Monday, September 23, 2013

Don't Tax My Credit Union

The tax reform currently in action at the hands of congressional lawmakers is causing an all-out war between banks and credit unions. The American Bankers Association began advertising its anti-credit union message throughout Washington, and last month ABA executives wrote letters to President Barack Obama and Congress. The issue is whether or not long time tax-exempt credit unions should continue to hold their federal tax exempt status. The ABA claims credit unions offer the same products as banks, therefore should pay the same taxes as banks. They also state that the tax-exempt status costs taxpayers $2 billion dollar a year.

In truth, banks are treated like any other profit making enterprise (and therefore are taxed accordingly), while credit unions are member owned and pay no federal taxes. This is because credit unions invest their profits back into their banking services by offering higher interest rates on deposit accounts and lower rates on loans – something the average banking institution cannot compete with. Banks say credit unions have been snatching customers because of the consumer frustration over rising fees and outrage, though in truth credit unions have grown only a tenth of a percent in America’s financial assets (totaling 2.1%) in the last ten years (The typical credit union has $4 million in assets, while the average bank holds $250 million). The American bankers association also fails to mention that for every dollar in new taxes the government might gain in federal taxes from credit unions, it would be eliminating $10 of credit union member benefits. That seems quite disheartening, considering credit unions started as a means to help meager income families, small businesses and seniors on fixed income who have been traditionally underserved and rejected by banks. As Chuck Albrecht (CEO/President of MMFCU) puts it, “Our not-for-profit status ensures that we can continue to focus single-mindedly on delivering value for our members.”

Credit unions are standing united. Don’t Tax My Credit Union is a national campaign dedicated to ensuring Congress doesn’t raise taxes on 96 million credit union members nationwide and preserves financial choice for American consumers. You can make a difference- start protecting your credit union today! Personally tell our elected officials at both the state and federal levels about the importance of credit unions’ not-for-profit status to ensure they stay that way! Click here to get started:

Monday, September 16, 2013

Filling in the Gap Responsibly

The 2013 school year is in full swing! It’s never too late, or early, to start thinking about how best to pay for your education. Mid-Minnesota Federal Credit Union recommends students plan out their college financial strategy in three steps: Maximize free money, utilize cheap money next, and then fill in the gaps!

Maximize Free Money

Start your search for college cash with scholarships and grants, which means no out of pocket expenses for you and you don’t have to repay them. Keep in mind, however, that if you are awarded a scholarship or grant, your college will deduct that amount from the financial aid they would otherwise have given you.

Here are different programs worth your time to take advantage of:

Utilize Cheap Money Next

Federal student loans would be the next place to look after searching for “free” money through local scholarships, grants, etc. Here are the two most common:

  • Direct Student Loans (Stafford) Offered by the Federal Government, these low-interest loans come in two different options:

  1. Direct Subsidized Loans 
-Financial need requirement
-Interest is paid by the gov’t while you are enrolled, during the six months grace period, and in deferment.

             2.   Direct Unsubsidized Loans
- No financial need requirement
- Student is responsible for paying the interest that accumulates while they’re enrolled, during the grace period, and during deferment. 

  • Perkins The Federal Perkins loan has a lower interest rate and longer grace period than the standardized direct loans, but is not subsidized. Exceptional financial need is required and determined by the student’s FASFA information. 

Fill the Gap Responsibly 

After utilizing free and cheap money, for many students there are still expenses remaining. This is where alternative loan options come in. Here are the two most common types:

  • Private These are not offered through the federal government, so it is important to look for a loan program from an institution you trust. 
- Look for a loan with zero origination and other additional fees, low interest rates, flexible deferment and repayment options, and an easy application process.
- Compare all options with MMFCU’s Student Choice Private Lending Solution. This program offers zero origination fees, low interest rates, and flexible repayment options. 

  • Federal Plus (Parent Loan for Undergraduate Students) These loans are in your parent’s name, cannot be transferred to the student, and include origination and other fees.