Boston Beer Company

Talk about a dramatic change.

In 2005, the Boston Beer Company made about $15.5 million, and every year increased profit by about $3 million per year. Suddenly in 2008 they didn't make nearly as much. They went from $22.5 million in 2007 all the way down to $8 million in 2008.

Just as quickly as they dropped in 2008, they rose in 2009 to a surprising $31 million. That is a bit more than what they made in 2008 and 2007 combined. They just about double their profit from 2005.

From 2008 to 2009, they had a profit increase of about 285%.

Martin F. Roper, President and CEO made a total of $1,049,303, compared to his last years compensation which included a large amount of money in stock options

totaling $7,415,918.

William F. Urich made a total of $766,768.

Gap...Not Taking a GAP year?

As nervous breakdown # 2 began taking shape, I thought looking at a clothing company might help...no such luck. 4 cigarettes later...

Gap seems to be doing something...Among all the other companies out there marking huge losses in revenue, such as Rite Aid with its -76% loss. Staggering. Gap seems to have only a small loss in revenue at -1%. However small this -1% may seem, it is good to keep it in the context of the actual numbers. Which would equate to around an 11 million dollar loss. Small in comparison to some, but still a huge amount to deal with. It's chairman and Chief Executive Officer, Glenn Murphy is valued at 2,250,000 and it's EVP, Finance and Chief Financial Officer is valued at 543,750.

Dell

The information technology services company Dell has seen better days. The company, which in 2007 redesigned their infrastructure to be "globally organized" as opposed to their previous regional management system. But since 2006, Dell's net revenue has decreased by 5.71% from 55.788 billion dollars in 2006 to 52.902 billion in 2010. The real drop happened between 2009 and 2010, when revenue dropped from 61.33 billion, a 13.74% drop.
Mr.Dell hasn't seen a change in his 950 thousand dollar salary since 2008, and even participated with a few other top executives in working 5 unpaid days, which saved the company $79,389. According to the proxy report, there were no bonuses or other fun things to contribute the executives' income.

Looks like Dell ain't doin' so well.

J Crew

Tedium, thy name is this assignment.

J Crew,

Total revenue (in thousands) for 2009 was 1,578,042 (that's direct and in store), an increase over last year $ 1,427,970 and the year before that $ 1,334,723, which leads me to one conclusion: in times of economic turmoil, people buy sweaters.

Millard Drexler, who was named by Charles Dickens apparently, is the CEO of J Crew. The breakdown of how much he (I had to Google a picture of him to make sure this was a dude's name) makes. His salary is $200,000. His bonus is 2 million. Plus stock awards, options, and other junk, and he pulls down $5,842,881 every year. Not too shabby. Must have sold a whole lot of khakis.

Dreamworks Animation

DreamWorks Animation posted revenue of $725.2 million for 2009, which is up from 2008 ($650.1 million) but down from 2007 ($767.2 million), which is kind of strange given the company's new commitment to 3D, which started with last year's Monsters vs. Aliens and means, with the 3D surcharge, much higher ticket prices. (Monsters vs. Aliens underperformed at the box office and the studio quickly scuttled plans for a sequel.) Also, three floppy words - Shrek the Musical.

The net income for the year was $151 million, again up from last year ($142.5) but down from the year before that ($227.8).

This year should be better, with the release of the already extremely popular How to Train Your Dragon and Shrek Forever After just around the corner.

A recent press release stated that there'd be a sequel to Dragon too: "2010 is off to a strong start, thanks in large part to the performance of How to Train Your Dragon which – having grossed nearly $375 million to date in worldwide box office – has become DreamWorks Animation's next franchise. We plan to release the sequel theatrically in 2013," said Jeffrey Katzenberg, CEO of DreamWorks Animation. "3D continues to have a tremendous impact on the industry at large and we are now looking forward with great anticipation to bringing Shrek Forever After, the final chapter in our beloved Shrek series and the first in 3D, to audiences across the globe next month."

[Two things of note about that shrink wrapped quote: One, even though Shrek Forever After may be the "last" Shrek movie, the financial filing says that there will be a Puss in Boots moving coming out next Thanksgiving. Isn't it a little disingenuous to call Shrek Forever After the last one when there will be a spin-off/sequel in a year? Also: I'd love to see a How to Train Your Dragon sequel too but Katzenberg isn't taking a little something called the Mayan apocalypse into consideration. 2012. Deal with it. John Cusack did.]

Their financial report is very interesting. I loved the description of why the stock is risky: "Our success is primarily dependent on audience acceptance of our films, which is extremely difficult to predict and therefor, inherently risky." It also gives you insight into their relationships with Paramount (who distributes their films theatrically) and Universal (responsible for their home video distribution), how they make their movies (including a handy chart which describes the development process) and what's on the horizon (apparently all those unanswered questions from Madagascar 2 will be wrapped up - Madagascar 3 is on the way!)

Also interesting is how the main man Jeffrey Katzenberg was paid for his troubles of providing expertly worded quotes for press releases: He wasn't paid a salary or a bonus but he had stock options and "award options" (whatever that means), which put his total earnings at $23,443,501. Not too shabby. Beats having to train dragons for a living.

Colgate-Palmolive Company

Colgate-Palmolive Company sells oral hygiene products, like toothbrushes, personal hygiene products, like body wash, and home care products, like dishwashing detergent. It sells its products in over 200 countries and territories throughout the world.

Since 2000, the company’s net sales, meaning its gross sales less returns, discounts, and allowances, have increased by 70%. The company’s net income, meaning its revenues less costs, has also increased substantially-- by 115%. Though the company has seen an increase in the amount of money coming in, however, it’s costs have also increased. The company’s capital expenditures, meaning the money spent to acquire or upgrade physical assets, has increased 57% since 2000.

As net sales and net income have increased, so has the amount of money made by the company’s executives. Ian Cook, who is Chairman of the Board, President, and Chief Executive Officer, saw his total income increase by 89% from 2007 to 2009. While his base salary increased only 19.5%, the amount he made from performance based-bonuses increased by 39.4%.

Chief Financial Officer Stephen C. Patrick, however, experienced something different. While his total income increased by a whopping 115% between 2007 and 2009, his base salary increased by only 9.5%, and the money made from performance-based bonuses actually decreased by 21%. Other executives, including Michael Tangrey, Vice Chairman, Fabian T. Garcia, Chief Operating Officer, and Andrew Hendry, Senior Vice President, also experienced a decrease in the amount of money they made from performance-based bonuses since 2007.

Nordstrom, Inc.

Nordstrom, Inc. is a fashion retail chain, with 187 stores in the United States. The retail stores sell clothing, shoes, cosmetics, and accessories. The company includes 112 full-line stores, 72 “Nordstrom Rack” stores, which are discount stores, two “Jeffrey” boutiques, and one clearance store called “Last Chance.” Within these locations, the company also has restaurants and spas. Since 2005, the company’s gross profit, meaning its total sales less the cost of those sales, rose a mere 3.4%. Its net sales, the gross sales less returns, discounts, and allowances, have likewise increased very minimally since 2005-- only 7%. These small increases in profit and sales ultimately caused the company’s net earnings, meaning it’s gross sales less taxes, interest, depreciation, and other expenses, to decrease by 20% since 2005.

Luckily for the executives, however, the company’s substantial decrease in net earnings over the last four years has not upset their personal earnings. Blake W. Nordstrom, the company’s Director and President, saw his total yearly income increase by 73.5% from 2007 to 2009. Though his base salary increased only .3% during this time, the amount he received from performance based-bonuses increased by a whopping 207%.

Michael G. Koppel, an Executive Vice President and Chief Financial Officer for the company, saw a similar trend in his personal earnings. While his base salary increased only 1.6% from 2007 to 2009, the amount of money received from performance-based bonuses increased 222%. Overall, Koppel made 118% more money in 2009 than he did in 2007, despite the company’s decrease in earnings.

FedEx Corporation

Founded in 1973, FedEx Corporation is a logistics, transportation, and related information Service Company that is based out of the United States. The company’s goal is to provide the highest quality service to its customers, in a manner appropriate to each market segment served. In 2009 FedEx Corporation Consolidated revenue was reported as $35,497,000,000, indicating a 6% decrease from 2008’s 10-K report. The Consolidated Net Income in 2009 was set at $98,000,000. In 2008 it was listed as $1,125,000,000, a 91% decrease. The company believes that the worsened global economic conditions of 2009, was a major contributor to FedEx Corporation’s lower revenue and earnings. Their results are said to reflect a decrease of demand for most of their offered services, particularly the FedEx Express and FedEx Freight branches.

As a response to weak business conditions, FedEx reduced salaries for their U.S. employees, eliminated a variety of compensation payouts, and reduced labor hours and line-haul expenses. The company, as a result, has exercised strict control over discretionary spending: travel and entertainment and professional fees. Further, FedEx has made adjustments to their routes and equipment types that coincide with current demand levels.

Frederick W. Smith, Chairman, President and Chief Executive Officer (Principle Executive Officer), received $8,479,584 in 2009, a 22% decrease from 2008, and a 50% decrease from 2007. Executive Vice President and Chief Financial Officer (Principle Financial Officer), Alan B. Graf Jr. in 2009 received $3,843,005. His total income has decreased 13% since 2008, and 42.6% since 2009.

Sources:
10-K
PROXY STATEMENT

Holding Steady Over at Gap

In 2009 GAP Inc. (which includes Gap, Old Navy, Banana Republic, Piperlime and Athleta brands) brought in $14.2 billion, that’s a 3% decrease from 2008 sales and 11.4% decrease in sales since 2005. The brand had a higher gross margin (40.3%) in 2009 compared to 2008’s 37.5%. Part of the decrease in sales from 2005-2009 can be attributed to the discontinuation of the Forth & Towne stores in 2007 in addition to.

Gap Inc. attributes it’s 3% decrease ($417 million) in net sales from 2008-2009 to an unfavorable retail market and the decline in net sales at its Gap and Banana Republic stores. Additionally, they say the $32 million dollar unfavorable exchange rate in 2008 was also to blame. Operating expenses also went up for the 2009 year—while the company made a $68 million dollar cut in payroll, benefits, bonuses and store-related expenses (things like packaging, store remodels and rent) it was offset by the $78 million dollar increase of marketing expenses for the Gap and Banana Republic stores, which puts the total operations cost at a $10 million dollar increase from to 2008.

After volunteering to decrease his salary by 15% in 2009 (1,275,000 instead of 1,500,000), Glenn Murphy who is the chairman and CEO of Gap Inc. walked away with a total of $5,037,290 in 2009. This is a significant decrease from the $37,418,725 million he made in 2007. Part of the difference can be attributed to the 1 million dollar one-time-sign-on bonus he made when he started working for the company in 2007, along with the other $21,872,956 million dollars in bonuses he made that year.

Overall Gap seems to be weathering what it described as an “unfavorable retail market.” The company has 2010 plans to expand its presence in Europe and China with additional Banana Republic stores in both areas.

Urban Outfitters Inc.

The young and trendy clothing company Urban Outfitters Inc. appears to be highly successful firm. The popularity of its clothing brands is reflected in the growth of their net sales. The company’s net sales grew from $1092107 million in 2006 to $ 1937815 million in 2010, a 77.4% growth. During this time period, its net income also underwent a significant growth of 68.1%, from $130796 million in 2006 to $219893 million in 2010.

In 2007, Urban Outfitters experienced a decline in their net income. Their net income reduced from $130796 million in 2006 to $116989 in 2007, a 10.5% decline.

Glen T. Senk, the company’s chief executive officer, had a total annual compensation of $29,944,180 in 2010. Chief financial officer John E. Kyees, had a total annual compensation of $713,536 in 2010.

Overall it would be safe to say that the company is becoming an increasingly successful business..

Whole Foods

The uber-trendy organic bonanza Whole Foods, commonly referred to as Whole Paycheck, sure seems to be bringing in the big bucks. Those $4 grapefruits may suck for you, but between 2005 and 2009, the company's sales increased by 67.02%, from $1,649,105,000 to $2,745,310,000. The store's gross profits are actually in line with their sales, as they increased by 70.83% in the same time period, from $4,701,289,000 to $8,031,620,000. So even if Whole Foods does end up with your whole paycheck, at least it hasn't been taking more and more of it.

Like most companies, Whole Foods noted 2008 and being the big bad year for business, but their profit still increased by 17.86%- not bad considering the damage that occurred for other companies that drowned in recession.

John Mackey, the CEO of Whole Foods, apparently doesn't feel the need for a paycheck.
In 2007 his annual salary was $93,500, but according to the Proxy report he voluntarily reduced his salary in 2008 and 2009 to $1. But with Non Equity Incentive Plan Compensation and Option Rewards, Mackey still walked out the door in 2009 with $710,076 in his pocket.

Looks like Whole Foods is going to keep doing well as long as the organic only crowds keep up their crunchy chic shopping habits.

APPLE INC.

Apple Inc., today, regards itself as the leading competitor in the electronic industry with their award-winning computers, OS X operating system and iLife and believes that they spearheading the professional applications, including the digital media revolution with its iPod, iTunes online store, and recently, the iPhone. In their annual 10-K report, their 2009 annual Net Sales was $42,905,000,000, a 14% increase from 2008’s $37,491,000,000 report. 2009’s Net Income indicated a 25.6% increase from $6,119,000,000 to $8,235,000,000. The total revenue as of March 27, 2010 Apple Inc.’s Net Sales is documented as $29,182,000,000 in their Condensed Consolidated Statements of Operations Quarterly Report. Apple’s 2009 report was at 20,964,000,000 indicating a 39% increase. Their Net Income as of March 2010 is $6,452,000,000 compared to March 2009’s $3,875,000,000. The rather significant increase was the result of higher sales of iPhones, Mac Computers, iPods, and other music related products. Apple Inc’s Chief Executive Officer, Steven P. Jobs, receives $1,000,000,000 as his annual salary. The document reports Chief Operating Officer, Timothy D. Cook’s yearly income as $14,001,040. Mr. Job’s salary has remained $1,000,000,000 since 2007; Mr. Cook’s has increased 88.6% within the past year.

Sources:

10-K REPORT
10-Q REPORT
PROXY STATEMENT

Target...Vaguely on the mark?

Target, an all popular store in areas other than Manhattan has slumped since 2004.
Their net earnings as of 2009 were 2,488 (million) as compared to 3,198 (million) in 2004. Which is a decrease of 22.2%. Unfortunately, the top earnings of the executives have not been posted for 2010. The earnings will be published as of April 29th, 2010. Which seems slightly fishy from an outsiders perspective. The top earnins were also not included in the 2009 10k. However, I did find the 2008 earnings on the SCHEDULE 14A document of 2009. Gregg W. Steinhafel, the Chairman, President and Chief Executive Officer's total income as of 2008 was 9,967,515 as compared to his 2006 total salary of 15,986,653. This is a notably huge cut in pay. Douglas A. Scovanner Executive Vice President & Chief Financial Officer, who's total salary in 2008 was 6,639,880 as compared to his 2006 salary which was 5,295,099.



10-K

http://sec.gov/Archives/edgar/data/27419/000104746910002121/a2196751z10-k.htm#dc72401_item_4a._executive_officers


Executive money making

page 21

http://sec.gov/Archives/edgar/data/27419/000104746909003070/a2191099zprec14a.htm#dm48101_executive_and_director_compensation

Reed Hastings Netflix

Even with the availability of free movies via internet, Netflix has continued to steadily increase its revenue from 2005 to 2009. In 2005 the company reported a net income of $41,889 which rose to $48,839 in 2006. However, the profit jumped in 2007 with the growth of subscribers rising by 25.6% in 2008 with 9,390 subscribers. The growth in the number of subscribers is certainly the cause for the increase in net income. Now in 2009 the company has a net income of $115,860 and another 30.6% raise in customers.

For Netflix's CEO Reed Hastings the raise in the companies income has not changed drastically. In 2007 the reports show that he generated a total compensation of $2,418,577 which rose to $2,760,854 a fairly large increase. This seems to be due to his salary increase from $850,000 in 2007 to $994,231 in 2008. What's interesting to note is that even with another salary increase in 2009 to $1,000,000 his total compensation actually dropped down to less than he made in 2008. The change is not drastic but doesn't seem to fit with the other executives continual growth in total compensation.

All in all Netflix and Hastings seem to be doing well and still ever growing despite the Internets attempts to make DVD renting a thing of the past.

Nike, Inc.

Nike, Inc. has presented a progressive growth in their revenues from 2005-2009. Last year, the company had a total revenue of $19176.1 million, their highest revenue in these five years. Their net income grey steadily from 2005-2007 and underwent a significant growth of $391.1 from 2007-2008. Nevertheless, in 2009, the company's net income dropped $396.7, resulting in a net income of $1486.7 million compared to a net income of $1883.4 million in 2008.

This drop in the company's net income accounts to a restructuring charge of $195 million that they did not experience in the previous years. In 2009, the company executed a restructure plan accounting to a 5% reduction of their global workforce.

The company's highest paid directors in 2009 were Douglas G. Houser, with a total annual compensation of $217269, and Ralph D. DeNunzio, with a total annual compensation of $201760.

http://www.sec.gov/Archives/edgar/data/320187/000119312509155960/ddef14a.htm

The Good, The Bad, and the Ugly.

President Obama signed legislation that will revamp the existing federal student loan system, allowing the government to directly provide loans to college students in the US. The bill will end a $60 billion program that gave federal money to private banks to provide loans for students, effectively cutting out their role as a middleman. According to the nonpartisan Congressional Budget Office, direct lending by the government will save taxpayers about $61 billion over the next ten years. Making an appearance at a Virginia Community College where Vice President Biden's wife teaches, President Obama cemented a final set of small tweaks to the health care reform bill that was signed into law last week. However, he also used the opportunity to emphasize the education part of the bill, which he called "overlooked." "In the 21st century, when the success of every American hinges more than ever on the quality of their education, and when America's success as a nation rests more than ever on an educated workforce that is second to none, we can't afford to waste billions of dollars on giveaways to banks," he said.
Of the money saved by the law, $36 billion will go toward Pell grants given to undergraduate students in need of financial aid. The law will increase the grants along with inflation during the next few years from $5,550 to $5,975, according to the White House. Additionally, it will provide 820,000 more grants by 2020. The Obama administration said that if the bill had not passed, the government would have had to reduce Pell grants to about $2,150 and reduce the number of covered students by 500,000. Pell once covered more than three-fourths of the cost of attending college, but now it only covers about one-third due to skyrocketing costs. The law will also make it easier for students to pay off loans. In the US, the average student graduates with over $23,000 in debt. Currently, caps prevent college graduates from having to pay more than 15 percent of their income on loans, but in 2014 the cap will be lowered to 10 percent. Funding will also go toward education initiatives for community colleges, historically black colleges and minority-serving institutions, which had been hit especially hard by the economic downturn. President Obama called the effort to pass the student loan reform bill a battle against the banks and institutions who "hired a army of lobbyists to protect the status quo." He singled out Sallie Mae, the biggest American student lender which spent more than $3 million on lobbying in just the last year. In the debates leading up to the law's passage, industry officials against it argued that many jobs would be lost. Fannie Mae has said it may have to let go one-third of its 8,500 workers nationwide. Republicans criticized the legislation, with many calling it an unwanted government takeover of the program. Sen. Lamar Alexander (R-Tennessee), whose state is home to several large student lenders, said in a statement Tuesday that this "Washington takeover" would overcharge students to help pay for the new health care law, lose 31,000 private sector jobs and provide inadequate service for students. "The Obama Administration's motto is turning out to be: 'If we can find it in the Yellow Pages, the government ought to try to do it,'" he said.In his closing comments at the bill signing, President Obama highlighted how the US also needs to help more students enter college and successfully earn their degree education-wise. However, he concluded, what has been accomplished over the past year represents "enormous progress." "For a long time, our student loan system has worked for banks and financial institutions. Today, we're finally making our student loan system work for students and our families," he said.

Exxon Mobile

Either Exxon is lying in their report, or something drastic happened.

From 2005-2008, they made around $358 billion dollars up to $459 billion dollars, with a net income from $24 billion up to $35 billion. But in 2009, something strange happened.

They went from around $459 billion in 2008 down to $301 billion in 2009. Profits went from around $35 billion in 2008 down to $17 billion in 2009.

R.W. Tillerson, CEO and Chairman of Exxon received $2,057,000 in salary, which went UP by about $200,000 since 2008. He also received $2,400,000 in bonuses along with almost $17,000,000 in stock options. Giving him a total of $27,168,317. Not a bad deal.

The senior vice president of Exxon, D.D. Humphreys received $1,010,000 in salary which also went UP by around $100,000 from the last year. He also received $1,418,000 in bonuses along with about $8 million in stock options. Giving him a total of $11,870,594. Poor guy.

percentage growth

about 285%

One Sided Love Affairs

I love music, but listen to it rarely unless I’m with friends. However, recently I have discovered myself to be having an overwhelming love affair with John Mayor. I know, kind of weird. But omg! The way he plays the guitar…I can’t even begin to tell you what it does to me! There’s also something about him. You know, he started out as a good wholesome-type guy and now, he has this bad boy type vibe to him. Very hott I must say. I find it more frustrating than ever that I don’t have someone like this in my life. Now that I’m writing that, I’m a bit repulsed by my words. However that does not mean that I take them back. The only real issue with this most recent love affair that I’m involved in (other than the fact that John is unaware) is that now I seek him out in every guy that I meet (not to mention that I do, in fact have a boyfriend!! Oops!) I guess the reasoning behind this posting is me looking for a word of advice…how do I break up with John…OR Can I just ride this thing out??

We Can Do It!

What is it about girls not drinking beer these days? I recently went into a one of my favorite lunch spots a few days ago and ordered a salad. I was having a particularly hard day so I thought why not order a beer. I mean yes, I was by myself, but the looks that I was getting from the waitresses on the floor were hysterical. You would have sworn that I didn’t have pants on or something! I guess there are the logistics…beer does have a ton of calories and is very filling but c’mon girls! Get with it! A brew once in a while, will not, I repeat, will not, expand your slimming waste-line. And a word of advice to the want to be models at a restaurant that I won’t mention, (also known as Coffee Shop on 16^th and Union) if I were you I would shy away from giving “eyes” to customers…it’s certainly not the best way to earn your tips. I feel like the only time I see a girl with a beer these days is if she’s in lingerie, drenched in some sort of liquid, and being paid to hold a bottle. This needs to change!

Ta Da!

23,650,563-6,138,560=

17 512 003/6,138,560=
2.85278681
X 100=

285.278681

Google percent growth

Between 2005 & 2009 is 375.27%

Wal-Mart Financial info

Wal-Mart Stores Inc., a worldwide store priding itself in low prices and a large variety of items has placed its 2009 annual net income as well as revenue on the SEC website. The total revenue of the 2009-2010 fiscal year is $23,950,000. The net sales is at $258,229,000 which is a small percent increase from last year's 255,348,000 due to an increase in customer traffic, global expansion and monetary exchange rates in countries such as Chile.

Head executive of Wal-Mart Stores Inc., Michael T. Duke, gets an annual base income of $1,200,000, including bonuses this number moves up to $9,371,523. Another head executive, Thomas M. Schoewe gets a base income of $811,200 which rises to $3,149,520 with bonuses.

http://www.sec.gov/Archives/edgar/data/104169/000119312510071652/dex13.htm

WHAT!

GOOGLE'S PERCENT CHANGE

285.278

PERCENT INCREASE

285.2% change from 2005 to 2009

The Future of Education

On March 30^th, nine days after the bill had passed, the Student Aid and Fiscal Responsibility Act was signed into law as part of the Health Care and Reconciliation Act, after a total of 56 votes compared to 43 approved the new legislation. According to Mark Kantrowitz of FinAid.org, over the next ten years the legislation is said to provide increased Pell Grants to students, which will now be provided by the United States government.

Over the next ten years, the student loan legislation will add $36 Billion dollars to the annual Pell Grant scholarship. Beginning in July of this year, the Pell Grant will be increased to $5,550 dollars and by the year 2017, will have gone up to $5,975 dollars; it will also provide 820,000 additional grants by 2020.

Essentially, the government will now be the direct lender of all federal student loans issued starting July 2010. According to the Congressional Budget office, the change will save taxpayers $61 Billion dollars over the course of the next decade and reduce the U.S deficit by a minimum of $10 Billion dollars. John Matulovich, an Access Group representative, believes that loans through the U.S Department of Education is a good change: “because they will offer certain loan forgiveness programs that other lenders do not as well.” Yet what exactly is to be said regarding the effect on both new students, and students currently enrolled in a higher education institution who already have been issued loans?

According to a statement made by the White House: for the students who have assumed loans after July 1^st, 2010, will now be able to “cap their student loan repayments at 10 percent of their discretionary income,” meaning the amount of income available remaining after the basic essentials have been purchased: food, clothing, shelter, and utilities. The statement goes on to say, that students who are persistent in their payments will have the remaining balanced forgiven after twenty years. Bill Mack, a financial expert, says that for the students who have acquired loans prior to July 1^st, “will now borrow under the same terms, from Direct Lending.” Furthermore, these students, once graduated, will now be able to consolidate their loans into one single program. According to Marc Kantrowitz, most benefits will entertain future students. “The main benefit, Kantrowitz says, “is [the government] mandating that all colleges be in a direct loan program.” This means that any student previously in the FFCF program in new or past loans, will also obtain lower interest rates. “But beyond that,” Kantrowitz continues, “it’s pretty much everything.” Bill Mack agrees that the impact the program will have on students will be minimal.

The legislation also is intended to distribute $2 Billion dollars towards a grant program for community colleges that will develop and improve their educational and career training programs. $2.25 Billion additional dollars will go towards Historically Black Colleges and Universities, including Minority-Serving Institutions. Furthermore, the government plans to pledge $750 Million dollars to fund programs intended on increasing financial understanding, and $1.5 Billion dollars towards federal loans.

Orrin Hatch, a spokeswoman for the Republican Senator Antonia—Ferrier of Utah, said that the bill was “completely inappropriate, [as Democrats] used takeover of the student loan bill to pay for the health care.” Many Republicans throughout the country agree with the Senator, disagreeing with government control over health care, therefore disapproving with the included educational reform. A spokesman from, Senator Olympia Snowe’s office in Maine, said, “The biggest reason for [Snowe’s] support for or against the student loan bill was more about health care…we opposed the student loan bill because it was put in with the health care bill.”

Democrats, however, with the exception of thirty-four votes against, felt very strongly about the bill. Jeanne Shaheen, Senator from New Hampshire voted for the student loan bill in the belief that it will help middle and lower class students who, while deserving of loans, were unable to afford them due to their initial and surrounding costs. Shaheen, formally a teacher, trusts that the bill will provide a guaranteed loan to suffering students as opposed to leaving it simply to chance.

Kathryn Solow, a sophomore at the School of Visual Arts in New York City and once a solid supporter of Obama, is now questioning the recently approved legislation. “While I might have several grievances regarding the health care bill, overall I am very happy that I will be guaranteed health insurance when I am older. Regardless, my main focus right now is on paying for college. I can only hope that whatever changes that are soon to occur will help ease my ongoing concern.”

Federal Pell Grant Recipents Will Benefit the Most from the New Student Loan Bill

As May nears and the end of the school year rapidly approaches thousands and thousands of current and prospective college students are anxiously waiting for their financial aid award letters to come in the mail. For nearly sixty-five percent of college students, the financial aid determines their fate; it will determine if they can continue with school in the upcoming year..

On March 30, President Obama signed a new student loan proposal along with the new healthcare reform plan. The new law goes into effect July 1, and it strips banks from funding private loans to families and giving the federal bank the priority to do so.

According to the National Center for Education Statistics (NCES) over sixty-five percent of students receive financial assistance from the government. Within that percentage, twenty-seven percent are recipients of the federal Pell Grant who receive an average of $2,600 a year. As soon as the student loan bill comes to effect, undergraduates can expect about $3,000 more in the financial aid package. Starting July, the average will increase to $5,550.

“Financial aid is always a big issue for me because it’s determines my fate. If I don’t receive enough aid to cover my tuition and housing, then I’d have to withdraw.” says Ashley Martin, 20, a pre-law student at UMass Amherst in Massachusetts. “I don’t know much about the new law but I’m aware I’ll get a better financial aid package this year.”

Prospecting students benefit from the new law the most, as the process of obtaining a private loan will become more efficient because schools will be borrowing money directly from the U.S. Department of Treasury. Both independent and dependent students will be able to apply for private student loans straight from their institution's financial aid office; eliminating the credit checks and possible rejections from national private banks.

“Most of the benefits will be available to future borrowers.” says leading financial expert for FinAid.org (a free online guide about financial aid for students)Mark Kantrowitz. “ Any student that’s in the FFCF program in both new or past loans will benefit of the lower interest rate in the direct loan program.”

The new student loan law does have it faults. Kantrowitz, also says that along with the new direct loan program the chances of obtaining a new private loan will be more difficult as the approval rate will be higher. Private loans are based on the credit of the applicant and most entering college freshman are credit delinquent with a blank credit slate, which will make their chances of scoring a private loan difficult without a credit-worthy co-signer.

“A higher approval rate scares me. I’ve never been lucky with private loans because I have no credit and I don’t know anyone who is in a good credit standing.” says Mark Lowermann, 22, a senior at NYU. “I guess since the Pell grant is increasing, I won’t have to deal with applying for a direct loan or finding a co-signer. So the law really has a benefactor for everyone, it seems.”


Community colleges will also get the benefit of the doubt. The federal bank will invests $2 billion in community colleges across the nation over the next four years to provide better education and career training for citizens eligible for Trade Adjustment Assistance. The TAA program came to effect in 1974, provides aid to both laid-off workers and workers who are struggling with reduced hours and wages courtesy of the increase in imports.

President Obama’s efforts with student loan funding, hit a close to home. During his national campaign for presidency, he announced that he at forty-seven years old had finally finished paying off his student loan debt. By 2020, he hopes that America will once become the most educated nation with the highest percentage of college graduates in the world.

Once the student loan bill comes into effect, 820,000 grants is expected to be distributed to low-income families by 2020. The U.S. Department of Treasury hopes to accomplish this goal by doubling the spending of federal Pell grants

Rebecca Jonnas, the secretary/PR for senator Jeanne Shaheen (D-NH) thinks the new student loan bill will provide greater opportunities for students who otherwise wouldn’t be able to afford college. “[The bill is] providing guaranteed loans for students, rather than leaving it up to chance.”

Chance doesn’t seem like the proper solution in terms of paying for higher education. FinAid.org reports that two-thirds of undergraduates will be $23,186 in debt by the time they complete their four year coursework and earn a Bachelor’s degree. The passing of the new bill couldn’t have come at a better time.

The Student Aid and Fiscal Responsibility Act: Current students screwed out of the bill?

The Student Aid and Fiscal Responsibility Act was signed into law on March 30, 2010 as part of the Health Care and Reconciliation bill that passed March 21, 2010 by a vote of 220-211. The Education Reconciliation portion of the bill will reduce the cost of interest on student loans, increase funding and support of Community Colleges, Historically Black colleges and minority serving institutions in addition to increasing the maximum on the Pell Grants over the next 10 years. While the Student Aid and Fiscal Responsibility Act marks the single biggest investment in financial aid to date, with many of its changes not effective till 2014, it has many wondering how the current expense of college will change for those already enrolled and accumulating debt.

Kris Wilson, a senior in high school is weighing his college decision now by what will cause the least financial burden. Having been accepted to Pratt and Parsons in New York City and Cornish College of the Arts in Seattle, he’s waiting on his Financial Aid letters from Parsons and Cornish before making his final decision. “Including work study I was given about $16,000 at Pratt; still left with a $30,000+ gap between what I was given and the cost of attendance” Wilson said. With the total cost of attendance being $ 52,000 and the remaining $36,000 being offered to him in loans, he fears the cost will be too much of a burden for his family over the next four years.

Wilson is vaguely aware of the changes being proposed by The Student Aid and Fiscal Responsibility Act because of a conversation with a teacher; despite changes that will affect his attendance he remains skeptical. “From the looks of it, anything changed in this bill won't come into effect until my senior year of college. So the hopes that it will affect me are low,” Wilson said.

Starting in 2014 students who take loans out will have interest rates no higher than 10% (that’s a 5% decrease from the current cap at 15%). After 20 years, loan forgiveness will be granted to those who keep up with their payments. For students who go into a public service field such as teaching, nursing and the army, loan forgiveness will be granted after 10 years. Financial Aid Expert Bill Mack feels that the new change in loan forgiveness will affect few. “The previous rule forgave the unpaid balance after 25 years .The usual repayment term is 10 years, and most students elect for that option. Mack said.”

As a part of The Student Aid and Fiscal Responsibility Act, 36 billion dollars is being invested to increase the maximum on Pell Grants. By 2017 the new maximum will be $5,975, and by 2013 the maximum of Pell Grants will be consistent with the rising cost-of-living. $2.55 billion will go towards Historically Black Colleges and Universities and institutions that serve a major population of minority students to support student retention and fund supportive programs. Community Colleges, which enroll over six million students, making them the largest portion of higher education, will see $2 billion dollars over the next four years. The funding will go towards the improvement of career education and training programs. Additionally, $750 million dollars will go to increasing the College Access Grant program which provides funding for educational programs on a state level, it also supports institutions that focus on financial literacy.

Even with the large amount of money that’s being spent on the reformation of educational programs and financial support we still will not see a lot of major changes for at least the next three years. Even so, politicians and financial experts alike have their doubts any changes will be less than major. Mark Kantrowitz, a leading expert from finaid.org says that a lot that was to be in the bill was sacrificed when the saving budget was cut by $30 billion dollars.

“They eliminated 10 billion dollars in funding for community colleges. They had to cut a College Access Grant from 3 billion to 750 million (a four fold decrease). They had to drop a proposal that cost a billion and a half. A lot had to be dropped as a consequence of those delays, Kantrowitz said.”

The only benefit for current students Kantrowitz says is that “any student that was in the FFCF program in new loans or past loans in general, they get the benefit of the lower interest rate in the direct loan program. There's also a higher approval rate. “

“Nobody knows what the outcome will be, there are over 2,000 pages of legislation all tied together, the senator would have been more supportive with a bill in which the consequences were known”, Kyle Hines, press secretary for senator James E. Risch of Idaho said.

The Student Aid and Fiscal Responsibility Act marks a large and necessary investment in our education system but the reality is, it’s a new act and no one knows what to expect, to many it’s still news.

The Student Aid and Fiscal Responsibility Act: Current students screwed out of the bill?

The Student Aid and Fiscal Responsibility Act was signed into law on March 30, 2010 as part of the Health Care and Reconciliation bill that passed March 21, 2010 by a vote of 220-211. The Education Reconciliation portion of the bill will reduce the cost of interest on student loans, increase funding and support of Community Colleges, Historically Black colleges and minority serving institutions in addition to increasing the maximum on the Pell Grants over the next 10 years. While the Student Aid and Fiscal Responsibility Act marks the single biggest investment in financial aid to date, with many of its changes not effective till 2014, it has many wondering how the current expense of college will change for those already enrolled and accumulating debt.

Kris Wilson, a senior in high school is weighing his college decision now by what will cause the least financial burden. Having been accepted to Pratt and Parsons in New York City and Cornish College of the Arts in Seattle, he’s waiting on his Financial Aid letters from Parsons and Cornish before making his final decision. “Including work study I was given about $16,000 at Pratt; still left with a $30,000+ gap between what I was given and the cost of attendance” Wilson said. With the total cost of attendance being $ 52,000 and the remaining $36,000 being offered to him in loans, he fears the cost will be too much of a burden for his family over the next four years.

Wilson is vaguely aware of the changes being proposed by The Student Aid and Fiscal Responsibility Act because of a conversation with a teacher; despite changes that will affect his attendance he remains skeptical. “From the looks of it, anything changed in this bill won't come into effect until my senior year of college. So the hopes that it will affect me are low,” Wilson said.

Starting in 2014 students who take loans out will have interest rates no higher than 10% (that’s a 5% decrease from the current cap at 15%). After 20 years, loan forgiveness will be granted to those who keep up with their payments. For students who go into a public service field such as teaching, nursing and the army, loan forgiveness will be granted after 10 years. Financial Aid Expert Bill Mack feels that the new change in loan forgiveness will affect few. “The previous rule forgave the unpaid balance after 25 years .The usual repayment term is 10 years, and most students elect for that option. Mack said.”

As a part of The Student Aid and Fiscal Responsibility Act, 36 billion dollars is being invested to increase the maximum on Pell Grants. By 2017 the new maximum will be $5,975, and by 2013 the maximum of Pell Grants will be consistent with the rising cost-of-living. $2.55 billion will go towards Historically Black Colleges and Universities and institutions that serve a major population of minority students to support student retention and fund supportive programs. Community Colleges, which enroll over six million students, making them the largest portion of higher education, will see $2 billion dollars over the next four years. The funding will go towards the improvement of career education and training programs. Additionally, $750 million dollars will go to increasing the College Access Grant program which provides funding for educational programs on a state level, it also supports institutions that focus on financial literacy.

Even with the large amount of money that’s being spent on the reformation of educational programs and financial support we still will not see a lot of major changes for at least the next three years. Even so, politicians and financial experts alike have their doubts any changes will be less than major. Mark Kantrowitz, a leading expert from finaid.org says that a lot that was to be in the bill was sacrificed when the saving budget was cut by $30 billion dollars.

“They eliminated 10 billion dollars in funding for community colleges. They had to cut a College Access Grant from 3 billion to 750 million (a four fold decrease). They had to drop a proposal that cost a billion and a half. A lot had to be dropped as a consequence of those delays, Kantrowitz said.”

The only benefit for current students Kantrowitz says is that “any student that was in the FFCF program in new loans or past loans in general, they get the benefit of the lower interest rate in the direct loan program. There's also a higher approval rate. “

“Nobody knows what the outcome will be, there are over 2,000 pages of legislation all tied together, the senator would have been more supportive with a bill in which the consequences were known”, Kyle Hines, press secretary for senator James E. Risch of Idaho said.

The Student Aid and Fiscal Responsibility Act marks a large and necessary investment in our education system but the reality is, it’s a new act and no one knows what to expect, to many it’s still news.

Paying for College: What the Future Holds

When President Obama signed the Health Care and Education Affordability Reconciliation Act on March 30, most people were focused on the health care aspects of the bill. But a large part of the measure was also dedicated to education reform. The Student Aid and Fiscal Responsibility Act, an important part of the bill, is aimed at changing the way our nation’s college students pay for their schooling and will have an affect on the younger generations of Americans.

“I feel good about it from what I know,” said Lily Polatchek, 19, a student at Connecticut College in New London, CT. “College in the U.S. is so expensive, and without a good system of financial aid, it is impossible for some people to pay for school.”

Polatchek would know; one year of school at Connecticut College costs $53,110, according to the school’s website. That doesn’t include the costs of books, supplies, and general living expenses. She had to take this semester off to apply for loans and figure out how she would finance the rest of her education. Luckily for her, it seems that the government may be stepping in to help.

“I think they are increasing Pell Grants,” said Polatchek, “meaning my financial aid would come more from grants than loans.”

Indeed, according to the House Committee on Education and Labor, $36 billion will be invested over the next ten years to increase the maximum annual Pell Grant scholarship. The legislation will also invest money in things like an Income-Based Repayment program for borrowers and supporting students at Historically Black Colleges and Universities and Minority-Serving Institutions.

Perhaps the most controversial part of the measure, however, is the federal student loan program, called Direct Loan. According to the House Committee, this won’t affect private lenders, because all of Direct Loans will be serviced by private lenders who will compete for contracts to service the loans. For students and taxpayers, the Direct Loan program is more reliable and cost-effective, or so says the House Committee, which is made up of 49 representatives from the House, the Democrats being the majority.

Those who opposed the student loan measure, however, said that the Direct Loan program would not help students and amounted to nothing more than another government takeover, this one created to help finance the huge health care bill with which it was passed. “Nineteen million college students are going to be unhappy when they find out that this latest Washington takeover overcharges them on their student loans to help pay for thew new health care law and other government programs,” said Senator Lamar Alexander (R- TN) in a press release on March 30th. “Any savings should go to the students, not the government.”

Republicans also took issue with the fact that private lenders would be eliminated from the process. Despite the Democrats’ assurance that the bill would not cause severe job loss because of the incorporation of private lenders into the Direct Loan program, banks were fighting against the bill and Republicans claimed it would leave many unemployed. Senator Alexander estimated 31,000 employees who currently work on getting students loans would be left jobless. Even Democratic Senator Ben Nelson of Nebraska opposed the bill, one of the few Democrats to do so, likely because the commercial lending bank Nelnet is based in his state.

On the other side of the spectrum, some thought the measure did not do enough to help students. Financial aid expert Mark Kantrowitz, from FinAid.org, thought the Pell Grant program should have been given more money to increase the scholarship. Although he conceded that without this legislation their would have been a significant decrease in the maximum Pell Grant this coming fall, he said that the program should be doubled and then increased to over 1% the inflation rate.

“Most of the money went towards maintaining the current level and leaving very little money for any actual increases,” said Kantrowitz. “Obviously there’s a lack of political will to devote new money to the Pell Grant program.”

But after a long political battle, Democrats seem pleased with the bill they got passed. In a statement released shortly after the bill’s signing, Representative George Miller (D- CA), chairman of the House Committee on Education and Labor, described the legislation as a “major step” for the American middle class.

“Because of this law, college students will be able to graduate with less debt, less burdensome debt payments, and more opportunity,” said Miller in the statement.

The “less burdensome debt payments” is a reference to the bill’s revised Income-Based Repayment Program, which would lower the cap for monthly payments to just 10% of a borrowers’ income. This should make it easier for borrowers to pay off their student loans.

“I think this measure shows that student debt is extremely common,” said Polatchek. “People dig themselves a hole with college loans, and it’s reassuring to know that the government is at least trying to help us get out of that hole.”

The Pervert Bill

In a classic season six episode of The Simpsons called "Bart's Comet," a rogue comet is hurtling towards the town of Springfield. Local anchorman Kent Brockman goes live ("via satellite") to the floor of the United States Congress, who are voting on a bill that could save the town from certain doom.

"Than it is unanimous," the crusty old white man (presumably the speaker of the house – the episode aired in 1995, when the House of Representatives was even crustier and whiter than it is now), "we are going to approve the bill to evacuate the town of Springfield in the great state of –"
He's interrupted by a younger white congressman.

"Wait a second – I want to tack on a rider to that bill: $30 million of tax payer money to support the Perverted Arts."

The speaker of the house resumes: "All in favor of the amended Springfield slash pervert bill?" He's met with a chorus of boos. "Bill defeated."

Why bring this up, besides to remind us all how much better The Simpsons was back in 1995?

Well, it seems that the Student Financial Aid Bill, which many see as something that piggybacked onto the much more widely discussed Health Care Reform Bill, was actually the earlier bill. To put it in The Simpsons terms, the Health Care Bill was actually the pervert bill.

As Mark Kantrowitz, from FinAid.org, puts it, "It would be more accurate to say that the health care bill was included in the student loan legislation." As he explains it, the student loan bill, which passed in congress on September 17th was latched onto by the Health Care Reform bill, Kantrowitz says, "because there can only be one budget reconciliation bill per budget cycle."

But the amalgam of Student Aid and Health Care left the Student Aid side of things to lose massive amounts of funding. "29-30 billion dollars in savings in the legislation was no longer able to be spent on student aid," Kantrowitz explained.

The newly passed Student Aid Bill, the most radical change in policy since the original bill was developed as part of the G.I. Bill (itself a response to the technological escalation between America and the USSR during the space race), has lost some of its key selling points, among them an increase in Pell Grant money (a post-secondary educational federal grant designed to help poorer income family), quadrupling the annual loan volume, and a reduction of questions in the annual FAFSA form which would make it easier for people to apply.

Also, as Kantrowitz bluntly puts it, "What the legislation does for current students and current borrows is pretty much nothing."

Of course, given how closely linked the Student Loan Bill was with the Health Care Bill made it just as contentious an issue, with Democrats, who ultimately passed the bill, claiming that it's a great achievement, while Republicans bemoaning it.

The office of Olympia Snowe (R-Maine) said that, "The reason we opposed the student loan bill is because it was put in with the health care bill” and “The bill received no republican support because it was put in with the reconciliation package." In other words: Snowe was shouting down The Pervert Bill.

Utah's Orrin Hatch's press secretary, characteristically, was a bit more persnickety: "The reason the senator opposed the student loan bill is because it was included in a massive 25 trillion dollar government health care take over. So we can start there." We can also end there.

The spokesman of James E. Risch of Idaho took a vaguely conspiratorial tone when saying, "The alleged savings the government would make would be pumped back into the health care system."

Democrats see things differently. Jeanne Shaheen of New Hampshire voted for the bill because her belief that it would help those middle and lower class students who deserved to further their education, who simply couldn't afford the cost of loans necessary to do so.

But the Arkansas senator Blanche Lincoln voted nay, breaking from the pack. "She just dislikes the proponents and prospects of the bill," said Maria Gueria, PR, Senator Lincoln's office. The careful wording of the response doesn't exactly illuminate what the senator was opposed to. Was it the Health Care Bill or the Student Loan Bill? The Save Springfield Bill or the Pervert Bill?

But the practical implication seems to be far off. A Chase Bank Student Loan employee said that she didn't see there being a whole lot of change. And Wells Fargo, in an email, used ominous phrasing in stating that "We've anticipated this change and prepared for it for some time." Mark from FinAid.org puts the first truly different year for student loans being 2014. This seems a bit ineffectual, especially that one of Obama's chestnuts during his 2008 campaign was that he had "just" finished paying off his student loans. At least, with this delayed application, young candidates can be using that line for many years to come. And that seems, at least a little bit, perverted.

A New Step in American Education

This past March 30th “The Student Aid and Responsibility Act” was signed into law as part of “The Health Care and Education Reconciliation Act” by President Obama. The legislation provides larger Pell Grants and helps students manage their loan debts, giving more Americans the opportunity to receive a higher education.

“The Student Aid and Responsibility Act” ensures that over the next 10 years, 36 billion dollars will be added towards Pell Grant scholarships. Starting this July, the scholarship will increase to $5550 and by 2017 it will increase to $5975. Furthermore, 2 billion dollars will be allocated to a grant program for community colleges and 2.55 billion will be given to Historically Black Colleges and Universities, as well as Minority-Serving Institutions.

Students who take out loans after July 1, 2012 and keep up with their loan repayment, will have their remaining balance forgiven after 20 years and a 10 year forgiveness will be granted to borrowers in the public service field. According to Bill Mack of Financial Aid Experts, Inc. the forgiveness portion of the bill will only have a small effect on student borrowers, “The previous rule forgave the unpaid balance after 25 years. It is expected this will impact very few students. The usual repayment term is 10 years, and most students elect for that option,” Mack says.

The act was approved at Congress with 56 approving votes and 43 disapproving votes. The bill received no Republican support. “We opposed it because out of the large schools in Georgia, all said they would rather their students have choices from where to borrow money,” says Glee Smith, legislative council for republican senator Johnny Isakson. Antonia Ferrier, spokeswoman for republican senator Orrin Hatch, the senator’s main motive for disapproval was the government’s takeover of the student loan bill to pay for their healthcare. “The reason the senator opposed the student loan bill is because it was included in a massive 25 trillion dollar government health care takeover. So we can start there,” Ferrier says.

On the other hand, the Democratic Party, showed full support for the bill. “[The senator believes in] providing guaranteed loans for students, rather than leaving it up to chance,” says Rebecca Jonnas, secretary and pr for democratic senator Jeanne Shaheen. A former teacher, Shaheen has been very involved in helping higher education organizations. Contrary to the majority of democrats, Senator Blanch Lincoln from Arkansas, opposed to the bill. “She dislike the proponents and prospects of the bill,” says her pr Maria Gueria.

The legislation mandates that starting this July all new federal student loans will be direct loans, managed by private companies under contracts with the Department of Education. According to Congress, the government will save 68 billion dollars in subsidies to financial institutions that guarantee federal student loans. "The government will now be the direct lender, banks are not going to manage the loan anymore...Sometimes federal loans will not cover the students needs, but will still have our private student loans," says Karen worker at Chase Bank. The consequences of the new act on student lending companies are yet to be seen. Yet companies such as Sallie Mae have already expressed concern about the law costing them a vast amount of jobs.

Higher education government funding can be traced back to the Cold War, upon the launching of the Sputnik, the first Earth-orbiting satellite, by the Soviet Union. President Eisenhower perceived the Soviet advance as a deficit in American education, something that needed to be changed. Politicians and educators started working together in creating a new national education policy and more funding. In September of 1958, President Eisenhower passed “The National Defense Education Act,” which granted funding to both public and private educational institutions.

In 1965, “The Higher Education Act” was signed into law. The legislation introduced grants, loans, and other programs giving more students the opportunity to receive a higher education.

President Obama perceives the “The Health Care and Education Reconciliation Act” as a significant advance in expanding higher educational opportunities for American families. “We will provide the support necessary for you to complete college and meet a new goal: by 2020 America will once again have the highest proportion of college graduates in the world,” the President says.

Many students are not aware of the new legislation and do not see themselves as being directly affected. “I’m not aware of the extent of its effect,” says New School sophomore Amanda Clarke. Many of the students, however, viewed it as an important step in national education and a benefit for future student loan borrowers.