Everyone I know is paying off student loans. I’m fortunate enough to be making my payments with no problem but I did struggle with them in the past (when I was significantly more broke). But with the economy as foul as it is, more and more people are getting behind on their loans and even going into default. And those that do, according to this story in the NY Times, are finding out just how much of a hassle dealing with their lender can be.

“More borrowers may begin to discover the harrowing consequences of reneging on student loans in the current economy. Numbers of borrowers behind on payments and in outright default are rising for some types of loans, and the tight job market makes it harder for graduates to find jobs that let them pay off debts. At the same time, investors are pressuring lenders to raise revenue by minimizing losses. Investors also expect more revenue from those lenders that operate collection agencies.” –NY Times

At the end of the day that all means more phone calls from collectors and a more stressful life for people who fall behind, so do your best not to.

One interesting thing about the NY Times story, though: they feature a 38 year-old activist who is fighting the student loan companies over their tactics. The problem: he’s behind in his own student loan payments, yet quit his job because he didn’t get the raise he wanted, and also spends time and I’m assuming money on tango and salsa lessons. How’s that work?

I read somewhere that poor people think about surviving day-to-day, the middle class thinks check to check and the wealthy plan for generations down the road. So what are you doing to ensure your future generations will have a stronger financial life than you did?

The thing I decided to do over the weekend was start college funds for the babies in the family. I have one newborn little cousin and one who’s three; they’ll both be getting 592 college savings plans in their names. I called up a financial adviser at Fidelity, where my sons’ college plans are and found out that anyone can start a 529 plan for a kid — you don’t have to be the parent. You can start one with as little as $50 and some of the plans allow you to deposit as little as $15 automatically per month. Sounds like a little, but even that much over the course of 18 years will add up to at least books for a semester or two.

Most 529 plans are associated with or sponsored by a state — you don’t have to live in that state to enroll in them, though, and all have federal taxes deferred on them. There are some state tax benefits, too, but you’ll need to read the fine print on which plan you choose to figure out which is best for you.  You can go to www.savingforcollege.com to read up more on 529s.

How many times has this happened to you: you deposit a check into your checking account, check with the bank to make sure the money is available then proceed to go about your business, paying bills and having a lil fun. Then you find out that the money you deposited really wasn’t all there and the bank has charged you a fee for being overdrawn. Don’t act like I’m the only one.

In fact, it happened to me this morning. I had plenty of cash in my checking account at the beginning of the week, and deposited a check on top of that on Tuesday. Now, last week I lent a family member money to help them out, and also paid some bills, so I knew my balance would come down, but to nowhere near zero or overdrawn, especially since I’d deposited more money this week, right?

Notsofast, Mr. Reed. I checked my bank checking account online this morning and saw that the bank showed my available balance in the negative, even though my ledger balance was more than enough to cover anything I’d spent. How was this possible?

Pissed, I called the bank and found out that they’d partially cleared my deposits, but held some of the money back for several days. In the meantime, every dollar I spent with my bank card cleared instantly. What’s worse, the bank’s online system showed all my deposits as having cleared fully, making me think I had far more money available than I did.

Fortunately, I can run to the bank at lunch and deposit enough cash to straighten it out and avoid whatever ridiculous overdraw fees they charge. That said, I should have known better than to spend as much as I did in the first place.

Lesson learned.

Are you broke but have a really, really smart kid in high school? This post is for you.

The New York Times reports that Brown University is joining a trend of Ivy League schools that are doing away with student loans and pretty much giving free tuition to enrollees with low and moderate incomes. Harvard, Dartmouth, Stanford and Yale are doing the same, the story says.

This is a good thing considering how much college costs these days; I took my last undergrad class in the fall ‘99 semester and I’m still paying off student loans — and I went to a public school. I’m deathly afraid that I’ll still be paying for my own education by the time my 11-year-old finishes high school.