Student Loans Consolidation |stock market

European and Asian Stocks Advance

2008-11-21T03:31:00.000-08:00

European and Asian Stocks Advance; U.S. Index Futures Gain

Stocks in Europe and Asia and U.S. index futures rose as speculation Citigroup Inc. may be up for sale and the cheapest commodity shares on record spurred rallies in banks and raw-material producers.
Citigroup rallied 20 percent in German trading. UBS AG, Switzerland's biggest bank, and Deutsche Bank AG jumped more than 5 percent. BHP Billiton Ltd. climbed 10 percent after mining shares fell to their lowest price relative to earnings since records began in 1995. Dell Inc., the second-largest personal-computer maker, advanced 6.3 percent on better-than- expected earnings.
``A split of Citigroup was already rumored quite a while ago,'' said Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management. ``I still think there is an upside between now and the end of the year because we are oversold. Maybe this is the start of this bear-market rally we have been waiting for.''
The MSCI World Index added 1 percent to 779.34 at 11:25 a.m. in London, trimming this week's decline to 11 percent. Europe's Stoxx 600 also advanced 0.8 percent, while the MSCI Asia Pacific Index increased 3.2 percent.
Futures on the Standard & Poor's 500 Index advanced 3.2 percent before a possible meeting of Citigroup's board. The benchmark index for U.S. equities has dropped to within 10 points of its level on Dec. 5, 1996, the day former Federal Reserve Chairman Alan Greenspan questioned in a speech whether the U.S. stock market suffered from ``irrational exuberance.''
More than $33 trillion has been erased from the value of global equities this year as credit losses and writedowns topped $967 billion and countries from the U.K. and Germany to the U.S. and Japan slip into recession.
Citigroup
Citigroup climbed 20 percent to $5.63. The board meets today to discuss the bank's options, a person familiar with the matter said, after Chief Executive Officer Vikram Pandit's efforts to rebuild investor confidence failed to halt the stock's descent to a 15-year low.
The board, under Chairman Win Bischoff and lead independent director Richard Parsons, will meet at Citigroup's headquarters in New York, said the person, who declined to be identified because the deliberations are private. The panel may consider selling off pieces of the bank or the entire company, the Wall Street Journal reported, citing people familiar with the matter. The New York Times reported that bank executives are not actively considering selling or splitting the firm.
UBS, the European bank hardest hit by credit-related losses, jumped 6.2 percent to 12 francs. Deutsche Bank, Germany's largest, gained 5.6 percent to 20.45 euros.
`Priced for Armageddon'
Banks have led declines this month that pushed Europe's Stoxx 600 to the lowest since 2003 and the S&P 500 of the U.S. to an 11-year low. The Stoxx 600 closed yesterday at 8.3 times reported earnings, below the four-year average of 14 times profit. The S&P 500 is valued at 16 times earnings, the lowest since 1995. The MSCI World Index of 23 developed countries trades at 11 times profit.
``Everything has been priced for Armageddon,'' said Geoffrey Pazzanese, manager of the Federated InterContinental Fund, which invests in developed and emerging markets equities outside the U.S. Federated Investors, based in Pittsburgh, manages $344 billion. ``Valuations are very attractive. Pessimism will subside at some point.''
BHP Billiton, the world's largest mining company, rallied 10 percent to 828 pence. Rio Tinto Group, the third-biggest, added 8.1 percent to 2,186. Vedanta Resources Plc, the Indian mining company controlled by billionaire Anil Agarwal, climbed 9.3 percent to 423.75 pence.
Record Low Valuation
The MSCI World Materials Index has lost 22 percent this month, the worst performance after a 28 percent retreat by financial shares in the gauge for 23 developed countries. Mining stocks closed yesterday at 5.6 times reported earnings of the companies in measure, the lowest since records began in 1995.
Dell added 6.3 percent to $10.43 in Germany. Third-quarter net income of 37 cents a share beat the 33-cent average of analysts' estimate in a Bloomberg survey. Dell has cut 13 percent of its workforce since its high point last year, helping bolster earnings even a sales missed analysts' estimates by more than $1 billion.11
DSG International Plc jumped 42 percent to 15.25 pence after the U.K.'s largest electronics retailer was upgraded to ``outperform'' from ``underperform'' at Credit Suisse Group AG, which said concerns about the company's survival dragged the stock too low. Today's rally trimmed the stock's slump this month to 28 percent.
``The risk of a near-term financial failure is in our view being over discounted by the market and we believe management will reassure on its financial position'' next week, Credit Suisse analyst Assad Malic wrote in a research note today.
Bank of Ireland
Bank of Ireland Plc jumped 24 percent to 1.25 euros after the country's biggest bank by assets said it has received ``unsolicited approaches'' from a number of groups looking to invest in the bank.
Aer Lingus Group Plc gained 5.9 percent to 1.043 euros after Ireland's second-biggest airline was added to Goldman Sachs Group Inc.'s ``conviction buy'' list, which said ``Aer Lingus is one of the few airlines where we believe full-year 2010 consensus estimates are now realistic.''
CRH Plc advanced 5.5 percent to 16.2 euros after the world's second-biggest building materials maker said it has completed the renewal and extension of its 1.5 billion euro debt facilities.
Immofinanz AG may sell property worth 300 million euros ($376 million) to the Austrian government and issue convertible bonds to help boost its liquidity, Vienna's Die Presse reported without citing anybody. Shares of Austria's largest property developer gained 39 percent to 53 cents.
-- Editor: Stephen Kirkland, Daniel Hauck

Bonds Advance on Stock Drop, Global Deflation Concerns

2008-11-21T03:30:00.000-08:00

Japanese Bonds Advance on Stock Drop, Global Deflation Concerns

Japan's 10-year government bonds advanced for a second day as the Nikkei 225 Stock Average slumped, extending a global stock rout that has erased more than $12 trillion of value in equities this quarter.
Ten-year yields fell to the lowest in six weeks after the Standard & Poor's 500 Index and Dow Jones Industrial Average slid to their lowest levels since March 2003. Inflation-linked bonds worldwide are yielding more than conventional debt, signaling the global economy faces increasing risks of deflation.
``Deflation concerns as well as the plunge in U.S. stocks are lowering Japan's yields,'' said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. The bias for yields to fall will continue, he said.
The yield on the 1.5 percent bond due September 2018 fell 3.5 basis points to 1.435 percent as of 4:25 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.302 yen to 100.559 yen. The yield touched 1.43 percent, the lowest since Oct. 9.
Five-year yields declined two basis points to 0.86 percent.
Ten-year bond futures for December delivery advanced 0.44 to 139.27 as of the afternoon close in Tokyo. A basis point is 0.01 percentage point.
The S&P 500 plunged 6.1 percent and the Dow dropped 5.1 percent yesterday. The Nikkei 225 lost 6.9 percent and the MSCI Asia Pacific Index slid 5 percent today.
Japan's bonds often move in the opposite direction to regional stocks. Benchmark 10-year yields had a correlation of 0.65 with the Nikkei and 0.72 with the MSCI index this month, according to Bloomberg data. A value of 1 means the two moved in lockstep.
20-Year Auction
Demand fell at the Ministry of Finance's sale of 900 billion yen ($9.4 billion) in 20-year bonds today. The auction drew bids worth 3.10 times the amount offered, compared with a so-called bid-to-cover ratio of 3.52 times at the previous sale in October. Last year's average ratio was 3.59 times.
The government increased the sale by 100 billion yen to compensate for reduced issuance of inflation-linked bonds, the MOF announced last month.
The lowest price at the auction was 0.12 yen below the average price, wider than a spread of 0.08 yen at last month's auction. The so-called tail is the difference between the lowest and the average price. The wider the tail, the less bids are clustered around the average price.
``A 2.1 percent coupon isn't great for investors,'' said Keiko Onogi, a debt strategist at Daiwa Securities SMBC Co., one of the 24 primary dealers that are required to bid at auctions, in Tokyo. ``The tail was wide, but the auction went smoothly.''
Deflation Risk
U.S. consumer prices plunged 1 percent last month, more than forecast and the most since records began in 1947, a Labor Department report showed. A Japanese report on Nov. 13 showed Japan's wholesale inflation rate slowed for a second month.
``This is the starting point of seeing global deflation,'' said Takashi Nishimura, an analyst at Mitsubishi UFJ Securities Co., a unit of Japan's largest bank by assets, in Tokyo.
The extra yield 10-year conventional Japanese bonds offer over similar-maturity inflation-linked debt, known as the breakeven rate, was at minus 156 basis points today, according to data compiled by Bloomberg.
The U.S. five-year breakeven rate was minus 68 basis points and the three-year U.K. breakeven spread was minus 71 basis points yesterday. A negative breakeven inflation rate reflects investor expectations for declining consumer prices over the life of the security.
Demand for bonds increased after repurchase rates fell, Mitsubishi UFJ's Nishimura said.
``Repo rates have been recovering this week and investors are becoming more confident about funding costs,'' he said. Ten- year yields may fall to as low as 1.3 percent by year-end, according to Nishimura.
The Tokyo repo rate fell almost a basis point to 0.406 percent, the lowest since at least October 2007, according to data compiled by Bloomberg News.

Indian Stocks Climb; HDFC Lead Advance

2008-11-21T03:25:00.001-08:00

Indian stocks rose, with the benchmark Sensitive index snapping a seven-day, 21 percent drop, as some investors judged recent declines excessive.
Reliance Industries Ltd., India’s most valuable company, added 4.9 percent, also halting a seven-day slump. HDFC Bank Ltd., the nation’s third-largest lender, added 3.1 percent.
“The market was looking very oversold,” said Jayesh Shroff, who helps manage the equivalent of $2.4 billion in equities at SBI Asset Management Co. in Mumbai.
The benchmark Bombay Stock Exchange Sensitive Index, or Sensex, rose 307.43, or 3.6 percent, to 8,758.44 as of 12:14 p.m. local time. The S&P CNX Nifty Index on the National Stock Exchange added 88.70, or 3.5 percent, to 2,641.85. The BSE 200 Index climbed 2.7 percent to 1,034.57. Nifty futures for November delivery added 3.6 percent to 2,641.80.
The Sensex has dropped 57 percent this year as global financial companies’ losses and writedowns from the collapse of the U.S. subprime-mortgage market neared $1 trillion, eventually toppling Lehman Brothers Holdings Inc.
Reliance gained 4.9 percent to 1,107.45 rupees, the most in almost two weeks. HDFC Bank added 3.1 percent to 846.50 rupees, its steepest advance since Nov. 4. HDFC’s 14-day relative strength index, which measures how rapidly prices rose or fell during the period, dropped below 30 yesterday. Some investors regard readings at 30 or less as a signal to buy.
Overseas funds sold a net 2.08 billion rupees ($51.6 million) of Indian stocks on Nov. 19, increasing outflows from equities this year to $13.1 billion, the nation’s market regulator said.
The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Bajaj Hindusthan Ltd. (BJH IN) gained 0.55 rupee, or 1.3 percent, to 43.45. India’s biggest sugar maker expects its fourth-quarter profit to climb from the previous three months because of higher prices, Chief Executive Officer Rakesh Bhartia said.
India Infoline Ltd. (IIFL IN) gained 1.75 rupees, or 4.4 percent, to 41.95, extending yesterday’s 4.2 percent advance. The local stock brokerage and financial services company rose after saying yesterday it may buy back shares.
Oil & Natural Gas Corp. (ONGC IN) rose 24.9 rupees, or 3.8 percent, to 676. India’s biggest explorer said oil will return to $100 a barrel, justifying its 1.4 billion-pound ($2.1 billion) takeover of the U.K.’s Imperial Energy Plc.

Stock Exchange

2008-11-21T03:22:00.000-08:00

10-year notes headed for their biggest weekly advance since the stock market crash in 1987, sending yields to record lows, as the risk of a global recession deepened.

Yields on two-, five- and 10-year notes and 30-year bonds fell to the least since the Treasury began regular sales of the securities as investors dumped equities and corporate debt in favor of the safest assets. Traders this week started to bet the Federal Reserve will cut interest rates to 0.25 percent from 1 percent to rescue the economy, which shrank in the third quarter.

``People are rushing to Treasuries,'' said Hiromasa Nakamura, senior fund investor in Tokyo at Mizuho Asset Management Co., which has $42.6 billion in assets. ``The rally is the biggest that I can remember.'' The U.S. may cut rates to zero and keep them there, he said.

The yield on the 10-year note was little changed today at 3.01 percent as of 10:50 a.m. in Tokyo, according to BGCantor Market Data. The rate fell 72 basis points this week, the most since October 1987. The 3.75 percent security maturing in November 2018 traded at a price of 106 9/32. A basis point is 0.01 percentage point.

Treasuries have returned 9.3 percent in 2008, heading for their best year since 2002, according to Merrill Lynch & Co.'s U.S. Treasury Master Index. U.S. corporate bonds have handed investors a 16 percent loss so far in 2008, their worst year since the Merrill figures start in 1997.

``It's the continued meltdown of the financial system, lack of action by Washington,'' said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG's Private Wealth Management unit in New York. ``There's no white knight coming to save us,'' he said yesterday.

Slowing Growth

Bonds may extend their rally as economic growth slows and central banks cut interest rates and pump funds into the financial system, Goldman, Sachs & Co. said.

The yield on the benchmark U.S. 10-year bond may decline to 2.75 percent by early next year, Francesco Garzarelli, chief interest-rate strategist at Goldman, wrote in a report. Goldman, which is one of the 17 primary dealers that trade directly with the Fed, had a previous forecast of 3.5 percent.

The Standard & Poor's 500 extended its 2008 tumble to 49 percent, poised for the worst annual decline in its 80-year history. The S&P slumped 6.7 percent yesterday, reaching an 11- year low. The MSCI Asia Pacific Index of regional shares fell 2.3 percent today, for a weekly decline of 12 percent, the most since the period ended Oct. 10.

Rate Futures

Futures on the Chicago Board of trade show 32 percent odds the Fed will lower its target for overnight lending between banks by 0.75 percentage point to 0.25 percent at its next meeting on Dec. 16, from zero bets a week ago.

``It's a direct correlation with stocks,'' said Thomas Roth, head of U.S. government bond trading in New York at Dresdner Kleinwort, also a primary dealer. ``We are the fear indicator, we are the tail being wagged by the fear in the system.''

Fed officials lowered their economic-growth estimates to zero to 0.3 percent for 2008, from 1 percent to 1.6 percent previously, the median forecast of Fed governors and district- bank presidents showed in a report this week.

Longer-dated Treasuries, which are more sensitive to inflation expectations, rallied this week on speculation the economic slump will trigger deflation, or a prolonged decline in prices. Consumer prices plunged 1 percent last month, more than forecast and the most since records began in 1947, the Labor Department said yesterday.

Breakeven rates, which show the difference in yields between inflation-linked and nominal bonds, suggest traders are betting the U.S. economy will face deflation over the next two years. The two-year U.S. breakeven rate was minus 4.04 percentage points.

Consolidation Loans

2008-11-17T02:09:00.000-08:00

The total personal debt in the United Kingdom at the end of September
stood at more than £1,000 billion – an increase of just over 5% in a 12-month –
so if you are feeling the effects of the credit crunch, and juggling
monthly repayments on credit cards, loans, etc., you are certainly not
alone. One possible solution to this ongoing problem may be to simplify your
finances by taking out a consolidation, or "debt consolidation", loan. As
the name suggests, this type of loan is designed to pay off existing
borrowing, and replace multiple monthly repayments with a single, affordable
repayment. This may not only provide what is effectively a "fresh start",
financially, but may also reduce the amount of interest payable on your
debt. Similarly, fixed monthly repayments – as opposed to minimum
payments on credit cards, for example – can allow you to pay off a
reasonable proportion of the debt each month, and thereby reduce the length
of time required to repay the total amount.

Pros & Cons of Consolidation Loans

The effectiveness of a consolidation loan depends, obviously, on the
interest rate available; there is no advantage to be gained by replacing
multiple repayments with a single repayment if this means paying the
same, or more, interest on your debt, but if you have one, or more,
credit cards – whose typical APR ("Annual Percentage Rate") is 17.5%, or
more – for example, a consolidation loan may provide a significant
benefit in this respect. You should, of course, choose the lowest APR available;
APR represents the true cost of borrowing (including any fees, charges, etc.,
which may not be immediately apparent) in a year.

Do bear in mind, however, that many lenders may you offer a more
competitive interest rate if you borrow more money – possibly more
than you actually need to repay your existing debt – so you need to
exercise a degree of self-discipline. The prospect of further spending a
holiday, or some other "luxury" item, may be appealing, but remember that the
purpose of a consolidation loan is to improve your financial situation in
the long-term, not to make it worse.

You should also calculate a repayment term that is suited to your own
financial circumstances; too short a repayment term may place you in the
position of being unable to meet monthly repayments, whilst too long a term may
cause you to lose your initial enthusiasm for improving your financial
situation, because you cannot see any real reduction in the total amount of
your debt. Lenders may actually ask you to complete a statement of your
outgoings – mortgage, or rent, payments, utility bills, other credit
commitments, etc. – so that you, and they, can make a realistic
assessment of an affordable monthly repayment.

On receipt of a consolidation loan, it may feel, psychologically, that
your financial situation has improved – which, indeed, it may well have, in
the long-term – even though you may not have actually reduced the total
amount of your debt, at all. This can be a potentially hazardous situation,
because it presents the illusion of available funds – possibly large amounts –
from previous sources of credit. It is a unfortunate fact that up to 80%
of borrowers who take out a consolidation loan actually run up further debts, so
be careful with credit cards, in particular, once the balance has been paid off.
A credit card with a high credit limit and a zero balance can be almost
irresistible, so it may be necessary to close any accounts and/or cut up cards,
themselves, unless your level of self-control is above average. The solution to
any debt problem is either to spend less, or earn more, in the long-term; in the
absence of a forthcoming lucrative career move, or promotion, this typically
requires a definite change in attitude towards spending.

The issue of PPI, or "Payment Protection Insurance", has always been a
thorny one in relation to consolidation loans, or loans of any kind. PPI
is designed, in theory, at least, to protect a borrower from unforeseen
circumstances, such as accident, illness, or redundancy, which may prevent him,
or her, from making repayments on a loan, or other credit agreement. In
practice, however, the number of borrowers who actually claim on this form of
insurance policy is small compared to the number of policies sold, and if
bought alongside a loan, PPI is typically very expensive. It is obviously up
to individual borrowers to decide whether PPI is necessary, or not, but even
if it is, it may be available from an alternative provider at a fraction of
the cost.

Student-loan consolidation

2008-11-02T02:53:00.000-08:00

Student-loan consolidation

This time of year, millions of college graduates face a reality of life after academia: With the six-month grace period on student loan repayment coming to an end, it's time for them to start making good on their debt.But this year, one popular option--student loan consolidation--is harder to come by.Consolidation loans are a type of refinancing for student debt. Graduates can lump all their college loans together, merging multiple bills into one and potentially lowering the interest rate.

Not anymore.The credit crunch has made it expensive for many lenders to raise the loans funds they need to create new loans. In addition, a law passed last year by Congress reduced the subsidies on federal loans that lenders receive from the government."Students Consolidation loans are, in effect, on their way out," said Mark Kantrowitz, publisher of FinAid, which tracks the student loan industry.Still, they're not gone entirely. Depending on your situation, consolidation loans may be an option. And even if you don't qualify, there are other ways to ease your monthly repayment burden.Here's some guidance: -- Go direct with federal consolidation.Virtually no private lender will consolidate federal student loans anymore.

But there is another option: You can consolidate your loans through the U.S. Department of Education's Federal Direct Loan Program.The government has become, in a sense, the lender of last resort, the consolidation loans are the same as those offered from private lenders. You even receive a 0.25 percentage point discount on your interest rate if you pay your monthly bill with automatic debit.

Rethink private consolidation Although you can consolidate federal loans, you cannot include private loans in the deal. Those must be consolidated separately.And only half a dozen or so lenders offer private loan consolidation. Borrowers now must meet stricter lending standards--higher credit scores and income levels, among other things--to qualify. Federal loans ignore these factors, making them more borrower-friendly.In many cases, to qualify for a loan with attractive interest rates, you need a FICO credit score of 700 of higher, up from 650 previously, according to Jon Rudy, director of student loan products at Edvisors, a resource on student loan options. You also need a debt-to-income ratio well below 50 percent.As such, it only makes sense to consolidate private student loans if your credit standing is stellar, especially if you hope to lower your interest rate.You can bolster your odds by applying with a co-signer, such as a parent, whose credit history may be better than yours. And your parent may not be on the hook forever: In many cases, private consolidation loans release co-signer of their obligation after 24 to 48 consecutive on-time payments.Regardless, make sure to do the math and compare whether a private consolidation loan would save you money. Keep in mind that consolidation loans generally extend the repayment period from the standard 10 years to as much as 30 years, reducing your monthly bill but adding to your overall cost.Also, be mindful of fees, which can amount to as much as 4 percent of the principal you owe. Shop around. -- Consider alternative repayment plansOther repayment options may be available.

Private Loans for College

2008-11-02T02:47:00.000-08:00

Private Loans for College Dry Up, Just as Students Most Need the Money

While college tuitions keep rising, students and families continue to grapple with how to cover education costs. But those who would normally turn to private loans as a source for financial aid assistance will find that this source is becoming more scarce.

In a worsening economy banks aren’t loaning money to one another let alone struggling middle-class families, who often turn to private lenders as well as the federal government to help cover college expenses.

“They’re having a terrible time getting access to private student loans,” says Becky Timmons, assistant vice president for government relations at the American Council on Education. “The private student loan market is part and parcel of the lending environment banks worldwide are facing. Private lenders are pulling out of the program in lots of cases and we expect more of that.”

Just like home and auto lenders, private financial aid lenders are tightening eligibility requirements, including now requiring more students to have co-signers, Timmons says.

Even before the current economic crisis, private loans were on the decline, reversing years of steady growth, according to a report released this week by the College Board, a non-profit organization that seeks to help more students get a college education. These loans accounted for 23 percent of all education loan borrowing in the past year, the report states.

Federal loans have more preferable conditions than private loans, college aid advocates say. But federal aid is often not enough.

The College Board report shows that public financial aid has increased 5.5 percent after adjusting for inflation, while tuition at four-year public colleges and universities has climbed 6.4 percent to $6,585.

The Pell Grant program — one of the most popular student financial aid options — only covers about 32 percent of college costs.

At the same time, the report shows that the availability of private loans declined by $173 million (1 percent); especially troublesome during an economic crunch.

Fallout from the current economic downturn was not reflected in data contained in the College Board report, but Molly Corbett Broad, president of the American Council on Education, says that given the current economic crisis states have slashed appropriations to colleges, donors are withdrawing, and endowments are posting net losses.

“Given the current economic strain on state budgets, the pressure on state governments to shift costs of education to students and families may prove irresistible,” Corbett Broad says. At least 17 states have already cut funding to public institutions of higher education, which will translate to higher tuitions shouldered by students and their families, she adds.

More than half of high school students in a recent survey said they were more concerned than ever about being able to afford going to college, according to a MeritAid.com survey released earlier this month. About 57 percent of the high school students said they were considering a less prestigious and cheaper college.

Marlon Williams graduated from high school three years ago and now works as a receptionist at a Gold’s Gym in Arlington, Va. He has been applying to community colleges but says tuition costs are making him doubt whether he can afford to go back to school.

“The recession put a strain on my pocket and put me in a lot more debt than I was already in,” Williams says. “If they increase the tuition I’ll be over my head for a hundred grand.”

People like Williams, who may need to turn to private lenders to help pay for college, are especially hard hit by tuition hikes. Yet even wealthier middle-class families, who are far more likely to turn to private aid, are also feeling the pinch from increased tuition.

Jessica Wu, a 20-year-old international student studying marketing at the College of William & Mary, is a diplomat’s daughter who considers her family “upper middle class.” After yearly tuition hikes, Wu says her family now has to find ways to cut corners in order to pay her college tuition.

Wu, a junior at the southeast Virginia-based public college, says her family will have to be more conscientious about spending. As an international student, Wu’s family pays $19,000 a year for her to attend William & Mary.

“There are lots of little sacrifices that we’ll probably have to make,” Wu says. “I’m probably not going to be able to go back home [to Taiwan]. We’re going to have to be more frugal.”

William & Mary was hit with a 7 percent reduction in state funding, which translates to $3.4 million. As a result, the college is cutting costs in maintenance and operations and implementing a college-wide hiring freeze, says Brian Whitson, the school’s director of news services.

Officials there haven’t cut programs yet, Whitson says, but they haven’t ruled out that possibility for the upcoming academic year.

Xpress Loan Servicing

2008-11-02T02:45:00.000-08:00

Fitch Takes Rating Actions on Xpress Loan Servicing's SLABS Servicer Ratings

Fitch Ratings has taken the following rating actions on the U.S. ABS student loan servicer ratings for Xpress Loan Servicing (XLS): --Private student loan servicer rating affirmed at 'Proficient'; --FFELP servicer rating downgraded to 'Proficient' from 'Proficient Plus'. The ratings are based on XLS' experienced management team and the financial strength of its parent, CIT Group, Inc. (Long-term IDR rated 'A-' by Fitch). XLS has serviced private consolidation loans for approximately three years and federally guaranteed student loans for four years. The downgrade is due to the uncertainty surrounding XLS' future. While CIT is still rated investment grade at 'A-', they have made clear to the market their intention to exit consumer businesses. CIT has stopped originating student loans and has been exiting consumer lending to focus solely on commercial lending. While XLS senior management team remains, they may be challenged in their ability to maintain the high service level standards previously achieved. XLS is a for profit student loan servicing subsidiary of CIT Group Inc. Servicing is performed from their Cleveland, Ohio headquarters using the Compass Servicing System which was developed by AES/PHEAA. XLS began servicing FFELP loans in 2004 and private consolidation loans in 2006. They are currently the 10th largest student loan servicer by unpaid principal balance. As of Oct. 1, 2008, XLS' serviced portfolio totaled about $9.1 billion, of which approximately $8.9 billion is federally guaranteed loans, predominantly consolidation Stafford and Plus loans. The remaining is consolidated private student loans.

Property Auctions in UK

2008-10-15T18:35:00.000-07:00

What You Need to Know about Property Auctions in UK

For both first-time and seasoned property investors, one of the best bets for scoring a great deal on a prize property is through an auction. An auction is a good place to start if you want to get up on the first rung of the property ladder. For the more experienced investor, auctions are also Following the publication of new white paper on the future of the future regulation of the secured loans industry, the Association of Finance Brokers (AFB) has called upon intermediaries to give their thoughts.It is calling for responses on a number of secured loans regulation issues by September 20th. Among the proposals included in the paper The advent of the global slowdown and credit squeeze is bringing on the pains in the real estate industry. It’s now time for some thinking out of the box and for determined real estate agents to be more creative in the way they run their businessI work with hundreds of real estate agents from about

Apply for Secured Credit Cards

2008-04-15T18:32:00.000-07:00

What You Need to Know Before You Apply for Secured Credit Cards
If you’ve been facing credit challenges and haven’t been able to obtain credit, you may be getting ready to apply for secured credit cards. Before you do, you need to realize that not all secured cards are created equal. Here are some things to consider before submitting any secured credit card application…The DepositWhen you apply

U.S. Needs to Maintain a Role in Mortgage Securities

2008-04-02T02:43:00.000-07:00

Bernanke Says the U.S. Needs to Maintain a Role in Mortgage Securities

The mortgage modification movement is poised for a big jump off the starting blocks with the Friday announcement by JP Morgan Chase & Co. of plans to modify terms on $70 billion in home loans for as many as 400,000 borrowers, according to today's Associated Press article in the Los Angeles Times and a longer article in the Wall St. Journal.
Borrowers behind on their payments or about it be -- particularly those with option adjustable interest rate mortgages, a.k.a. options ARMs, that result in negative amortization -- could be moved into loans with lower rates or smaller principal amounts owed.
JP Morgan joins other lenders taking a similar course, including Bank of America and Wachovia.
Reports the Journal:
"The move ... suggests that banks are realizing they can improve the value of their loan portfolios through mass modifications rather than foreclosures, which tend to produce larger losses. Until now, mortgage holders have been reluctant to renegotiate loans or have been doing so one-by-one, a time-consuming process. The bundling of loans into securities that are then sold to investors further complicates matters."
Foreclosures will be put on hold for 90 days while the modification process is put into effect. That's a long road ahead.

LOANS FOR LIFE

2007-08-27T05:21:00.000-07:00

A loan is a type of debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt. A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.
Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding. Bank loans and credit are one way to increase the money supply.
Legally, a loan is a contractual promise of a debtor to repay a sum of money in exchange for the promise of a creditor to give another sum of money.

Types
SecuredA mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security - a lien on the title to the house - until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.
In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter - often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.
UnsecuredThese may be available from financial institutions under many different guises or marketing packages:
credit card debt, personal loans, bank overdrafts credit facilities or lines of credit corporate bonds The interest rates applicable to these different forms may vary depending on the lender, the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.
AbusesPredatory lending is one form of abuse in the granting of loans. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorised, it could be considered a loan shark.
Usury is a different form of abuse, charging excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organisations of lending at usurious interest rates and making money out of frivolous "extra charges" [1]
Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.

STUDENT LOAN
Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually carry a lower interest rate than other loans and are usually issued by the government. Often they are supplemented by student grants which do not have to be repaid.

LOANS IN CANADA
Government LoansCanadian citizens, permanent residents of Canada, and protected persons (including convention refugees)[1] are normally eligible for loans provided by the federal government, through the Canada Student Loans Program (CSLP), in addition to loans provided by their province of residence. Loans issued to full-time students are interest free while a student is in full-time studies, (as long as the maximum number of eligible weeks has not been reached) - the interest is paid by the government during the interest free period. When they are no longer in school, the loans immediately begin to accumulate interest. Repayment usually begins after 6 months at which time the accumulated interest is added to the loan amount. In most cases, the loan(s) must be repaid within 10 years after completion of studies.
Funding is available for part-time students through the CSLP (provincial student loans are not available). Part-time students must make interest payments while in study and begin payments of principal and interest when they cease to be a part-time student. Grants may supplement loans to aid students who face particular barriers to accessing post-secondary education, such as students with permanent disabilities or students from low-income families.
Students must apply for the Canadian and provincial loans through their provincial government. The rules for what determines your province of residence vary, but normally it is defined as where you have most recently lived for at least 12 consecutive months, not including any time you spent as a full-time student at a post-secondary institution. In most cases, the province of residence is the province one lived in before becoming a post-secondary student.
Canada Student Loans (CSL) of up to $210 per week of full-time study or 60% of the student's assessed need (the lesser of these) can be issued per loan year (August 1–July 31). Loans issued through provincial programs will normally provide students with enough funding to cover the balance of their assessed need. Part-time loans of up to $4,000 can be made, but a student cannot be more than $4,000 in debt on part-time loans at any one time. All Canadian students may also be eligible for the Canada Millennium Scholarship Foundation Bursary (CMS Grant), and other grants provided by their province of residence.[2]
For example, students in British Columbia may be eligible for a maximum of $14,300 combined loan and grant funding per year.
HistorySome text from the Department of Human Resources and Social Development Canada:
The CSLP was created in 1964. Since its inception, the Program has supplemented the financial resources available to eligible students from other sources to assist in their pursuit of post-secondary education. Between 1964 and 1995 , loans were provided by financial institutions to post-secondary students who were approved to receive financial assistance. The financial institutions also administered the loan repayment process. In return, the Government of Canada guaranteed each Canada Student Loan that was issued, by reimbursing the financial institution the full amount of loans that went into default. In 1995, several important changes were made to Canada Student Loans. First, the Canada Student Financial Assistance Act was proclaimed, replacing the existing Canada Student Loans Act (which still remains in force to this day) reflecting the changing needs of the parties involved in the loan process, including the conferred responsibility of the collection of defaulted loans to the banks themselves. The Government of Canada developed a formalized "risk-shared" agreement with several financial institutions, whereby the institution would assume responsibility for the possible risk of defaulted loans in return for a fixed payment from the Government which correlated with the amount of loans that were expected to be, or were, in default in each calendar year. During this period, the weekly federal loan amount was increased to a maximum of $165. On July 31, 2000, the risk-shared arrangement between the Government of Canada and participating financial institutions came to an end. The Government of Canada now directly finances all new loans issued on or after August 1, 2000. The administration of Canada Student Loans has become the responsibility of the National Student Loans Service Centre (NSLSC). There are two divisions of the NSLSC, one to manage loans for students attending public institutions and the other to administer loans for students attending private institutions. Defaulted Canada Student Loans disbursed under this new regime are now collected by the Canada Revenue Agency which, by Order in Council dated August 1, 2005, became responsible for the collection of all debts due under programs administered by Human Resources and Social Development Canada. Due to the close nature of the Canada Student Loan Program (CSLP) and the provincial student loan programs, the changes in 1995 and 2000 were largely mirrored by the provincial programs. As a result of these changes, students who attended school before and after these transition years may find that they have up to 6 different loans to manage (pre-1995 federal & provincial; 1995-2000 federal & provincial; and post-2000 federal & provincial). The extent to which this is possible depends largely on a student's province of residence.
Students in professional programsMost charter banks in Canada have specific programs for students in professional programs (e.g., medicine) that can provide more funds than usual in the form of a line of credit, sometimes with lower interest rates as well. Students may also be eligible for government loans that are interest free while in school on top of this line of credit, as private loans do not count against government loans/grants.
Loan Administration and RepaymentThe Canada Student Loan (sometimes referred to as the National Student Loan) is administered by National Student Loan Service Centre under contract to Human Resources and Social Development Canada (HRSDC). Students have the choice of opting for a fixed interest rate of prime interest rate + 5%, or a floating interest rate of prime interest rate + 2.5%.
Based on the HRSDC student loan calculator [5], and assuming a prime interest rate of 4.5%, a standard 10-year (114 month) repayment period, and a loan of $30,000:
- if the Floating Interest option is selected, monthly payments will be $361.02 (principal and interest), resulting in total payments of $41,156.77 ($30,000 principal + $11,156.77 interest) over the life of the repayment.
- if the Fixed Interest option is selected, monthly payments will be $400.50 (principal and interest), resulting in payments of $45,657.54 ($30,000 principal + $16,657.54 interest).
Repayment AssistanceCSLP offers a number of programs to assist students who find themselves facing financial difficulty during repayment. Among these programs are:- Interest Relief , which is designed to help students meet repayment obligations if they are temporarily unable to make payments on their government student loans because of unemployment or low income. Interest Relief is granted for periods of six months, up to a maximum of 30 months. Some exceptions may apply. Students may also be eligible for a further 24 months of Extended Interest Relief. Once approved for Interest Relief, students are not required to make payments on either the monthly interest or the outstanding principal of their loan(s) (the federal and/or provincial government will pay the interest on a student's behalf).
- Debt Reduction in Repayment is designed to help students facing long-term financial difficulties manage the repayment of their Student Loan(s). DRR lowers the principal amount of a loan, thereby reducing the monthly loan payment to an affordable level based on family income. A student can receive up to three reductions (totaling up to $26,000) on their Canada Student Loan principal during their lifetime, depending on financial circumstances.
- Revision of Terms is a feature that provides students with the flexibility to manage loan repayment in a way that is responsive to individual situations. It can be used to decrease the monthly payments by increasing the repayment period (from the standard 10 years up to 15 years) should a student find the standard terms difficult to maintain. It can be used to increase loan payments by reducing the repayment period, allowing more rapid repayment of a loan.
- Permanent Disability Benefit allows for the reduction of loans for students who are experiencing exceptional financial hardship due to a permanent disability. The eligibility criteria varies based on date of loan negotiation and lender. A recent Access to Information request indicated that over 60% of applicants to this program were denied loan forgiveness.