Archive - August 2008

1
PLUS College Loan Program Improves
2
Are Your Investments Insured?
3
Education Loans Jeopardized by Auction-Rate Securities Market Meltdown
4
Using Exchange Traded Funds – Part 2

PLUS College Loan Program Improves

Recent changes to the PLUS federal student aid program should provide last-minute help for families seeking to fund college or graduate school expense this fall. In light of the failure of the Massachusetts Educational Finance Authority to secure funding for a new round of college loans, students who were counting on MEFA loans are scrambling to find an alternative. With many banks withdrawing from the education loan marketplace, options for loan funding have been shrinking this year.

Some important changes have been made to the PLUS educational loan program (formerly known as Parent Loans For Undergraduate Students). Until …

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Are Your Investments Insured?

Are your Investments Insured?Generally speaking, investments held in brokerage accounts are insured by an agency called the Securities Investor Protection Corporation (SIPC).  The SIPC is a quasi-governmental body under the oversight of the SEC.  The SIPC is definitely not the brokerage version of the FDIC.

Although the SIPC does not have the regulatory power of the FDIC, it does have one similar function: it insures assets held at all SEC-registered brokerages.  When a broker-dealer fails, the SIPC manages the distribution of investors’ assets.  If any assets are missing, the SIPC replaces insured securities up to the insurance limits.

There are many kinds …

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Education Loans Jeopardized by Auction-Rate Securities Market Meltdown

Education Loans Jeopoardized by Auction Rate SecuritiesThe Massachusetts Educational Financing Authority (MEFA) announced late last month that it’s unable to raise funds needed to provide fixed-rate private education loans, as it has in the past. Families counting on MEFA loans will be scrambling to find other funds in the next few weeks unless a plan proposed by Governor Deval Patrick succeeds. At the end of the post I offer some last-minute ideas for families who will be facing a funding crunch if MEFA loans do not come through this fall.

MEFA provided loans to 40,000 Bay State residents last year, but its revenue-raising ability has …

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Using Exchange Traded Funds – Part 2

Today’s post continues Part 1 with a further explanation of this rapidly-growing alternative to the mutual fund. In my initial post I explained that ETFs

  • are created by financial institutions in large blocks that can be freely converted into underlying securities
  • are transparent, meaning that the underlying securities are publicly disclosed on a continuous basis
  • trade continuously on financial exchanges at prices that generally move closely with the underlying securities
  • are generally liquid, reflecting the liquidity of the underlying securities
  • are usually (but not necessarily) linked to a securities index
  • tend to have low management costs

These are generalizations, and …

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