Recent News

Federally backed student loans have been in the headlines for the past few months as Congress had to decide whether or not to keep interest rates from doubling this past July 1. Since then, the bill has passed, keeping interest rates of Stafford loans at 3.4 percent. But is there a bigger problem here? Managing Director of DLG Wealth Management, Andy Guzzetti, discusses the problem that the majority of students face by attending college.

There is no doubt that college is expensive and prices are on the rise. In February this country had $867 billion worth of student loans. Now, outstanding loans are around $1 trillion. In about 5 months, student loan debt in the US has increased 15 percent. As of July 1, Congress passed the bill stating that the Stafford Student Loans were not automatically going to increase to 6.8 percent and that they were going to stay at their current rate of 3.4 percent. Congress had to act quickly, making this one year bill a definite quick fix.

For those students and graduates with tremendous outstanding student loan debt, the bill passed is great for them. It lowers their monthly payments estimated over the life time of the loan and it will help them out. It boils down to this; there’s a mountain of debt in the student loan industry and something has to be done. This is debt and students and parents have to treat it like debt and look at whether it is worth it or not. Having Stafford Loans at 3.4 percent for people may have many overlook their debt because they see a low interest rate. If it were raised however, to the proposed 6.8 percent, then people would start taking a look at these loans. It would also show colleges that people are aware of these loans, the possible debt an education would incur on them and they may not be borrowing as much. This could prompt colleges to not raise their tuition costs as much as they’ve done in the like ten years.

It’s very important to be aware of all the costs of your higher education to make an informed decision. Money-saving ideas that will save you thousands for your future may be to go to a community college for a few years and maintain a part time job. Do your homework and analysis and you should be all set.

For more information on managing your finances or starting a college education savings program with an investment advisor near Albany, Utica or Saratoga NY, call (518) 348-0060 or contact us here. You can also see Andy Guzzetti every Monday morning on WXXA Fox – Albany.

As of July 1, 2012, big changes were made when it comes to 401(k) retirement savings plan. Administrators of these plans must now disclose all fees associated with participant’s 401(k) plans. Typically, the problem has been that the 401(k) fee disclosures were ignored or too complex to comprehend, therefore making it difficult for participants to grasp them and realize the total cost.

The new law passed by the Department of Labor is not all-new. Fees associated with 401(k) retirement savings plan were always disclosed to participants but not altogether. Some of the fees were in a prospectus and some were in a third party administrator’s contract. Moving forward, investment companies that administer 401(k)’s will be providing new disclosures to employers that sponsor the plans. These new fee disclosures will be passed on from employers to participants with information about how much they are paying to invest in their retirement plan.

This new law is intended to make it easy for companies to make a decision on what they want to do with their plans or decide which plan sponsor to use. The second important date is August 30th when companies will need to disclose information about these fees to their participants. This is a positive change, as people should know their plans. There is a catch to this change. There is no such thing as a free lunch. If we look at an example; let’s say we have a plan that charges a percentage of assets. One plan is charging you 1% and another is charging you .5%. If you fall into the trap and go with the low-cost retirement savings plan, then you’ll need to look at the returns. What if the plan charging 1% was getting you an 8% return versus the plan charging .5% only getting you a 7% return? The plan charging 1% is the better option.

Our advisors at DLG Wealth Management suggest that people don’t fall into the trap of investing in plans that administer low cost only fees to their retirement accounts. Take some time and some research. Ask the following questions when speaking with your advisor; what is my advisor doing? What is the Manager doing? What have the results been? Who is the third party administrator? These are some of the questions to think about. It’s great to have disclosure as it’s easier for people now to see how much it’s costing them and then they can make their decisions based on that.