ABCDE BUSINESS sunday, june 6, 2010
CAR PAGES Going beyond great
Hyundai outdoes itself with the 2010 Santa Fe Limited crossover utility vehicle, Warren Brown writes.
Plus, ads for thousands of vehicles. Starting on the back page.
THE BIG MONEY
Momentum for an industry? Zipcar speeds ahead with an IPO. G2
ON LEADERSHIP
Israel, Turkey and the U.S. Weighing the fallout of an ally’s actions. G2
BP investors struggle to factor in the unfathomable
The oil and losses surge, but executive cites ‘firepower here to deal with the costs, any costs’
by Steven Mufson and Tomoeh Murakami Tse
Former Labor secretary Robert Reich wants to place BP’s U.S. operations in temporary receiver- ship. Sen. Ron Wyden (D-Ore.) wants the oil gi- ant to suspend its dividend payments. Attorney General Eric H. Holder Jr. is weighing criminal charges. And lawyers in more than a hundred lawsuits want BP to pay billions of dollars in damages for harm done to people’s health, the environment and businesses. “At this stage, it is impossible to predict the
longer-term cost of environmental remediation, claims and litigation, but they will be sizable,” BP chief executive Tony Hayward said in a confer- ence call with investment analysts Friday. So would anyone in his right mind buy shares in this company? Yes. Despite the fatal explosion on the Deep-
water Horizon drilling rig that triggered the mas- sive oil spill in the Gulf of Mexico, 10 of the 14 leading investment analysts tracking BP have “buy” ratings on the company, including one who has upgraded his recommendation. The reason: BP is a colossus with more than 18 billion barrels of proven reserves, operations in more than 100 countries, oil production every- where from Angola to Russia to Alaska and a new agreement in Iraq. Even after paying out its reg- ularly quarterly dividends at a rate of $10.5 bil- lion a year, BP will still have $5 billion to $10 bil- lion in cash flow, depending on the price of oil. And its relatively modest debt level means that it
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MARKETS Trouble at every turn
Weak U.S. jobs data dampen prospects for a steady recovery, and Europe’s crisis spreads. G6 YTD: Dow
NASDAQ S&P 500 -4.8% -2.2% -4.5%
MICHELLE SINGLETARY The Color of Money
Hey, graduates: Do you know
how much you owe?
oon the sounds of “Pomp and Circum- stance” will fade and thousands of college graduates will have to really start facing the music — their education loans. For them, I have a new tune: Know what you
S
owe. That should be the mantra for every student borrower because an unsettling number of graduates — and their parents — only have a vague idea of how much has been borrowed. It’s only after the degree has been obtained that they add up the costs. Many don’t know who they borrowed from or how many different loans they have. In 2008, about two-thirds of students gradu-
ating from four-year colleges and universities had student loan debt averaging $23,200, ac- cording to data ana- lyzed by the Project on Student Debt, an initia- tive of the nonprofit In- stitute for College Ac- cess & Success. Okay, graduates, so now that you have your degree, what do you know about your loans, and how will you man- age them?
Remember Cliffs-
Compact advice in CliffsNotes fashion.
Notes? For this month’s Col- or of Money Book Club
selection, I am recommending a CliffsNotes book — “Graduation Debt: How to Manage Stu- dent Loans and Live Your Life,” by Reyna Gobel. True to the CliffsNotes brand, this compact guide walks you through the student loan laby- rinth starting with “know what you owe.” “In order to work toward paying off your stu-
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Getting that diploma without piling on debt
by Daniel de Vise I
n a nod to the rising cost of college tuition and the burden of massive student loan debt on graduates, a growing number of universities are stepping up with “no-loan” aid pledges. More than 50 colleges — including elite private schools and flagship state uni- versities in Virginia and Maryland — have eliminated or capped loans in their financial aid portfolios for some or all students, promising enough aid in grants and work-study to cover most of the gap between what they charge
and what each student can afford to pay. At a handful of private universities with sizable endowments, including
Princeton, Harvard and the University of Pennsylvania, the goal is quite literal- ly to eliminate loan debt for most graduating seniors. “It’s going down, and it’s going down dramatically,” said Amy Gutmann, president of Penn. “A typical family earning $90,000 a year attends Penn tuition-free. A typical family earning $40,000 a year attends Penn with tuition, room and board covered.” Although the pledges ease the crisis of paying for school, most re- quire families to pay a portion, called the expected family contribu- tion. It is a predictable sum that considers household income and assets. A family with an income of about $120,000 a year might be expected to contribute $30,000 a year toward college costs; a family with half that much might be asked to contribute $12,000. “No loan doesn’t mean no cost,” said Lauren Asher, presi- dent of the nonprofit advocacy group Institute for College Access & Success. Aid pledges help, but a college education remains a long-term investment. Parents either plan for the ex- pense and sock away money, perhaps in a tax- advantaged 529 plan, or they leave the student
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How one college hands out money
by Jane Bennett Clark Kiplinger’s Personal Finance
W ILLUSTRATION BY CHRISTOPHER HITZ FOR THE WASHINGTON POST
ander Ursinus College and you’d think you had stepped into an Ivy League idyll. Stone-clad build- ings overlook a sweeping lawn, which slopes to a pic-
ture-perfect, small-town Main Street. Winding paths skirt carefully tended gardens. Outdoor statues gaze raptly at midair as students stroll by, chattering on cellphones. But Ursinus College, in Collegeville, Pa., lacks the wealth
and status that allow the real Ivies to choose from among the best students in the country and to cover their full financial need with no-loan aid packages. Like the vast majority of colleges, Ursinus must not only troll for top students but also calibrate exactly how much money it will take to bring them to campus and keep them there. In college-speak, it’s called enrollment management — a
way of slicing and dicing admissions policies and financial aid to attract a strong and diverse student body while bring- ing in enough revenue to keep the doors open. Whereas elite
numbers continued on G3 An inside view:
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