Another story pointing out how for-profit schools target prospective students more on the basis of ability to pay than on their ability to benefit from the for-profit school offers. Hat-tip to Bloomberg BusinessWeek magazine for story and graphic:Online Colleges Target VeteransGI benefit-rich veterans help Kaplan and other universities avoid federal financial aid rules Keith Melvin, a disabled and decorated Iraq War veteran, wanted to go to a traditional college until a recruiter for the online, for-profit Kaplan University began courting him. She assured him, he said, that he could trust Kaplan because it's owned by Washington Post Co. (WPO), and because the Post's board boasts such luminaries as Warren Buffett and Melinda Gates. "I was more familiar with Jimmy Buffett than I was with Warren Buffett," Melvin says. After learning the difference between the Sage of Omaha and the Sage of Margaritaville, Melvin enrolled at Kaplan last year. Invoking Buffett and Gates is one of many ways Kaplan attracts veterans—and the public funds used to pay their tuition. Federal spending on veterans' education will more than double this year, to $9.6 billion from $4.2 billion, says the U.S. Veterans Affairs Dept., largely because of a more generous GI Bill that took effect in August 2009. It pays veterans' tuition up to the level of their state's most expensive public university. Kaplan ranked third in 2009 in the number of students funded by veterans' benefits, behind two other for-profits, Apollo Group's (APOL) University of Phoenix and American Public Education's (APEI) American Public University System. Eight of the top 10 colleges were for-profits. "These schools are after the monetary gain of a healthy benefits package, not necessarily what's in the best interest of students," says Donald D. Overton Jr., executive director of Veterans of Modern Warfare, a service group with 5,000 post-1990 veterans as members. Kaplan spokeswoman Melissa Mack says: "Kaplan has received significant interest from veterans because of our military-friendly practices." She says recruiters aren't encouraged to use the names of Buffett and Gates. Enrolling veterans helps for-profit colleges exploit a loophole in a 1992 law capping the proportion of revenue they can derive from federal student aid at 90 percent. Tuition paid to for-profit colleges under the GI Bill counts as nongovernment revenue. Kaplan University, which derived 87.2 percent of its revenue in 2009 from taxpayer-funded education aid such as Pell Grants for poor students, may have exceeded 90 percent if revenue from the GI Bill and U.S. Defense Dept. tuition assistance for active-duty military was added, says Bradley Safalow, chief executive of PAA Research, which analyzes higher education stocks. U.S. Education Secretary Arne Duncan, whose department is pushing tighter regulation of for-profit colleges, expressed concern in September that some schools may violate the spirit of the law, which was meant to ensure that they offer an education good enough that some students are willing to pay for it out of their own pockets. For-profit colleges should have "some skin in the game beyond our dollars," Duncan said. Veterans often don't complete degrees or land lucrative jobs after attending for-profit schools. At Kaplan University, only 30 percent of two-year students and 33 percent of four-year students graduate. Spokesman Ron Iori says Kaplan's graduation rates are higher than many traditional schools that also serve a predominantly low-income student body like its own. Iraq vet Scot Reynolds, who earned a bachelor's degree in management from Kaplan University in 2009, now works as a telemarketer for $8 an hour plus commission—less than he made before he graduated. "My income has drastically dropped," he says. "Kaplan was extremely limited with help in finding work." Iori says Kaplan provides a wide array of job placement services. Kaplan, long known for preparing high school students for the SAT college admissions exam, derived 64 percent of its revenue in the quarter ended July 4 from its higher education division. The unit includes predominantly online Kaplan University, with 75,000 students, as well as Kaplan colleges, which have 37,000 students on 60 campuses. About 11,000 Kaplan University students, or 15 percent of its enrollment, are veterans, active-duty service members, or military spouses, up from 8,500 a year ago. The school targets the more than 1.2 million veterans of the Iraq and Afghanistan Wars, who are eligible for richer benefits under the revised GI Bill, by advertising in military-related magazines such as Army Times and G.I. Jobs, exhibiting at job fairs for current and former service members, and sponsoring events held by Amvets, the country's fourth-largest veterans' organization. Veterans "can virtually go to Kaplan with no out-of-pocket expenses," Kay Houghton, Kaplan director of corporate alliances, said as she handed out brochures at the Amvets national convention in Louisville in August. The bottom line: Washington Post Co.'s for-profit college, Kaplan University, has used the prestige of its parent to attract veterans and their federal aid.
The argument in favor of treating health insurance as a public good or public utility (like fire protection or electric service) is extraordinarily strong. That's why this, reported by Economic Fairness Oregon
, is such a good idea:Seeing double If you told your boss you wanted to make twice as much money, would you need to justify why you deserved it? What if prices at your local grocery store doubled? You’d probably want an explanation, unless you’re the CEO of a major insurance corporation. The average monthly health insurance premium in Oregon has skyrocketed from $184 for a single person in 1998 to $365 for a single person in 2008. Has coverage gotten better? Are companies handing out gold-plated health cards? We don’t have the answers, because insurers don’t have to give them. A package of insurance rate review bills making its way through the Oregon legislature aims to change that. Senator Chip Shields introduced Senate Bills 717, 718 and 719 to bring some long-lacking accountability to the insurance industry. Here are some of the important changes that this package of bills would provide:
If you’d like even more proof that the free rein afforded insurers is hurting Oregonians, read this Oregonian article about Representative Brian Clem’s mother-in-law losing insurance because of her provider’s repeated mistakes. While the CEOs of Providence and Regence each made more than half a million dollars last year, Oregon’s small business owners and consumers struggled to afford the cost of protecting themselves and their families with basic medical coverage. Hearings on these bills will be taking place soon in Salem. Please urge your local senators to support this crucial legislation today.Economic Fairness Oregon is a non-profit, non-partisan organization dedicated to consumer protection and fair lending laws. Our goal is to restore a financial system built to work for the people, not against them.
- Create a public hearings process on requests by insurance companies to increase premiums on individual and small group policyholders.
- Allow small businesses to intervene in the rate review process.
- Bring insurance companies under the Unlawful Trade Practices Act.
Message to Tax Preparers
I'm not a tax guy -- that means I don't give tax advice to anyone, and I definitely don't give tax advice for money. But, there's one thing you don't have to be a tax guy to know: NEVER LET ANYONE TALK YOU INTO TAKING A HIGH-INTEREST LOAN AS PART OF DOING YOUR TAXES. The "refund anticipation loan" scam has proved to be one of the most profitable parts of the tax prep industry, because it's nothing but legal loansharking, disguised as a convenience.
To tell you the truth, most of the people who pay a storefront tax preparation service could do their own taxes with a simple, plain-English (or Spanish!) tax-prep handbook borrowed from the library or one of the many volunteer-based tax assistance programs around town (like this one
. Or this one
.) But if you don't want to deal with the forms, and you want to pay to have someone else do it for you, fine. But never, ever mix doing your taxes with borrowing money. If you don't have the money to pay the tax preparer, go to your credit union
(you do belong to a credit union, right? No? Why not!?) and get a small loan to cover the tax preparation fee. Do not borrow from your tax preparer, any more than you would borrow from The Mob.
More on this from Economic Fairness Oregon
: A Terrible Deal With just a few weeks left until tax day, thousands of Oregonians are getting ready to file their taxes. Unfortunately, many of them will be taken for a ride. The tax preparation industry’s latest “innovation” is the Refund Anticipation Check. RACs are essentially a loan on the cost of a tax preparation fee. Workers who can’t afford the upfront cost of paying a preparer to file their taxes will spend even more, just to defer the payment. Here’s how it works – the tax preparer sets up an account to receive the taxpayer’s return. When it arrives, the tax preparer deducts the filing fees, plus several other add-on costs that are often masked in fine print. Whatever is left is then returned to the taxpayer. Just how bad a deal is a RAC? To illustrate, EFO calculated the cost of a RAC versus a payday loan (for those who need a refresher, the Oregon legislature recently cracked down on payday loans because of their abusive fees). The cost of a RAC, including the fees to receive a check or use a prepaid debit card, ranges from $50-$60, while the amount a taxpayer would pay to borrow the average preparation fee of $187 from a payday lender is around $25. That means a RAC is at least twice as much as a payday loan! Does this mean we should encourage payday loans for tax prep? Absolutely not. It means we need sensible rules to curb the excessive fees taxpayers are charged just to get their refunds. That’s why EFO supports the Tax Preparation Transparency Act (SB 778), legislation that would end the add-on fees for RACs and require tax brokers to disclose the bank fees associated with RACs upfront, so taxpayers can make informed decisions. You can learn more about the bill here. Urge your elected leaders to support the measure here. . . . Economic Fairness Oregon is a non-profit, non-partisan organization dedicated to consumer protection and fair lending laws. Our goal is to restore a financial system built to work for the people, not against them. Know someone who would like this message? Share it: On the web: www.economicfairnessoregon.org Contact: firstname.lastname@example.org Phone: 503.236.6088 Address: 1638 NE Davis St. Portland, OR 97232Twitter: @EconFairnessOR Facebook: Economic Fairness Oregon
"Who's afraid of reforming Wall St? Well, pretty much everybody in Washington except for Elizabeth Warren
"". . . And then there's the question of Elizabeth Warren, the Harvard law professor who invented the idea of the Consumer Financial Protection Bureau and should be its first director. The Administration seems undecided on whether to appoint her, fearing a Senate confirmation battle that could last for months. "The banks are scared to death of her," one Senator told me. "She speaks in clear, simple sentences. That terrifies them." Which means this is a fight worth having — and a way to dramatize the complicated issues at the heart of regulatory reform. The President should appoint Warren. The Senate should be forced to vote on her, so the public will know who really wants to clean up Wall Street and who doesn't."
That this is news
is what's most shocking:Credit-Card Rules Amended by Fed to Avoid Issuance to People Who Can’t Pay
Mar 18, 2011
The U.S. Federal Reserve approved a rule that would require credit-card issuers to consider consumers’ individual incomes before extending credit.
Credit-card applications generally can’t request household income
” because that term is too vague for issuers to evaluate whether customers will be able to make the required payments on the accounts, according to a statement from the Fed today. The rule is needed to prevent making credit available to consumers who lack the ability to pay, the Fed said.
The change is supposed to limit issuers from giving cards to college students, yet some lawmakers are concerned that stay- at-home spouses will suffer. . . .
Application Fees The Fed also specified that promotional programs that waive interest charges for a specific period of time are subject to the same protections as reduced rate programs. Under this clarification, a card issuer that offers to waive interest charges for six months would be prohibited from revoking the waiver and charging interest unless the cardholder becomes more than 60 days delinquent.
Application fees that a consumer is required to pay are also covered by rules that apply to overall fees charged during the first year after the account is opened, the Fed said. Since the total amount of fees is capped at 25 percent of the initial credit limit, a card issuer that charges a $75 application fee with a $400 limit would be banned from charging more than $25 in additional fees during the first year after the account is opened.
Because the word is that Wall St. "loathes" her
:Elizabeth Warren, the woman the financial industry loathes
Jeff Manning, The Oregonian
. . . Warren is the Harvard academic and firebrand consumer advocate who for years has been making life uncomfortable for the financial industry. She was also Obama's pick to be interim head of the newly created Consumer Financial Protection Bureau.
Now, four months before the Bureau even officially comes into existence, the banking industry and its Congressional water-carriers are attacking her and the bureau.
Characteristic of the attack was Wednesday's Wall Street Journal editorial, which huffed and puffed that the bureau was accountable to no one and that Warren was already stretching the bureau's portfolio, inserting herself into ongoing negotiations between state attorneys general and the banks over questionable foreclosures. . . .
This is why you should not suffer in silence if you are being harassed or abused over a debt: because there are laws to protect your family and your dignity from abusive collection practices, regardless of any financial reversals you have suffered that make it hard to pay your debts. The firm below operated all over the state. If you or someone you care about is being harassed or abused over a debt, contact an attorney.
You do have rights, debts or no debts. EUGENE-AREA LAW FIRM SHUT DOWN FOR UNLAWFUL DEBT COLLECTION PRACTICES
March 17, 2011
Derrick E. McGavic must pay $70,000 and cease practicing law
Attorney General John Kroger today announced an agreement that shuts down a Eugene-based law firm that was the subject of dozens of complaints about its debt collection practices. In addition to closing down McGavic & Finney PC, the settlement requires founding partner Derrick E. McGavic to pay $70,000 and surrender his license to practice law.
"At a time when many Oregonians are struggling to manage their debt, the Department of Justice is committed to holding unscrupulous debt collectors accountable," said Keith Dubanevich, Chief of Staff and Special Counsel to Attorney General Kroger.
The Department of Justice started investigating McGavic and his partner Kristan Finney after receiving more than 90 complaints against their law firm. McGavic was simultaneously undergoing an investigation by the Oregon State Bar.
McGavic & Finney specialized in representing national debt collectors that buy defaulted consumer obligations in massive quantities on the secondary market – often for pennies on the dollar.
Consumer complaints filed with the Oregon Department of Justice accused McGavic of systematically ignoring debtor protections and rights afforded under the Oregon and Federal Debt Collection Protection Acts. For example, McGavic allegedly misidentified or purposefully confused the identity of creditors in documentation to delay consumers' response and thus increase fees and interest payable to McGavic and his clients.
Notices issued by McGavic allegedly omitted specific information related to the amount of the defaulted debt and failed to provide proper verification of debts when requested by consumers. Similarly, McGavic allegedly repeatedly called debtors who had requested in writing not to be called.
The Department of Justice's investigation also uncovered McGavic's pattern of falsifying fee affidavits in Motions for Default Judgments by claiming services he did not perform. In addition, McGavic allegedly provided his office staff with a schedule to be used to arbitrarily increase the fees claimed - depending on the amount of money claimed or the venue of the action.
The agreement filed March 16 in Lane County Circuit Court requires Derrick McGavic to pay $70,000 to the Oregon Department of Justice to reimburse the cost of the investigation; dissolve the law firm of McGavic & Finney, PC; and resign from the Oregon State Bar.
McGavic is further prohibited from acting as a debt collector or operating a law firm or a collection agency in the State of Oregon.
Kristan Finney may continue to operate under a different business or firm, subject to numerous stringent injunctive provisions specified in the settlement agreement.
Senior Assistant Attorney General Gregory Smith handled the case for the Oregon Department of Justice.
Attorney General John Kroger leads the Oregon Department of Justice. The Department's mission to fight crime and fraud, protect the environment, improve child welfare, promote a positive business climate, and defend the rights of all Oregonians.
Contact: Tony Green, (503) 378-6002 email@example.com |
Sallie Mae that is. An excellent link
dropped in one of the comments to this letter to the editor in the Statesman-Journal
There is not a week that goes by that I don't see people who found out that, when they weren't even old enough to buy a beer, they signed up for a lifetime of outrageous above-market interest rates and backbreaking fees, all courtesy of the student loan-sharks who are not taking any risk on student loans, since the government guarantee eliminates the risk!
This is the kind of legalized piracy that threatens our nation's future -- oppressing people following the conventional wisdom ("Get an education") is like pouring gasoline all over the barn floor and lighting matches randomly. Every year the debt tsunami floods out more and more young-- and now middle aged people -- who have been carrying these absurd loans for years and still wind up facing bigger balances than ever. This is highly toxic stuff for a democracy. I spoke at the recent town hall meeting with Rep. Kurt Schrader about how consumer protections need to be restored to student loans. If you get in over your head with credit cards, you can get a fresh start with bankruptcy. If you can't afford your home, you can give it back to the bank. Student loans are the only loan that it is impossible to get out from under when you can't afford to pay them. Lenders can garnish wages, pensions or disability payments. You can be forced to pay no matter how low your income or whether you are old or disabled. After I spoke at the meeting, two member of the audience turned around in their chairs and thanked me for my comments. Another asked to read my notes. These laws really need to be changed. There is no protection for consumers who could not find better jobs and afford to pay off their debt. — Jessica Hopkins, Salem