Sallie Mae Settles with NY AG in Student Loan Probe; to Pay $2 million
Published April 12th, 2007 in Uncategorized. 0 CommentsAttorney General Andrew M. Cuomo today announced a settlement with Sallie Mae, the nation’s largest student lender. Reston, VA based Sallie Mae voluntarily agreed to adopt the Attorney General’s code of conduct governing student lending and contribute $2 million to a fund devoted to educating college bound students about their loan options. Under the agreement, Sallie Mae agreed to discontinue call centers or other staffing for college financial aid offices, discontinue paying financial aid officers for appearing on advisory boards, and discontinue paying for any trips or travel for any financial aid officer. Sallie Mae serves almost 10 million borrowers, manages a portfolio of over $142 billion in loans nationwide, and has relationships with over 5600 schools.
“Sallie Mae is the largest student lender in the United Sates. Their adoption of this code of conduct will affect millions of students and thousands of schools around the country, and will help set a new industry standard that all lenders should adopt,” Cuomo said. “With Sallie Mae’s $2 million contribution to an education fund, thousands of college bound students will now have more information on how to wisely choose the best student loan for them.”
U.S. Rep. George Miller, the chairman of the House Education and Labor Committee said, “With today’s skyrocketing college costs, it is inexcusable for any financial institution to be collecting excess profits at the expense of students and parents. Attorney General Cuomo’s settlement with Sallie Mae demonstrates the value of vigorous oversight, and is an important step towards ensuring that all student lenders abide by the highest ethical standards.” Miller continued, “The sole purpose of the federal student loan program is to help students pay for college, not to pad corporate profits.”
Tim Fitzpatrick, Chief Executive Officer of Sallie Mae, said, “We are pleased that Attorney General Cuomo has recognized Sallie Mae’s leadership in the student loan industry and our ethical market practices with students and schools. “We are delighted to join the Attorney General as part of our ongoing efforts to educate consumers on financing college. We thank the Attorney General for his leadership in this area.”
Cuomo’s nationwide investigation into the student lending industry has uncovered many questionable conflicts of interest including revenue sharing agreements, university call center staffing by lender employees, gifts and trips from lenders to financial aid directors, and even apparent stock tips to financial aid officers. Last week, Cuomo announced landmark multi-million dollar settlements with eight universities and Citibank. In 2006, Sallie Mae and Citibank accounted for 22% of the private loans nationwide.
The Student Loan Code of Conduct adopted by Sallie Mae in its settlement with Cuomo includes the following provisions:
1. Ban on Financial Ties. Lenders are prohibited from giving anything of value to any college in exchange for any advantage sought by the lender. This severs any inappropriate financial arrangements between lenders and schools and specifically prohibits “revenue sharing” arrangements.
2. Ban on Payments for Preferred Lender Status. Lenders may not pay or give colleges any financial benefits whatsoever to get on a college’s preferred lender list.
3. Gift and Trip Prohibition. Lenders are prohibited from giving college employees anything of more than nominal value. This includes a prohibition on trips for financial aid officers and other college officials paid for by lenders.
4. Advisory Board Rules. Lenders are prohibited from paying college employees anything of value for serving on the advisory boards of the lenders.
5. Call-Center and Staffing Prohibition. Lenders must ensure that employees of lenders never identify themselves to students as employees of the colleges. No employee of a lender may ever work in or providing staffing assistance a college financial aid office.
6. Disclosure of Range of Rates and Defaults. Lenders must disclose to any requesting school the range of rates they charge to students at the school, the number of borrowers at each rate at the school, and the lender’s historic default rate at the school. This will ensure that schools will have the information they need to select preferred lenders who are best for students and parents.
7. Loan Resale Disclosure. Lenders shall fully and prominently disclose to students and their parents any agreements they have to sell loans to any other lender.
Source: InsideARM.com
Excellent Video Seminar On Bankruptcy
Published April 4th, 2007 in Bankruptcy Process and Procedure and Uncategorized. 0 CommentsThis seminar is given by Showell Blades, my colleague in South Carolina. It’s an excellent overview of bankruptcy, and I recommend that all of my readers take the time to watch it.
Credit Counseling On Late Night TV? Change The Channel!
Published March 27th, 2007 in Consumer Scams and Credit Counseling. 1 CommentMany people who are having financial problems can’t sleep at night. The credit counseling industry knows it, so that’s why you see so many of those debt management commercials on late-night television.
They all sound so promising. A quick phone call and your bill problems will disappear. But not so fast - you need to do some homework before you fork over your hard-earned money to some late-night huckster.
But before choosing a debt management program, be skeptical. It’s better to find help from a reputable organization such as the NFCC. The Federal Trade Commission also advises consumers against choosing a debt-management program without meeting with a certified credit counselor first.
Be especially wary of debt-consolidation or counseling organizations that:
- Charge high up-front or monthly fees for enrolling in credit counseling or a debt management plan.
- Pressure you to make “voluntary contributions,” another name for fees.
- Won’t send you free information about the services they provide without requiring you to provide personal financial information, such as credit-card account numbers, and balances.
- Try to enroll you in a debt-management plan without spending time reviewing your financial situation.
- Offer to enroll you in a debt-management plan without teaching you budgeting and money-management skills.
- Demand that you make payments into a debt-management plan before your creditors have accepted you into the program.
Source of post: MarketWatch.
Credit Card Junk Fees Cost Americans $31 Billion Per Year
Published March 26th, 2007 in Card Card Companies and Personal Finance. 0 CommentsWhen you get a credit card, watch out for those junk fees. They’re all in the fine print, but most people don’t even look at them. These fees can cause your credit card debt to balloon out of control, making it more likely you will fall behind on your bill payment.
Here are the top 5 credit card junk fees to watch out for:
- The late fee. Banks charge as much as $39 (on top of finance charges) if your payment doesn’t arrive on time. If you’re prone to forgetting, schedule automatic payments through your bank. If it’s only happened once or twice, talk to your creditor. They might just waive the fee.
- The balance-transfer fee. Many cards will advertise low APRs on balance transfers to entice customers, but the transfer fee could negate the advantages. The good news is that some cards don’t have them — Capital One, for example, has no balance-transfer fees on most cards.
- The cash-advance fee. Use your credit card to get cash from an ATM, and you’re actually taking out a loan — probably with a very high interest rate. But you may also have to pay a transaction fee both to your credit-card company and to the bank that owns the ATM you use. All in all, it’s not worth it. Best to avoid cash advances altogether.
- The over-limit fee. Exceed the limit on your credit card and you may have to fork over another $39. Wait — doesn’t that undermine the point of a credit limit? Perhaps, but some companies will OK the over-charge as a “convenience” for you. (But wouldn’t it be more convenient if they just raised your credit limit?) You may want to explicitly let your credit-card company know not to let you charge more than your limit.
- The foreign-currency fee. If you use your card abroad, you’re going to have to pay a hefty fee — typically around 3% of your purchase — so stick with traveler’s checks. If you must use a card, look for one with no fee or low rate before you travel.
Source for post: MarketWatch.
Getting A Tax Refund? Here’s How To Make The Most Of It!
Published March 20th, 2007 in Personal Finance. 0 CommentsCNN reports that tax refunds are up this year, topping $2,500 on average. That may or may not seem like a lot of money, but whatever your perspective there ways to maximize the impact of every dollar.
For starters, remember that this is your money - you’ve been overpaying the IRS all year, and now they’re just giving it back to you. But most people think of a refund as forced savings.
CNN Money has these ideas putting your tax refund to good use:
Fund your IRA: You’re allowed to make up to a $4,000 contribution ($5,000 if you’re 50 or older) for tax year 2006 through April 17 this year.
Fund a 529: Socking money away for a child’s college education is one of the harder financial demands of parenthood. But at least in a 529 you may get a tax deduction for your efforts. To see if your state offers a tax deduction for a 529 plan, visit SavingForCollege.com.
Open a CD: Rates have been pretty favorable - averaging 5.4 percent of late, which is about double the rate of inflation. Check out the Loan Center for a comparison of specific banks’ CD rates.
Add to your emergency fund: There’s nothing less fun - or harder to save for - than a rainy-day fund worth three months of your expenses to protect you financially if ever you’re laid off or face a large unexpected expense like a broken down car or water heater.
Reduce your credit card debt: If you’re carrying high-rate debt reducing or eliminating your balance sooner rather later can save you a bundle long-term.
If you want to put your refund to use in more than one way, the IRS is now offering a split-refund option, which lets you designate up to three accounts at financial institutions into which you want the IRS to direct deposit portions of your refund. To activate this option you’ll need to fill out Form 8888 and send it in along with your tax return.
Disputing Errors On Your Credit Report
Published March 19th, 2007 in Credit Reporting and Uncategorized. 0 CommentsCredit report errors are very common. In fact, recent studies have shown that the majority of people have some sort of error on their credit reports - errors that are as simple as an incorrect middle initial or prior home address all the way up to major problems such as accounts that belong to other people.
Thankfully, it’s simple to dispute errors on your credit report. All you need to do is provide each credit reporting agency with a letter outlining your dispute and providing the necessary proof. Send your letter by certified mail to each credit reporting agency.
The three addresses where you need to mail your disputes are:
- EQUIFAX
P.O. Box 740241
Atlanta, GA 30348 - TRANSAUNION
Consumer Disclosure Center
P.O. Box 2000
Chester, PA 19022 - EXPERIAN
P.O. Box 2002
Allen, TX 75013
Your dispute letter should include your full legal name, social security number, date of birth, and copy of your driver’s license or other government-issued photo identification.
Remember to sign and date the letter, and keep a copy of the letter as well as all back-up information you send. This may be important in the event that the credit reports are not properly updated with correct information.
For more information go to the FTC’s web page devoted to this subject.
How To Fix Your Credit Report
Published March 19th, 2007 in Credit Reporting and Personal Finance. 1 CommentYou see the ads everywhere. Companies are offering to repair your credit for a fee. But what most people don’t realize is that you don’t need to hire anyone correct inaccurate or incomplete information on your credit report. In fact, many credit repair offers are scams that, at best, waste your money and, at worst, involve you in a crime.Under the Fair Credit Reporting Act, you can challenge information that you believe is inaccurate. If the reporting agency cannot verify the accuracy of the information, they must remove it.
But it is important to remember that it is illegal to dispute information that you know to be correct. For example, those companies that claim to be able to remove negative information from your credit report even if it is truthful and accurate are engaging in illegal tactics.
Consumers are entitled to a free credit report annually from each of the major reporting agencies. Gte a copy of your free annual credit report by clicking here.
If you have errors on your credit report, you should speak with an experienced lawyer to work through the issues and protect your legal rights.
Last week Kmart Corp. agreed to institute a gift-card fee refund program as part of its settlement with the federal government, which charged the retail chain with engaging in deceptive practices in marketing and selling its gift cards. Kmart had imposed fees for non-use of the gift cards without adequately disclosing them to purchasers, according to the government.
The refund program would apply to all cards issued before May 1, 2004. To get a dormancy fee reimbursement, you must provide the gift card number on which the fee was assessed, as well as your mailing address and phone number. Kmart will provide information about the refund program on its Web site, including a toll-free number, e-mail address and mailing address, any of which consumers can use to claim their refund.
If you have any questions or concerns about the refund program, you can contact the FTC’s consumer hotline at 202-326-3569.
Important Questions To Ask Before Signing Up For A Credit Card
Published March 12th, 2007 in Personal Finance. 0 CommentsLike it or not, credit cards are a valuable part of life. I gave mine up years ago, but I know that’s not going to happen for the rest of the world.
But before you go out and sign up for every credit card in sight, take a look at these Key Questions To Ask Before Signing Up For A Credit Card. These tips are very helpful, and will assist you in making sure that a particular offer is right for you.
