Indiana Attorney General Curtis Hill announced Monday the state is suing credit agency Equifax. The suit follows an investigation into a 2017 data breach that compromised the private information of nearly 4 million Hoosiers. Hill says he’s suing in part … Continue reading →
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A recent study completed by Fidelity Investments and MEFA found that most parents and their children don’t discuss paying for college.
To deal with rising tuition costs, many parents need their college-aged students to share the burden of paying for college. The problem is, most of them have never actually told their kids. This was the main finding from a study conducted by Fidelity Investments and the Massachusetts Educational Financing Authority.
The study also found that parents are starting to save earlier for their child’s college education but are still having a hard time reaching their goals. 66 percent began saving for college before their child was five years old, which is a four percent increase since 2016. However, only 37 percent are able to reach their savings goals.
There is still good news to be found. Those results are still higher than the national average of 28 percent, and it’s 9 percent higher than the findings in 2016, according to Tom Graf, the Executive Director of MEFA. He said that the “survey results show we have the opportunity to build on those numbers.”
Though 66 percent of Massachusetts parents expect to cover most of the tuition costs themselves, many parents want their children to save $9,282, on average, by high school graduation. And 47 percent of parents feel that it isn’t their responsibility to cover all of the college costs. When the study first started in 2007, that figure was 60 percent.
But 47 percent of parents with a child who is in 10th grade or higher have not shared these expectations with their student. In 2016, this figure was 41 percent.
The study found that there are other college-related topics parents haven’t yet discussed with their child. Fifty-five percent of parents haven’t explained how the financial aid process works. And 54 percent of parents haven’t talked to their child about how much student loan debt they may have to take on.
Meanwhile, 83 percent of parents believe that dealing with their own student loan debt has made them better educated regarding financial topics. Yet 50 percent of parents aren’t sure what the best college savings plans are, and 51 percent don’t know how much they should save each month. Although 52 percent do have a financial savings plan in place, this is down from 57 percent in 2016.
Even more troubling: 71 percent of parents said they are familiar with a 529 plan but only 39 percent have opened one, which is a 7 percent drop from 2016. It’s not all bad news, though. The parents who have opened a 529 savings plan have saved an average of $32,200. In 2016, parents had only saved an average of $20,400.
Massachusetts also offers an annual in-state tax deduction for families who contribute to the U.Fund College Investing Plan, which is the Massachusetts 529 plan. The study concluded that Massachusetts parents would benefit from learning more about these incentives to save.
Although this study focuses on Massachusetts families and students, it’s an important reminder to start talking with your child sooner rather than later about paying for college. Setting expectations and coming up with a plan can help you prepare for the big investment you’ll be making in a college education. And the more money you have saved for college, the less you’ll have to borrow in student loans.
The post Many Parents Don’t Talk to Their Kids About Paying for College appeared first on The Student Loan Report.
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A new ruling from the IRS allows employers to tie 401(k) benefits to student loan payments.
On August 17, the Internal Revenue Service (IRS) told one unnamed employer that they can tie their employees’ 401(k) contributions to their student loan repayment benefits. This decision could pave the way for other employers to follow suit.
As more companies become aware of the student debt problem, many are becoming interested in offering student loan repayment benefits to their employees. Employers realize that offering this benefit is a good way to attract qualified employees and increase employee retention.
After all, data shows that 86 percent of younger employees are willing to stay with a company for up to five years if that employer is willing to help them pay back their student loans. Several well-known companies, like PricewaterhouseCoopers, Fidelity, and Staples, already offer their employees’ student loan repayment plans, according to Bloomberg.
However, they are still in the minority with only 4 percent of all employers offering student loan repayment plans. That could be partially due to the fact that when an employer helps an employee pay down their student loan debt, it’s considered taxable income.
The private letter ruling from the IRS addressed employers that want to offer a student loan repayment option that is connected to their 401(k) plan but is concerned about complying with the law.
In the program described in the IRS’ ruling, if an employee pays at least 2 percent of their annual salary toward their student loan debt, this will count as their 401(k) contribution.
This is good news for borrowers who need to continue making payments on their student loan debt but also want to continue saving for retirement. A study by the Center for Retirement Research at Boston College found that by age 30, college graduates with student loan debt had only saved half as much toward retirement as graduates with no student loan debt.
Prior to the ruling, it was unclear whether employers could offer a tax-free student loan repayment option. This ruling paves the way for employers to tie 401(k) payments and student loan repayment benefits together. And it gives employers the flexibility to design different plans offering student loan repayment benefits.
Attorney Jeffrey Holdvogt told Bloomberg this program offers the most benefit to employees who are paying down their student loan debt but not able to save anything toward retirement. He added that this ruling will likely cause more employers to offer a student loan repayment benefit as part of their retirement program.
The post IRS Allows Employers to Tie 401(k) Benefits to Student Loan Repayments appeared first on The Student Loan Report.
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A quarter of adults under age 34 are withdrawing savings from their 401(k) plans to pay down credit card and student loan debt. Fully 60 percent of today’s young adults define “financial success” as being debt-free, as opposed to 19 … Continue reading →
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Rights to Free Credit Reports
Under federal law, you’re entitled to a free credit report if a company takes adverse action against you, such as denying your application for credit, insurance or employment, and you request your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company that supplied the information about you. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud. Otherwise, a consumer reporting company may charge you up to $9.50 for additional copies of your report.
To buy a copy of your report, contact:
Equifax: 1-800-685-1111
Experian: 1-888-EXPERIAN (1-888-397-3742)
TransUnion: 1-800-916-8800
Under state law, consumers in Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont already have free access to their credit reports.
If you ask, only the last four digits of your Social Security number will appear on your credit reports.
Establishing a Credit History
If you’re denied a loan or credit card because you have no credit history, consider establishing one. The best way is to apply for a small line of credit from your bank or a credit card from a local department store. Make sure you list your best financial references. Make payments regularly and make certain the creditor reports your credit history to a credit bureau.
If Your Spouse Dies
Under the ECOA, a creditor cannot automatically close or change the terms of a joint account solely because of the death of your spouse. A creditor may ask you to update your application or reapply. This can happen if the account was originally based on all or part of your spouse’s income and if the creditor has reason to believe your income alone cannot support the credit line.
After you submit a re-application, the creditor will determine whether to continue to extend you credit or change your credit limits. Your creditor must respond in writing within 30 days of receiving your application. During that time, you can continue to use your account with no new restrictions. If you’re application is rejected, you must be given specific reasons, or told of your right to get this information.
These protections also apply when you retire, reach age 62 or older, or change your name or marital status.
Kinds of Accounts
It’s important to know what kind of credit accounts you have, especially if your spouse dies. There are two types of accounts — individual and joint. You can permit authorized persons to use either type.
An individual account is opened in one person’s name and is based only on that person’s income and assets.
If you’re concerned about your credit status if your spouse should die, you may want to try to open one or more individual accounts in your name. That way, your credit status won’t be affected.
When you’re applying for individual credit, ask the creditor to consider the credit history of accounts reported in your spouse’s or former spouse’s name, as well as those reported in your name. The creditor must consider this information if you can prove it reflects positively and accurately on your ability to manage credit. For example, you may be able to show through canceled checks that you made payments on an account, even though it’s listed in your spouse’s name only.
A joint account is opened in two people’s names, often a husband and wife, and is based on the income and assets of both or either person. Both people are responsible for the debt.
Account “Users”
If you open an individual account, you may authorize another person to use it. If you name your spouse as the authorized user, a creditor who reports the credit history to a credit bureau must report it in your spouse’s name as well as in yours (if the account was opened after June 1, 1977). A creditor also may report the credit history in the name of any other authorized user.
If You’re Denied Credit
The ECOA does not guarantee you’ll get credit. But if you’re denied credit, you have the right to know why. There may be an error or the computer system may not have evaluated all relevant information. In that case, you can ask the creditor to reconsider your application.
If you believe you’ve been discriminated against, you may want to write to the federal agency that regulates that particular creditor. Your complaint letter should state the facts. Send it, along with copies (NOT originals) of supporting documents. You also may want to contact an attorney. You have the right to sue a creditor who violates the ECOA.
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CBCInnovis, a leading provider of mortgage credit and data validation services to the mortgage lending industry, today announced an integration of its credit reporting capabilities with Maxwells digital mortgage technology. The integration of CBCInnovis with Maxwell provides credit reports to … Continue reading →
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