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It’s Time to Break Up General Electric Company (GE)

By U.S. News & World Report

General Electric Co (NYSE: GE) shares plunged today, losing 4 percent after announcing that its insurance business — a part of the slimmed-down GE Capital — would take a $6.2 billion charge for the fourth quarter.

But that’s not even the day’s most shocking company development: Apparently, the legendary American industrial giant is seriously mulling a breakup. The diversified blue-chip conglomerate may split up its businesses as soon as this spring, according to breaking reports from CNBC and Bloomberg.

Zooming out a little bit, this becomes easier to understand. GE stock’s recent performance, its $6.2 billion insurance loss, longtime efforts to shed the risks and assets of GE Capital, and comments from the new CEO on Tuesday all make clear that a breakup may be imminent and necessary.

“We are looking aggressively at the best structure or structures for our portfolio to maximize the potential of our businesses,” GE CEO John Flannery says.

[See: 7 of the Best Stocks to Buy for 2018.]

This strategic breakup may result in “separately traded assets really in any one of our units, if that’s what made sense,” Flannery said. The most likely way that would happen is if GE spun off certain divisions that then became their own, independent, publicly traded companies. GE shareholders would likely receive stock in the newly independent public companies in proportion to the number of GE shares they own.

While spinoffs might seem like an artificial financial magic trick, they can create quite a lot of value for shareholders.

First, a bunch of GE spinoff companies would each have their own management, laser-focused on that business only, resulting in greater concentration and less red tape. An intangible but real cost for a global conglomerate of GE’s size is the inability to move faster.

Secondly, and perhaps even more importantly for shareholders: Wall Street is much more efficient at evaluating individual companies, each with different specialties, business models, margins and growth prospects, than one sprawling company that owns a load of diverse businesses.

If GE’s top brass feels strongly enough about a breakup that it could happen by spring, it’s likely that the board believes GE stock is undervalued, trading for far less than the sum of its parts.

The number of different GE divisions is dizzying. The company is in power, oil and gas, aviation, health care, transportation, renewable energy, and energy connections and lighting. And that $6.2 billion charge proves the multi-year effort to shed GE Capital assets and reduce financial risks still has a long way to go.

[See: 7 of the Best Blue-Chip Stocks to Buy for 2018.]

Though shares are plunging on the massive quarterly insurance loss, patient long-term shareholders who wait for the dust to settle could be well-advised to buy GE shares before the breakup happens — if and when the rumors are confirmed in more detail.

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It’s Time to Break Up General Electric Company (GE) originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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