Student loan reform signed into law

President Obama has signed into law the student loan reform that was attached to the health care bill. It’s a huge triumph against bank lobbyists and a significant victory for students who have been victimized by aggressive loan techniques used by the banks that are similar to the tactics they used for credit cards. Millions of young Americans are saddled with debt with onerous interest rates and penalties.

The new law is also a victory for taxpayers who no longer have to subsidize bankers preying on students.

The new law will eliminate fees paid to private banks to act as intermediaries in providing loans to college students and use much of the nearly $68 billion in savings over 11 years to expand Pell Grants and make it easier for students to repay outstanding loans after graduating. The law also invests $2 billion in community colleges over the next four years to provide education and career training programs to workers eligible for Trade Adjustment aid.

The law will increase Pell Grant grants along with inflation in the next few years, which should raise the maximum grant to $5,975 from $5,550 by 2017, according to the White House, and it will also provide 820,000 more grants by 2011. Including money from last year’s stimulus program and regular budget increases, the White House said Mr. Obama has now doubled spending on Pell Grants.

Students who borrow money starting in July 2014 will be allowed to cap their repayments at 10 percent of their income above basic living requirements, instead of 15 percent. Moreover, if they keep up their payments, they will have any remaining debt forgiven after 20 years instead of 25 years – or after 10 years if they are in public service, such as teaching, nursing or serving in the military.

Mr. Obama portrayed the overhaul of the student loan program as a triumph over an “army of lobbyists,” singling out Sally Mae, which he said spent $3 million to stop the changes. “For almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks,” he said. He said the money “was spent padding student lenders’ pockets.”

Hopefully this will enable more Americans to chase the American Dream.


Learning to be an entrepreneur

Is the life of an entrepreneur for everyone? Probably not, as it can be rather demanding and it’s hard to imagine living that life unless you have a passion for business or for the service or product you choose.

The next question involves whether you can learn to be an entrepreneur. Some people may want to do it, but they really aren’t prepared to make a successful go of it.

Read the rest of this entry »


Tough time for jobs in California

Forbes has several articles asking tough questions about the job market in California. The sad truth is that California is losing jobs to other states and other countries, as the high tax burden and cost of living makes it difficult for employers to commit to the state.

Now, you have to take into account the agenda at Forbes. While the business magazine is excellent, the ideological bent is very clear. The publication favors free markets and loathes taxes. While you would expect that from most business writers and publications, Forbes sometimes takes that to an extreme.

That said, they often make compelling arguments when presenting cases where business development is hindered by taxes and regulation, and California has become the poster-child for many of these problems.

In one provocative article, a Forbes writer argues that California is becoming more like France.

A friend of mine who is a successful venture capitalist shared a depressing observation over dinner recently: “California is like France,” he said. “I try not to hire here, and I certainly would not launch a company here. But the wine is good.”


Listen up Sacramento, your tax base is moving elsewhere.

“California has competition,” says Mehta. This is starting to show. A report recently released by the Bureau of Labor Statistics shows Silicon Valley lagging. Tech employment fell nearly 17% between 2001 and 2008, while nationally those types of jobs grew 4%. Silicon Valley’s 11.8% unemployment level is higher than the nation’s.

“It’s a combination of taxes and talent,” says Mehta. “Taxes and expenses here are high, and we can get the talent or move it elsewhere. This wasn’t the case 10 years ago.”

Another article details how employers like McAfee are moving employees outside the state.

The dysfunctional nature of California politics is now catching up to the state. Meanwhile, other states are seizing the opportunity with incentives and other aggressive tactics to brings in jobs. Will California wake up?


Watching expenses with prepaid credit cards

If you have a small business, the thought of giving some of your employees a credit card for expenses can be terrifying. Sure, they may be trustworthy, but it becomes something you have to monitor, and sometimes the problem can get out of hand and you don’t catch it for months.

One solution would be to use prepaid credit cards for your employees. This way, you don’t have to worry about them exceeding the limit on the card, and it forces you to monitor the situation and pay attention to expenses.

In this economy, you need to use every tool at your disposal to monitor costs. Having your employees fill out reports isn’t enough, as you’re often too busy to look over them closely. With this system you can minimize mistakes.


Lessons from the king-sized success (and failures) of Donald Trump

People who want to learn about success often forget that many of these lessons are also about how to face gigantic problems and solve them. As Oscar Wilde famously said “Who are afraid to fail are afraid to succeed.” There is no better person to learn from than Donald Trump.

As a kid, Trump was obsessed with baseball to the exclusion of almost everything else so his parents had to send him to the New York Military Academy to sort him out. It worked and Trump pulled up his socks, graduating from one of the best business schools in the country, the Wharton School of business at the University of Pennsylvania. After an apprenticeship with his father, a successful real estate developer, Trump was ready to take off on his own. Trump has always thought big and told Millionaire Magazine “Always do something that you like, always do something that you enjoy doing, or you will never be successful. You will never be good at it,” However, it is Trump’s success in overcoming his gigantic problems that make him truly unique.

Trump made a multibillion dollar fortune only to see most of it wiped out in the real estate market crash. He was staring down the brink of the precipice with total debts of over $9.2 billion. His superlative negotiating skills and his astute business moves enabled him to recover. In his own words: “It’s always a great asset to be able to get along with people.” Over the years, despite some very tricky deals, I’ve generally been able to get along with people. You always have to let the other side think that they are also getting something out of the transaction. And, it’s often true that the best deals are the ones that everybody benefits from.”

Trump would be a winner anywhere, but he happened to choose the real estate business. He was also a master at using debt and keeping his options open. Certainly, one lesson you can learn from him on using debt is to investigate the use of elastic loans.


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