Daily Aid 6: Warren Buffett, FDIC, student loan settlements, savings bonds
Daily Aid 6: Warren Buffett, FDIC, student loan settlements, savings bonds
Student Financial Aid News
New York State Attorney General Andrew Cuomo settled with Nelnet (ticker: NNI), Campus Door (ticker: LEH), GMAC Bank (ticker: GMAC), NextStudent, Xanthus Financial Services, EduCap, and Graduate Loan Associates for $1.5 million in a lawsuit against deceptive student loan marketing practices.
From the Wall Street Journal:
Warren Buffett’s Berkshire Hathaway Inc. (ticker: BRKA) has told one of its subsidiaries to stop insuring bank deposits above the amount guaranteed by the federal government, dealing a fresh blow to the financial-services industry as it tries to assuage anxious customers. The subsidiary, Kansas Bankers Surety Co., is notifying about 1,500 banks in more than 30 states that it will no longer offer a program called “bank deposit guaranty bonds.”
Commentary:
This is a big, big deal because it indicates a lack of confidence in the banking system by Warren Buffett, which is kind of like Emeril Lagasse expressing a lack of confidence in food or Paris Hilton expressing a lack of confidence in parties. It’s a sign of how tough the economy has become and how risky it is to be in any financial vehicle not insured by the federal government. Buffett’s move indicates that fundamentally, he believes a strong enough potential exists for runs on banks that insuring deposits above the FDIC limit would be a money-losing proposition.
What does this mean for you? If you have cash or savings that exceeds the FDIC insurance amounts available, you need to open another account and move the excess so that it’s insured. This includes, by the way, corporate payroll accounts, so ask your employer if they have a reserve cash account that’s insured separately, just in case your employer’s bank goes under and your payroll cash account exceeds the FDIC insurance limit.
Scholarship Update
Who would you choose as the ultimate political super hero or villain? What powers of good or evil would they wield in the battles fought in the political ring? Choose a current or past visionary or miscreant that embodied the true spirit of a hero or villain and tell us what powers they used and what political topics you feel most strongly about. Can’t find a suitable candidate? Create your own by giving them a name, personality and list of powers. You can even include a sketch if you like! Whether you’re picking from the past or creating from scratch make sure to include the ultimate list of powers that will give your hero or villain the power to rule the political world! Receive scholarship up to $500. Ends November 14, 2008. Open to members of Brickfish.com who are legal residents of the fifty (50) United States, the District of Columbia or Canada (excluding Quebec), and 13 years or older.
Details at our free college scholarship search site.
Mail Bag
Nick writes in:
Mr. Penn,
I have a question about savings bonds. I have bonds I received when I was born that have been building interesting over the years. I am considering cashing them out to help pay for graduate school. However, Do you know if they are exempt from the FAFSA if they remain as is much like an IRA? Do you recommend I cash them in at a certain time of year?
If you don’t know personally, do you know of any documentation I can read on the subject?
Thanks a lot and love the podcast. I wish podcasts had existed in their current form when I was in 10th grade.
Savings bonds are treated as cash, actually, an asset. From the FAFSA:
Investments include real estate (do not include the home you live in), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.
Thus, they are counted as a resource that can be liquidated to pay for education. However, unlike tax year events, they’re a cash resource, which means that as long as you spend or otherwise eliminate them prior to the day you actually file the FAFSA, they won’t be counted against you.
Are they still earning interest? Some savings bonds continue to accrue interest after maturity; others don’t. Consult a qualified financial planner (one may be available for free or nominal charge at a community bank or credit union) for more advice on minimizing the tax consequences.
5 most recent Financial Aid Podcast posts
Did you enjoy this? If so, please consider subscribing for free to get it delivered to you. Subscribing for free means you don’t have to remember to download it every day.
+
+
+
Reminders
+ 
+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Free college scholarships contests!
+ Open an FDIC-insured savings account today!
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ Graduate student loans at GradLoans.com
+ Private student loans available at any time - visit AlternativeStudentLoan.com
+ Private student loan consolidation at StudentLoanConsolidator.com
+ FAFSA form tutorials and free help at FAFSAonline.com
+ The Financial Aid Podcast is a publication of the Student Loan Network.
I want to hear from you! Send me your comments, questions, and feedback using this handy contact form!
