Worrisome Spike in Student Loan Write

American Banker (subscription)Worrisome Spike in Student Loan Write-OffsAmerican Banker (subscription)The dramatic rise in student loan volume is a worrisome trend for policymakers, but perhaps a more troubling one for banks is a big spike in write-offs (see chart 1). Between January and August of last year, lenders wrote off $13.6 billion in student ...

Student Loans Got More Expensive And Debt Piled Higher

NEW YORK ( MainStreet) — Student loans grew in 2013 at an alarming rate, with no sign of a slow-down as trend lines generally pointed up.

The crisis and its essence could be boiled down to a single number, not difficult to report, but hard to comprehend. Sometime last spring, the total number of outstanding student loans passed the $1 trillion mark. That was quickly followed by another milestone, when the total number of outstanding federal loans minus private loans, about 10% of the market, also blew by $1 trillion. The World Bank puts the U.S. Gross Domestic Product at around $16 trillion.

The economic crisis was the perfect conspirator as refugees from the recession sought asylum on campuses of all kinds as they have throughout the decade. To get there, they borrowed money. The loan balances of some 40 million Americans with student loans is closing in on $30,000 per student.

The Consumer Financial Protection Bureau (CFPB) reported that some 7 million borrowers, representing about 13% of outstanding loans are in default. That doesn't include nearly 9 million borrowers whose payments have been deferred due to economic hardship.

Studies by the New York Fed found that student loan debt has become a noteworthy drag on the economy. People who are beginning their careers have concluded that they can't afford auto loans and home mortgages, nor do they want to risk starting a family because of their student loans are devouring their paychecks.

Meanwhile the cost of federal loans increased. Last summer, interest rates on Stafford loans for undergraduates went from 3.4% 3.85%. Congress tried to sell the increase as a victory for students—a last minute deal prevented rates from doubling from 3.4% to 6.8%. But there will be increases on future loans, and they will be tied to rates on the 10-year Treasury bill in a rate environment that is expected to increase. By the end of the decade, 6.8% might look cheap.

Debt, no degree: Bills mount for ex

Aj Mast / for NBC News

This past April, facing the prospect of three 20-page papers due in the same week, Indiana University East student Harmony Glenn had a panic attack in the school library.

"I couldn't breathe, and my chest felt tight," she said. "I was asking myself, 'Do I push forward...or do I cut my losses?'"

Glenn, 27, had been inching toward a bachelor's degree since 2004, transferring schools and taking breaks from her studies to switch her major, live with her parents to save money, and later move around Indiana with her husband to chase the best-paying jobs. Lately, she'd been working fulltime as a sales associate for a skin care retailer in an Indianapolis mall, and didn't have the bandwidth to focus on her schoolwork.

The night of her panic attack, she made a decision to leave school. "I just looked at the bills and realized this didn't make sense anymore," she said.

Her husband, Christopher, 29, had dropped out a couple of years before after getting "burnt out" by both working and studying first at St. Joseph's, then Ball State University, then Indiana University. He got his EMT certification instead. Together, they have around $40,000 in student loan debt, but no degrees to show for it.

"There's not a day that goes by that we don't think about it," said Christopher. "This debt is a huge weight hanging over our heads. We've always wanted to purchase real estate, but our debts put a damper on that."

The Glenns are part of a growing population stuck paying down debt for a degree they never got. According to a 2011 study by the Harvard Graduate School of Education, only 56 percent of students who enter four-year programs graduate within six years. That number plunges to 22 percent for for-profit colleges. Meanwhile, the percentage of incoming students relying on loans is growing-from 2001 to 2009, the number increased from 47 percent to 53 percent, according to a report by Education Sector. The same report also found that borrowers who drop out are four times more likely to default on their loans.

Some of these dropouts grew up middle class with an expectation of getting a degree, like the Glenns. Others are students from low-income backgrounds, perhaps the first in their families to go to college. Michelle Obama recently launched an effort to encourage these first-timers to pursue higher education, but the odds are stacked against them: Pell grants and funding for state and city universities continue to shrink. Forty percent of students at four-year colleges, and 60 percent at community colleges, are working 20 hours or more to make up for these gaps, according to the Pell Institute.

Other paths to debt - and dropping out"A lot of these kids come up against this wall of bureaucracy," said Jennifer Silva, author of Coming Up Short, a book about working-class young adults. "They lack mentors to help them navigate the system" of admissions, financial aid, and choosing classes. "It ends up leaving them feeling kind of betrayed."

This maze of red tape caused Hector Gonzalez, 30, to drop out of college more than a decade ago. Gonzalez-who was born in El Salvador, raised in San Jose, Calif., and didn't have a green card-couldn't get a straight answer as to whether he qualified for loans.

"I felt bounced between a lot of people, and it seemed like no one had the answers," he said. "[Financial aid officials] would look at my documentation and become uncertain and unsure."

When a private Christian school in San Diego finally approved him, he got $6000 from the Free Application for Federal Student Aid for each semester, but halfway through the spring, school officials told him he didn't qualify after all. He tried working three jobs for the rest of the semester in order to pay the tuition, but it wasn't enough. Twelve years and a chunk of interest later, Gonzalez still owes money to the school and on his FAFSA loan.

"At the age of 18, I was stuck with a $12,000 bill and nowhere to go," he said. "I wish a counselor at my high school would have sat me down" and explained that "private universities aren't always better."

And neither are for-profits, where one-fifth of the nine million yearly Pell grant recipients end up matriculating, according to an Education Trust analysis of federal education data. Mary Nguyen, an analyst at Education Trust who led the Education Sector study last year on students who drop out with debt, found that many students choosing exorbitantly expensive for-profits don't know the difference between a for-profit college and a regular one. They enroll "based on inadequate information," overwhelmed with "the confusing array of choices," she said.

Drew Scott, 26, registered for the for-profit Art Institute to study video game arts because he was attracted to the accelerated program.

"I didn't completely understand what I was getting into," he said. "I knew it was more expensive, but at the time, I thought, 'they wouldn't be charging more if it wasn't better, right?'"

After two years of uneven teaching quality-"some of the teachers didn't quite know what they were doing"-Scott concluded he wasn't getting his money's worth. He left the program earlier this year, owing $30,000 to the government and $15,000 to his parents. Scott now lives in Seattle and makes $11 an hour working part-time at a game-testing job. "I definitely didn't need to go to school" to do this job, he said.

Scott has yet to mail in a loan payment, but others have gotten used to the stack of monthly bills. Rich Bisset, 25, a sales associate at an electronics store in Jersey City and the first in his immediate family to go to college, budgets $700 every month to various student loans. He owes $60,000 after a few semesters at Farleigh Dickinson, a private university, and then a cheaper stint at Rutgers University.He dropped out because he was working too much, and his grades plummeted as a result.

"I try not to think about that $700 because I already know it's going somewhere," he said. "If I got to keep it, I'd move out"-Bisset still lives at home in Colonia, N.J.-"or do some repairs on my car."

Dreams deferredBisset hopes to return to school "when my finances are more stable," but Harmony Glenn is fairly sure she'll never go back.

"I never assumed [retail] would be my career," she said. "I always assumed it was what I was doing until I finished my degree." Becoming a manager at the skin care store would help her pay off the family debt, while going back for a political science degree promises her nothing.

Both Glenns do worry about what their parents think; their families stressed the importance of college early on. Harmony "walked into kindergarten knowing that what came after high school was college." Christopher's father, just 18 when he was born, tried to steer Christopher away from his own profession as a paramedic because of the low pay. His father worked two jobs so Christopher's mother could go to school, and she's now a city comptroller.

"My mom is kind of the poster child for 'a degree will get you farther,' " Christopher said. "But at this point, it doesn't always work like that."

Education coverage for NBCNews.com is supported by a grant from the Gates Foundation.

Senators want US colleges to share the risk on college loans

With college tuition climbing exponentially and student loan defaults on the rise, a group of Democratic senators is proposing a package of reforms with a plank that some conservatives have already embraced. Could bipartisan reform be on the way?

With college tuition climbing exponentially and student loan defaults on the rise, Sens. Richard Durbin of Illinois, Jack Reed of Rhode Island and Elizabeth Warren of Massachusetts are proposing a package of reforms with a plank that some conservatives have already embraced.

Could bipartisan reform be on the way?

"One of the more controversial new proposals," Inside Higher Ed reported, "to be introduced by Reed, would require colleges with high student loan default rates to pay a penalty to the government that is proportional to the defaulted debt. Reed said the legislation is aimed at holding colleges more accountable for student loan defaults by having them share the risk of those defaults. 'They will have to have skin in the game,' Reed said. 'They will have to make financial judgments based on how well-informed and how reliable their graduates are in terms of paying back their student loans.' "

The loan default proposal has been gestating for some time, and much of the push has come from conservatives. In January 2012, Alex Pollock at the American Enterprise Institute argued for "skin in the game."

"Who are the most important parties to have 'skin in the game' in student loans?," he asked. "The colleges themselves, of course! They are the effective originators, the promoters, and the chief financial beneficiaries of student loans. It is their rising costs which result in ever more debt and more risk of default for student borrowers and for taxpayers."

This past summer, the Pope Center for Higher Education Policy reported on the proposal, noting that there are "strong objections to the idea of colleges sharing default risk." Economist and higher education reformer Richard Vedder told the Pope Center he expected a "firestorm" of protest from universities and lobbyists."

One major criticism is that such accountability would limit access by discouraging schools from admitting high-risk students.

"Vedder thinks that criticism is inappropriate," the Pope Center reported, because "keeping students from going to a school where they would likely default would be good for them, not bad. 'Should the taxpayer be subsidizing sending kids to go to school to make some people feel warm and fuzzy about themselves,' Vedder asked, 'when they are in fact consigning these kids to a very, very bad future where they end up getting a job probably no better than had they not gone to college?' "

University of Tennessee law professor Glenn Reynolds, a libertarian, has also argued in this direction this summer, noting in the Wall Street Journal that "an extensive 2012 analysis by the Associated Press of college graduates 25 and younger, 50% are either unemployed or in jobs that don't require a college degree. Then there are the large numbers who don't graduate at all. According to the National Student Clearinghouse Research Center, more than 40% of full-time students at four-year institutions fail to graduate within six years. The National Center for Education Statistics reports that almost 75% of community-college students fail to graduate within three years. Those students don't have degrees, but they often still have debt."

"Why do students have so much debt?" Reynolds asked. "According to a recent study by Mark Perry, a professor of economics and finance at the University of Michigan at Flint, between 1978 and 2011, college tuition in the U.S. increased at an annual rate of 7.45%, vastly exceeding the rate of inflation and the almost-stagnant rate of growth in family incomes."

Email: eschulzke@desnews.com

Students' loans still can be consolidated

Students' loans still can be consolidated

In a letter dated Dec. 23, Edward Taylor wrote about trying to consolidate his granddaughter's student loans. He said, "a very gracious woman at a large bank told me they are now prohibited by federal law put in place by the White House, to consolidate any federal student loans." He went on to say he hoped college students who voted for the president understand how he has "helped" you.

Mr. Taylor's granddaughter can consolidate her student loans into the Federal Direct Loan Consolidation program. When borrowers ask their bank about consolidating loans, the bank may not tell them they can still consolidate through the direct loan program because the bank will lose the loan when the borrower consolidates into the direct loan program. This may have happened to Mr. Taylor.

The implication that the White House "passed a law" to disadvantage student borrowers is likewise incorrect.

Steve McNamara

Spotsylvania

8 Tips to Get Out of Student Loan Debt

Earning a college degree is an exciting time for graduates, but it can also be stressful as nearly 40 million Americans are saddled with $1.2 trillion in student loan debt, according to CBS News. Unfortunately, student loan debt is a growing economic crisis across the nation. But, a college degree doesn't mean you need to be saddled with student loan payments for the rest of your life. Read these eight tips to begin digging your way out of post-graduate debt.

1. Pay what you can

This is different than paying what you want. "Student loans are virtually impossible to discharge in bankruptcy - you have to prove "undue hardship" - and there are enough federal options to help with repayment that you don't need to let the balance sit accruing interest in deferment and forbearance," says Janet Novack, a Forbes writer. Don't make the mistake of trying to make unrealistically high payments - make sure you're signed up for an income-based repayment plan. It's better to pay an amount you can afford rather than miss a payment and watch fees pile up.

2. Tackle your loan principal

According to Katie Couric, whenever you find yourself with extra cash, consider putting some toward your loans. "If you pay more than your minimum, that payment will automatically be applied to future interest payments and not to lowering your loan principal," Couric writes. By adding a note telling the loan processor to treat the extra cash as a reduction of principal, it helps lower your future interest payments.

3. Take advantage of forgiveness programs

According to the Chicago Tribune, you could be eligible for Public Service Loan Forgiveness and not even know it. PSLF says that by participating in public service opportunities rather than working in the private sector, some of your student loan debt is forgiven - that includes almost any state, federal, or nonprofit organization. The Consumer Financial Protection Bureau estimates that potentially 33 million people are eligible for the program, but most aren't aware they are.

4. If you're not eligible for PSLF, try another

There are more than 60 different student loan forgiveness programs. Many employers also offer student loan repayment as a benefit, so be sure to inquire about it. "Try doing your own digging to find other programs. A little work could save you a lot of money, to the tune of thousands of dollars," says Chicago Tribune writers Betsy Mayotte and Brazen Careerist.

5. Don't try for a quick fix

There's a difference between informational websites, such as studentloans.gov and tuition.io, and sites that promise quick fixes to reduce debt, according to Forbes. "You just have to patiently chip away at the debt, and be wary of anything that promises otherwise," Novack says. If you see a site promising to "slash your monthly payments," proceed with caution.

6. Reap the tax benefits

According to Couric, you can deduct your student loan interest when tax time arrives. For 2013, you can deduct up to $2,500 or the total amount you paid in student loan interest, whichever is less.

7. Focus on private loans first

Private student loans have variable rates, which is unlike federal student rates. Even if private student loan rates seem low, they most likely won't be that way for long. Private student loans also offer fewer repayment options and no forgiveness options, according to MSN Money writer Liz Weston. Think about paying the minimum possible on your federal loans while you focus on paying off the private loans.

8. Reduce interest rates

Many student loan lenders have some kind of interest rate discount for people who set up direct deposit, according to Lenders prefer direct deposit because it increases the chance that you'll continue paying on time. Often, the discount is about 0.25 percent, which can knock off a big chunk of the interest you'll pay over the life of the loan.

More From Wall St. Cheat Sheet:

8 Tips to Get Out of Student Loan Debt

Earning a college degree is an exciting time for graduates, but it can also be stressful as nearly 40 million Americans are saddled with $1.2 trillion in student loan debt, according to CBS News. Unfortunately, student loan debt is a growing economic crisis across the nation. But, a college degree doesn't mean you need to be saddled with student loan payments for the rest of your life. Read these eight tips to begin digging your way out of post-graduate debt.

1. Pay what you can

This is different than paying what you want. "Student loans are virtually impossible to discharge in bankruptcy - you have to prove "undue hardship" - and there are enough federal options to help with repayment that you don't need to let the balance sit accruing interest in deferment and forbearance," says Janet Novack, a Forbes writer. Don't make the mistake of trying to make unrealistically high payments - make sure you're signed up for an income-based repayment plan. It's better to pay an amount you can afford rather than miss a payment and watch fees pile up.

2. Tackle your loan principal

According to Katie Couric, whenever you find yourself with extra cash, consider putting some toward your loans. "If you pay more than your minimum, that payment will automatically be applied to future interest payments and not to lowering your loan principal," Couric writes. By adding a note telling the loan processor to treat the extra cash as a reduction of principal, it helps lower your future interest payments.

3. Take advantage of forgiveness programs

According to the Chicago Tribune, you could be eligible for Public Service Loan Forgiveness and not even know it. PSLF says that by participating in public service opportunities rather than working in the private sector, some of your student loan debt is forgiven - that includes almost any state, federal, or nonprofit organization. The Consumer Financial Protection Bureau estimates that potentially 33 million people are eligible for the program, but most aren't aware they are.

4. If you're not eligible for PSLF, try another

There are more than 60 different student loan forgiveness programs. Many employers also offer student loan repayment as a benefit, so be sure to inquire about it. "Try doing your own digging to find other programs. A little work could save you a lot of money, to the tune of thousands of dollars," says Chicago Tribune writers Betsy Mayotte and Brazen Careerist.

5. Don't try for a quick fix

There's a difference between informational websites, such as studentloans.gov and tuition.io, and sites that promise quick fixes to reduce debt, according to Forbes. "You just have to patiently chip away at the debt, and be wary of anything that promises otherwise," Novack says. If you see a site promising to "slash your monthly payments," proceed with caution.

6. Reap the tax benefits

According to Couric, you can deduct your student loan interest when tax time arrives. For 2013, you can deduct up to $2,500 or the total amount you paid in student loan interest, whichever is less.

7. Focus on private loans first

Private student loans have variable rates, which is unlike federal student rates. Even if private student loan rates seem low, they most likely won't be that way for long. Private student loans also offer fewer repayment options and no forgiveness options, according to MSN Money writer Liz Weston. Think about paying the minimum possible on your federal loans while you focus on paying off the private loans.

8. Reduce interest rates

Many student loan lenders have some kind of interest rate discount for people who set up direct deposit, according to Lenders prefer direct deposit because it increases the chance that you'll continue paying on time. Often, the discount is about 0.25 percent, which can knock off a big chunk of the interest you'll pay over the life of the loan.

More From Wall St. Cheat Sheet:

Can I Stop My Garnishment for My Student Loans?

Posted: 12:17 p.m. yesterdayUpdated: 12:45 p.m. yesterday

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 doesn't 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?

Tiffany

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Dear Tiffany,

I first wanted to address a misperception you and most others have that bankruptcy can't 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 that's 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 you'd need to check to see if your situation would be eligible for this approach. I would suggest you call the U.S. Department of Education Direct Loan Consolidation Center at 1-800-557-7392 and inquire.

Steve

Steve RhodeWRAL Get Out of Debt Guy

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2012 grads have highest

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The college graduating class of 2012 is, on average, deeper in the hole with student loan debt than any class before. And graduates of Pennsylvania colleges -- state and private -- are more likely than graduates of other colleges nationwide to be burdened with student debt, according to data from the U.S. Department of Education and national surveys of colleges and college graduates.

An independent, nonprofit organization based in Oakland, Calif., the Institute for College Access & Success, recently released its eighth annual report on average student loan debt in the U.S., which found that college graduates who borrowed for bachelor's degrees granted in 2012 had an average student loan debt of $29,400 -- the highest average student loan debt on record.

"The graduates of 2012 left school and entered repayment at a time of high unemployment," said Debbie Cochrane, research director at the institute. "In many ways, these graduates were hit from both sides.

"They went to college during a recession when their family's ability to pay for college was likely reduced. Now they are graduating from college and may be experiencing substantial challenges getting a job to repay the loans."

The report pointed out that seven in 10 college seniors who graduated last year had student loan debt.

Average debt was even higher for graduates of Pennsylvania colleges in 2012 -- $31,675, according to the institute, which also is home to the Project on Student Debt.

"Pennsylvania is a high debt state," Ms. Cochrane said.

Pennsylvania ranks third in the nation in terms of highest average student loan debt and fourth in the nation when it comes to the share of college graduates who have student debt.

Ms. Cochrane said 70 percent of graduates from Pennsylvania public and nonprofit colleges have student loan debt. By comparison, only 41 percent of students graduating from Nevada colleges have student debt. New Mexico college graduates have the lowest average student debt -- just under $18,000.

Typically, Ms. Cochrane said, public college graduates have less student loan debt than those who attended private colleges, and they are also less likely to have student loan debt.

"The opposite is true in Pennsylvania. From what we can see, public colleges in Pennsylvania are relatively expensive compared to public colleges elsewhere. And there's less grant aid available to Pennsylvania students in public colleges."

Another organization that tracks college debt, used different research methods, but had similar findings.

Mark Kantrowitz, senior vice president and publisher of Las Vegas-based Edvisors.com, said he found the average student loan debt for 2012 college grads nationally was $30,000.

He said his method doesn't produce college specific data, but it does provide a statistically significant national average.

And the 2012 number shows debt on the rise.

"This is the highest figure so far," he said. "Average student debt is going up about $1,000 per year. I predict it will continue to go up.

"The primary driver is a failure of grants to keep pace with increases in college costs."

Mr. Kantrowitz said his figure for average debt is slightly higher because he uses a national survey of students that is statistically representative to get an overall average amount of student debt. The Institute for College Access & Success average debt figures are based partly on data that is voluntarily reported by colleges. Colleges with the highest student debt are least likely to respond to the survey. The institute also uses data from the U.S. Department of Education to reach the average debt figures that it has reported for the past eight years.

Mr. Kantrowitz said the student loan default rate has risen from 6.7 percent five years ago to 10 percent.

The main reason for defaults is when a student borrower fails to complete his education. "People who drop out are four times more likely to default," he said. "Of people who default on loans, two-thirds of them are college dropouts.

"So, it's important if you go to college that it's the right thing for you and you're at the right school."

Tim Grant: tgrant@post-gazette.com or 412-263-1591

This Year's Best Reporting on Education

From jaw-dropping pay and perks at universities to a $1-billion plan to purchase iPads, here are some of 2013's best accountability stories in education.

HIGHER-ED PERKS AND PAY

* New York University's pay practices and unusual perks for top administrators and star professors got some attention in the New York Times. The non-profit university-which has among the nation's highest student-debt loads-gave a $685,000 bonus to executive VP Jacob Lew when he left the school for Citigroup in 2006. Over time, the Times reported, the school also forgave $440,000 of what Lew owed in mortgages. NYU president John Sexton also got mortgage loans for an expensive vacation home. In response to the criticism, the university said it would stop lending money to its top employees for their second homes.

* A column in the Pittsburgh Post-Gazette memorialized a longtime adjunct professor at Duquesne University who died after being let go without severance or retirement benefits from the school where she had taught 25 years, even while suffering from cancer. The piece once again brought attention to the low-wage adjuncts that make up a growing share of the teaching ranks at universities. Duquesne University argued that many at the university cared and reached out personally to the adjunct, Margaret Mary Vojtko, said her situation was "wholly unrelated to her employment status."

* Elsewhere, a considerably more famous adjunct professor was slated to receive far more generous compensation, until Gawker got ahold of the numbers. The City University of New York offered to pay former CIA Director David Petraeus $200,000 to lead a seminar, which Petraeus graciously agreed to do even though he told school officials in emails that he "could have gotten more money or more prestigious places." After it all emerged, Petraeus ended up announcing that he'd teach for $1.

FOR-PROFIT COLLEGE SHENANIGANS

* Corinthian Colleges Inc., the parent company for many for-profit schools, paid temp agencies to hire its graduates in order to pump up job-placement rates for its schools-and thus allowing Corinthian to continue to qualify for billions in federal student aid dollars from the government, according to the Huffington Post. Lured into the for-profit colleges by savvy marketing and assurances of career-services help that would lead to employment, students signed up, took on sizeable loans, and landed positions that were actually paid for by the school and designed to turn over quickly so new graduates could fill their places.

* Faced with falling undergraduate enrollment, for-profit school giant DeVry has been trying to diversify itself through medical education, operating for-profit medical schools in the Caribbean that still qualify to participate in federal student aid programs and enroll students who didn't make it into US medical schools, Bloomberg Markets reported. The attrition rate is high. Other for-profit med schools that don't qualify for federal student aid have found a loophole: aligning themselves with online master's programs at schools in the United States.

RACIAL AND INCOME INEQUALITY

* How do you begin to talk about learning at schools when your students are just trying to get there and back alive? A gripping series-in two parts-by This American Life took listeners inside Harper High School on the South Side of Chicago and inside the world of students whose daily existence is shadowed by the specter of gun violence and fears of getting jumped.

* For years, George Washington University said it practiced "need-blind" admissions. In fact, the university had long been taking students' financial resources into account when making final admissions decisions and would opt to accept students with more resources over poorer students with comparable-or even better-qualifications, the student newspaper, the GW Hatchet, reported.

* Fifty years ago, Alabama Governor George Wallace stood in the schoolhouse door at the University of Alabama to block desegregation. Today, de facto segregation at the school still exists, found the school newspaper, The Crimson White. Look no further than its Greek system, which the paper described as "still almost completely divided along racial lines."

FUNNY MONEY, FUNNY MATH, AND OTHER (MIS)MANAGEMENT ISSUES

* Chicago taxpayers will be paying for decades for facilities improvements on schools that now sit shuttered, the Chicago Tribune reported. That's because officials in Chicago Public Schools ignored demographic projections of declining enrollment and borrowed billions for construction anyway-while contributing nothing to teacher pension funds for a decade. Over the long term, a growing percentage of general state aid-historically used to fund operations-has been going to pay off bond debt.

* Los Angeles Unified School District's $1-billion plan to provide all its students with iPads is not going well, the Los Angeles Times has been reporting. For one, the district made the purchase largely funded through bonds that would have to be paid back over 25 years-and only announced in November that it didn't own the educational software permanently as previously stated, but would have to renew its license for it in three years, adding to the price tag.

* Charter-school advocates like to cite their long waiting-list numbers to argue that more such schools are needed. Local news outlets like Chicago's WBEZ and the Boston Globe have done good work pointing out that those numbers aren't actually reliable-and tend to overstate demand.

* Michelle Rhee, former chancellor of DC Public Schools and one of the country's most well-known "education reformers," knew early on about widespread testing irregularities and possible cheating- far earlier than she has claimed publicly to have known, according to a confidential memo that was sent to her back in 2009 and obtained by PBS' John Merrow. USA Today initially blew the whistle on the likelihood of widespread cheating in 2011.

* In the K-12 world, cyber schools-many of them operated by for-profit companies as an online option for public school-are still taking in taxpayer dollars even while many flunk on state report cards, reported Politico.

* And, surprise: Some more colleges inflated their admissions data this year to U.S. News, per the Chronicle of Higher Education.

This post originally appeared on ProPublica, a Pacific Standard partner site.

SAC Federal Credit Union joins push for financial literacy

SAC Federal Credit Union, Nebraska's largest member-owned financial institution, has decided to take a stab at fixing what it deems a major problem: plummeting financial literacy, particularly among so-called millennials born from the 1980s to the early 2000s.

The credit union, which now offers online classes in budgeting and credit basics, came to the conclusion after finding via surveys that 78 percent of millennials rely on the financial habits of friends as a model in forming their own and that 61 percent of people between 25 and 34 years old get financial assistance from their families.

To fight back, SAC Federal has become the first U.S. financial institution to offer an online personal finance program called Financial Avenue, a curriculum developed by the Lincoln nonprofit group Inceptia, which attempts to keep borrowers from defaulting on their student loans.

"We were getting a lot of feedback on financial literacy at our branches," said Karen Guy, SAC Federal's business and marketing analyst. "It is a key component of everyone's life."

The coursework is straightforward, requiring registration and a password via the credit union's website. That unlocks many pages and menus of self-directed study on a variety of financial topics, from how interest rates work to the basics of homebuying.

Guy said SAC Federal, with about 20 branches in the Omaha metro area and 75,000 members, began offering the program in November and has garnered about a new participant a day since. The program is designed to reach young folks, she said, but is available to anyone and helpful to most.

"The response has been overwhelming," Guy said. "The parents we have heard from were looking for a resource like this."

The Financial Avenue program includes Web pages with study material. Each lesson takes about 30 minutes to read and digest. There are also videos about five to 10 minutes long, plenty of articles, plus a blog regularly updated by SAC Federal staffers.

The Financial Avenue educational program was developed by Inceptia, part of the nonprofit group NSLP. NSLP started out about 30 years ago as the National Student Loan Program, a nonprofit group that guaranteed repayment of federal higher education loans if the borrower defaulted. It now concentrates on borrower education and lender compliance.

The education program was developed a few years ago, said Sue Downing, Inceptia's marketing vice president. Financial Avenue, she said, is now being offered at 325 U.S. colleges and universities; Creighton University's financial aid department offers Financial Avenue on its Web page. About 200 students at the college will be using the budgeting part of Financial Avenue as part of their classwork starting in January.

Downing said Inceptia consulted personal finance experts in developing the Financial Avenue program and used the financial education curriculum of the U.S. Treasury Department as a template. She said the goal was a lesson-based plan, not one based on a simulation, video game or other entertainment-derived vehicle.

About 30,000 courses of Financial Avenue have been completed in recent years, Downing said. Participants take a test at the beginning and at the end; the average improvement is 31 percentage points.

"There has been a shift," Downing said. "Parents are moving to the view that schools are responsible for teaching many life skills, so it isn't happening as much in the home."

Jennifer Davidson, director of the Nebraska Council on Economic Education, said the state's school districts are required to begin implementing a new financial literacy standard this month, as part of social studies curricula. It will probably be some time, she said, before all 250 Nebraska school districts get the whole curriculum enacted.

In the meantime, her group offers three nationally recognized programs for students from fourth grade through 12th grade: the Nebraska Stock Market Game, the Nebraska Economics Challenge and the Nebraska Finance Challenge. They are statewide competitions on the subjects at hand, with lots of learning and lessons going into a final presentation judged by a panel, whose verdict sends one group of Nebraska students to the national stage.

"The idea is to get people to think critically about money," Davidson said. "That makes for better savers, investors and citizens."

Cassie Hunt is a believer in upping the financial knowledge base. The senior at Lincoln Northeast High School was a participant in the stock market and economics challenges this year. She said she learned a lot about publicly traded companies and responsible spending and plans to take that with her to college next year.

Hunt agreed that most young people take their initial cues about money from their peers. In her group, Hunt said, conversation is common about who spent what, and it is usually on dining out. Fortunately, she said, no one has gotten into big trouble with credit cards. Debit cards - which come up as "transaction not authorized" when there is no money in the kitty - have been a different story.

"I am the girl who has done that," Hunt said. "I was terrible with money. But I have learned to check my balance before I leave the house."

Contact the writer: Russell Hubbard

russell.hubbard@owh.com | 402-444-3133

Russell Hubbard covers banking, financial services, corporate finance, TD Ameritrade, business lawsuits, bankruptcies and other economic and financial topics.

Student Loan Bill of Rights

In the aftermath of a recent report that found the lack of student loan servicing standards and information on monies owed, two U.S. Senators will work as a team to create a Student Loan Borrower Bill of Rights.

Sponsored by Illinois Senator Richard Durban and co-sponsored by Senator Elizabeth Warren of Massachusetts, the measure is intended to ensure that all student loan borrowers fully understand the range of repayment options and resources available to them. For service members and veterans, the measure would require loan servicers to provide each borrower with a liaison specifically trained in the benefits available to military borrowers. Thirdly, the bill calls for fair treatment of borrowers by the financial institutions servicing their loans.

"With student loan debt far outpacing the rise in starting salaries, many of these borrowers find they are unable to make their monthly payments," said Durbin. "When lenders refuse to work with them on a repayment plan, they begin a downward spiral that is difficult to turn around. That debt keeps them from being able to purchase homes, cars or other goods which fuel our economy . . . Every borrower should have basic protections when it comes to their student loans."

The bill proposes six basic rights for borrowers of both federal and private student loans. Those rights are:

Options such as alternative payment plans to avoid default; Information about key terms and conditions of the loan and any repayment options to ensure changing plans will not cost more; Knowledge of who the loan servicer is and how to reach them; Consistent practices on how monthly payments are applied, with a specific requirement for lenders and servicers to honor promotions and promises that are were either advertised or offered; Fairness, such as grace periods when loans are transferred, or debt cancellation when the borrower dies or becomes disabled; and Accountability accompanied by timely resolution of any errors and or certification of private loans.

Last October, the Consumer Financial Protection Bureau (CFPB) released a report revealing that a growing number of private student loan borrowers are burdened with debt that has no limits on interest rates and few, if any, options for alternative repayment plans.

CFPB's analysis of 3,800 student loan complaints received from October 1, 2012 through September 30, 2013 found that 87 percent were directed at one of eight companies. Sallie Mae, a financial services firm specializing in educational loans for more than 40 years, topped the complaint list with nearly half - 49 percent. In other cases, according to CFPB, federal student loan borrowers were unaware of their available repayment options such as income-based repayment.

Both types of borrowers experienced problems with payment misallocation. This specific problem was a challenge to resolving account errors in a timely manner.

In a more recent and related report, the Institute for College Access and Success' (TICAS) Project on Student Debt found that seven in 10 of 2012 college graduates had student loan debt. Additionally, the Class of 2012 had an average debt of $29,400.

Each year from 2008 to 2012, this report found that the average debt of federal and private loans combined increased 6 percent each year. These figures were drawn from data voluntarily provided by 1,075 public four-year and four-year private nonprofit institutions.

Although TICAS contacted for-profit colleges which accounted for seven percent of 2012 bachelor's recipients, none chose to share their data. The lack of this additional data may have contributed to understating the scope and volume of the nation's student loan debt, now estimated to be $1.1 trillion.

"Borrowers are already struggling to make ends meet as they graduate with debt that surpasses their annual wages", noted Sen. Durbin. "These borrowers and their families should not have to face additional costs because they cannot resolve errors quickly or gain access to programs meant to help them. My bill will ensure that all borrowers will have access to these basic rights and protections."

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.

You Can Still Save for Retirement When You Have Student Loans

If you have student loans, you already know they can be overwhelming. But as any responsible spender knows, they aren't the only demand on your budget.

Along with rent or a mortgage, the day-to-day business of living and any credit card debt you have, there's also saving for retirement, that period of 20 years-or far longer-during which you may need to live almost completely off the money you've saved. The thing about retirement savings is that there's no substitute for starting early-and it can be incredibly difficult to make up for lost time.

If you're wondering how on earth you're supposed to put money in your IRA or 401(k) when your student loans have already laid claim to your budget, you're not alone.

We asked Katie Brewer, CFP with LearnVest Planning Services, for help with one of the hardest money to-dos of all: Prioritizing which of these financial goals should receive your hard-earned dollars.

First, Take a Closer Look at Your Student Loans

"When it comes to retirement and paying student loans, it doesn't have to be one or the other," says Brewer, "And in fact, it shouldn't be." She explains that loans and retirement savings both feel urgent because, in a sense, both are urgent.

Student loans are a pressing debt that needs to be repaid, and missing a payment has the potential to tank your credit score (and after nine months of not making full payments, you go into default, which tanks your credit score and may turn your account over to a collections agency, among other similarly unpleasant things). Your first step is figuring out where you stand.

1. Know What You Owe. Brewer says student loans are best tackled with a routine. "Approach your student loan payment like your rent: It's a fixed expense you have to pay every month, so it has to fit into your budget," she says. "If you are struggling to make the minimum payments, and you're okay with extending your repayment period, call your lender and see if there's anything they can do to help reduce your monthly payments. Once you have that number, it can be a good idea to set up auto-payments so that you never miss one." As with all auto-payments, these should come from your checking account, which should be monitored to make sure payments are being made and that there's enough money in your account to cover all of your costs.

Generally speaking, Brewer cautions, by no means should your student loans be deferred or put into forbearance in order for you to contribute to retirement. "Many types of loans still gather interest during deferment or forbearance, which means you'll have to pay more later," she explains. "These measures aren't for people who are working on prioritizing their savings-they're for people who truly can't afford their payments, as a temporary fix to keep them out of default." If you're having serious problems finding the money to pay your loans, learn more about those options at Student Aid.

2. Find the Best Way to Pay. For federal loans, there are actually seven different repayment plans, and they aren't one size fits all. While all borrowers are automatically enrolled in a standard repayment plan if they don't choose otherwise, to make your money go furthest, you should be using the plan that best fits your needs. If you need help, consult our guide to federal student loan repayment plans, which breaks down how each plan works, as well as its pros and cons.

If you have several federal loans, consider consolidating, which means combining all of your loans into one monthly payment. You can consolidate private loans as well, but they'll remain separate from any federal loans you might also have, meaning that if you have both federal and private loans, the fewest number of payments you would be able to make is two. There are caveats to consolidating-for instance, it has the potential to lengthen the repayment period-so you'll want to consider carefully whether it's the right move for you (the Student Aid checklist can help with that). If you do want to consolidate, apply through the government's Borrower Services website.

3. Portion Out Your Budget. The 50/20/30 rule tells us that at least 20% of our budgets should be dedicated to our financial priorities-the payments that build a secure financial future, like loan repayments and retirement savings. "Especially for people with outsized student loan payments, designating a full 20% of their monthly budget to financial priorities isn't usually the problem," explains Brewer. "More often, they run into trouble when these large payments take up that entire 20%, and then they still need to find room in their budgets to save for retirement." The free LearnVest Money Center can give you transparency into how much of your budget goes to financial priorities, and where you may be able to find a few additional bucks to save for retirement.

Now, onto your retirement strategy.

Retirement: Why Start Now?

Money saved today for retirement is more valuable than money saved tomorrow-literally, it has the potential to be worth more, thanks to the compound interest earned by your accounts. "One of the first things we work on with clients is how they'll save for retirement," says Brewer. "Think of it as a reasonably paced jog toward retirement if you start now, versus a mad dash to the finish line if you wait until later." How do we start running?

1. Make a Plan of Attack. First things first: Where will you keep your retirement savings? This isn't a money-under-the-mattress situation, or even the right time to use a savings account. There are specific accounts that exist solely to save and invest your money for retiring, like employer-sponsored 401(k)s and individually opened IRAs. To figure out which options are available to you and how to start taking advantage of them, use our checklist: I Want to Save for Retirement.

"If money is tight, your retirement and student loan contributions aren't the place to cut back."

2. Have a Goal in Mind. While it's nearly impossible to predict exactly how much money you'll need in retirement down to the penny (seeing as that would mean you need to know exactly how many years you'll live), what you do want to figure out is a number called your replacement ratio, or what percentage of your current salary you'd need to live on once you retire.

Generally, LearnVest experts recommend replacing 70% to be financially secure, but those who are planning to live on a tight rein may be able to make do with 60%, and those who want to live it up in their golden years should plan on replacing 80-100%. For more specific numbers, you can consult a financial planner or use an online retirement calculator from a reputable source such as Kiplinger.

3. Don't Be Afraid to Start Small. Brewer recommends starting with small retirement contributions and increasing gradually as you earn more. "If you can't contribute all that you want to right away, start by saving 1% to 2% of your gross income, then increase your savings percentage every six months," she says. "That way, you can get a head start on retirement without having to restructure your entire life to fit it in. It can be scary to realize you aren't on track for a financially secure retirement, but one of the most important things you can do is get off the bench and into the game." And those who start saving early are more likely to stick with it over the long-term.

The Bottom Line

When it comes to student loans and retirement savings, the tricky part isn't figuring out which is more important-it's figuring out how to contribute to two similarly important goals. "If money is tight, your retirement and student loan contributions aren't the place to cut back," Brewer says. "Your discretionary spending, or your larger fixed costs-think rent or utility bills-are probably better targets for downsizing before the money you're investing in your future."

The bottom line, Brewer explains, is that while student loan payments must be made in full, it's important not to let retirement savings fall by the wayside completely when money gets tight. "You should calculate out how much you need to be saving to be on track for retirement, but keep in mind that if you can't swing that amount right now, it's better to start contributing something than nothing at all. Automate your contributions and when you get a raise, it's the perfect time to consider accelerating your retirement savings."

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment advice. Please consult a financial adviser for advice specific to your financial situation. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other's products, services or policies. Read More from LearnVest:

How I Saved $60,000 for Retirement ... on a $40,000 Salary

40 Financial Things You Should Know By 40

Checklist: I Want to Pay Off My Student Loans Check the Latest Mortgage Rates 7 Federal Student Loan Payback Plans: What You Need to Know

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SUGAR LAND - Money Management International (MMI) announced its newest financial education counseling program, designed to help student loan borrowers make informed decisions about student loan repayment. Through this new counseling program, student loan borrowers will meet one-on-one with a trained counselor to explore their specific repayment options, discuss ways to rehabilitate defaulted student loans, and receive education on the most up-to-date deferment and forbearance programs.

Today, there are approximately 37 million Americans holding nearly $1 trillion in total student loan debt, according to the Consumer Financial Protection Bureau. Student loan debt is growing ten times faster than credit card debt and currently represents the second highest, after mortgages, in total household debt. With tuition costs and debt growing at such an alarming rate, coupled with higher interest rates and serious consequences for defaulting, it pays to take the necessary steps to become educated on student loan repayment programs.

"Although there are new programs and options available for struggling student loan borrowers, choosing the one that best fits a person's unique financial needs can be difficult," said Jo Kerstetter, vice president of education and industry relations for MMI. "We are excited to help borrowers make the best decisions regarding their repayment options."

MMI's student loan counseling program begins with a complete personal finance assessment, including a budget analysis, a financial goal review and the creation of an action plan designed to assist student loan borrowers in reaching overall financial success. Counseling participants will leave the session feeling empowered and prepared to manage their student loans, as well as their overall financial life.

For more information, visit MMIurl.org/StudentLoanService or call 888-922-9723.