Military personnel still face hassles with student loans, despite law, report says

A government regular says military personnel are still being hassled over student loans despite federal laws and programs put in place to protect them, and officials worried it could signal a broader problem in the $1.2 trillion debt market.

The Consumer Financial Protection Bureau said in a report Tuesday it has received more than 1,300 complaints from military borrowers since 2012. Most of the complaints stem from military personnel trying to defer loan payments or cap their interest rates while on active duty or after being disabled, as is allowed under law. However, the CFPB found many military personnel are getting denied or ignored by companies that handle their loan.

Todays report demonstrates that student loan servicers still need to do more to improve practices that are hurting military families, said Holly Petraeus, assistant director for service member affairs at the CFPB, in a phone call with reporters.

Dorie Nolt, a spokeswoman at the Education Department, said it has tried to get rid of any “addition red tape” to manage student loans, including eliminating the requirement that service members must submit paperwork to prove active-duty status. Instead, loan servicers must check a Defense Department database.

While the agency said there are cases which loan servicers aren’t checking the database, the Education Department said some 141,000 personnel have received the benefit.

We continue to work with our servicers to ensure they are treating all borrowers fairly, but especially the men and women defending our country, she wrote in an email.

Federal law offers extensive education benefits to people who joined the military after 9/11. In general, if a person completes three years of service, four years at a public school are free or the student can receive $20,000 a year at a private school.

But the recession prompted many people with existing student debt to enlist. The law entitles these military personnel to reduce the interest rate or temporarily stop making monthly payments if they are deployed.

With federal and private loans, separate companies service agreements by processing monthly payments and helping borrowers with repayment options.

In the latest report, the Consumer Financial Protection Bureau echoed concerns by consumer advocates and the Justice Department that these loan servicers make it unnecessarily difficult for service members to find relief. In many cases, they are either denied for no reason or encounter so many obstacles that they give up or spend deployments repeatedly submitting paperwork.

The Department of Justice announced in May that nearly 78,000 service members would get reimbursed under a $60 million compensation settlement with Navient, formerly part of Sallie Mae, because they had been charged excess interest on student loans.

When asked about the discrepancy among the CFPB findings, the Justice Department settlement and the Education Departments May report that found little wrongdoing, Petraeus said, Ill simply say that we were very pleased to see the Department of Justice get millions of dollars for service members across all loan portfolios.

CFPBs student loan ombudsman, Seth Frotman, told reporters that he worries that problems facing military families are indicative of broader issues in the market that are driving Americas growing loan default problem.

The Associated Press contributed to this report

Cut your reno costs

With only a few more months of warm weather left, every home owner should be considering if they need to do any reno projects before the cold weather arrives. Whether you own a condo or a house, making it energy efficient before winter is a great way to not only invest in the resale value of your home, but also help you save on monthly energy bills. Its really a win-win.

Costs amp; Loans amp; Rebates, Oh My!

The biggest concern people have when thinking about home renovations is obviously the price tag associated with the work involved, and with good reason. Some renovations can cost a pretty penny (or nickel now that the penny is defunct) for high quality results, not to mention the expense of new appliances. However there are several solutions to these issues.

Loans

Dont be scared off by the term. You can take out a personal loan from a trusted financial institution and with flexible rates and terms you can pay it back over time so the cost of renovations wont hit your wallet all at the same time. Whether you need a few hundred or a few thousand dollars, this is a great way to not break the bank.

Rebates

Did you know that if youre renovating your home to make it more energy efficient, you may qualify for rebates from utility companies? Visit your service providers website to find out more about the different rebates they offer. Examples of some rebates include $500 for a new electric heat pump, up to $1,000 on an Energy Starreg; water heater or receive $100 when you purchase an energy efficient washing machine. When you add up a few different upgrades, thats a whole lot of nickels back in your piggy bank.

Understanding the Numbers

Its great to hear everyone talk about energy efficiency and saving money, but what does it actually mean to you, the consumer or homeowner?

Simple. Based on a Natural Resources Canada report on BC residential energy use, just over 50% of homeowners energy use goes towards heating with approximately 25% of that same bill going towards heating water. Put another way, installing a water efficient shower head could save you $40 per year all on its own. So think about what an energy efficient washer and dryer, dishwasher and hot water tank can do for your annual utility bill.

What Else Can I Do?

Old windows are energy guzzlers. Because they let in heat in the summer and cold air in the winter, the windows in older homes are one of the biggest sources of wasted energy consumption and as a homeowner, you pay for that. So even though windows are a big ticket item, you will definitely see a big return on your investment when you realize how much money you were wasting on higher energy bills.

With the Okanagan winter around the corner, making updates during the summer is a great idea and shopping for energy efficient appliances before the big rush when temperatures start to drop may also yield you a pre-season discount. So not only will you be sitting pretty when Old Man Winter comes knocking, youll be laughing when you get your utility bills and see the savings. Savings that will help you repay the money you borrowed to update you home even faster.

ProsperaCredit Union is a full service financial institution that prides itself on building relationships, we serve our members through sixteen branches; online and mobile banking; and a locally-based contact centre.

Updating your home or buying a new car? Investing in your RRSP, TFSA or consolidating debt?

ProsperaCredit Union can help you. Visit us in branch or online atwww.prospera.ca

Breaking Down Student Loans by Profession

The continued growth of student loan debt in the United States has reached staggering numbers of more than $1.2 trillion and 40 million borrowers. After receiving a bachelors degree, many students continue to earn a graduate degree in order to improve their knowledge base and earning potential. Those pursuing a medical, dental, MBA or law degree have to deal with a serious price tag that is significantly higher than the national average undergraduate balance of $29,000. A recently graduated dentist, for example, will acquire an average of $240,000+ of student loans or 7.9 times more than those with a four year degree alone.

More Tuition Numbers by Graduate Degree Type:

MBA: The average annual tuition for a two-year MBA program exceeds $60,000. If you attend one of the top business schools in the US, you can expect to pay as much as $100,000 or more in tuition and fees.

Law: The average yearly tuition for a law degree is around $50,000. However, the average debt taken on by a law school graduate was $84,000 if you attend public schools and $122,158 if you attend private schools.

Medical: The average yearly tuition for a medical student is $28,719 for resident students at public institutions, $49,000 for non-resident students at public institutions, and $47,673 for students at private institutions. The average debt a medical student graduates with is between $170,000 and $190,000.

Dental: The average yearly tuition in-state is $38,826 and out of state is $63,774. The average dental student graduates with $241,097 of debt.

These students have to pay off major tuition costs from graduate school and may need to pay off their undergraduate loans as well. It becomes an astronomical amount of money leaving many students with financial issues even after securing a high paying job. Plus, many of these working professionals are paying high-interest rates for their graduate student loans. As a good first step, they should research their options and consider refinancing their student loans to pay a lower rate and ensure that they start their professional careers on solid financial footing. Many working professionals dont know that they can refinance their student loans and some who are aware dont make the effort because they think it will take a good deal of their already limited time. But this is not true, as many student loan refinancers, including DRB, make the application process simple and easy with fast approval.

DRB recently announced a new product that will offer perspective MBAs the opportunity to finance their student loans while still in business school. This marks DRBs first financing product for in-school borrowers. This product can change the debt numbers across the board as students will be able to finance their loans while they are still attending school. It will give students a head start as they begin to financially set up their lives after graduation and keep them from being buried in debt.

Aryea Aranoff works on strategy, marketing and technology at DRB Student Loan, a marketplace lender and FDIC-insured bank offering low rate student loan refinancing to working professionals and parents with PLUS loans. DRB Student Loan is a leader in this space offering some of the lowest rates in the country on its student loans.

40 Billion Worth of AAA Student Loans Are at Risk of Becoming Junk – Bloomberg

It’s no secret Americans are having trouble paying off their record $1.2 trillion in student loans. What’s less known is that the trend is turning a typically sleepy corner of the bond market into a potential hazard zone.

People who borrowed money for education before the financial crisis are taking longer than forecast to repay their debt, thanks in part to relief programs. That’s creating a risk for holders of securities created by bundling the loans — which are government guaranteed — because the bonds may not be retired by maturity.

As a result, Moody’s Investors Service and Fitch Ratings are considering cutting their rankings on almost $40 billion of securities, possibly dropping top-rated debt to junk status. The potential downgrades threaten to unleash an unusual situation where fundamentally sound bonds with minuscule coupons that reflect their low default risk would need to find new buyers, potentially crushing their prices.

Andrew Burton / Reuters

Thirty-seven-year-old Kelly Tynan would like to give her younger self two pieces of practical financial advice. First, go to state school; it’s far cheaper than a degree from a private college. Secondly, and relatedly, take on less student debt.

Student-loan bills now consume more than $700 per month of Tynan’s take-home pay, as a special-education teacher and mother of a 2-and-a-half-year-old in the Boston area. If Tynan didn’t have roughly $60,000 in student-loan debt, she could have saved more cash in her 20s, or would now live in a larger home. I might have been able to take a few trips and have that experience of the world, she says. As a parent, that is nearly impossible to do now.

Rising student debt is a central obstacle on the complex new financial landscape confronting Americans, particularly young people just starting out. In the latest Allstate/National Journal Heartland Monitor poll, nearly three-in-10 young people who define themselves as just starting out cited paying off student loans as their biggest financial challenge; that tied with saving up enough money for major expenditures such as buying a home was their top concern. In sharp contrast, only about one-in-nine older poll respondents who define themselves as no longer starting out described student loans as the toughest financial challenge they faced in their own youth. Instead, older respondents pointed to making ends meet, not accumulating debt, and setting aside cash for major purchases as the greatest challenges in their early financial lives. (For an explanation of how the poll defined those who are still starting out and those who have advanced past that stage in their life, see here.)

Twenty-three percent of both young and older respondents pinpointed a salary of $50,000 as the sufficient wage for anyone starting out.

That contrast is yet another indication of how student debt has reshaped the financial experience of young people post-college. Just ask 24-year-old Matthew Rogge of Lincoln, Nebraska, another poll respondent who considers himself lucky to hold down a full-time job after he graduated in May 2014. Rogge’s $40,000 in student debt hangs over him, he says. It makes it hard to save, he adds, even with his job as a general manager for a small, local catering company. Honestly, I would not have even needed to go to school for the job I am in now.

The increasing weight of student loans was apparent again when the poll asked respondents their view on how young people should use their disposable income. Young people said that the best use of any extra money was to pay off debt like credit cards and student loans (32 percent), followed by building up an emergency fund (21 percent) and saving for a major purchase like a car (15 percent). Older people—when asked what they wish they had done differently in their early financial lives—cited investing in a retirement account (26 percent); saving to buy a home (15 percent); and paying off credit-card debt or student loans (14 percent) as the best use of any extra money. (Older people with student debt answered that question somewhat differently, giving equal weight to saving for retirement and paying off student loans. There was no meaningful difference on that question among younger people with and without student debt.

10 Ways to Pay Off Your Student Loans in One Year

By Kyle Winkfield, Contributor

So youre out of college, drowning in debt and probably wondering, Was it really worth it?

Whether it was or wasnt is probably yet to be seen. But either way, you might be desperate to rid yourself of student loan debt — especially if the amount of your debt is on par with the national average, which is more than $35,000 for the average student graduating in 2015.

The good news: Employing all of the following 10 tips can help you get rid of your student loans in just one year. There are, however, a couple of things to consider, such as how much you owe versus how much youre earning. If your base loan is $30,000, and youre only making $35,000 a year, eliminating your debt within 12 months might not be an achievable goal. And if youve already begun a family, these tips can be very challenging to employ. So, it might take you two, three or more years instead to pay off your debt.

But nonetheless, use these strategies to reduce or erase your student loan debt. It will be a tough year, but it will be rewarding when you see your loan balance shrink to $0.

1. Seek a job offering student loan repayment reimbursement.

Many government agencies and other employers provide employee recruitment and retention incentives in the form of student loan assistance. When looking for your first real job after college or perhaps seeking an employment upgrade, look for employers who offer programs such as these.

Related: 13 Things Millennials Should Know Before Their First Real Job

2. Take on extra work.

If youve got the time and energy, pick up extra work. Whether your current gig offers overtime or you can make money on the weekends cutting grass, consider taking on a part-time job to add to your monthly income. Who knows — maybe working 60 to 80 hours a week for a year will eliminate thousands of dollars from your indebtedness? If so, the short-term grind will be worth it for the long-term gain.

3. Set up payroll allotment.

Check with your jobs human resources department, and ask to set up payroll allotment. With payroll allotment, a certain amount of your regular paycheck goes directly into another account and not into your main checking or savings accounts. If you dont see the money, you wont be tempted to blow your paycheck. And in a short period of time, you will have accumulated a nice chunk of change that can be used to make a lump sum payment on your student loans.

4. Say no to the 401(k) plan.

Opposite most advice youre most likely receiving, if getting out of debt is your No. 1 goal, consider delaying your retirement savings by 12 months. Delaying the benefits of one year of 401(k) contributions in favor of faster debt servicing is worth it in the end. The amount youre paying in loan interest will probably be more than you earn in your 401(k) after you factor in market risk and taxes due.

5. Do more things at home.

Youve probably already learned that you can save more money by doing more things at home. Making your meals, watching movies on Netflix and even mixing your own cocktails can be much cheaper than going out. Use the money you saved to go toward your student loan payments.

Read: 9 Strategies for a Cheaper Night Out

6. Get a roommate.

If college didnt burn you out on shared living spaces, consider the cost savings of acquiring roommates or seeking a lower-cost living arrangement. Sharing the rent and electric bills or renting a room in a house — instead of renting a full apartment — could drastically cut back monthly living expenses.

7. Sell your things online.

Do you have assets that you can sell? If youve acquired valuable items that you no longer need or want, consider selling them online. Check out sites like eBay and Amazon.

8. Ditch your car.

Regardless of your environmental status, no one can deny the high costs of transportation. Look into rideshare and carpool options. Or, see if your city offers public transportation. It might not always be the most luxurious way to get around town, but gas, insurance and maintenance on a car add up quickly.

9. Resist the urge to shop.

Do you need new pants or just want new pants? If you can make your wardrobe, cell phone and shoes go the distance for 12 months without upgrades, do it. Youd be surprised by how much you save when you stay out of the mall.

And heres a bonus tip: Unsubscribe yourself from the daily email advertisements for those cant miss sales! so youre not tempted to waste your money on something you dont really need.

10. Move back in with Mom and Dad.

Moving back home is the least favorable option for many college grads, but in most situations its an opportunity to drastically reduce living expenses. If your parents would love to have you home to snuggle with one more year — and theyre willing to let you off with low to no overhead costs — this is a sure-fire way to cut costs and dedicate yourself to debt servicing.

Keep reading: Why Your Parents Should Have Crushed Your College Dreams

You might be ready to hit the ground running. Or, you might be saying, Ehh … maybe in a few years. If paying off your debts within a year is simply not feasible, look at your next option: Figuring out how to reduce the amount of time youre in debt.

The average payback schedule is 10 to 20 years, so your goal should be how to reduce that schedule down to seven, five or even two years. This can be accomplished by creating a detailed budget, utilizing a debt snowball strategy and implementing some of the 10 tips above.

This article originally appeared on GOBankingRates.com: 10 Ways to Pay Off Your Student Loans in One Year

More from GOBankingRates:

  • 9 Best Student Savings Accounts
  • Why Homeowners Are Paying Off Their Mortgages Before Student Loans
  • 10 Best Credit Cards for College Students

Aequitas played crucial role in Corinthian student loans deemed predatory …

As federal lawyers bore down on Corinthian Colleges Inc., a Lake Oswego firm infused the national chain of trade schools with cash — enough money to allow Corinthian to issue more than 100,000 new student loans.

That matters today because federal regulators maintain in court filings that Corinthian Colleges had been using predatory and deceptive tactics to entice students into enrolling and borrowing for tuition.

An affiliate of Aequitas Capital Management bought for about half price more than $500 million in Corinthians student loans and then charged the college chain millions in fees for its help. In the process, the Aequitas affiliate threw a lifeline to Corinthian that helped keep its doors open, becoming an instrumental player in a student loan program that regulators contend put thousands of additional college students on a path toward default and heartbreak.

When Corinthiancollapsed and shut down its remaining campuses earlier this year, students were stuck with high-priced loans and unfinished degrees.

Aequitasis a private firm that manages investments for wealthy individuals. It formed Campus Student Funding LLC to buy the debt from Corinthian. Neither Aequitas nor Campus Student Funding have been accused of wrongdoing and they accept no blame for what happened. The company says it struck a sound business deal in 2011 that helped students who otherwise couldnt go to college.

Indeed, thousands of students completed their degrees and paid their loans.

Some werent so fortunate.

Dawn Thompson, 49, studied at Corinthian for six years to become a paralegal. The struggling Midwest mom of two remains unemployed and buried in $170,000 in loans. She said her Corinthian degree did her no good. Shes joined a nationaldebt strike movement urging other students to refuse to repay their Corinthian loans.

Others are taking aim at Aequitas.

We will make every effort to make Aequitas business less and less profitable, said Laura Hanna, a debt strike organizer. These loans are immoral and scandalous.

Federal regulators are pressing holders of Corinthian student debt to forgive it. Campus Student Funding still owns more than $80 million in Corinthian student loans. The company said most students are paying off their loans.

But the heady gains Campus Student Funding enjoyed in the beginning may give way to millions in lost revenue in the wake of Corinthians collapse. A June 8 filing in US Bankruptcy Court shows that a Corinthian subsidiary owes the Aequitas student funding arm more than $44 million.

The arrangement illustrates the big money and the big risks inside the world of high-interest student loans. Nationally, students are borrowing about $100 billion a year to attend college, a flow of cash that proved irresistible to profiteers.

Publicly owned companies flocked to the college business a decade ago and companies such as Corinthian racked up billions in revenues. The schools arranged federal loans for students who then passed the money to the schools for tuition and other costs.

Records and congressional testimony describe how students at Corinthian paid tuition double what comparable schools charged. Worse, they were stuck with financing that was the equivalent of payday loans — interest five times what other sources charged.

A promising deal

Aequitas officials said in written statements that its affiliate did business with Corinthian because it was in good standing with the US Education Department.

Our philosophy is to support underserved sectors and for many of these students earning a degree would help them make a living and help contribute to society, the company said. Perhaps a single parent or high-school dropout, getting a higher education was a last chance to save their future.

Bob Jesenik, a one-time US Bancorp manager, formed Aequitas in 1993 and earned $1 million last year. The name Aequitas, pronounced E-kwi-tos, is Latin for justice and equality.

Some of Oregons most well-regarded businessmen sit on his companys advisory board. They include Gerry Frank, longtime aide to US Sen. Mark Hatfield who is a freelance columnist for The Oregonian/OregonLive; former Portland television station manager Marty Brantley; corporate lawyer Will Glasgow; and local tech entrepreneurs Patrick Terrell and Keith Barnes. Frank and Brantley declined comment, Neither Glasgow, Terrell nor Barnes returned messages.

Aequitas owns investment advisory firms, other operating companies and a business lending arm. Its CarePayment subsidiary buys consumer debt from doctors and hospitals in whats called receivables financing.

In 2011, the small regional firm sought a way to expand into student lending — and had the seeming good business fortune to link up with Corinthian, one of the nations largest for-profit colleges. It became the companys single largest investment. At the time, California-based Corinthian had 110,000 students and revenues surpassing $1.7 billion.

But Corinthian had serious baggage.

Critics for years accused Corinthian of targeting poor and minority students with loans carrying interest rates up to 19 percent. In 2007, California authoritiesalleged the college lured students by lying to them about the success its graduates had in finding work. The college admitted no wrongdoing but paid $6.5 million to settle.

In June 2011, US Sen. Tom Harkin, D-Iowa,heaped scorn on Corinthian during a Senate committee hearing. He said that the companys students were more likely to end up with ruined credit than a valuable degree.

Three weeks later, Aequitas-affiliate Campus Student Funding signed its deal with Corinthian. Jesenik, the CEO, said the company did so despite concern the chain might be labeled a predatory lender.

It was clear that Corinthian was having troubles of their own, both regulatory and financially, Jesenik said in a 2014 deposition. We were all aligned to make sure that whatever we did with Corinthian was going to be safe, was going to be defensible.

Jesenik sat for the deposition after his company was sued by another firm. The suit, which is pending, involved fees and control of the Corinthian relationship.

$1.1 million a month in fees

Campus Student Funding negotiated highly favorable terms.

It bought Corinthians student loans at a deep discount — usually in the range of 50-55 cents on the dollar. That left the Aequitas affiliate to potentially double its money by collecting the full value of the loan from students.

It didnt have to worry about whether students paid their loans. Corinthian agreed to take back any student loan that went unpaid after 90 days.

Finally, Campus Student Funding got fees: program management fees, transaction fees, and asset management fees. While Aequitas officials said the fees totaled $36 million, Corinthian officials said the total was $68 million. Aequitas disputes the higher figure, saying Corinthian had trouble in its final days providing accurate information.

Corinthian had good reason to agree to such terms: access to billions from the federal treasury.

The US Education Department dispenses nearly $100 billion a year in taxpayer-funded student loans — the largest source of college money in the country. The students use those loans to pay tuition and other college costs. Corporate colleges such as Corinthian commonly derive 80-90 percent of their revenue from such financing.

Education Department rules require those for-profit colleges to come up with at least 10 percent of their revenue from other sources — meaning students. But since Corinthians student body tended to be poor, Corinthian needed to lend students enough to cover the full tuition.

It was this private, internal loan program that Campus Student Funding financed. By early 2014, the company had purchased more than $561 million in such loans.

With the Aequitas affililate funding its internal loans, Corinthian had what amounted to an ATM card to use at the Education Department.

These loans were toxic multipliers, said Ben Miller with theCenter for American Progress. For every dollar they loaned in this program, they got nine dollars from the federal government.

Aequitas said it was appropriate to finance Corinthian because the Education Department also was funding loans for Corinthian students. The federal lending continued despite investigations of Corinthian that had gotten under way by other government agencies.

Between 2011 and 2014 and with Aequitas help, Corinthian banked more than $3 billion from the federal treasury. Aequitas, meantime, offered returns of 12 percent to its investor clients who put money in the student lending deal.

Corinthian crumbles

When scrutiny of for-profit colleges intensified, Campus Student Funding and Corinthian in 2012 cut loan rates by 2 percentage points or more. Aequitas said it also lowered loan fees and extended grace periods.

Olaf Janke, Aequitas chief financial officer, said in a 2014 deposition that they hoped to make the loans more student-friendly. He acknowledged that the federal Consumer Financial Protection Bureau urged such reforms. Janke said Aequitas wanted to avoid the fate of other private student lenders, which paid multi-million dollar settlements after being accused of discriminatory lending and overcharging.

Janke, who has since left Aequitas, said in the deposition that Campus Student Funding replaced the diminished interest income by charging higher fees to Corinthian. Aequitas officials disputed that.

Aequitas finally ended the relationship in January 2014. The company didnt cite qualms about Corinthians treatment of students as the reason it cut the cord.Rather, as an internal Aequitas memo to its clients showed, the companys own investors and lenders balked at the risk as Corinthians conduct was spotlighted.

We had increasing difficulties in procuring capital, Janke said in his deposition. Due to the Corinthian negative headlines, investors either demanded a higher rate of return for their investment or they elected not to invest at all.

Last summer, the Education Departmentrestricted Corinthians access to federal money. In response, the corporate college stunned its investors and critics in announcing intentions to get out of the business.

Three months later,the Consumer Financial Protection Bureau sued Corinthian in federal court, claiming the private loan program that Campus Student Funding helped finance violated federal consumer protection laws. The federal agency accused Corinthian of predatory, deceptive and illegal practices in the program. Neither Campus Student Funding nor Aequitas were named.

The bureau has asked the judge to cancel 130,000 private Corinthian student loans.

Working behind the scenes, the bureau has already managed to get millions of dollars worth of Corinthian student debt extinguished. Sources said the bureau is in talks with Aequitas to work out such forgiveness but Aequitas hasnt agreed.

In a May SEC filing, Aequitas warned its clients that the fast changing regulatory environment could adversely affect the performance of certain of its investment funds.

Despite the controversy, Aequitas hasnt soured on higher ed, telling investors in early 2014 that it was aggressively pursuing other higher education funding relationships.

It formed anew affiliate providing Web-based college reviews, scholarship directories and internship listings. After three years of doing business with the corporate college that became the poster child for abusive student lending, Aequitas now casts itself as the college students ally.

Were here to help students, proclaims its website. Every action we take and decision we make must benefit students. If it doesnt, we wont do it.

— Jeff Manning

503-294-7606, jmanning@oregonian.com

@JeffmanningOre

Now You Can Pay for Code Boot Camp With Student Loans

President Obama has praised coding bootcamps like General Assembly and Dev Bootcamp as quick ways to secure a ticket into the middle class. But given that these programs can cost upwards of $10,000 and often require people to take an extended period of time off of work, it could be argued that these bootcamps aren’t all that affordable for people who aren’t in the middle class to begin with.

But that may soon change as more online lenders begin offering student loans for these alternative learners. The latest entrant into this space is Affirm, the financial technology startup that PayPal founder Max Levchin launched back in 2014. Starting Tuesday, students at General Assembly, Bloc, Kaplan’s Dev Bootcamp, and Metis will be able to secure loans that last 12, 15, or 18 months, with interest rates ranging from 6 to 20 percent. In most cases, students won’t be required to pay back the loan during the first six months they’re enrolled in the program.

With this new product, Affirm joins companies like Earnest and Upstart, which have also begun offering student loans for this same demographic. Levchin says he expects this field will only grow with time, as more students pursue this type of education.

I’m pretty bullish on the whole thing. In general, I think it’s going to grow very aggressively, Levchin says.

Perpetuating the Cycle?

Not everyone in the tech industry views that as a good thing, though. There are those who say these bootcamps are offering students the promise of a job and then failing to deliver, and that giving these students loans will just perpetuate the cycle of debt that so many people already live in. Meanwhile, many hiring managers say they still see a marked difference in the quality of work produced by bootcamp graduates versus traditional college graduates. It’s hard for somebody to come out of a dev bootcamp in a short amount of time and perform at the same level in an interview as someone who just finished a computer science major, said Airbnb’s vice president of engineering Mike Curtis in a recent interview with WIRED.

But Levchin argues that there are differences in quality with any education system. In four-year programs, there’s a real difference between Stanford and a state school computer science degree, he says. In that sense undoubtedly there’s a pecking order.

That’s why he says Affirm is being purposely selective, and only working with bootcamps that place a high percentage of their graduates in high-paying jobs. That’s not just for branding. It’s for financial reasons too. The students who stand the best chance of paying Affirm back on time will be the ones who are able to secure those jobs after graduating.

That won’t be the only way that Affirm determines who’s worthy of a loan, though. Over the last year, the company has learned a lot about how to determine trustworthiness from its initial product, Buy with Affirm, which enables people to pay online merchants in installments and offers low, transparent interest rates. People apply for credit using just their name, phone number, email, and date of birth, and Affirm’s algorithms go to work analyzing thousands of bits of publicly available data. In certain cases, the system will ask the applicant for a bank statement or other supplemental information, but most times, they’re approved instantly. The student loan product will work in much the same way.

Levchin’s ultimate goal is to apply these indicators to more industries to create a suite of online credit and loan products, all under the Affirm umbrella. Our goal is not about being a point-of-sale lender or education lender. It’s fundamentally about helping people improve their quality of life through responsible use of debt.

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IRS Outlines ID Theft, Fraud Safeguards

Anti-Fraud
,
Fraud
,
Risk Management

IRS Outlines ID Theft, Fraud Safeguards
Privacy Experts Question Effectiveness of New Measures

Eric Chabrow (GovInfoSecurity) bull;
June 12, 2015

More Trouble in Student Loans?

If you want a good term that generates controversy, despite the need for it, it is student loans. This has become a growing debt burden on Americas professionals to the point that many college graduates are simply not able to participate in the economy as they might if they werent having to make such large monthly payments.