On March 30, 2010, Obama combined two major reforms into one, calling it the Health Care and Education Reconciliation Act.   The health care issue is one that we have discussed before; the focus of this post is to explore the reasons for the student loan reform, which is the ‘Education’ part of the “Health Care and Education Reconciliation Act.”

A Little Background on Student Loans

In the most recent years, student loans were offered by many private lenders whose funds came from the federal government.  In essence, private lenders became student loan brokers between the government and students.  Because of this arrangement, student loans became expensive due to this middlemen arrangement.

What is the Student Loan Reform?

Starting July 01, 2010, all student loans will be granted directly from the federal government, disallowing private lenders to lend to students.

What is the purpose of the student loan reform?

The purpose of the student loan reform is to make education more affordable, allowing more people to obtain the higher education needed to compete in an increasingly global economy. Cutting out the middlemen (private lenders) could mean a potentially $60 Billion dollars of savings in the next ten years, with $36 billion being used towards Pell Grants.

The Arguments

Many (mainly from private lenders) have argued that jobs will be lost in the private lending industry if private lenders are barred from providing student loans and that student lending will become nationalized.  However, the other side of the argument is that although it is true that some jobs will be lost in the private lending sector, more jobs will be created on the government side. In addition, no matter how you cut the cheese, students loans are  nationalized since the money does originate from the government.

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An economic stimulating offer to give a $8,000 tax credit to first-time homebuyers and $6,500 to those who are trading up is about to expire on April 30th – just a month away. This fast upcoming date may be the primary reason why the number of home purchase loan applications have sharply increased, the highest level in 5 months.  A similar thing had occurred back in October when first home buyers tax deadline was nearing which was then extended due to the potentially positive impact on the economy.

However, the number of mortgage refinances have dropped by 1.3% due to interest rate increases. Refinances are more popular when interest rates decrease.

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Twitter recently launched a new dynamic home page that better explains what the site is used for.  The old twitter was a static plain  looking page that, except for its wide-spread popularity that made it self explanatory, was difficult to comprehend at first glance.  However, if you look at the diagram below which compares the Facebook Home Page of Pay1Day.com, a direct payday loans lender online and Twitter’s new home page, it is apparent that  Twitter’s new home page looks a lot like a user’s Facebook’s Profile page, which follows trends of many applications that tie in the two platforms together, largely through syncing posts.

Written by contribution author: Gabriel Rodriguez

According to a Press Release from the United States Federal Reserve Board, big banks are in for some big changes this summer. Regulation E, in summary, is a new regulation that will go into effect July 1st, 2010. This regulation prohibits banking institutions from charging “Overdraft” or “NSF” fees to a customer without receiving consent from the customer to “Opt-In” to the bank’s “Overdraft Services”.

What this means for customers is they now have a choice in whether or not they would like to have the option to overdraft on their checking or savings account, or rather to simply be “declined” on the transaction that would overdraft the customer’s account.

What this means for big banks is a little more complex, and certainly unsure. A national payday Industry. Opponents to short-term lending often cite “outrageous” APR percentages and predatory practices as the primary factors in the push for regulation, when in reality the same calculations applied to overdraft/NSF fees would prove the APR percentages to be higher than the cash advance loan products that they criticize.

For example (from the ABC News Associated Press) when looking at fees for $100, the typical $15 fee associated with a payday loan equates to 391% APR, whereas a $29 NSF charge would figure out to be 755% APR. But no matter how you look at it, banks are constantly gathering support against any threats to their NSF income, and in some cases they are beginning to offer small loans with terms very similar to the short-term loan product in order to ensure the minimization of potential NSF losses over the upcoming years.

On Friday, March 26, 2010 The Obama Administration announced ways to stop foreclosure by:

• Legislation requiring lenders to temporarily decrease or eliminate mortgage payments for those who are unemployed or having trouble making payments to no more than 31% of their income. The previous attempts by the administration to help underwater homeowners, which make up 25% of all homeowners, have had little success due to the prior program’s lack of ability to help those who were unemployed.  Therefore, the new program hopes to buy these homeowners some time to find a new job and get back on their feet so that they can soon afford to make regular mortgage payments.

• Offering lenders financial incentive to reduce mortgage balances for underwater borrowers who have loans exceeding 15% of their house value or refinancing current borrowers into more affordable interest rates.  The reduced mortgage amount will be put into an interest-free account and gradually forgiven over 3 years if the homeowner is current on payments. Until now, officials have tried to steer clear of mortgage reduction because they believed that would encourage people to default on their mortgage, especially if they were able to make them.  However, because previous efforts to prevent a housing slump and increasing foreclosures have proved not to be effective, government and lenders such as Bank of America are realizing that mortgage reduction seems the only way to go.

• Offering lenders incentive to find alternative ways to prevent foreclosure if mortgage reduction and interest rate refinancing are not an option through methods such as short sales, which is permitting the house to be sold for less than the mortgage balance.

The assistance will be funded by shared costs between private banks and the federal government, the latter to be funded through the $50 billion TARP (Troubled asset relief program), which will not require additional tax dollar support.

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On Wednesday, March 24, 2010, Bank of America announced that it will forgive some troubled mortgage debt to provide assistance in stabilizing the economy and housing market, reports Solomon Finance.  With further dropping housing sales and house values and pressure from both homeowners and investors, the lending giant will start reducing mortgage balances to a select group, possibly leading other banks to follow suit if things work out well.

After unsuccessful attempts of stabilizing the housing market with interest rate decreases by many banks and the government reduction program, which helped less than 200,000 homeowners, Bank of America, recently announcing that it will stop overdraft fees due to legislation, is responding to cries for more help by giving mortgage debt forgiveness a try and avoiding last resort measures such as foreclosure, which can be devastating to both homeowners and banking portfolios.

However, B of A’s mortgage debt reduction  is not an easy way out available to everyone: the program will be accessible by invitation based on certain criteria. To start, Bank of America will extend this program to homeowners, with mortgages initiating from a purchased company in 2008, Countrywide, the most aggressive lender during the housing boom, with proof of payment difficulty and balances exceeding 20% of their property value.  In addition, Bank of America will only allow up to a 30%  reduction of the principle value.

Although the mortgage principle reduction program is favored by many, someone will have to pay for it and precautions must be made to not upset homeowners who are able to and or making timely payments and who may perceive this extra help as an unfair advantage. “You have to be careful not to design a program that would change… in a destabilizing way or would be widely perceived as unfair to people who are continuing to pay,” says Michael S. Barr, assistant secretary of the Treasury.

In response to continued housing downslides, evident that existing efforts, or lack thereof have not been effective in providing property value, neighborhood and economic stability, BofA’s action of  “giving some to get some” could be the only way to get things back on track.

The new health care overhaul, made official on Tuesday, March 23, 2010 by President Obama, is expected to tighten regulation of insurance companies as well as extend health coverage to over 30 million uninsured Americans.   Some changes will appear to reduce current benefits for some groups, with people who earn more paying more towards health insurance premiums.  However, the new health reform goals are designed to make health care more accessible to everyone in the long run.   Although the reforms  are fairly complicated and difficult to detail, below are how some major changes and how they will affect certain groups of people:

Health Care Reform Saves Piggy Bank

* Married couples with a disabled spouse, insured through Medicare

Good: The current threats of Medicare coverage cuts due to the troubling economy will be eliminated until 2014 for adults and 2019 for children.  In addition, the disabled spouse could receive more services and support through state incentives.

* Single mother who is employed but uninsured with a dependent who has asthma

The Dilemma: The current insurance dilemma for this group is that they don’t make enough to qualify for private insurance and they make too much to qualify for public options. In addition, because her current employer does not offer health benefits and she can’t afford private insurance because of coverage denial for conditions such as asthma or require higher premiums, this family struggles to obtain good health coverage. In addition, the family isn’t eligible for public programs because their income level is too high.

Good: The new reforms will not allow private insurance to refuse coverage for a child’s pre-existing medical condition.  By 2014, they can receive help to buy state health insurance with caps on premiums and out-of-pocket expenses based on the mother’s income.

* Married couples insured through Medicare

Good: They will receive more discounts and rebates for prescription drugs, which is one of their major problems, currently.

Bad: In 2010, subsidies to the more expensive Medicare Advantage plan will be cut which will result in higher premiums or benefit reduction to those who have this plan.

* Older couples who are married and currently insured making more than $500K combined annually

Good: Current benefits cannot drop coverage if they get sick or put caps on lifetime limits.

Bad: By 2013: They will contribute almost 1% more of their income to medicare. Flexible spending accounts will be reduced from as much as $5,000 to $2,500 and will not cover over-the-counter drugs.

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Big Decisions Affect Small World

Unrest and uncertainty follows Google’s decision to uncensor search in China. As some have suspected, China did not put up with Google’s uncensoring decision and has disabled certain searches and blocked some search results.  In addition, China will most likely cancel the deal that was supposed to make Google the main mobile search provider for China Mobile – losing out on a major financial business deal.  So based on our earlier predictions, Google’s plan for uncensored search results against government wishes while expanding its market share may not have panned out the way it wanted.

Google may also have to put up another search filter battle with Australia along with Yahoo and have argued that putting up filters means inhibiting legitimacy of information.

What more is that Dell has expressed that it may have to jump ship from doing business in China to India because it is more “conducive to enterprise with security of legal system” as quoted by India’s Prime Minister.

It’s a small world – If both Google and Dell leave China to do business elsewhere, this could mean a major global economic change – Wow!

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On Monday, March 22, 2010, Google has stopped censoring search results on Google Search, Google News, and Google Images in China. Censoring Internet search has been predominant in China as a means of preventing social and political deviation; before Monday, Google has been following suit.  According to Google, they are making this move for security reasons due to hacking attempts coming from China.  As a result, they have performed a workaround that will redirect visitors from google.cn to google.cn.hk, delivered through Hong Kong servers – a very legal yet controversial move.

Google has become an industry giant because of its ability to return relevant search results quickly and it weakens without being able to do so, whether because of technology or laws.

As the event unfolds, it is uncertain how the Chinese government will respond, however, we will discuss the possible pros and cons:

Cons: Acting against the ideal wishes of the Chinese government, Google may be losing some market internet share if the government decides to shut access to Google in China altogether. This means huge potential loss in Google paid search advertising as well as monetization on other Google properties such as Gmail and Picasa.

Pros: Whether or not the Chinese government decides to censor Google, this bold move will likely appeal to the younger masses who are more inclined to tolerate or champion free speech and free search.  So even if it has to sit on the sidelines for a while, it has potential to get back in the game in the future.

Is this the case of Google wanting to have its cake and eating it too by desiring to expand its internet marketing share in a country while bypassing its government ideals?  Stay tuned…

This was brought to you by Pay1Day.com, direct payday lender online.

If you need some quick cash and are unsure whether you should take out a payday loan, consider a few tips that may help you through the process smoothly and avoiding common mistakes.  Payday loans are short term, small amount cash loans ranging from $100 – $1000 and are  meant to be taken out in between pay dates as a temporary means to fulfilling immediate cash needs and are utilized best when they are repaid within the immediate next pay period.

Before you take out a payday loan

Ask Yourself What You Need the Loan For: Why do you need to take out an immediate cash loan? Are you in a tough situation or are you looking for some extra spending cash? Although payday loans are easier and faster to obtain than most other lending options, remember that they are meant to be taken out for a short period of time and repaid during your next pay check, which usually is for 7 – 14 days. Because interest rate fees can increase quite quickly, they may soon exceed the amount of the loan itself if they aren’t repaid quickly.  Therefore, just make sure that your reason for taking out a loan is worth the repayment criteria.

Do you have other options? Do you have any other means of borrowing cash like from friends or family?  With the right agreement in place, you can successfully borrow from a loved one and pay them back on your agreed upon date.

Understand the Terms: Again, payday advance loans are short term loans.  Because their loan amount is small, most lenders have to charge a proportionately higher interest rate and require a faster repayment period than other types of loans. Learn what the fees and interest rates are and when you should pay your loan back to best suit your needs.  In general, the faster you can repay the loan back, the better.

After You Take Out a Loan

Now that you have taken out the cash loan, remember the terms and conditions and follow them! It’s that easy. Put it on your calendar, daily planner, or send alerts to yourself to pay back the loan on time to decrease fees.  The better you are at handling your finance the more credit worthy you become, making it easier to obtain other types of credit.

With Pay1Day.com, you can get cash wired directly into your account next day.  With an safe and secure online application, instant approval with no credit score checks or faxing, we are the leading direct payday lender dedicated to helping you out.  As part of our service, we advise you on whether a payday loan is right for you.