Your Tax Dollars at work: Housing Bailout

Want to know where $1.7 Billion of your tax dollars are going? Thanks to Congress your money is going directly to bail out speculators and irresponsible lenders.

The Senate leaders moved closer today to passing a bill that would provide $300 billion in direct mortgages to homeowners; requiring a reduction in principal and cost basis so these homeowners will not be under-water. The majority of these homeowners would never have received loans under traditional lending criteria. Many will still go into foreclosure eventually even under a government financing program, leaving taxpayers holding the bag.

This Senate bill will be merged with an earlier bill passed in the House, Congressional analysts have estimated the House version of the bill would cost taxpayers $1.7 billion. It is an open question of how much the Senate measure would tack on to this.

Despite the twisting of words from politicians that Fannie Mae and Freddie Mac are actually “funding” the mortgage measure, the reality is that every last dime of this measure is backed by your tax dollars. So much for moral hazard, the only lesson learned in the housing fiasco will be that it pays to speculate in the housing market for both gamblers and financial institutions. Washington will always be happy to bail you out of your mistakes.

Dodd, Shelby Agree on $300 Billion Mortgage-Insurance Measure

Funds still flowing for student loans

The lock-up of the auction rate market has only impacted some student loans, a wide variety of government-backed and private-sector student loans are still available. One recent article outlines the Best Federal Loans for Graduate Students. Much of the content of the article is also applicable to undergraduates. Fixed rate federally backed student loans have many advantages over private loans. Eight key advantages are outlined in the article followed by a description of the best federal loan programs.

Anya Kamenetz outlines why There is No Student Credit Crunch. Despite several states having to cut back FFELP programs; there are still plenty of resources for low-cost federal student loans in the upcoming academic year.

It is best for students to focus on federally backed loans and stay away from private student loans with expensive variable interest rates and borrowing terms that make most people cringe.

Both of these articles are worthwhile reads for college students and their parents. Before applying for financial aid, it is important to have a sound understanding of the available programs.