November 17, 2024

Some Colleges Don’t Produce Big Earners. Are They Worth It?

Just 43 percent of the students who start at Grambling are outearning high school graduates six years later. “Our interest is not in getting the elite financially but getting the students who would not have had opportunities at other institutions,” said Gavin R. Hamms, the associate vice president of enrollment management. “It’s deeper than the data.”

Warren Wilson College in Swannanoa, N.C., faces a unique challenge. It is a so-called work college, which means students have an on-campus labor assignment. There are community engagement requirements, too, on top of regular classwork and whatever additional job students might need to earn extra income.

The school’s graduation rate is just 53 percent, according to the College Scorecard. If those among the 47 percent enter the labor market without a degree, they’re at a disadvantage. Indeed, just 37 percent of the students who start there are outearning high school graduates six years later.

Warren Wilson’s provost, Jay Roberts, didn’t shy away from the figure in an interview. Warren Wilson has obstacles to completion — and thus to higher earnings — that most other schools don’t have. While it has reduced the campus work requirements in the last few years, the school still won’t be right for every teenager who shows up thinking that it is.

Dr. Roberts does ask that people consider other metrics, too, though. The school, he said, does better than peers on survey questions of those who do graduate about whether the school prepared them for social and civic engagement and whether they find their work meaningful.

Indeed, there are students who are by no means undecided about their studies and careers and do enter college with a reasonably clear sense about their modest financial goals. Those at Hampshire College in Amherst, Mass., outearn high school graduates 46 percent of the time six years after starting.

Article source: https://www.nytimes.com/2022/08/20/your-money/college-graduate-earnings.html

How Online Travel Planning Is Getting Easier

Expedia Group wants your loyalty. Named for its flagship online travel agency, Expedia, the collection of travel companies includes the online agencies Travelocity and Orbitz, the vacation rental platform Vrbo, the hotel discount booking site Hotwire.com, the rental car site CarRentals.com and more. In early 2023, it plans to unite them under One Key, a loyalty program spanning its 12 brands, meaning points earned booking a flight on Expedia could be applied to the cost of a future rental on Vrbo.

“It’s so hard for people to keep track of programs and rewards,” said Jon Gieselman, the president of Expedia Brands, the consumer division of the group, who added that the idea of an integrated loyalty program occurred to him when he opened his own travel wallet stuffed with dozens of membership program and credit cards.

“It struck me that our superpower opportunity was to create connections between all of our brands in the minds of customers and at the same time make it easy to make sense of disparate programs,” he added.

A few of the brands, including Expedia, Orbitz and Hotels.com, already have loyalty programs — with a collective enrollment of 154 million members — and the company has not yet disclosed conversion formulas or One Key’s rates for earning and using points.

While most loyalty programs encourage members to stay with one brand, One Key will allow users to apply points across categories in a scheme Mr. Gieselman called the “unloyalty program,” making it distinct from competitors.

“Expedia’s expanded loyalty offering can draw more people to the brand umbrella with flexible options to earn and burn points on whichever Expedia brand offers the most fitting options for a given trip,” said Ms. List of Phocuswright, adding that the loyalty program eases “friction” between Expedia brands that often overlap.

Article source: https://www.nytimes.com/2022/08/17/travel/online-travel-planning.html

Where Money Meets Feelings: Financial Therapy Finds Its Footing

“The financial therapy program trains people to recognize when an issue is outside of their expertise, and how to make a referral to someone else when necessary,” she said. Many financial planners deal with clients when they are facing major life events, such as marriage, divorce, career changes, retirement or a death in the family, and it’s normal for them to suggest a lawyer or an accountant. Why not a therapist?

Larger financial institutions are adopting more touchy-feely angles with their clients, too.

“Financial planners have always known that clients have trouble implementing goals even when they have been clearly outlined and demonstrated,” said Sonya Lutter, a founding member of the Financial Therapy Association who leads research and education at Herbers, a consultancy for financial advisory firms. “The part that’s been missing is the personal, behavioral element — a computer can’t just spit that out. A lot of big firms now recognize this, and are starting to integrate behavioral training into their work.”

Even the CFP Board, an organization that oversees the accreditation process for certified financial planners, has embraced the “soft skills” of money management. In January, the board added a section to its education program called “The Psychology of Financial Planning,” which covers “principles of counseling” and “client and planner attitudes, values and biases,” among other topics.

“Now anybody who wants to be a certified financial planner has to show competency in the psychology of financial planning, which is more or less financial therapy,” Dr. Lutter said.

With Americans feeling high financial anxiety, perhaps it’s inevitable that therapy and money should mix. It’s also a reflection of the growing challenges of our financial lives.

“Most of us no longer have stable careers for 30 years and then retire,” Ms. Clayman said. “We juggle multiple different jobs and income sources. We need to manage and plan for our future. And if we have a partner, we need tools for merging those two complex systems together. I would argue that’s a process that’s bigger than any spreadsheet can contain.”

Article source: https://www.nytimes.com/2022/08/13/business/financial-therapy-personal-finance.html

What to Know as the Pause on Student Loans Is Set to Expire

Mark Kantrowitz, a financial-aid expert, advises students to borrow “only as much as you need, not as much as you can.” Your total debt at graduation should be less than your anticipated annual starting salary, he said — ideally, “a lot less.”

Abby Shafroth, a lawyer with the National Consumer Law Center, said students rightfully worried about borrowing too much but should also be wary of borrowing too little. “You don’t want to borrow less but then not have enough for books,” she said.

The Consumer Financial Protection Bureau offers tools on its website to help determine how much you can safely borrow based on your financial situation and anticipated income after graduation.

Here are some questions and answers about student loans:

On July 1, rates for federal student loans for undergraduates rose to 4.99 percent for loans made through June 2023. Rates on federal loans are set each spring based on a formula and apply to all new loans made during a given academic year. The rate is fixed for the life of the loan. So if the rate on your loan for the last academic year was 3.73 percent, that won’t change. (Rates on most student loans are temporarily set to zero during the repayment pause; regular rates are expected to apply when the pause lifts.)

In general, dependent students can borrow up to $5,500 in federal loans their first year, $6,500 their second year, and $7,500 for each of their third and fourth years, with an overall cap of $31,000 (in case it takes longer to graduate). Borrowing caps are higher for independent and graduate students. Parents can borrow so-called Plus loans, at higher interest rates, if additional funding is needed. (Private lenders also offer student loans, but the loans lack the consumer protections of federal loans and are not included in the payment pause.)

Article source: https://www.nytimes.com/2022/08/12/your-money/student-loans-pause.html

Advice for Handling Retiring During a Financial Downturn

That warning light starts blinking when the withdrawal rate increases a certain amount — or one-fifth — above its initial rate. So if the portfolio plummets and the amount withdrawn now translates into 6 percent or more, up from 5 percent, retirees would need to cut their withdrawal dollar amount by 10 percent.

For example, consider a retiree who in the first year collects 5 percent, or $25,000, from a $500,000 portfolio. If inflation was 9 percent, the next year’s withdrawal would normally rise to $27,250. But if a guardrail was tripped — that is, if the portfolio plummeted to roughly $415,000, making that $25,000 now equivalent to a 6 percent withdrawal rate — the amount withdrawn would instead need to decline to $24,525 (or 10 percent less than $27,250).

Conversely, if the portfolio grows, causing the withdrawal rate to shrink to 4 percent, the retiree can increase the dollar amount withdrawn by 10 percent and adjust for inflation thereafter.

This rule is generally applied until the final 15 years of retirement — for example, an 85-year-old couple who want to be safe until age 100 can stop using it, as long as they aren’t concerned about how much money they want to leave to their heirs.

Check up. This is another rough rule of thumb that helps retirees figure out whether they may be withdrawing too much.

Let’s say you’re retiring at 70 and you decide you will probably need your money to last until age 95. Divide one by 25 (the number of years you need the money to last): That translates into a 4 percent withdrawal rate for that year. With a $500,000 portfolio, that’s $20,000.

But if you’re on track to pull out $30,000 that year — or 6 percent — you may want to pull back. “It’s an ongoing gut check,” Mr. Blanchett said. “Is this going to work long term? And that is a really simple way to get an answer.”

And if you don’t adjust? Just understand that you may have to make more drastic changes later.

“You are just trading money with yourself over time,” Mr. Blanchett added.

Article source: https://www.nytimes.com/2022/08/11/your-money/retiring-recession-financial-math.html

Electric Cars Are Too Costly for Many, Even With Aid in Climate Bill

Demand for electric vehicles is so strong that models like the Ford Mach-E are effectively sold out, and there are long waits for others. Tesla’s website informs buyers that they can’t expect delivery of a Model Y, with a purchase price of $66,000, until sometime between January and April.

With so much demand, carmakers have little reason to target budget-minded buyers. Economy car stalwarts like Toyota and Honda are not yet selling significant numbers of all-electric models in the United States. Scarcity has been good for Ford, Mercedes-Benz and other carmakers that are selling fewer cars than before the pandemic but recording fat profits.

Automakers are “not giving any more discounts because demand is higher than the supply,” said Axel Schmidt, a senior managing director at Accenture who oversees the consulting firm’s automotive division. “The general trend currently is no one is interested in low prices.”

Advertised prices for electric vehicles tend to start around $40,000, not including a federal tax credit of $7,500. Good luck finding an electric car at that semi-affordable price.

Ford has stopped taking orders for Lightning electric pickups, with an advertised starting price of about $40,000, because it can’t make them fast enough. Hyundai advertises that its electric Ioniq 5 starts at about $40,000. But the cheapest models available from dealers in the New York area, based on a search of the company’s website, were around $49,000 before taxes.

Tesla’s Model 3, which the company began producing in 2017, was supposed to be an electric car for average folks, with a base price of $35,000. But Tesla has since raised the price for the cheapest version to $47,000.

Article source: https://www.nytimes.com/2022/08/08/business/energy-environment/electric-vehicles-climate-bill.html

Why College Students May Need Renter’s Insurance

A renter’s policy doesn’t cover everything. The policy may shield you if someone trips and gets hurt in your apartment, but not if a guest intentionally punches a hole in the wall, Ms. Alvarado said: “That’s what the security deposit is for.”

The average annual renter’s premium was $174 in 2019, according to the Insurance Information Institute. Some policies cost less. Lemonade, an online insurer, offers basic policies starting at $5 a month.

Coverage details can vary by state and by insurer. Make sure the policy’s maximum benefit is high enough to cover your belongings. Always check to see if the policy pays the replacement cost of damaged property rather than actual cash value, which may be less, and if it lists any exclusions. Policy language can be confusing, so ask if you don’t understand something.

Students with items that exceed their policy’s coverage amount, like special computer equipment or musical instruments, may be able to add them at extra cost, Ms. Worters said.

A renter’s policy typically covers water damage caused by sprinkler systems that are accidentally set off or from rain entering through a damaged roof — but generally not from floodwater flowing in from the ground up. For that, you would need a flood insurance policy.

How frequent is water damage from sprinkler system mishaps? “I wouldn’t describe it as common, but when it does occur, it’s significant,” said Josh Gana, facilities and physical environment director with the Association of College and University Housing Officers-International.

Article source: https://www.nytimes.com/2022/08/05/your-money/college-students-renters-insurance.html

The Democratization of Airport Lounges

Now other banks are getting into the lounge game, including Capital One, which opened its first lounge — with a stationary cycling room, showers and craft cocktails — in November at Dallas-Fort Worth, with follow-ups planned for Denver and Washington Dulles outside of Washington, D.C., in 2023. Entry is restricted to owners of the bank’s Venture X card, which costs $395 a year, and their guests; the card’s perks include credits up to $300 for travel purchases.

JPMorgan Chase has announced it will open its own brand, Chase Sapphire Lounge by the Club, with six global locations, including Boston, Phoenix and New York’s LaGuardia Airport beginning next year and available to holders of its Chase Sapphire Reserve card ($550 a year with benefits, including $300 in credits on travel purchases and Priority Pass membership).

In these times of airline mayhem, many travelers are willing to buy themselves out of the airport hell of sitting on the floor to get close to the only available electrical outlet in the concourse, a rescue offered by pay-per-use clubs.

Plaza Premium Group, which has restaurants, lounges and hotels in more than 70 global airports, recently introduced its PPL Pass Americas, which costs $59 for two visits within a year to most of its lounges in North, Central and South America. The pass gets you into stand-alone Plaza Premium Lounges and the airline lounges it operates for the likes of Virgin Atlantic, Avianca and Air France. There are six eligible lounges in the United States, with a new location in Orlando, Fla., expected to open later this year.

Article source: https://www.nytimes.com/2022/07/27/travel/airport-lounges.html

The Case of the $5,000 Springsteen Tickets

Since then, Ticketmaster, which is handling most of the U.S. shows on Mr. Springsteen’s tour next year, has tried to wear the white hat, at least some of the time. In an interview in May on a podcast called “The Compound Friends,” Michael Rapino, the chief executive of Ticketmaster’s parent company, Live Nation Entertainment, noted that many tickets for the best concerts and other events had a much higher street value the moment Ticketmaster sold them. Why shouldn’t an artist capture most of that excess? Prices that are too low open the door for scalpers to make more money — via the profit they gain from selling at the true market price — than performers make themselves.

If artists do want to capture that, Ticketmaster is prepared to help — and to take a fee for doing so. And that’s what Mr. Springsteen seemed to be doing here, using Ticketmaster’s “Official Platinum” system, in which seats are “dynamically priced up and down based on demand.”

You already know what happened next: Those platinum prices were plenty pricey. Outrage ensued. A congressman from New Jersey yelled into the wind.

“This broke our spirit,” said Pete Maimone, a real estate agent in North Brunswick, N.J., who coordinates a face-value-only ticket exchange for longtime fans. He has shut it down for now, he told me, while fighting back tears. “We did not want to participate any longer in this clear-as-day scheme to extract money from fans,” he said.

Over the weekend, in an attempt to quiet things down, Mr. Springsteen’s camp gave Ticketmaster permission to release some numbers. Just 1.3 percent of Ticketmaster users paid more than $1,000 per ticket. Also, 88.2 percent of tickets were “sold at set prices,” according to Ticketmaster, though the remaining 11.8 percent are likely to represent more than 11.8 percent of the revenue per show, owing to their higher face value.

Who set these prices? “Promoters and artist representatives set pricing strategy and price range parameters on all tickets, including dynamic and fixed price points,” a Ticketmaster spokeswoman said in an emailed statement. “When there are far more people who want to attend an event than there are tickets available, prices go up.”

Article source: https://www.nytimes.com/2022/07/26/your-money/bruce-springsteen-tickets.html

Average Car Payments Hit a Record High. Here’s What to Know.

Here are some questions and answers about car prices:

Maintaining good credit is important so you can qualify for the lowest interest rate possible, Mr. Smoke said. Some dealers may still offer zero percent financing on new cars, but you’ll typically need a credit score of 760 or higher to qualify, he said. You can get a free credit report at annualcreditreport.com.

Compare loan rates among lenders and get prequalified before car shopping, Mr. Preston of Consumer Reports said, so you can check the rate you secured against the one offered by the dealer.

Yes, and many consumers are doing that, Edmunds says. More than a third of shoppers who financed a new car in June chose a loan of 73 to 84 months — or about six to seven years. But longer loans typically have higher interest rates, so you’ll pay more over time even though payments are more manageable. And with longer loans, there’s more risk of becoming “upside down,” meaning the car will be worth less than the loan balance. In other words, you could owe money if you have to sell the car before the debt is paid.

Delinquency rates on consumer debt, including car loans, remain low but increased “modestly” in the first quarter of the year, according to the Federal Reserve Bank of New York. If you are struggling to make payments, contact your lender to discuss options, said Kristen Holt, chief executive of GreenPath Financial Wellness, a nonprofit credit counseling agency that has its headquarters in Detroit: “It’s better to speak to the lender instead of just missing a payment.”

If the problem is short term, you may be able to defer payments while you stabilize your finances. With car values high, you could probably sell your car and pay off the debt, then shop for a more affordable model — if you can find one. For most Americans, commuting to work without a car is difficult, unless you work from home or live near a city with good public transportation. If the rate on your loan is high, you can try refinancing. Ms. Holt said some credit unions offered lower-interest programs.

Article source: https://www.nytimes.com/2022/07/15/your-money/monthly-car-payments-interest.html