Posts Tagged "debt"

Smooth sailing: woman on a yacht

Straightest Course to Riches – Parents

Some Boston University students cruise city streets in their BMWs or Lamborghinis. Three of Donald Trump’s five children have joined the family business so far. And the financial media are full of useful advice for parents who might want to buy a house for their adult offspring.

Nature versus nurture? Not surprisingly, nurture won out when researchers applied this question to who has more influence on the wealth of young adult Swedes who were adopted as children – their biological parents (nature) or their adoptive parents (nurture).

Wealth “is not due to the fact that children from wealthier families are innately more talented,” the international team of researchers concludes. “Instead, it appears that even in a relatively egalitarian society like Sweden, wealth begets wealth.”

While this might seem obvious, there had been surprisingly little research on the topic, which is gaining prominence here as U.S. wealth inequality widens. The study used an unusual Swedish data source that allowed the researchers to compare the wealth of adopted children with the wealth of both their adoptive and biological parents. The adoptees’ average age was 44. …Learn More

College Funds Depend on Family Income

How much teenagers must borrow for college often depends on whether their parents can help foot the bill – and how much they can afford.

Fresh data from a survey by Sallie Mae, the private college lender, shed light on how low-, middle- and high-income families find the money to pay for a college education. The data break down how much of students’ total costs – tuition, plus books, room and board, fees, living expenses, and transportation – come from earnings, savings, borrowing, grants or other sources.

Chart

Here’s what stands out in the data, which are displayed in this chart:

  • In low-income families, the students themselves take responsibility for saving, earning or borrowing money to cover 32 percent of their costs, and middle-income students pay 29 percent. Students from high-income families cover just 19 percent of their costs; they tend to pay more for their education, so their total dollar costs are higher, which somewhat narrows the dollar difference between what students in each income group pay. …

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College Debt = Student Stress

It’s hardly surprising that debt causes stress, but this condition seems rampant among the college crowd.

A new study in the Journal of Financial Therapy finds that nearly three out of four students feel stressed about their personal finances, and student loans are a big reason.

In 2012, the average graduating senior owed $29,400. Student debt has already been shown to be a barrier to homeownership and a cause of bankruptcy among young adults. Paying back the loans is also very difficult when borrowers don’t graduate and earn less in their jobs. Add stress to the host of issues that accompany borrowing for college.

Students who have debt or expect to be in debt after college – whether college loans, credit cards, or car loans – are “significantly more likely to report financial stress” than students who did not have any debt, the study reported. …Learn More

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Top Blog Topics: Financial Ed, Retirement

It’s customary every six months for Squared Away to round up our readers’ favorite blogs. The following were your top picks during the first six months of 2015, based on an analysis of online page views.

To stay current on blog posts in the future, click here to join a once-weekly mailing list featuring the week’s headlines on Squared Away.

Retirement is a perennial favorite among readers. But the top 10 list below also includes blogs about financial education and knowledge of the U.S. retirement system, longevity, and the hardships specifically faced by older workers: …Learn More

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Get a Truly Free Credit Report

These federal government resources should be helpful to Squared Away readers ranging in age from 20 to 70:

Free credit report: Young adults in particular may not be aware they’re entitled to a free credit report from one of the major credit rating agencies. To ensure the report truly is free, click and follow the links to an outside source recommended by the Federal Trade Commission. To file a paper request or ask for a report by telephone, try the federal Consumer Financial Protection Bureau’s website.

New U.S. Social Security Administration blog: The agency started a new blog last month to provide important benefit information under various programs. Here’s a sample of three useful articles on the blog:

Student Debt Burdens Non-Grads More

Cover of bookThe share of college students who must borrow to pay for their education has surged over the past decade. Average borrowing per student is also much higher than it was in 2004, though there’s evidence it might now be in decline.

Only now is serious research trickling in about the personal financial fallout from the nation’s $1 trillion-plus in student debt outstanding. But one new study reaches an interesting conclusion about the burden of student debt: it “is much greater among non-completers than among those who obtain a college degree.” One reason is that they can’t expect to earn the higher income that a degree confers on a graduate.

The study – part of an edited volume published by the W.E. Upjohn Institute for Employment Research, “Student Loans and the Dynamics of Debt” – gauged the debt’s impact on various measures of personal financial stability, including the likelihoods of filing for bankruptcy protection and buying a house.

The researchers first analyzed a broad sample of U.S. households over age 29, controlling for income and other demographic characteristics. They found some negative impact as student debt levels rise, but this effect was “not particularly strong.”

However, there was a large impact on the financial stability of a subgroup of borrowers who had not completed their degrees. The personal finances of these “non-completers,” as the study called them, are “particularly susceptible to being burdened by student debt.”…Learn More

Video: College Borrower’s Remorse

Parents should watch this video with their college-bound children.

The young adults featured in “Voices of Debt” have one thing in common: a lack of understanding of the financial implications of debt at the time they were taking out their student loans.  So it’s critical that parents start this conversation early with their children.

The compelling video, produced by Manhattan ad agency The Field, speaks for itself.  Similar videos can be found here.Learn More

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