Month: January 2014

Student loans’ new oversight

Got a problem with your student loan? Not sure where to turn when the company managing your payments isnt responding to your complaints?

Come March, youll have a powerful ally, because the Consumer Financial Protection Bureau will have supervisory authority over non-bank student loan servicers. The agency already had the authority to supervise student loans handled by the largest banks. Its expanded power will include non-bank servicers that manage more than 1 million accounts, regardless of whether they involve federal or private loans. The CFPB estimates it will have authority to oversee the seven largest student loan servicers with more than 49 million borrower accounts.

The agencys student loan ombudsman, Rohit Chopra, released a report recently highlighting issues borrowers have had with the way their private student loans were being handled. The Consumer Bankers Association felt it was misleading, relying on a small percentage of all people who have private student loans to make sweeping characterizations of the marketplace.

But we dont have to go too far in the past for an example of problems in loan servicing: the housing crisis that led to many complaints about residential mortgages. The CFPB is concerned that we face a sequel on a similar scale. With outstanding debt at about $1.2 trillion, student loans have now become the second-largest debt load after mortgages.

We have heard complaints from private student-loan borrowers that their servicer is not held accountable for answering their questions and providing quality customer service, CFPB Director Richard Cordray said during a teleconference with reporters. Borrowers have complained that they had trouble making prepayments or partial payments on their loans. They have also complained that when their loans were transferred between servicers, their paperwork was often lost and processing errors were made that resulted in late fees.

The CFPB needs to hear more. Go to and let your voice be heard. The more specific cases it investigates about whats happening when you pay your student loans or the roadblocks you face when you cant, the better the agency can identify trouble spots during its examinations. Your experiences can impact reform that may be needed.

But your complaint wont just be for informational purposes. It may get resolved. The CFPB forwards complaints to the servicing company and will work on getting you a response. Once a complaint is made, the servicer has 15 days to respond to the borrower and the CFPB. The agency expects companies to then resolve the issue within 60 days. You can track the status of your complaint and get email updates about it.

I expect the agency to shine a light on servicing problems with both federal and private student loans.

Contact Michelle Singletary, a financial columnist at The Washington Post, at

FTC’s Tax Identity Theft Awareness Week, tax ID theft a growing problem


ST. GEORGE – The Federal Trade Commission’s Tax Identity Theft Awareness Week begins Monday and runs through Friday. The FTC is hosting 16 events across the country along with a series of national webinars and Twitter chats designed to raise awareness about tax identity theft and provide consumers with tips on how to protect themselves, and what to do if they become victims.

Identity theft has been the top consumer complaint to the FTC for 13 consecutive years, and tax identity theft has been an increasing share of the Commission’s identity theft complaints. In 2010, tax identity theft accounted for just 15 percent of the FTC’s identity theft complaints from consumers, while in 2011 it made up 24 percent of the overall identity theft complaints. In 2012, tax identity theft accounted for more than 43 percent of the identity theft complaints, making it the largest category of identity theft complaints by a substantial margin.

“This week’s events are designed to teach consumers more about how to protect themselves from tax ID theft and how to respond if they become victims,” Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said. “As consumers begin making preparations to file their taxes, now is the right time for them to learn more about this important issue.”

On Jan. 15, the FTC will host webinars in English at 11:30 am and in Spanish at 1:30 pm Links to the webinars will be available from the Tax Identity Theft Awareness Week webpage. At noon on Jan. 16, the FTC will co-host a Twitter chat on @FTC with the Identity Theft Resource Center using the hashtag #IDTheftChat. At the same time, the FTC will also host a Spanish-language chat on @laFTC using the hashtag #roboimpuestos.

The 16 Tax Identity Theft Awareness Week events hosted by the agency will be held in cities in Alabama, California, the District of Columbia, Florida, Georgia, Maryland, Nevada, New York, Ohio, South Carolina, Texas, Washington and Virginia. The events held in Huntsville, Ala., Ft. Jackson, SC and Ft. Belvoir, Va., will focus on the particular needs of military service members, veterans and their families when it comes to fighting tax identity theft. Various events will include representatives of the IRS, AARP and local US Attorney’s offices, who will provide additional information to consumers.

The FTC has created consumer education materials on tax identity theft as well as information for consumers about how to protect yourself from identity theft and what to do if you become a victim of identity theft.

In addition to the FTC-hosted events, the FTC has created an array of materials for use by local and state law enforcement agencies, consumer advocates and others in creating events of their own or providing information to consumers on how to prevent, recognize and respond to tax id theft.

About the Federal Trade Commission and resources

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the US and abroad.

The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow them on Twitter, or subscribe to press releases for the latest FTC news and resources.

Related posts

  • IRS warns of pervasive phone scam
  • Police warn about scams targeting southern Utah
  • IRS warns of typhoon-related scams


Twitter: @STGnews

Financial Planning In Retirement

Most people look at retirement as the finish line, the point after which financial planning and investing become moot.

The reality is far different. Forty percent of baby boomers expect to work until they die, according to data from AARP. The very idea of “retirement” is up in the air, since many folks in their mid-60s cannot afford to quit work and might never do so.

Here are some steps to help you approach financial planning in retirement:

1. Do estate planning now

Financial advisors regularly bemoan the fact that their clients operate under the presumption that they will never die. If you have any money at all, you have to have a plan in order to realize the tax benefits of leaving it behind intelligently.

At a minimum, an estate plan will give you a target, an end goal for whatever wealth you control, that helps you make better choices today.

2. Figure out your income streams

The Social Security Administration will help you get a solid projection of how much to expect and what happens if you delay taking benefits. This can get tricky, so take your time on it, especially if you are in a two-earner household.

If you have a pension or annuity, get a solid idea of your income from that. Now add in any work you continue to do and income from your retirement savings.

3. Be smart about spending

Advisers often toss out broad numbers, such as 80% of pre-retirement income. Your situation could be wildly different.

If you pay down your mortgage and have no other debt, your cost of living will be driven by health spending, taxes, food, insurance and travel. If you have major debts, however, things change.

4. Review insurance needs

Around 60 or so, most term life policies convert into much more expensive voluntary coverage. You might or might not need disability coverage, if you have it.

As you near 60, it will be harder to find long-term care coverage, so consider taking out a policy soon if you feel the need. A financial advisor can help you make smart choices here.

5. Stay invested

How long will you live in retirement? According to Centers for Disease Control data, maybe 20 years or more. That’s a long time, long enough for inflation to zap your nest egg. A conservative investment portfolio can generate income while protecting your wealth from inflation.

Retiring on time and living well are not conflicting goals, so long as you maintain a strong sense of the realities of financial planning in retirement. It’snot about “getting by” but effectively using the resources you have to make the best choices along the way.

Huge cyberheist puts millions at risk for ID theft

Clearwater, Florida — The Target security breach impacting more than 110 million customers is just the tip of the iceberg now that Neiman Marcus and at least three other well known storeswere learninghave also been hacked. Thenames of the three stores isnt being released yet.

So, how did one of the largest thefts of private data in US history happen?

Stu Sjouwerman, the founder and CEO of KnowB4 in Clearwater, says, They were in there and they pulled everything out. These are eastern European cyber-mafia and they are truly very sophisticated in stealing credit cards.

He says something as simple as a Target employee in a front office or in a mail room opening an innocent looking email or clicking on a link could have started it.He says hackers broke into their system and likely waited for months before strikingswiping names, addresses, phone numbers, email addresses on top of credit and debit cards and the pin numbers for them.

SEE ALSO: US data thefts turn spotlight on Romania

Sjouwermansays theres been easy fix out therefor retailersand for banks for some time and that is to makea different type of credit card available to consumers.

It will look the same but instead of a magnetic stripe on the back of the card — there is an actual chip embedded in the card and that chip is much harder to hack.

But he says theres one reason whybanks havent switched –cost.

And Sjouwerman says if you think youre safeand that youve dodged a bullet because you havent noticed charges on your bank or credit card statements, yethe saysit could be on the way. Because with all the personal information swiped millions of people are open to identify theft.

He says theresone big thing we can all do immediately to reduce our risk and thats to ditch the debit card.

When you start paying with a debit card — that is a really bad idea because that goes straight out of your account. You are the one that runs the risk.

Instead, he says only use your debit card to withdraw money from the ATM and never to pay for anything online or in stores because your account can be drained. Credit card purchases are protected and most times you wont be on the hook if a thief makes charges to it.

The experts also say you shouldnt give away your personal information in the check out lane either. Say no when a store clerk asks for your phone, email, address because all of that information along with your credit card information is like a gold mine to a hacker when it comes to stealing your identity.

You may also like…

Weird Florida:A look back at some of the strangest stories of the year

Miracle Baby:Tampa toddler has 5-organ transplant

Broke Bad:Contest winner busted in synthetic drug ring

Here kitty, kitty:Lion escapes enclosure at Pasco sanctuary

Fake Cop:Man arrested 3 times for impersonating officer

Animal tragedy:Girls miniature horse attacked by dogs

#ShortYellows:Florida quietly shortened yellow lights

Kittens shot:Officer shoots kittens in front of children

Popular photo galleries:

Faces of Meth:Devastating before and after photos of meth abusers

Trayvon Martin Shooting:Trayvon Martin crime scene photos and George Zimmerman injury photos

Hooters Winners:Winners of the 2013 Hooters swimsuit pageant

Rejected:Funny Florida license plates rejected by the DMV***warning graphic***

Deadly sinkhole:Home collapses, man dies in giant sinkhole

Popular Databases:

Florida Sex Offenders:Look up sex offenders in any Florida neighborhood here

Restaurant Inspections:Look up inspection reports for any Florida restaurant here

Tammie Fields, 10 News

College scandal: Government shouldn’t profit on student loans

Forty years ago, a college student could get a well-paying summer job at a mill or warehouse and earn enough to pay for a year at a state university. Not anymore.

Today students are graduating with loan balances of $45,000 or more, and often struggle to find a job that will enable them to repay their debt.

With so much money outstanding, and some unemployed graduates unable to pay off their balances, you might suspect that student loans are big money-losers. In fact, such loans have become a huge profit center for the US Department of Education.

Last year, the government made more than $42.5 billion in profits from student loans, and that wasnt even a record. The figure would have topped $50 billion if interest rates hadnt been lowered.

Its nice to see a government program that doesnt run in the red. But should profits come at the expense of students who are struggling to get an education, at a time when college is more essential and expensive than ever before?

Much of the problem stems from the fact that federal and state governments no longer subsidize higher education to the extent they once did. Today, that share comes from tuition and fees.

This nation needs a better-educated workforce. Figuring out an intelligent plan to use loan profits to make that happen would be a worthwhile investment in the nations future.

Can I Stop My Garnishment for My Student Loans?

By Steve Rhode

Dear Steve,

My wages are being garnished for overdue student loans. Its been going on for a few years. I already declared bankruptcy about 6 years ago but of course that doesnt impact student loans.

I am just wondering if there is any way to move to making voluntary and automatic monthly payments in replace of the garnishment to repay a student loan?


Click here to get my free my weekday email newsletter with the latest tips and advice on how to beat debt and do better financially. Subscribe now.

Dear Tiffany,

I first wanted to address a misperception you and most others have that bankruptcy cant deal with student loans. It can and does when the bankruptcy attorney pursues it correctly. Many people have their student loans reduced or eliminated completely in bankruptcy. for more information.

Much of this depends on what kind of student loans you actually have.

It does not sound like these are private student loans since in North Carolina, a private student loan holder would be able to sue you for default but not garnish your wages.

If they are federal student loans, which I think they are, then your tax refunds can be intercepted and your wages can be garnished through an Administrative Wage Garnishment without suing you.

The federal wage garnishment process for student loans has a very easy appeals process when the garnishment is first issued. An appeal can prevent or significantly reduce the garnishment.

To avoid garnishment of 15% of disposable pay, the borrower must:

  • Negotiate repayment terms acceptable to the department or the private collection agency (PCA) and ensure that thedepartment receives the first payment by the response deadline date on the garnishment notice, which is 30 days from the date the garnishment notice was sent.
  • Make a hearing request in writing postmarked no later than the deadline on the garnishment notice.
  • If requesting copies of documents, make a request for a hearing because requesting document(s) does not delay a garnishment order.
  • Provide proof to support any objection made to the existence, amount, or enforceability of the debt, or a claim of legal exclusion or financial hardship.
  • Pay any expenses he or she incurs to obtain legal representation and to attend an in-person hearing. (All in-person hearings are held at one of the three regional offices: Atlanta, Chicago, or San Francisco. The borrower is responsible for the cost of attending and those of any witnesses to attend on their behalf.)
  • Initiate any legal action against his or her employer if the employer discharges, refuses to hire, or takes disciplinary action against the borrower based on the garnishment action.

Additionally, federal loans have a process to rehabilitate your student loans. This would stop the garnishment and remove your negative past payment history. Unfortunately at this time it would require you to make nine full payment on top of the garnishment. For many thats impossible.

Starting in July 2014 the procedure will be modified and the calculation used to make an acceptable rehabilitation payment will change and let more people participate in the rehabilitation program.

Another option is you might be able to still consolidate your student loans now and opt for the income based repayment payment that will be dependent on your income. Your payment could be as low as $0 per month. This can stop a garnishment but youd need to check to see if your situation would be eligible for this approach. I would suggest you call theUS Department of Education Direct Loan Consolidation Center at 1-800-557-7392 and inquire.


Steve Rhode
WRAL Get Out of Debt Guy

If you have a credit or debt question youd like to ask about, how to get out of debt, just click here and ask away.

If youd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

Looking for comments?

One Company Is Working Hard To Make Sure Your Student Loans Stay With …

Sometimes, terrible things happen in life.  When something like cancer strikes, despite your best intentions and hardest efforts, medical bills and unemployment can leave you in a position where paying off your student loans is just not a thing you can make happen.

Theoretically, thats where bankruptcy comes in.  Reality, however, doesnt follow the theory.  As the New York Times reports, there is an agency out there working their butts off pushing back on bankruptcy to make sure that student debt is as permanent as possible.

The Educational Credit Management Corporation is a nonprofit entity with an exclusive government agreement, an organization whose sole purpose is to prevent student loans from entering default.  There arent many borrowers who even try to have their student loans discharged in bankruptcyonly a few hundred per yearbut ECMC is there to make things as difficult as possible for the ones who do.

ECMC mounts legal challenges to the few borrowers who do try to have their student loans discharged in bankruptcy.  The law requires borrowers seeking to be set free of their loans to prove that repayment would bring undue hardship.  The argument against that, therefore, is that a distressed borrowers hardship really isnt so hard after all.

The NYT profiles one such borrower, a woman who unfortunately found herself with a diagnosis of pancreatic cancer after borrowing $43,000.  She sought bankruptcy protection; ECMC fought back.  In an exceptionally ballsy, if not particularly compassionate, response to her concerns about a cancer relapse, lawyers representing the agency wrote that The mere possibility of recurrence is not enough, and, survival rates for younger patients tend to be higher.

Another borrower profiled in the NYT piece had owed $50,000 in student loans, which she paid off in full.  She declared bankruptcy in 2004 for other reasons, and as part of that proceeding provedat a hearing that ECMC did not attendthat her loans had been paid.  When her bankruptcy proceedings concluded in 2010, ECMC began to hound her, and garnished her Social Security income, all in the name of repaying loans that had already been paid in full.

ECMC came into being twenty years ago, when student loan default rates were heading steadily upwards.  In 1990, the largest student loan guarantee agency became insolvent, and student loan defaults reached an all-time high of 22%.  In the resulting media and political frenzy, ECMC was born.

Actual student loan lenders are subject to oversight from the Consumer Financial Protection Bureau, but ECMC is not.  And for now, the organization keeps tightening the meaning of undue hardship, leaving a narrower and narrower window for desperate borrowers who, one might feel, have already faced tragedy enough.

Loan Monitor Is Accused of Ruthless Tactics on Student Debt [New York Times]

Is the Private Student Loan Market as Bad as it Seems?

A new study found private student loans have been performing better than federal loans in recent years.

The private student loan market may be doing better than previously reported, according to a new study from student loan analyst MeasureOne.

By analyzing data from seven of the largest private student lenders, the data analytics company found the outstanding balance of private loans has essentially leveled off since 2011, while that of federal loans has consistently increased since 2008. Outstanding balances from those seven lenders make up about 6 percent of all outstanding student loan debt. Overall, private student loans account for about $90 billion, or 8 percent of the $1.1 trillion in outstanding student debt, the report says.

&"The rapid growth of the student loan market has been the focus of a great deal of media, political and regulatory action,&" said Dan Feshbach, MeasureOne founder and chief executive officer, in a statement. The findings, he said, show &"the improving credit quality and repayment performance of the private student loans of the seven largest active lenders.&"

[READ: Democratic Senators Announce Ambitious Student Debt Agenda]

The number of undergraduate students taking out private loans has decreased from its peak of 14 percent in the 2007-08 school year, to 6 percent in the 2011-12 school year, the report found. Meanwhile, the share of undergraduates taking out federal loans increased from 35 percent in 2007-08 to 40 percent in 2011-12.

Seven private lenders — Discover Bank, The First Marblehead Corporation, PNC Bank, RBS Citizens, Sallie Mae, SunTrust Banks, Inc., and Wells Fargo Bank — provided data to MeasureOne for the report.

The private student loan market, which boomed in the years leading up to the financial crisis, typically doesn’t offer the same consumer protections as the federal student loan market, and has drawn harsh criticism from student advocacy groups and government agencies.

The Consumer Financial Protection Bureau has zeroed in on consumer complaints that detail borrowers’ expressed inability to repay their private loans. Unlike federal loans, private loans typically don’t have income-based repayment plans, and are more difficult, if not impossible to refinance.

Thousands of borrowers have submitted complaints — according to the CFPB’s second annual report on private student loan processing related to problems with payment processing, especially when borrowers needed to adjust their repayment terms during financial hardship. Many frustrated borrowers have also complained about breakdowns in communication with their private lenders and servicers, especially if their loans are transferred between servicers.

[ALSO: Urban Students Improve in Math, Reading]

&"Basic account information is sometimes unavailable, records are not retained, and borrowers are ping-ponged from one customer service representative to the next and to the next, without getting an accurate or even consistent answer,&" said Rohit Chopra, the CFPB’s student loan ombudsman, upon the release of the October report.

But of all loans, both federal and private, that are in repayment and seriously delinquent (more than 90 days past due), the share of private loans has dropped from a high of about 6 percent in the second quarter of 2009, to about 3 percent as of the third quarter of 2013, MeasureOne reported. The Federal Reserve Bank of New York estimates the number of student loans, both federal and private, that are in serious delinquencies increased to 21 percent as of the third quarter of 2012.

The report suggests the decline in delinquencies and the number of overall private student loans is due to the fact students and schools are being more careful.

In the years leading up to the recession (2005 to 2007) the percentage of private student loans certified by a student’s college or university was much lower than it is today.

School certification is important, according to the CFPB, because the school’s financial aid office verifies a student’s financial need and receives loan payments directly from the lender. This helps prevent over-borrowing, and gives financial aid officials the opportunity to counsel families and students on their borrowing options.

Between 2005 and 2007, according to the CFPB, the percentage of private loans that were made without school involvement or certification grew from 18 percent to 31 percent.

But according to the MeasureOne report, which only looked at seven private lenders, the percentage of private loans that were uncertified dropped to 0.76 percent in the 2012-13 school year.

[MORE: Most of NCLB’s ‘Failing’ Schools Were Not Targeted the Following Year]

Additionally, more students today are taking out private loans with co-signers. In the 2008-09 school year, for example, about three-quarters of undergraduates took out private loans with a co-signer. But by the 2012-13 school year, more than 91 percent did so. Overall, nearly 87 percent of undergraduates and graduates took out loans with co-signers in 2012-13.

Richard Hunt, president and chief executive officer of the Consumer Bankers Association, said in a statement that those in the federal student loan market should learn from &"the long-standing best practices the private student loan market has used to best serve our nation’s students.&"

Hunt also noted the consistently increasing rate of default — failing to make student loan payments for 270 days — among federal student loans. The Department of Education released data in October showing the number of borrowers who defaulted on their student loans two and three years after entering repayment has increased for several years.

&"Thanks to commonsense underwriting by lenders, there have been positive trends in private loan performance over the past 5 years…In contrast, federal student loan default rates continue to rise at an unconscionable rate,&" said Richard Hunt, president and chief executive officer of the Consumer Bankers Association, in a statement. &"With over $1 trillion in outstanding federal student loan debt, students — and the taxpayers who foot the bill — are done a great disservice when defaults occur.&"

More News:

  • Grade F: Most College Presidents Pan New Obama Ratings System
  • Study: High Standardized Test Scores Don’t Translate to Better Cognition
  • College Enrollment Falls for Second Year in a Row


  • Allie Bidwell is an education and science reporter for U.S. News & World Report. You can follow her on Twitter or reach her at

    Read more stories by
    Allie Bidwell

You might be interested in…

  • Obama Behind the Scenes

  • Gun Control Cartoons

  • Obama Cartoons

student loans

Consumer columnist David Lazarus a victim of ID theft

David Lazarus wrote a column on Saturday taking retailers like Target to task for not doing a better job of safeguarding the credit card data of their customers. Hours later, he found that his own American Express card was among the pilfered. An identity thief ran up nearly $2,000 in bogus charges at Polo Ralph Lauren, Coach, Tommy Hilfiger and Burberrys on Saturday, he says on an LA Times blog. Id appreciate the irony if I wasnt so cheesed off.

American Express contacted me to say that my card number was used to purchase hundreds of dollars worth of goodies at leading luxury stores.

The thief made off with the loot before my card could be shut down.

I received news of my fourth — collect them all — incident of ID theft on the same day I wrote a column saying that business have the tools and know-how to keep hackers at bay, but they dont effectively use them….

The AmEx rep told me the company is seeing a surge in fraud reports as a result of the Target hack. Count me among them.