Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 18, 1994 TAG: 9407220059
SECTION: BUSINESS PAGE: 6 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
A: The government recently announced a pilot program setting up a loan fund and allowing students the option of 10-year, 25-year and 30-year repayment plans.
Kevin Kramp, who works in the office of Rep. Bob Goodlatte, R-Roanoke, said the program is not retroactive. It applies only to students in college and loans being made now, not to people who are already graduates and paying off loans.
The purpose of the program is to set up a revolving loan fund. Kramp said the idea is that repayments will serve as funds to help other students in the future.
Colleges and universities were given the option of whether they wish to participate in the pilot program. The Associated Press reported that 104 colleges have accepted and, Kramp said, the University of Virginia is one of them. Students at those schools can participate right away, but students at any college can transfer their existing loans into the new program.
Before entering such a program, students should consider whether they want to be paying their student loans into their 50s - along with the interest to double or triple the debt. But the plan allows students to change their minds and switch to a more traditional 10-year repayment plan after graduation if their earnings permit.
Investment clubs
Q: Are there any investment clubs in town? I am interested in the possibility of starting one or joining an existing one.
A: Barry Murphy, a spokesman for the National Association of Investors Corp., an organization of investment clubs, said it never matches people with clubs. That's because of problems with liability if either side, the investor or the club, turns out to be a problem. Also, Murphy said, an investment club really is a small mutual fund, and the Securities and Exchange Commission opposes soliciting for mutual funds without a prospectus.
Most clubs, he said, are formed by groups of friends who already know and trust each other. Murphy suggested that you start a club among your own acquaintances. He suggested placing a classified ad if you want to search for other amateur investors.
Remember that the investment goals of the club will be established by the majority of the club members. You want to find people who share your investment philosophy, people with whom you are comfortable. That essential element is a reason that some clubs fail.
If you want information about starting a new club, you can call the National Association of Investors Corp. at (810) 543-0612. Follow instructions of the automated answerer. Or you can write to the association at 1515 E. Eleven Mile Road, Royal Oak, Mich. 48067.
The closest local chapter of the association is in Richmond. The Central Virginia chapter there has a recorded line that provides news of association activities. The number of this line is (804) 756-8084.
An officer of the chapter, Mary Kay Huss, said it too has information that can help you to start a new club. She said some people come from Roanoke for various chapter seminars and events in Richmond. The largest event is the annual fair, scheduled this year for Nov. 12. Sometimes people and clubs match themselves at these regional events, Huss said.
You might also check with your stockbroker. Some clubs buy their stocks through a specific broker, but others perform the entire research on their own and use a national discount brokerage house.
Liability for tax error
Q: My tax preparer made an error on my return two years ago, and now I'm getting a big bill from the IRS. It was his transcription error that caused the problem. What portion of this bill is he responsible for?
Also, there was a difference between the way he handled an out-of-state royalty and the way a former tax preparer handled it. How do I get a professional opinion between the two?
A: You must pay the tax portion of the bill because you owed the taxes in any case. You also must pay the interest because you had the use of the money until the government claimed it. Your tax preparer, however, is responsible for any penalties assessed against you.
If there is a difference in the way two tax preparers handled a royalty, you should take all of your records to a certified public accountant.
If you do not know a CPA in your area, you can get the names of three practitioners with the needed expertise by calling toll-free to the Virginia Society of CPAs. The number is (800) 733-VCPA.
by CNB