It’s a vicious cycle: because some people in the low- and moderate-income community either lack traditional credit histories or rely on financing from non-mainstream credit providers that aggressively market to those lower-income communities, these consumers often have no other choice but to turn to payday and other predatory lenders where interest rates are extremely high, leading them to fall behind on their payments. This, in turn, negatively impacts their credit scores…and the cycle continues.
Surrounded by parents, grandparents, aunts, uncles, cousins, and friends, my son Joel graduated from college on May 16. He completed his bachelor’s degree in four years without taking on any student loans. There are many reasons why he was able to do that, including the fact that Joel grew up in a middle class household with parents who expected him to go to college and started saving for his college education at birth. Joel was also eligible for some merit-based scholarships and grants and worked each summer to earn some spending money. Joel understands that not every kid has such opportunities and he thanked everyone who helped him along the way.
The Department of Education recently proposed rules that would protect students from excessive fees and other predatory practices on prepaid and debit cards used to receive federal aid funds. The Department estimates that this proposal could protect as many as 9 million college students receiving $25 billion in federal aid.
A proposal to relax federal standards in mortgage lending and bank regulation could undo years of work to enhance consumer protections and prevent financial crises. U.S. Senate Banking Committee chairman Richard Shelby (R-AL) proposed legislation that would change criteria used to define big banks, sharply reducing the number of banks that would fall under federal regulation, as well as loosen mortgage lending standards. The proposal will be marked up tomorrow at 9:00 a.m. CT. Woodstock Institute is firmly opposed to these proposed changes.
The spring legislative session for Illinois lawmakers is scheduled to finish on May 31st. Between now and then, our elected officials are working to craft a budget that must address a projected six billion dollar deficit. Governor Rauner proposed a budget that included severe cuts to crucial human services, including programs for homeless youth and services for affordable and supportive housing. Slashing the budget does not have to be the answer.
Student debt is frequently viewed as investment in the future, since taking on this debt allows students to attend college and access more employment opportunities upon graduation. For millions of for-profit college students, however, student loans turn out to be a bad investment. For-profit college students are more likely to graduate with more debt and experience fewer job options than students at public and nonprofit schools. At the Community Investment Awards, Woodstock Institute will host a panel to discuss this important issue and what we can do to address it.
Congresswoman Tammy Duckworth (D-IL 8) went to great lengths last week to ensure that expansions to the Military Lending Act, proposed by the Department of Defense (DoD) and supported by Woodstock Institute and advocates across the country, would go into effect as planned.
In a city as large as Chicago, it can be difficult for communities to find the economic support they need. A lack of access to financial services and limited community development can inhibit the growth of these neighborhoods, but one organization has dedicated itself to ensuring that communities can thrive. The Resurrection Project (TRP) stands as a pillar of support for Chicago’s Southwest Side, including Pilsen, Back of the Yards, and Little Village.
One of our movement’s accomplishments of which I’m proudest is the creation of the Consumer Financial Protection Bureau (CFPB). The CFPB has already dramatically improved the lives of millions of consumers, for example, through enacting and enforcing mortgage loan and servicing rules that protect homebuyers and homeowners in foreclosure, taking action against for-profit colleges that trap students in debt without providing quality education, and creating groundbreaking rules to protect consumers of products such as prepaid cards and payday loans. The CFPB has delivered over $5 billion in financial relief to over 15 million consumers who have been harmed by abusive and deceptive financial services. Consumers now have more information they can use to make sound financial decisions thanks to the CFPB’s efforts to improve disclosures for mortgages and student loans and expose consumers to financial education at critical points in their lives. Consumers in Illinois and across the country are getting a fairer shake because of the CFPB.
Illinois Attorney General Lisa Madigan and Senator Dick Durbin are taking a stand for student loan borrowers by urging the federal government to forgive the federal student loans of Corinthian Colleges students. Student loans are often regarded as “good debt”: they help consumers build their assets by giving them access to more prestigious and higher-paying jobs. However, an unwelcoming job market has left student loan borrowers with fewer job options and thus fewer opportunities to pay back their debt. One of the populations that was the hit the hardest is for-profit college students. Woodstock Institute research shows that for-profit college students are graduating with more debt and fewer job opportunities than their peers.
Most Illinois residents know that the state is billions of dollars in debt and has fallen behind on funding its pension obligations. Gov. Bruce Rauner has proposed severe cuts to the fiscal year 2016 (FY16) budget to remedy this situation. However, the Governor’s proposals have focused on cutting the budgets of Illinois human services, including services for affordable housing, homeless youth, and supportive housing. These cuts hurt the state’s most vulnerable citizens by taking vital resources away from those that need them the most.
Higher education has long been one of the keys to attaining the American Dream; however, skyrocketing student debt has turned the dream into a nightmare for many in our country. With challenges ranging from deficient student loan servicing to predatory for-profit colleges, millions of borrowers need help as they struggle to pay off their loans. Rohit Chopra, the Consumer Financial Protection Bureau’s (CFPB) Student Loan Ombudsman, stands out as a leader in student debt reform.
The Consumer Financial Protection Bureau (CFPB) proposed regulations for the prepaid card industry in December 2014 and accepted public comments through March of 2015. Woodstock commented that these rules are generally strong and will help keep consumers safe in this growing industry, but we believe that the CFPB can strengthen the rules by expanding protections in several areas.
Millions of Illinois workers struggle to build retirement savings. The tides started to change when former Governor Pat Quinn signed the Illinois Secure Choice Savings Program into law. Private sector employers with 25 or more employees who do not offer a retirement savings option will automatically enroll workers into the Secure Choice plan. Employees will fund their Roth IRA accounts through payroll deductions. This achievement could not have been accomplished without the dedicated work of Heartland Alliance for Human Needs and Human Rights, a leader in the Secure Choice campaign. Secure Choice’s influence is growing across the country.
For many college students, selecting a bank account is one of their first experiences with the financial system. With so many options, students may rely on their college for guidance on which bank account would best meet their needs. It’s easy for students to choose the bank that gives out freebies in the dining commons, puts the college logo on bank marketing materials, or can activate an account using their student ID cards.