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Dorion-Gray Capital Management® Weekly Commentary July 13, 2015

| July 15, 2015
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THE MARKETS... 

U.S. stocks enjoyed widespread gains Friday, and major indexes closed up more than 1 percent amid hope that Greece and Euro zone finance ministers would reach a deal over the weekend. The increases followed the Federal Reserve chair’s predictions of an interest rate increase sometime this year and her concern over the country’s continuing weak labor market. For the week, the Dow rose 0.19 percent to close at 17,760.41. The S&P gained 0.03 percent to finish at 2,076.62 and the NASDAQ fell 0.23 percent to end the week at 4,997.70. 

Summertime Driving –

The national average price of gasoline fell by 22 cents a gallon from Memorial Day 2014 to Labor Day 2014 (source: AAA, BTN Research). 

Sequestration Numbers – 

Per the 2011 Budget Control Act (BCA) legislation, Congress is currently authorized to spend $1.016 trillion of discretionary spending for fiscal year 2016 (i.e., 12 months that begin Oct. 1, 2015), split between $523 billion for defense and $493 billion for non-defense programs (source: BCA, BTN Research). 

A Little Short - 

The “aggregate national retirement deficit” is $4.13 trillion. This “present value” amount represents the additional funds that working Americans would need to save by age 65 to eliminate expected deficits in their retirement years (source: Employee Benefit Retirement Institute, BTN Research). 

WEEKLY FOCUS – Gainful Employment Regulations Go Into Effect

Gainful employment regulations went into effect on July 1, after a federal judge dismissed a lawsuit challenging them in May. The new regulations are the Obama Administration’s effort to address the insurmountable educational debt many of today’s college graduates incur. 

The rules require schools to demonstrate their average graduate’s annual loan payment is not greater than 8 percent of the graduate’s total earnings or 20 percent of his or her discretionary income. Schools that consistently fail to meet the standards risk losing federal aid. 

To help students make good educational choices, the regulations also call for a greater level of transparency. While considering a prospective school’s program, students will be able to access practical information, such as the typical debt level of students in the program, job placement rates, average income and number of loan defaults. 

The guidelines will apply to almost all programs at for-profit schools – except for some liberal arts bachelor’s degrees – and most non-degree programs, including certificate programs at public and private nonprofit institutions. Many for-profit institutions will need to make changes, since they account for 44 percent of all federal student loan defaults and only 11 percent of the overall higher education population. 

While it’s too soon to tell whether gainful employment regulations will adequately protect students, cut costs and improve outcomes, many feel something needs to be done. Steep tuition hikes have led to increased loan levels while stagnant salaries have made repayment even more difficult. This has created an economic drag that impairs young adults’ upward mobility and hinders their innovation and entrepreneurship. It often causes them to delay getting married, having children, purchasing a home or saving for retirement. This also results in less tax revenue, and taxpayers are left on the hook for the $100 billion in overdue student loan debt people cannot afford to pay back. 

Helping children or grandchildren with college expenses may be among your financial goals, but the variety of options and plans can be daunting. We can help you explore the various avenues for sending your student to college without large loans or the loss of your retirement funds. 

The Dorion-Gray Team 

Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. A Registered Investment Advisory Firm. Dorion-Gray Capital Management is a Registered Trademark for the 4 Tactical and 9 Strategic model portfolios currently offered by Dorion-Gray Financial Services through Securities America Advisors, Inc. Dorion-Gray Retirement Planning is a trade name of Dorion-Gray Financial Services, Inc. Dorion-Gray Financial Services, Inc. and the Securities America companies are separate, unaffiliated entities. 

© 2013. Dorion-Gray Financial Services, Inc.

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