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Consumer Archive

Consumer

Amid Rising Costs, Families Pay Less For College

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NEW YORK (7/30/13)--The cost of college is up, but the average American family is spending less on higher education, according to a report by Sallie Mae (ABC News July 23).
 
The reason? Families are making smarter financial decisions.
 
According to the annual survey released last week by the student-loan company, since the recession more American families are making decisions about their children's education based on its price tag--most likely out of necessity. 
 
Tuition continues to rise. Over the past five years the cost of tuition at public four-year colleges is up 27% above overall inflation, with the average sticker price at public universities now a whopping $17,860 (Associated Press July23).
 
Student loan debt is also climbing. Members of the national college class of 2011 had 5% more debt at graduation than the class before them with an average debt load of $26,600, according to the Institute for College Access and Success, Oakland, Calif.
 
Despite--or because of--these trends, Sallie Mae found college spending per student dropped to $21,000 during 2012 from its 2010 peak, when families were paying $24,097.
 
Here are some strategies families are using to cut the cost of college:
  • Live at home. The report found 57% of students live with their parents or relatives, up from 41% last year.
  • Cut the pricey top picks. Nearly 70% of families eliminated colleges during the application process due to their high price tags, up from 58% in 2008. About one-fifth of low-income students chose to transfer to less-expensive schools.
  • Take a student job. Nearly half the students surveyed reported increasing their work hours in 2013.
  • Finish quicker. Nearly 30% of students accelerated their course work to pay for fewer semesters.
  • Use grants and scholarships. Families reported covering about 30% of their school bills with grants and scholarships--the biggest portion of their payment sources.
  • Start a college-savings plan. Low-income, middle-income, and high-income families all increased their use of 529 plans, with 17% of families overall using the tax-advantaged college-savings plan--up from 12% the previous year.
  • Begin paying back your loans immediately. Twenty-two percent of students reported they were paying back their loans while still enrolled in school to reduce the overall cost.
  • Choose a more lucrative major. About 20% of student reported changing their majors to more marketable fields.
For more information, read "June Financial Fitness Challenge--Get New Grads Off to a Smart Financial Start" in the Home & Family Finance Resource Center.

Military Finances, Travel Apps On H&FF Radio

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WASHINGTON (7/26/13)--This week's Home & Family Finance Radio explores the complex finances of military personnel, rising insurance rates, and travel apps for your summer vacation.
 
In this episode, which you can listen to on the Internet, host Paul Berry, Washington, D.C., journalist and broadcaster, discusses these topics with special guests:
  • "Military Consumer Protection Day." Carol Kando-Pineda, counsel for the Division of Consumer and Business Education at the Federal Trade Commission, Washington D.C., explains the challenges of military finances.
  • "Insurance Rates on the Rise." Gillian White, editor for Kiplinger's personal finance magazine, Washington, D.C., says large insurance claims have resulted in higher premiums.
  • "It's Not Too Late for a Summer Vacation." Ross Kenneth Urken, a reporter for the financial website TheStreet.com, New York, shares the best travel apps for your smartphone.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
 
Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 95 million members, and is presented by CO-OP Network.
 
CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.
 
For related information, read "Life Insurance: How Much Is Enough?" and "Encore: Seven Questions to Ask Before Traveling Abroad" in the Home & Family Finance Resource Center.

Car-title Loans: $6 Billion Debt Trap

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WASHINGTON (7/23/13)--Car-title loans have ballooned into a $6 billion dollar industry over the past decade, with $4 billion coming directly from borrowers in the form of exorbitant fees. Twenty-one states still permit this debt-trap, which puts one of consumers' most significant assets on the line (Center for Responsible Lending July 15).
 
Here's how they work. Similar to the subprime mortgage loans made at the height of the mortgage bubble, car-title lenders make asset-based loans without evaluating whether the borrower can repay the loan. The decision is made instead on the value of the collateral--in this case, the car. Typically there's no credit check, nor does the lender ask about other monthly expenses or debts. If the borrower can't make the payment, there are two choices: Get another loan, or lose the car to repossession.
 
Many borrowers end up in a cycle of debt. One recent study estimates that borrowers who take out the typical nine title loans in a year wind up paying back more than three times the amount borrowed--$3,391 in payments for a $1,042 loan.
 
The Washington Post (July 15) reports that, in Virginia, car-title loans in 2012 were up about 26% from 2011, and 20% of borrowers failed to make a monthly payment on a title loan for at least 60 days.
 
The Center for Responsible Lending cites several borrower stories, one involving a retiree who depleted his life savings to pay for his wife's cancer treatments; he then took out a 375% Annual Percentage Rate (APR) title loan on his pickup truck. His fixed income only covered the title-loan fees, not the principal. He ultimately retired the debt by taking out a loan at 16% APR through a credit union.
 
Keep these tips in mind before giving away your vehicle:
  • Zone in on the APR. Car-title loan rates range from 84% to 300% and higher. Focusing only on that "small and easy" initial fee traps many people into an endless cycle of debt.
  • Shop around. Ask at the credit union what other options are available for your situation.
  • Steer clear of all predatory loans. That includes refund anticipation loans and overdraft loans. Ask about credit union alternatives to expensive loans offered by payday lenders.
  • Boost your rainy day account. Consider automatic transfers from checking to a liquid savings account for greater peace of mind.
For more information, watch "Tough Times Series: Avoid Payday Lenders" in the Home & Family Finance Resource Center.

H&FF Radio: Early Literacy, Career Prep And Budget Readiness

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WASHINGTON (7/19/13)--This week's Home & Family Finance Radio looks at the significance of preparation--whether for learning, job hunting, or budgeting.
 
In this episode, which you can listen to on the Internet, host Paul Berry, Washington, D.C., journalist and broadcaster, discusses these topics with special guests:
  • "Volunteer First, Work Later." Linda Zugec, managing director at The Workforce Consultants, a network of human resource consultants in New York City, talks about the benefits of volunteering now to prepare for future employment.
  • "Poll Shows Consumers Misunderstand Budget Goals." Gail Cunningham, vice president of membership and public relations for the National Foundation for Credit Counseling, Washington, D.C., shares results of a recent NFCC poll indicating that consumers mistakenly think budgets restrict their financial options rather than make options possible.
  • "Making Kids Learn to Read at Third-Grade Level." Patrick Corvington, senior fellow with The Campaign for Grade-Level Reading, Washington, D.C., discusses the organization's efforts to close the gap in reading achievement that separates many low-income students from their peers and to ensure that all children have an opportunity to meet those higher standards.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.

Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 95 million members, and is presented by CO-OP Network.

CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For related information, read "Uneven Income Calls for Proactive Money Strategies" and "The Time Has Come...To Get a Job" in the Home & Family Finance Resource Center.

Health Care Law Delay: Who Will It Affect?

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NEW YORK (7/16/13)--The Obama administration's decision to delay the employer-mandate portion of the health care law means that a small group of people who thought they'd be covered by their employers in 2014 will have to wait another year (The New York Times July 3).
 
The Affordable Health Care Act passed in 2010 requires certain employers to offer their employees suitable health coverage by Jan. 1, 2014, or pay a fine. The new deadline for that requirement is Jan. 1, 2015.
 
The people most likely to be affected by the new deadline are those who work for companies with more than 50 employees working 30 or more hours a week and that don't offer insurance. Because 94% of employers in that category already offer health care, the effect is expected to be small.
 
You won't be affected by the delay if you already are already insured through:
  • Your job;
  • Medicaid or Medicare; or
  • A private insurance policy.
If you're part of the small group affected by the delay, it's important that you find out how to buy your own insurance at one of the newly created state exchanges. The individual mandate portion of the health care law requires you to purchase it by Jan. 1, 2014 or face fines. That's still in effect.
 
Open enrollment for the state-based health insurance exchanges begins on Oct. 1, but you don't have to wait. Many state exchange websites are already open for your exploration.
 
You might qualify for a subsidy to help pay for your insurance if your modified adjusted gross income  is between 100% and 400% of the federal poverty level. For example, 400% of the federal poverty level in 2013 is about $46,000 for an individual and $94,000 for a family of four.
 
Learn more about the exchanges, get prepared for open enrollment, and find out if you qualify for a subsidy by visiting the Health Insurance Marketplace at Healthcare.gov and clicking on either the Small Business or Individual tab.

H&FF Radio: Gold, Young Drivers And Marriage

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WASHINGTON (7/12/13)--After listening to this week's Home & Family Finance Radio, you might find yourself entertaining thoughts of gold prospecting, choosing the perfect car for your teenager, or asking to see your fiance's credit report.
 
In this episode, which you can listen to on the Internet, host Paul Berry, Washington, D.C., journalist and broadcaster, discusses these topics with special guests:
  • "Gold Rush." Miguel Perez-Santalla, vice president of business development at the peer-to-peer gold exchange BullionVault, London, dissects the gold market, offering advice on whether you should invest and the Federal Reserve's impact on the price of precious metals.
  • "Young Drivers, Affordable Wheels." Jessica Anderson, an editor at personal-finance magazine Kiplinger, Washington D.C., explains which cars make financial sense for teenagers.
  • "Before You Marry, Talk Finances." Patrick Bet-David, author and founder of the financial-education advocacy and insurance marketing agency People Helping People, Woodland Hills, Calif., encourages couples considering marriage to disclose and discuss their personal finances with each other before walking down the aisle.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
 
Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 95 million members, and is presented by CO-OP Network.
 
CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For related information, read "The Best Cars for Stages of Your Life" and "Put Your Financial House in Order Before Tying the Knot" in the Home & Family Finance Resource Center.

The Time Has Come ...To Get a Job

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McLEAN, Va. (7/9/2013)--Good news for new grads: Employment prospects are looking up for half of the U.S. Unemployment rates fell in 25 states in May, while job rates increased in 17 states and were unchanged in eight states and the District of Columbia (USAToday.com June 21).
 
You've had a few weeks to celebrate not being a student anymore, and maybe you've even taken a break from the job search you started before graduation. Now it's time to get serious about finding employment. Here's advice to help your effort from usnews.com MONEY Careers (May):
  • Start looking for jobs now. The thought of having the rest of the summer to relax and enjoy one more shot at a carefree lifestyle sounds intriguing but, if you wait, you could prolong your job search by more than several months. Hiring processes can drag out; your best bet is to start looking now.
  • Think twice about contact info. Ideally your contact information already portrays you as a responsible adult. If it doesn't, now's the time to change your e-mail address, voice mail message and social networking info. Silly voice mails and e-mail signatures won't cut it in the working world. It's also not uncommon for prospective employers to check social networking sites. An inappropriate photo could cost you the interview--and the job.
  • Don't stick up your nose at being an intern. Just because you're finished with college doesn't mean you won't benefit from interning. Some internships actually are available only for nonstudents. An internship can give you on-the-job experience and help you get your foot in the door.
  • Take advantage of your network and networking skills. You might feel uncomfortable asking for help. Don't. Reach out to managers and co-workers at past jobs and internships. Contact that family friend who works at a company that interests you. Let everyone who might be a contact know that you're looking for work and that you're available.
  • Include all experience on your resume. It's not uncommon for young adults to exclude jobs they don't feel are important from their resumes. While a job working in fast food might not be relevant to the job you're seeking, these types of jobs still can help demonstrate that you are reliable, have good customer service skills and that you have a good work ethic.
For more information about handling your financial life after being a student, read the Financial Fitness Challenge "Get New Grads Off to a Smart Financial Start" in the Home & Family Finance Resource Center.

H&FF Radio: Investing For Wealth, John Rocker Helps Vets

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WASHINGTON (7/5/13)--Celebrate America's independence with Home & Family Finance Radio this holiday weekend. On this week's episode, learn about the efforts of a former professional pitcher to help homeless veterans, and also how to work toward your own financial independence.

Host Paul Berry, Washington, D.C., journalist and broadcaster, discusses these topics with special guests:
  • "The Five Steps to Wealth." Kimberly Foss, president and founder of Empyrion Wealth Management, Sacramento, Calif., and author of "Plan for Wealth," shares the five foundational principals of investing.
  • "Helping Homeless Vets." John Rocker, a former pitcher for the Atlanta Braves and director of public affairs for Save Homeless Veterans, Atlanta, discusses his new memoir and his efforts to re-establish homeless veterans in society.
  • "Credit Unions: The Big-Bank Alternative." Bill White, vice president of residential lending at NASA FCU, Washington, D.C., highlights the differences between big banks and credit unions, as well as the latest mortgage trends.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association.
 
The radio show, which is streamed via the Internet, is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide.
 
Home & Family Finance airs Sundays at 3 p.m. (ET) on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 95 million members, and is presented by CO-OP Network.
 
CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

For related information, use the resource link to watch "Top 10 Reasons to Belong to a Credit Union" in the Home & Family Finance Resource Center.

Summer Scams: Travel, But Avoid the Cons

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MADISON, Wis. (7/2/13)--For scammers, the summer vacation season is the Super Bowl. Unfortunately, you are the game ball these crooks hope to catch in their quick-money schemes.

One emerging fraud is an update of the "grandparent scam" for the Internet age. One-third of consumers ages 18-49 share their vacation plans on social media. Criminals who see this information can contact family members, typically the elderly, requesting a money transfer to solve an "emergency situation" involving the vacationers (Orlando Sentinel June 22).
 
Last year victims attempted to send $20.5 million through MoneyGram, a popular money-transfer company, to con artists using the grandparent scam. To avoid a similar fate, don't post your vacation plans on Facebook or Twitter. If you receive a panicked phone call from a purported relative, before sending money call the relative who supposedly is in trouble.

Here are some other popular summer scams and what you can do to avoid them, according to Time magazine (June 22).
  • Fake front desk call. In Jekyll Island, Ga., this scam has gotten so bad that hotels are putting up signs warning guests. A scammer impersonating a front-desk clerk will call in the middle of the night claiming a computer glitch requires verification of your credit card information. To avoid this one, simply don't give out your credit card information over the phone.
  • Fake Wi-Fi. When travelling you never can be certain the free hotel or Starbucks Wi-Fi you're using is legitimate. Crooks can use portable devices to create fake Wi-Fi hotspots that look authentic. When you use these "evil twin" hotspots, all of your Internet activity is viewable. To be safe, use your mobile device's data plan or, if you do use Wi-Fi, assume your activity is being monitored and don't check any sites that would reveal personal information.
  • Disappearing MoneyPak deposit. The Better Business Bureau recently cautioned consumers about using Green Dot's MoneyPak cards, popular prepaid debit cards available at major retailers. Scammers are pushing consumers to purchase a MoneyPak card, which doesn't offer the same protections as a credit card, and hand over the 14-digit security code to pay for limited-time-only deals, including discount airfare. Be wary of any deal too good to be true, especially one that requires such a specific form of payment.