Diversions April 2, 2008

Graduation Dazed?

This spring, 3.33 million students will graduate from high school, the largest class in American history.
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For those with a student in that group, it may be too late – but Kiplinger has unveiled an educational video on paying for college and how to borrow wisely titled “Borrow Smart.’ The 24-minute video first offers tips on saving, keeping costs low, and accessing scholarships and grants. Kiplinger experts then advise families on how, when necessary, they can borrow wisely to make the investment in a college education.
The film, written by and featuring editors of Kiplinger’s Personal Finance magazine, was underwritten by Sallie Mae (which describes itself as “the nation’s leading saving- and paying-for college company’) champions its “1-2-3 approach’ to paying for college:
  • first, tap “free money’ such as grants and scholarships;
  • second, fully exhaust federal loans;
  • third, fill any gap with private education loans.
Late Starts?
According to Sallie Mae’s 2007 Survey of Parents of College-Bound Freshmen, 61% of all parents of incoming college freshmen said that they began initial discussions about the best way to pay for college after the child entered high school.
The College Board reports that the average cost of a four-year public college in 2007-2008 was $13,589 and the average cost of a four-year private college was $32,307. One-third of all college graduates finish with no debt. The other two-thirds who borrowed finished school with an average of $19,200 in student loans.
Video Details
According to the announcement, the video is a highlight of the “Paying for College’ section of the Kiplinger Web site at www.kiplinger.com/money/payingforcollege. Sallie Mae is also making it available to families across America via its Web site at www.salliemae.com/kiplinger.
The video is accompanied by a downloadable guide, including discussion questions for parents and students to use as they talk about how to pay for college.
Data & Research April 1, 2008

Debt Impeding Retirement Savings

A new survey found that 43% of non-retirees said debt affects their ability to save for a comfortable retirement “a great deal,″ while 32% of non-retirees said debt forced them to cut back their retirement savings.
Reported by

A Securian Retirement news release about the survey reported that more than half of retirees (52%) acknowledged they were in debt when they retired. Those with the heaviest debt loads were also the most likely to pronounce themselves financially insecure.

According to the news release, more than half of retirees surveyed retired with non-mortgage debt, and 23% said their debt equaled or surpassed their savings and investments at retirement. Twenty-six percent of Boomers and 33% of Silents (born 1925-1945) expected to carry non-mortgage debt into retirement.

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Respondents indicated their top two financial goals are paying off debt and saving for retirement (or, for retirees, ensuring a comfortable retirement for the rest of their lives). While seven in 10 respondents said disposing of debt is a high priority, only four in 10 actually paid down more debt than they added during a 12-month period.

“It’s understood that Americans have debt, but what’s surprising is the impact of debt on their ability to prepare financially for retirement,” said Kerry Geurkink, director, Annuity Marketing for Securian Retirement, in the release. “Finding the right balance between today’s living and tomorrow’s security becomes more challenging when consumers either don’t acknowledge or simply don’t understand the extent of their debt.”

“Debt – The Blind Spot on America’s Road to Retirement’ is a multigenerational study conducted for Securian by Washington D.C.-based Mathew Greenwald & Associates. Respondents came from Generations X and Y, plus Baby Boomers and members of the Silent Generation and included more than 2,000 working and retired Americans.

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