put money into the economy or let the government do it.

What!?

And it is at this point that I wish I would have bookmarked this article because the rest of the story was as ridiculous as that last statement sounds. Can you believe that there are people out there crazy enough to think that they need to spend money to help kick start the economy? Listen everyone, it’s very simple – SAVE YOUR MONEY!

No, I’m not talking about putting all of your money under a mattress (though I actually know someone who does that). Spend your money on items that you need for you and your family, yes. But when it comes to big ticket items that you don’t need and might not be able to afford at this point in time – DON’T BUY THEM!

And for the love of God, don’t think that anyone needs to go out and spend money in an act of patriotism! Save your money. If you’re on an automatic investment plan like a 401k or an automatic stock purchasing plan, then if you feel comfortable with what you’ve got, continue to invest your money in that way. But good grief! Don’t think that it is our patriotic duty as Americans to go out and spend out money. That would be one of the dumbest moves that many Americans could make right now.

Think smart, then spend your money.

It’s Important To Check Your Credit Report

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The other day I went up to Roxbury to see my Mom and brothers and while I was up there my older brother went online to get his free annual credit report from AnnualCreditReport.com (not freecreditreport.com from the commercials, which actually does NOT give you a free credit report). The last time I checked all three of my credit reports was in December 2007 so after seeing my older brother pull his reports, I thought that now was as a good a time as any to do the same. Plus, in these uncertain economic times it pays to spend a few minutes checking your credit report to ensure accuracy.

And, as always, the credit report is an interesting thing. I should note that I didn’t ask for my credit score because 1) they charge you for that and 2) when I moved into the new apartment in the summer they ran a credit score on me and it was 790 – I’ll take that number any day! However, there were two discrepancies in my credit report that needed immediate attention.

First, the New Jersey Higher Education Student Assistance Authority (NJHESAA) once reported that I paid 30 days late on one of my student loans (back in 2006). The problem, though, was that the loan was still in deferment and was not due for payment at the time. Back in 2007 when I pulled my credit reports, I noticed this problem and called NJHESAA and while they agreed that this was a mistake on their part, they also said that they couldn’t contact the credit bureaus to have it fixed. So I contacted Experian to get the mistake removed from my report and they took it off without any problems. My mistake in 2007, though, was that I didn’t ask TransUnion or Equifax to remove the discrepancy. So when I pulled up my reports the other day – guess what was sitting there staring at me on those two reports. That’s right – the NJHESAA mistake strikes again!

I sent messages to both TransUnion and Equifax and as of today, Equifax removed the problem and TransUnion is still investigating. I pulled up my Equifax credit report to confirm that they fixed the mistake and I can confirm that they, in fact, did fix the problem. They were very quick and very efficient at addressing this problem.

The second interesting thing that I found on my credit report was an open credit card account that was actually a sub-account off of one of my mother’s credit cards from many years ago. This account was only reported on two of the three credit reporting agencies. Since this account was closed and replaced with a different sub-account (not for me), I submitted disputes with the two agencies that still listed it as open. To date, both agencies are still looking into this one.

The reason for this post is to encourage you to go online and check your credit report at AnnualCreditReport.com. Even if you have excellent credit and a perfect credit history like I do, you may be surprised at what you find.