Products August 12, 2015

Prudential Issues Resource About Paying for College

The firm encourages families to seek out financial aid rather than rely on student loans.
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Prudential Financial has issued a new white paper to help families figure out how to pay for college education.

Titled  “Paying for College: A Practical Guide for Families,” it emphasizes seeking out all potential sources of financial aid, rather than heavily relying on student loans, which Prudential says can strangle a family’s finances.

“It can be a daunting process, but well worth the effort, especially if it means avoiding large amounts of debt or not dipping into retirement savings,” says Caroline Feeney, president of Prudential Advisors. “If it seems too intimidating, don’t be afraid to seek guidance because there is a good chance you’ll be able to put the right payment strategy in place that works for your family.”

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Prudential notes that 70% of college graduates today enter the workforce with an average of $33,000 in student loan debt. In addition, many parents carry college loan debt, with one-third of outstanding student loan debt held by individuals 40 and older. In total, outstanding student loan debt in the United States is in excess of $1.1 trillion, Prudential says.

“The good news is there are many ways to make college costs more manageable,” Feeney says. “We urge families to tap in to school resources, guidance and financial aid counselors, as well as their family’s financial professional who can help them make critical decisions around leveraging existing financial resources in a way that helps them protect longer-term financial security.”

Prudential’s white paper covers the variety of aid available: grants, scholarships, work-study programs, tax credits, tax deductions, needs-based aid and merit-based aid. It also examines subsidized and unsubsidized federal loans eligible families can consider, and the new repayment options on federal loans that have been introduced in recent years.

Furthermore, it discusses the variables that affect a student’s access to financial aid, including their choice of school, how much the family has saved for college, and how adept the family is at working through the process of applying for help. Equity in a family home and retirement accounts do not have any bearings on a child’s eligibility for aid, Feeney says.

Prudential’s “Paying for College” white paper can be downloaded here.

Compliance August 12, 2015

Record Companies Sued Over Pension Contributions

Several well-known music recording companies are named in a lawsuit tied to music streaming revenues and other sources of potential pension contributions.
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The American Federation of Musicians and Employers’ Pension Fund (AFM Pension Fund) says it is suing Atlantic Recording Corporation, Hollywood Records, Sony Music Entertainment, Universal Music Group Recordings and Warner Brothers Records for failure to meet pension fund contribution obligations.

The suit states that the five recording companies “failed to make pension fund payments from foreign audio stream revenue and foreign and domestic ringback revenue.” Followers of the music industry will already be familiar with the issue of audio streaming revenues, which have surfaced time and again as music consumers migrate towards online streaming as a primary listening platform.

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The complainants note the American Federation of Musicians of the United States and Canada (AFM) has had various contracts over the last 75 years “requiring the companies to share a portion of sales revenue with musicians.” Most of the revenue historically was from record sales and later CD sales, the complaint alleges, but in 1994, AFM and the recording companies entered into an agreement, subsequently renewed, requiring the companies to pay 0.5% of all receipts from digital transmissions including audio streaming, non-permanent downloads and ringbacks.

Ray Hair, AFM International President, suggests the record companies have not treated the pension funds with fairness or transparency in making these payments. 

“Last year independent auditors discovered that the recording companies had not made the required revenue payments from foreign audio streams, ringbacks, and foreign non-permanent downloads, Hair says. “Attempts to reconcile the issues outside of court have been ongoing for several months to no avail.”

The suit has been filed in a New York district court, according to AFM, and seeks “payment for all missing revenue owed the AFM Pension Fund, late payment penalties, interest, damages and legal costs.”

The full complaint is here.

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