Personal finance consultant Kim Cooper explains why it’s important to teach kids about money. And how to do it.

In a City Hall ceremony packed with dignitaries, Mayor Nutter and Philadelphia School District officials signed an “education accountability” agreement Thursday that gives the city more say in how the district conducts business.

“This agreement represents a new beginning and a new way of working together,” said school Superintendent Arlene Ackerman. “I’m thrilled to be a part of this.”

The mayor demanded the accord last weekend as a condition of the city finding as much as $110 million to help the schools fill an enormous budget gap.

He also demanded that district officials detail how they would spend any additional city and state dollars – they provided that information on Thursday as well.

The signing came a day before what could be a critical Council hearing on three tax proposals to raise money for the schools – two from the mayor and one from Majority Whip Darrell L. Clarke.

The mayor is pushing his two-cents per ounce sugary drinks tax to raise $80 million a year. He also has proposed a 10 percent property tax hike that would raise $95 million.

Council raised property taxes 10 percent last year, and there appears to be little support to do so again. Nutter also proposed a soda tax last year, but the measure met fierce industry and union opposition and never came up for a vote.

To read the full story: Philly.com

In an effort to maintain access to lucrative federal student aid dollars, some for-profit colleges have used aggressive efforts to manage the statistics showing how many of their students default on federal loans, according to internal documents released at a Senate hearing Tuesday.

Some colleges have hired private investigators and dedicated entire departments toward driving down the student loan default rates at their schools –- though often just long enough to avoid penalties from the federal government that would prevent them from receiving student loan and grant money. Critics have likened such a practice to banks keeping bad loans off their books from quarter to quarter.

The goal, according to numerous e-mails obtained by the Senate Health Education, Labor and Pensions committee, is to push as many potential loan defaults outside the two-year window that the federal government uses to evaluate eligibility for federal student aid. In some cases, schools have paid outside firms $1,000 per head to put a student in loan deferment or forbearance, in which payments are delayed but the loan balance continues to increase over time, according to documents referenced during Tuesday’s hearing.

“They are not counseling the student on what is in their best interest,” said Pauline Abernathy, the vice president of the Institute for College Access and Success, who testified at Tuesday’s hearing on student debt at for-profit colleges. “They are simply paid a thousand dollars per head; they really are bounty hunters.”

Student loan default rates are a key factor in any college’s eligibility for federal higher education aid dollars. But loan default numbers are a life-and-death statistic at for-profit colleges, where schools rely on those federal student aid dollars for a vast majority of revenues.

To read the full story: The Huffington Post

If the School District of Philadelphia wants the city’s help in closing its massive budget gap, the district must agree to open its books and give the city a greater say in how it spends money, Mayor Nutter said Sunday night.

In a nine-page letter to the School Reform Commission, he called on the district to sign an “education accountability agreement” and provide detailed information about how it would spend any additional city and state funding. He gave the district until noon Thursday to do so.

By next week, the district would have to provide information on funding sources, program costs, salaries, benefits, pensions, outside contracts, audits, and any other data that “detail the full and complete financial condition of the School District.”

“These deadlines are firm and must be met in order for the city and my administration to move forward in our efforts to support legislation for additional funding,” the mayor wrote. “This is a serious matter and I know you realize the gravity of my concerns.”

The district has asked for $75 million to $110 million from the city to help close a $629 million budget gap. Nutter said he would seek the money to preserve a list of endangered priorities, including full-day kindergarten.

On Friday, School Superintendent Arlene C. Ackerman announced that she had found a way to save full-day kindergarten by using federal Title I money.

The administration was angered because Nutter learned of the deal only an hour before Ackerman announced it. Nutter also noted that shifting Title I aid simply created another hole elsewhere in the budget.

The mayor faces a difficult week of negotiations to persuade City Council to pass either a soda tax, which he would prefer, or a real estate tax hike. The soda tax would raise $80 million a year for the schools; a 10 percent property tax hike would generate about $95 million.

A Council committee hearing on the two proposals has been scheduled for Friday. With Council’s summer recess set for June 16, action likely must be taken this week if Nutter is to win more money for the schools.

To read the full story: Philly.com

The government is moving forward with its crackdown on the country’s for-profit schools, aiming to protect students from taking on too much debt to attend schools that do nothing for their job prospects.

The Department of Education has finalized its “gainful employment” rule, which will ban for-profit schools like DeVry University or Apollo Group Inc.’s University of Phoenix from accessing federal financial aid dollars if too many of their graduates are unable to find jobs that pay enough to allow them to afford their student loan payments. If graduates owe too much relative to their income, or too few former students are paying back their tuition loans on time, schools stand to lose access to Pell grants and federal student aid. Such a loss would seriously crimp schools’ ability to attract students.

“These new regulations will help ensure that students at these schools are getting what they pay for: Solid preparation for a good job,” Secretary of Education Arne Duncan said Thursday. “We’re giving career colleges every opportunity to reform themselves but we’re not letting them off the hook, because too many vulnerable students are being hurt.”

Most students at career colleges and vocational schools pay tuition with federal financial aid dollars — as much as 90 percent of a school’s revenue can come from government aid. But that leaves taxpayers on the hook if students can’t find good jobs and default on their loans.

And they are defaulting in large numbers.

Students at for-profit institutions such as technical programs and culinary schools represent just 12 percent of all higher education students but 46 percent of all student loan dollars in default. The average student earning an associate degree at a for-profit school carries $14,000 in federal loan debt versus the $0 debt burden of most community college students.

To read the full story: Yahoo! Finance

The amount of money flowing into government-sponsored 529 plans has surged 75% in the last two years as fear of rising college tuition trumps fear of the stock market. Still, contributions remain well below the 2006 peak.

Fear of rising college tuition is trumping fear of the stock market.

Contributions to government-sponsored college-savings programs are rising sharply after sinking during the recession.

The amount of money flowing into the programs, known as 529 plans, has surged 75% in the last two years but remains well below its 2006 peak, according to a recent study.

Experts applaud the stepped-up rate of investment but say families need to save even more to overcome stubbornly rising tuition costs and cutbacks in government funding for higher education.

“It’s reassuring that we’re at least approaching previous savings levels, but we probably should be saving a lot more,” said Mark Kantrowitz, publisher of college-savings websites Finaid.org and Fastweb.com.

U.S. families poured a net $9 billion into 529 plans last year, up from $5.1 billion in 2008, and the pace accelerated in the first quarter of this year, according to Financial Research Corp. in Boston. The annual peak was $13.9 billion in 2006.

Several factors are being credited for the pickup, including improvements in 529 plans and growing confidence in the stock market’s recovery. But experts say the biggest driver is parents’ fear that their children will be priced out of college.

The annual cost of tuition, room and board at private four-year colleges averages $37,000, and tops $50,000 at some elite schools, according to the College Board. For students attending public universities in their home states, the average bill has surged to more than $16,000.

To read the full story: The Chicago Tribune

A bill to change a Pennsylvania law that requires school districts to keep tax increases below the inflation index is headed for a vote in Harrisburg.

The law, passed in 2006, allows for 10 exceptions, including pension payments and special education costs. The bill amending the law would end the exceptions, thus requiring voter approval for any proposed property tax hike.

Jay Himes of the Pennsylvania Association of School Business Officials opposes the legislation.

“Eliminating and repealing outright all the exceptions isn’t warranted,” he said. “We don’t think it’s necessary, we don’t believe they’ve been abused, they have been utilized on an exceptional basis.”

“We think it creates a short-term and long-term financial chaos for school districts,” said Himes, adding that the exceptions are necessary for schools to operate properly.

To read the full story: Newsworks.org

The House Republican budget is now out in the public. Though it’s in sharp contrast to Gov. Tom Corbett’s spending plan, the parameters of the budget had been public for several days before Tuesday’s official announcement.

The GOP plan would maintain Corbett’s $27.3 billion spending level, but dramatically increase funding for State System of Higher Education and state-related colleges and universities. Instead of losing more than half of their state funding, SSHE schools would receive 85 percent of last year’s budget, while Penn State, Pitt, Temple and Lincoln universities would lose a quarter of their state support.

“I think everybody standing behind me was as surprised as you were, when the governor proposed a 54 percent decrease in funding for our 14 state-owned universities,” said House Appropriations Committee Chairman Bill Adolph. “Many of these universities are the economic engine in those communities.” In all, the House GOP plan provides $377 million more than Corbett’s budget for higher education.

House Republicans would also increase funding for K-12 education, and restore the accountability block grant program, which many school districts use to fund early childhood education efforts. (The block grant funding would be less than half of its current level, but Corbett wanted to completely eliminate the program.)

Other changes include a 5-percent reduction for General Assembly funding–about three times as large of a cut as Corbett proposed–and $55 million more for hospitals across Pennsylvania.

To read the full story: Newsworks.org

This time next year, if you want your kid to play high-school basketball, you might have to pay for private-school tuition. And if the marching band is more their thing, start saving for private music lessons.

Aiming to erase a projected $629 million budget shortfall created largely by slashed state support, Philadelphia public-school officials yesterday swung a big ax at the 167,000-student district’s budget, proposing drastic changes – such as reopening union contracts and changing state law to decrease support for charter schools – that skeptics say are unlikely to happen.

Yet without the changes, officials threatened, they’ll be forced to cut all athletics, instrumental-music programs, bilingual counselors, summer programs and gifted-and-talented programs. Further, class size will balloon by about three kids per class in a district in which some complain that class sizes already are too large.

“This is not a budget that the management of this district endorses,” said Michael Masch, the district’s chief financial officer. “We do not believe that it is a budget that is good for the children of Philadelphia.”

But the state bullied the district into this budget, Masch and Deputy Superintendent Lee Nunery said yesterday at district headquarters.

“Here in Pennsylvania, the governor proposed $1.1 billion in cuts to pre-K-to-12 education – $292 million of those cuts will fall on the School District of Philadelphia,” Masch said. “Although we educate just a little over 10 percent of [the state's] students, we are being asked to shoulder more than 25 percent of all of the governor’s cuts.”

The $629 million gap announced yesterday was far larger than the $465 million that officials estimated just a few weeks ago. Administrators attributed the jump to a deeper analysis and to an increase in non-negotiable expenses, such as contractual salary increases, pension payments and charter schools.

In a morning meeting that wasn’t listed on its schedule, the School Reform Commission approved a tentative operating budget of $2.7 billion for next year, down from this year’s $3.2 billion budget.

The proposed cuts outraged parents and activists, who accused the district of using students as political pawns and riling up parents to catalyze criticism of Gov. Corbett.

“They’re using my child’s classroom as their personal political football, and it’s not working for me. It’s brinkmanship,” said Helen Gym, a Center City mother of three who has one child in a district school and two in charter schools.

“The district has lost credibility because it hasn’t challenged executive salaries, and it doesn’t do competitive bidding on professional-services contracts that cost over $100 million. There’s a whole host of things that need to be put on the table, not just essential school services.”

Jerry Jordan, president of the Philadelphia Federation of Teachers, blasted the proposed changes but acknowledged that state cuts put the district in an unenviable position.

“There are no good cuts,” Jordan said.

Still, cutting early-childhood programs and after-school programs in a poverty-riddled district, when studies show that such initiatives are critical for academic and life success, is “absolutely harmful,” Jordan added.

To read the full story: Philly.com